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Suggested Citation:"Chapter 3 Asset Value Scope." National Academies of Sciences, Engineering, and Medicine. 2022. A Guide to Computation and Use of System-Level Valuation of Transportation Assets. Washington, DC: The National Academies Press. doi: 10.17226/26667.
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Suggested Citation:"Chapter 3 Asset Value Scope." National Academies of Sciences, Engineering, and Medicine. 2022. A Guide to Computation and Use of System-Level Valuation of Transportation Assets. Washington, DC: The National Academies Press. doi: 10.17226/26667.
×
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Page 41
Suggested Citation:"Chapter 3 Asset Value Scope." National Academies of Sciences, Engineering, and Medicine. 2022. A Guide to Computation and Use of System-Level Valuation of Transportation Assets. Washington, DC: The National Academies Press. doi: 10.17226/26667.
×
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Page 42
Suggested Citation:"Chapter 3 Asset Value Scope." National Academies of Sciences, Engineering, and Medicine. 2022. A Guide to Computation and Use of System-Level Valuation of Transportation Assets. Washington, DC: The National Academies Press. doi: 10.17226/26667.
×
Page 42
Page 43
Suggested Citation:"Chapter 3 Asset Value Scope." National Academies of Sciences, Engineering, and Medicine. 2022. A Guide to Computation and Use of System-Level Valuation of Transportation Assets. Washington, DC: The National Academies Press. doi: 10.17226/26667.
×
Page 43
Page 44
Suggested Citation:"Chapter 3 Asset Value Scope." National Academies of Sciences, Engineering, and Medicine. 2022. A Guide to Computation and Use of System-Level Valuation of Transportation Assets. Washington, DC: The National Academies Press. doi: 10.17226/26667.
×
Page 44
Page 45
Suggested Citation:"Chapter 3 Asset Value Scope." National Academies of Sciences, Engineering, and Medicine. 2022. A Guide to Computation and Use of System-Level Valuation of Transportation Assets. Washington, DC: The National Academies Press. doi: 10.17226/26667.
×
Page 45
Page 46
Suggested Citation:"Chapter 3 Asset Value Scope." National Academies of Sciences, Engineering, and Medicine. 2022. A Guide to Computation and Use of System-Level Valuation of Transportation Assets. Washington, DC: The National Academies Press. doi: 10.17226/26667.
×
Page 46
Page 47
Suggested Citation:"Chapter 3 Asset Value Scope." National Academies of Sciences, Engineering, and Medicine. 2022. A Guide to Computation and Use of System-Level Valuation of Transportation Assets. Washington, DC: The National Academies Press. doi: 10.17226/26667.
×
Page 47
Page 48
Suggested Citation:"Chapter 3 Asset Value Scope." National Academies of Sciences, Engineering, and Medicine. 2022. A Guide to Computation and Use of System-Level Valuation of Transportation Assets. Washington, DC: The National Academies Press. doi: 10.17226/26667.
×
Page 48
Page 49
Suggested Citation:"Chapter 3 Asset Value Scope." National Academies of Sciences, Engineering, and Medicine. 2022. A Guide to Computation and Use of System-Level Valuation of Transportation Assets. Washington, DC: The National Academies Press. doi: 10.17226/26667.
×
Page 49
Page 50
Suggested Citation:"Chapter 3 Asset Value Scope." National Academies of Sciences, Engineering, and Medicine. 2022. A Guide to Computation and Use of System-Level Valuation of Transportation Assets. Washington, DC: The National Academies Press. doi: 10.17226/26667.
×
Page 50
Page 51
Suggested Citation:"Chapter 3 Asset Value Scope." National Academies of Sciences, Engineering, and Medicine. 2022. A Guide to Computation and Use of System-Level Valuation of Transportation Assets. Washington, DC: The National Academies Press. doi: 10.17226/26667.
×
Page 51
Page 52
Suggested Citation:"Chapter 3 Asset Value Scope." National Academies of Sciences, Engineering, and Medicine. 2022. A Guide to Computation and Use of System-Level Valuation of Transportation Assets. Washington, DC: The National Academies Press. doi: 10.17226/26667.
×
Page 52
Page 53
Suggested Citation:"Chapter 3 Asset Value Scope." National Academies of Sciences, Engineering, and Medicine. 2022. A Guide to Computation and Use of System-Level Valuation of Transportation Assets. Washington, DC: The National Academies Press. doi: 10.17226/26667.
×
Page 53
Page 54
Suggested Citation:"Chapter 3 Asset Value Scope." National Academies of Sciences, Engineering, and Medicine. 2022. A Guide to Computation and Use of System-Level Valuation of Transportation Assets. Washington, DC: The National Academies Press. doi: 10.17226/26667.
×
Page 54
Page 55
Suggested Citation:"Chapter 3 Asset Value Scope." National Academies of Sciences, Engineering, and Medicine. 2022. A Guide to Computation and Use of System-Level Valuation of Transportation Assets. Washington, DC: The National Academies Press. doi: 10.17226/26667.
×
Page 55
Page 56
Suggested Citation:"Chapter 3 Asset Value Scope." National Academies of Sciences, Engineering, and Medicine. 2022. A Guide to Computation and Use of System-Level Valuation of Transportation Assets. Washington, DC: The National Academies Press. doi: 10.17226/26667.
×
Page 56
Page 57
Suggested Citation:"Chapter 3 Asset Value Scope." National Academies of Sciences, Engineering, and Medicine. 2022. A Guide to Computation and Use of System-Level Valuation of Transportation Assets. Washington, DC: The National Academies Press. doi: 10.17226/26667.
×
Page 57
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Suggested Citation:"Chapter 3 Asset Value Scope." National Academies of Sciences, Engineering, and Medicine. 2022. A Guide to Computation and Use of System-Level Valuation of Transportation Assets. Washington, DC: The National Academies Press. doi: 10.17226/26667.
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Page 58

