A framework for asset valuation of civil infrastructure

Asset management systems include the monitoring of performance. From an investment point of view, this requires an understanding of both the asset valuation method and the performance models. In other words, there is an accounting / financial dimension and a technical / engineering dimension. Civil engineers are now being faced with this requirement, but guidelines have not yet been developed as to what and how to do it. Using a high quality database from the City of Edmonton Municipal Pavement Management Application, the total network asset value of 113 road sections in 1993 was calculated using six valuation methods. The valuation methods were grouped into two categories: past-based methods that used historical cost data to calculate value and, current-based methods that use current replacement cost to calculate value. Using two performance model types, straight line and sigmoidal, both deterministic models, the 1993 condition was projected to 1999 and the valuations were repeated. Based upon an improved understanding of the impact of valuation method and performance / depreciation model on the calculation of present and future network level asset value, a framework was developed that provides guidance to public works asset managers on how to implement asset valuation. The framework is based upon differentiation of the assets by expected life (defined as useful life), management approach (scheduled or needs based maintenance) and availability of performance data and models.