Productivity-based approach to valuation of transportation infrastructure.

PDFTech ReportSWUTC/14/600451-00089-1DTRT12-G-UTC06InfrastructureMaintenanceAsset managementValuationCase studiesUtility theoryBenefit cost analysisResource allocationSensitivity analysisTexasSouthwest Region University Transportation Center (U.S.)Zhang, ZhanminPeters, Diniece D.University of Texas at Austin. Center for Transportation ResearchUniversity Transportation Centers Program (U.S.)US Transportation CollectionTransportation infrastructure, a vital component to sustain economic prosperity, represents the largest public-ownedinfrastructure asset in the U.S. With over a trillion invested dollars invested into long-lived physical assets such asroads and bridges, transportation agencies are tasked with maintenance and rehabilitation efforts to ensure that theaccess to transportation facilities is readily available and that the infrastructure is properly preserved. The managementof these assets and the determination of their value, however, have been at the forefront of discussions in many stateagencies and local governments. As a consequence, asset valuation has become a key component in asset managementbecause it links the performance of infrastructure and deterioration process with the value of the infrastructure and itsdepreciation, providing critical information for decision makers at various levels to make more informed decisions. Autility-based methodological framework for the valuation of transportation infrastructure is presented along with a casestudy to demonstrate its applicability. A general framework is presented with emphasis on the valuation of pavementinfrastructure. The results from the framework is then compared to existing valuation methods in addition to a series ofsensitivity analysis on the variation of performance measures and their effect on the value of an asset. The developmentof this valuation approach serves as a starting point for assessing, in addition to the physical condition of an asset, theoperational measures that can often make an asset less useful to its customers and managing agency. Utility theory canbe utilized to combine the effect of performance indicators of varying measures and scales on the value of an asset. Theproposed framework can assist state and local transportation agencies in the optimization of resource allocationprocedures for better coordination of asset investments, facilitating benefit-cost analyses to quantify the impact ofinfrastructure investments. This tool allows agencies to detect deficiencies if any, in the management of its assets,providing a feedback mechanism that can foster an introspective review of its current management practices that mayneed further refinement or possibly elimination