Below is the uncorrected machine-read text of this chapter, intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text of each book. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.

Section 3.1 Identify the Asset Value Driver Section 3.2 Review Data Availability and Quality - Section 3.3 Establish the Asset Hierarchy Section 3.4 Determine the Need for Componentization - 3-1 A Guide to Computation and Use of System-Level Valuation of Transportation Assets - - -

Information on asset value and how it is changing may support a number - - - - - Table 3-1 Section 3.1 Identify the Asset Value Driver 3-2 A Guide to Computation and Use of System-Level Valuation of Transportation Assets

- - 3-3 A Guide to Computation and Use of System-Level Valuation of Transportation Assets Initial Asset Value (Chapter 4) Treatment (Chapter 5) Depreciation (Chapter 6) Calculation (Chapter 7) Financial Reporting Consistency Calculate value based on historic cost. Establish cost, useful life and treatment history for construc- tion, reconstruction and replacement. Depreciate value linearly based on asset age. Asset Value ACR Reporting Asset Calculate value based on replace- ment cost or market value. Establish cost and useful life for construction, reconstruction and replacement. Avoid analysis of historic treatments by using condition data where available. Depreciate value age determined using condition data. Use linear depreciation unless a non-linear depre- ciation pattern has been established. Asset Value Cost to Maintain Value ACR ASR AFR Evaluating Treatment Decisions Calculate value based on replacement cost. Establish cost, useful life and all treatments being compared. Avoid analysis of historic treatments by using condition data where available. Depreciate value age determined using condition data. consumption pat- tern in determining how to depreciate. Asset Value Cost to Maintain Value NPV ACR Determining and Society Calculate value using an economic perspective. Establish cost and useful life for construction, reconstruction and replacement. Calculate costs and over the life of the asset in lieu of depreciation. NPV

Calculating asset value requires data on the asset inventory, on asset age Section 3.2 Review Data Availability and Quality 3-4 A Guide to Computation and Use of System-Level Valuation of Transportation Assets Source: NCHRP Report 956 (17)

Data Needs - - - 3-5 A Guide to Computation and Use of System-Level Valuation of Transportation Assets

