Guide Home / 5. Resource Allocation / 5.5 Asset Valuation / 5.5.2 Using Asset Value to Support TAM Decisions

6 Key Summarizing Questions

  1. What is the overall value of the asset inventory? This is the most fundamental question about asset value. What exactly is the value of a given inventory of assets?
  2. What is the cost to maintain current asset value? Establishing overall asset value for each asset classification is a prelude to this follow up question. An agency would need to determine how much value is lost each year as assets age, and what investments are needed to offset depreciation and optimize the assets’ lifespans.
  3. How much should an agency invest in existing assets? This question is closely related to the second question, but the two questions may have different answers. If the measure of value is meaningful, then an agency should ideally spend enough money to maintain or increase asset value over time. However, it is inevitable that the value of a given asset will decline following construction or renewal of the asset: it is simply not realistic to expect assets to remain in a “like new” condition indefinitely. On the other hand, if the value of the asset inventory has declined to the point that is demonstrably suboptimal (e.g., a case in which assets are in such poor condition that users experience increased costs from delay and the agency incurs increased costs from emergency maintenance) then merely maintaining existing condition is undesirable. Answering this question requires additional analysis to determine the asset value associated with achieving an agency’s “desired state of good repair,” and the cost to achieve this value. Once obtained, the answer supports decisions about how much to invest in the asset inventory.
  4. How should funds be allocated between different assets or networks? To the extent that funds are insufficient for addressing all of an agency’s investment needs, it may be necessary to prioritize between different asset classes or networks (e.g., the Interstate System, Non-Interstate NHS, and Non-NHS). Information on asset value helps communicate the size of the inventory expressed in a single unit of measure – dollars.
  5. What’s the best life cycle strategy for our assets? Information on asset value, together with supporting management systems, can be used to test different asset life cycle strategies and illustrate the effectiveness of different strategies for maximizing value. Doing this requires predicting asset value assuming different strategies and comparing their results.
  6. What is the value generated by the asset? Much of the discussion thus far has revolved around the value of the asset, as it relates to construction and maintenance costs. However, two assets of the same type, length, and roadway characteristics may generate strikingly different value for the communities that use them. Variations in the volume of traffic, the availability of alternative routes, and the accessibility offered by these roads are only some of the factors affecting how road users perceive their value. When considering investment decisions, it is important to account for the road user’s perspective.