Asset Valuation: A Performance Measure for Comprehensive Infrastructure Asset Management
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Date
2017-12-14
Authors
Alyami, Zaid
Journal Title
Journal ISSN
Volume Title
Publisher
University of Waterloo
Abstract
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 government’s budgets. Several government regulatory bodies mandate agencies to report their Tangible Capital Assets’ (TCA) values within their annual statement. For example, the Canadian Public Sector Accounting Board (PSAB), the Governmental Accounting Standard Board (GASB) and the New Zealand International Financial Reporting Standards (NZ IFRS), to name a few.
Although some limited research has been conducted on incorporating asset value into asset management systems, there is no comprehensive work done to date to incorporate asset valuation in asset management. An integration method is imperative to manage assets in the most optimized cost-effective ways while maintaining or enhancing the value of these assets. Integrating asset value in asset management strengthens the asset management framework by integrating financial and engineering reporting. In addition, agencies have traditionally made investment decisions for individual assets separately. Independent management systems have traditionally been developed to manage assets, in particular pavements and bridges, the two main transportation assets. The lack of integration between management systems may be due to restrictions associated with funding and/or limitations to the agency’s ability to compare data objectively across asset types. Deciding how to best allocate limited resources across these various asset classes to provide acceptable performance poses a persistent and difficult challenge for agencies. Asset value holds a great promise to be incorporated in asset management as a performance measure that translates infrastructure condition in monetary terms that can be easily communicated and understood by the stakeholders (agency, policy makers, users, etc.). Therefore, asset value can be viewed as a common performance measure for integration mechanism between competing asset management systems.
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The objective of this research is to develop a methodology that integrates asset value as a performance measure in asset management decision making. This thesis introduces an asset management methodology that aims to arrive at an optimum value-based asset management plan of maintaining infrastructure assets taking into account budgetary and performance constraints. To achieve this objective, an Asset Value Index (AVI) that integrates asset value and value-driver performance measures and associated thresholds and Level of Service (LOS) requirements is proposed. The Multi-Attribute Utility Theory (MAUT) is used to develop the proposed AVI. In order to incorporate asset value in asset management and develop the AVI, a comprehensive and analytical analysis of various asset valuation methods is conducted. Based on the analysis, challenges of incorporating asset management are identified and addressed by the proposed Asset Value Loss ratio (AVL) as an integration means.
To demonstrate the proposed methodology, a case study from the Ministry of Transportation of Ontario (MTO) second generation Pavement Management System (PMS2) is presented. An overview of MTO road assets network is presented and analyzed. In addition, the various components of the proposed methodology are demonstrated through the case study. Furthermore, the outcome of the implementation of the proposed AVI is compared to optimization output, Do-Nothing output as well as needs assessment output. Furthermore, building on the proposed methodology presented, a value-based cross asset management methodology is presented using the AVI as a common integration measure. A case study of pavements and bridges based on data obtained from the 7th International Conference of Managing Pavement Assets (ICMPA 7) is used to illustrate the proposed methodology.
Description
Keywords
Asset Management, Asset Valuation, Prioritization and Optimization, Performance Modeling, Infrastructure Management, Transportation Infrastructure