Data Quality and Completeness Data Needs for Asset Value Calculation Always Needed Asset quantity by: Asset class Asset sub-group (e.g., asphalt vs. concrete pavement) System (e.g., Interstate, NHS) Asset quantity for each individual asset or compo- nent Challenges Some asset classes may be implicitly included with another asset class – e.g., pavement markings and shoul- ders may be captured as part of pavement Always Needed Distribution of asset life or condition by asset class or sub-group Asset life or condition for each individual asset or component Always Needed Treatment cost The impact of treatment on the life or condition of an asset or component Historic data on treatments performed by: Asset class Sub-group, Asset component Challenges Always Needed Discount rate Challenges A number of parameters are required if calculating economic value – See Chapter 4 for further discussion. 3-6 A Guide to Computation and Use of System-Level Valuation of Transportation Assets

- - Data Assessment - NCHRP Report 956: Guidebook for Data and Information Systems for Transportation Asset Management (17) 3-7 A Guide to Computation and Use of System-Level Valuation of Transportation Assets Source: NCHRP Report 956 (17)

Figure 3-1 3-8 A Guide to Computation and Use of System-Level Valuation of Transportation Assets

After establishing the motivation for calculating asset value and review- ing available data, the next step is to identify which assets will be includ- ed in the valuation calculation through establishing an asset hierarchy. An asset hierarchy is a framework for organizing a set of assets. It specifies as- set classes and sub-classes, as well as any parent-child relationships between different types of assets. Note that an organization may already have established an asset hierarchy that can be used to support this step. Alternatively, one may establish a hierarchy specifically for the purpose of calculating asset value. In any case, it is important to note that the set of assets included in the asset value calculation may be different from that defined for other purposes. Thus, if one is referencing an exist- ing hierarchy, it will be necessary to further note which assets are included explicitly in the asset value calculation, which are includ- ed implicitly as part of some other asset, and which are excluded. Assets exist within a network, and they rely upon the collective maintenance of the network to function properly. If some assets in these networks are not explicitly valued, their impact should be accounted for implic- itly within the valuation. Also, at this point practitioners should establish whether the asset value calculation is focused on specific systems or subsets of assets. Asset subsets comprise its inclusion within a system (e.g., on the NHS or Interstate), ownership of the asset (federal, state, or local), and the asset’s geography. A final consideration for the asset hierarchy is ensuring that assets excluded from the analysis are not neglected in maintenance or other investments. By analyzing assets within a network or along a corridor, one can weigh all aspects of maintenance for all levels of Section 3.3 Establish the Asset Hierarchy Chapter 3. Asset Value Scope 3-9 A Guide to Computation and Use of System-Level Valuation of Transportation Assets Minnesota DOT Asset Hierarchy Minnesota DOT (MnDOT) includes calculates value for pavement and bridge assets in its 2019 TAMP, as well as for culverts, tunnels, signs, light towers, noise walls, signals & lighting, pedestrian infrastructure, build- ings and ITS. The table displays MnDOT’s full asset hierarchy. Source: Minnesota DOT (29) Pavement (Roadway Miles) Bridges Highway Culverts Deep Stormwater Tunnels Overhead Sign Structures High-Mast Light Towers Noise Walls Signals and Lighting (Signal Systems and pole mounted lighting) Pedestrian Infrastructure (Curb ramps, sidewalk and pedestrian bridges) Buildings Intelligent Transportation Systems Total State Highway System Assets 14,331 4,801 40,687 8 1,858 478 434 28,442 Various Units 876 14,310 N/A Unit/ Count $29.4 billion $14.6 billion $1.6 billion $372 million $175 million $19 million $374 million $541 million $279 million $1.2 billion $151 billion $48.7 billion Replacement Value $29.4 billion $29.4 billion $29.4 billion Not calculated Not calculated Not calculated Not calculated Not calculated Not calculated $945 million Not calculated N/A Current Asset Value

- - - - - - - (18) Structures - 3-10 A Guide to Computation and Use of System-Level Valuation of Transportation Assets

- - - - - - - - (19) 3-11 A Guide to Computation and Use of System-Level Valuation of Transportation Assets

