Asset Management – Transport Infrastructure Perspective

Asset management is defined as “a strategic approach that identifies the optimal allocation of resources for management, operation, preservation and enhancement of the asset to meet the needs of current as well as future generations”.

The transport infrastructure assets represent by far the biggest capital asset that any country’s public sector holds. Transport networks are vital to national economic prosperity. The comfort and safety in which people can move from one place to place and the appearance of roads and streets are important contributors to quality of life.

But a few authorities know that their infrastructure is worth, and detailed information on what it comprises, and the condition it is in, is patchy and often out of date. There is a general perception that spending is insufficient to maintain our transport infrastructure to satisfactory standards. However, the governments do not have robust, consistent information about the true cost of holding and maintaining the assets, or the size of maintenance and investment backlogs. And most authorities do not have detailed information they need to drive down the cost base and improve service delivery.

Asset management plays a key role in tackling these problems.

Benefits of Asset Management

Asset management is used for:

• Whole life cost-based modelling, to understand and minimize costs, maximizing value over the long term
• Scenario planning and option appraisal to model and understand the cost consequences of different maintenance strategies
• Prioritizing work programs to maximize the return on a given level of investment
• Reducing the number and value of successful third-party claims
• Understanding and adjusting trade-offs between capital and revenue spends to achieve the best balance.
• Using the detailed information that the system will provide about the cost of individual maintenance activities to drive down the cost base, and to monitor whether treatments deliver the expected performance
• Informing better procurement
• Monitoring performance trends over time
• Benchmarking

Asset Management Process

Asset management process involves a few steps and considerations. They are summarised below.

Condition Assessment

The physical condition of the asset in practice has two elements:

1. The perceived condition of the asset as ‘measured’ by public and road user perception.
2. The condition of the asset as determined by measurement and analysis of road condition data (less obvious to the public and road users).

Demand Aspirations

‘Demand aspirations’ is a term used to describe the non-condition related performance requirements of the asset. These can relate to safety, availability, accessibility etc. Such measures recognise that the asset provides a service to customers by enabling them to travel.

The development of measures that reflect performance against these aspects and in particular the development of a relationship between the resources allocated to tasks that support them is critical if the principles of asset management are to be applied fully across all aspects of the highways service.

Valuation of Assets

A replacement value for the asset is a common starting point for a valuation. This may then be adjusted by one of a number of methods to provide a current value that is intended to reflect the depreciated value of the asset. It should be noted that all highway valuations start by placing a value against the asset register, the highway inventory. Most valuation methods then use some estimate of the expected lives of the assets and their components. Calculating expected lives and understanding the effect that maintenance treatments have in prolonging those lives is therefore a critical valuation process. It is also clearly a critical asset management process. The processes and data requirements of valuation and asset management are largely the same. A well-developed asset management approach can provide the information required to meet financial reporting requirements (valuation) and to improve the management of the asset.

Placing a monetary value on highway assets emphasises their importance and hence the need to maintain them. Monitoring how the asset value is changing with time can indicate if costs are being unduly passed to future generations and can provide compelling arguments for investing in the preservation of the asset base.

Good asset management needs appropriate inventory plus up-to-date local cost data and condition information. It also needs an understanding of how assets or components deteriorate and an understanding of how assets or components deteriorate and in particular when they will have to be replaced or treated.

It has been observed that there could be substantial differences between the results, depending on the type of survey (CVI, DVI or SCANNER) used to produce the carriageway condition indicator (CCI).

The condition data are processed to produce the CCI and this is then used in subsequent calculations to give ultimately the Depreciated Replacement Cost (DRC).

The Gap Analysis is used to determine the current (‘as is’) practice and desired (‘to be’) practice which then forms the basis for developing a prioritised and costed Improvement Plan.

Performance Gaps

Once asset inventory, condition and cost data have been collected, the performance of each asset or asset group should be calculated and compared with the desired or target level. Care should be taken when relying on historic performance data and appropriate levels of confidence should be established.

The desired performance levels are defined in national, industry standards, Codes of Practice and procedures, as well as local standards of the authority. These can also be defined in terms of business objectives, demands and aspirations.

The current performance is usually established through the application of different types of performance assessment methods. These typically are represented by a formal regime of inspection and surveys.

Optimisation and Budget Consideration

A good starting point for the investment strategy is to consider the total finance available for highway assets and their consequences, identified in each of the lifecycle plans. Although this may not establish the investment required to meet desired service standards, it will provide a necessary base case.

In the medium to long term future the use of refined deterioration modelling information can then be used to prove the investment requirements to achieve defined service standards and hence match the total finance to those standards or level of services.

It is important to regularly monitor the impact that an investment strategy has on asset performance and the support it gives to lifecycle objectives.