Multipurpose Asset Valuation for Civil Infrastructure: Aligning Valuation Approaches with Asset Management Objectives and Stakeholder Interests

Abstract

Valuation is a critical component of asset management for civil infrastructure because it provides a means for evaluating facilities whose value is to be preserved or enhanced. Although the basic concept of valuation is generic, there are various quantitative approaches for valuing assets. These approaches can be classified to provide guidance for selecting the right valuation approach to accomplish different asset management objectives. Various approaches are examined for valuing assets in transportation corridor, financial, and corporate real estate asset management from the viewpoint of the purpose of valuation. How different valuation approaches support different purposes is shown, and the importance of selecting appropriate valuation methods to achieve different objectives is discussed. On this basis, some of the critical issues are identified for developing useful valuation classification frameworks to relate valuation approaches with an agency’s asset management objectives and the scope and emphases of stakeholder interests. Building on the purposes of valuation associated with the Governmental Accounting Standards Board Statement 34 requirements, a prototype framework is developed for classifying valuation approaches, and emerging opportunities to expand the scope of valuation tools for multipurpose infrastructure valuation are discussed. The results should be useful to agency staff interested in understanding how various valuation tools can help them to accomplish different asset management objectives as they upgrade their infrastructure management systems to asset management systems.

Elemental Decomposition and Multicriteria Method for Valuing Transportation Infrastructure

“…Valuation approaches and methods can be seen in several different dimensions. These include temporal span of the data (historical or future), associated costs and benefits, different sets of value indicators in the valuation function, and characterized investment risks (5,8). The most common manifestation of these dimensions is the way the different approaches consider maintenance and its recuperative effects on asset value.…”

“…To restore and preserve this system, highway agencies seek to develop and evaluate more cost-effective strategies; this practice has manifested itself in recent years by the growing tendency of public agencies to incorporate business principles into their decision-making processes (4). These principles have come to form a significant part of modern asset management implementation, in part because they enable asset managers to properly value their infrastructure to facilitate financing opportunities and future investments (5). Previous research has demonstrated that appropriate valuation of highway assets permits proper management of the infrastructure, by monitoring and minimizing the value lost through physical deterioration, congestion, underutilization, and safety hazards (6).…”

Integrating Economic and Utility Concepts for a Comprehensive Bridge Valuation Model

“…Amekudzi et al examined various quantitative approaches for valuing assets. They identified some of the critical issues for developing useful valuation classification frameworks to relate valuation approaches with an agency's asset management objectives and the emphases of stakeholder interests ( 15 ). Solminihac et al proposed a methodology to determine the asset value of low-volume roads and presented a procedure to quantify the effect of maintenance policies on such asset values ( 16 ).…”

Novel Utility-Based Methodological Framework for Valuation of Road Infrastructure

“…For this reason, the valuation approach for transportation infrastructure should be linked to the interests of the stakeholders. These stakeholders are represented by users of the facility, financiers, engineering and construction professionals, system managers, the general community, and marginal populations (11).…”

“…In addition, the authors highlighted various applications and limitations associated with each category. Moreover, Amekudzi et al proposed that asset valuation can be past, current, or future value, depending on an agency's objectives and goals (11). Past-based approaches rely primarily on historical expenditures and use book value and equivalent worth in place.…”