- Vehicles - (20) - - Fixed Guideway 3-12 A Guide to Computation and Use of System-Level Valuation of Transportation Assets

- Transit Asset Management Guide (21) Facilities (22 (23) Other Assets Drainage: Geotechnical: - 3-13 A Guide to Computation and Use of System-Level Valuation of Transportation Assets

- - Land: - - 3-14 A Guide to Computation and Use of System-Level Valuation of Transportation Assets

- - - - Section 3.4 Determine the Need for Componentization 3-15 A Guide to Computation and Use of System-Level Valuation of Transportation Assets

Criteria for Componentizing - - 3-16 A Guide to Computation and Use of System-Level Valuation of Transportation Assets Calculation of Asset Value with and without Components Sub Super Deck 12,000,000 10,000,000 8,000,000 6,000,000 4,000,000 2,000,000 0 Bridge 12,000,000 10,000,000 8,000,000 6,000,000 4,000,000 2,000,000 0

Chapter 3. Asset Value Scope / Section 3.4 Determine the Need for Componentization y Data are available on the inventory of asset components and on either their condition or age to support calculation of depreciation; and y The driver for calculating asset value is to evaluate different treatment options, or there is significant interest in doing so. Agencies may establish additional criteria for when to value assets at a component level. The example below describes guidance for valuing assets at a component level. For example, Austroads describes that an asset over $5 million should be componentized when the asset struc- ture can be separately identified, the differ- ent parts can each be measured, and the components have dif- ferent service lives (24). The example below illustrates the compo- nentization approach recommended by CIPFA for local agencies in the U.K. 3-17 A Guide to Computation and Use of System-Level Valuation of Transportation Assets Defining Asset Components The Chartered Institute of Public Finance and Accountancy (CIPFA) has established an asset hierarchy and componentization approach for the purpose of calculating asset value to be used by local agen- cies in the U.K. (16). In its guidance CIPFA defines three levels in the hierarchy: • Level 1: Component Type – broad categories based on the general function of the components. They divide the Highways Network As- set into categories of components and provide an appropriate basis for high-level management information. • Level 2: Component groups – used to distinguish between compo- nent types that have a similar function and form. • Level 3: Elements – distinguishes between components that, at least when systems become well developed, may require individual depre- ciation and impairment models, such as different service lives and/or rates of deterioration. The table depicts how these levels are defined for pavement (carriageways). Source: CIPFA (16) • Carriageway • Area (metre) based elements • Flexible pavements • Flexible composite pavements • Rigid concrete pavements • Rigid composite pavements • Linear elements (see paragraphs 6.6.2.2) • Pavements layers • Other surface types, eg paved • Central reservation, round about, lay- by, traffic island etc • Earthworks (embankments and cuttings, retaining walls height <1.35m) • Traffic calming • Fords and causeways • Kerbs • Line markins • Road studs • Road drainage elements (gullies, drains, etc, but not large structures) • Boundary fences and hedges • Hard strip/shoulder verges/vegetation LEVEL 1 Component type LEVEL 2 Component group LEVEL 3 Elements that level 2 implicitly covers

- - - - - Figure 3-3 (25) (26) - - 3-18 A Guide to Computation and Use of System-Level Valuation of Transportation Assets Cross-Section of Typical Pavement Components.

Structures - Figure 3-4 - - Figure 3-5 - (27) 3-19 A Guide to Computation and Use of System-Level Valuation of Transportation Assets Cross-Section of a Bridge Showing Its Major Components Example Structural Elements of a Bridge Abutment Fixed Bearings Approach Slab Concrete Deck Assembly Joints Painted Steel Girders Painted Steel Guardrail Strip Seal Joint

Other Assets - - (28) 3-20 A Guide to Computation and Use of System-Level Valuation of Transportation Assets

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Determining the value of a transportation organization's physical assets is important for both financial reporting and transportation asset management (TAM).

The TRB National Cooperative Highway Research Program's NCHRP Web-Only Document 335: A Guide to Computation and Use of System-Level Valuation of Transportation Assets details how to calculate asset value and use it to support application in TAM.

Supplemental to the document are summary of the research project activities and recommendations for implementation.

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