Incorporating asset value in life cycle cost analysis for transportation infrastructure assets

Asset valuation is an essential component of effective asset management. It is an important method to demonstrate proper management of public assets and effective utilization of tax payers' money. Asset valuation is used in standard reporting, depreciation schedules, auditor requirements and condition assessments. As such, it allows agencies to demonstrate funding needs for asset preservation. On the other hand, Life Cycle Cost Analysis (LCCA) is used in asset management to evaluate different maintenance and rehabilitation strategies. In addition to maintenance and rehabilitation costs, agencies started to include other factors such as salvage value and user costs and environmental costs in the LCCA. However, to date, the impact of asset value on LCCA is not considered. Incorporating asset value in LCCA as a means of evaluating the return on investment is imperative. The paper presents a methodology to incorporate asset value as a component of LCCA. The proposed method is illustrated through an example using data from the Ministry of Transportation (MTO) Pavement Management System (PMS2).