Analysis of asset valuation methods for civil infrastructure

Asset management systems include the monitoring of performance. From an investment point of view, this requires an understanding of both the asset valuation method and the performance models. In other words, there is an accounting/financial dimension and a technical/engineering dimension. Civil engineers are now being faced with this requirement, but guidelines have not yet been developed as to what and how to do it. Using a high quality database from the City of Edmonton Municipal Pavement Management Application, the total network asset value of 113 road sections in 1993 was calculated using six valuation methods. The valuation methods were grouped into two categories: past-based methods that used historical cost data to calculate value and, current-based methods that use current replacement cost to calculate value. Using two performance model types, straight line and sigmoidal, both deterministic models, the 1993 condition was projected to 1999 and the valuations were repeated.; This thesis has provided the guidance that civil engineering needs to value infrastructure in a stable, consistent, rational and understandable manner. The main contribution of this research is in an improved understanding of the impact of valuation method and performance/depreciation model on the calculation of present and future network level asset value. Based upon this understanding, a framework was developed that provides guidance to public works asset managers on how to implement asset valuation. The framework is based upon differentiation of the assets by expected life (defined as useful life), management approach (scheduled or needs based maintenance) and availability of performance data and models.; Because of the scale of network asset management, data accuracy is a factor in the estimation of value. The use of Monte Carlo simulation to characterize data variability was demonstrated as a means to reduce variability in asset valuation regardless of which valuation method is used. Inclusion of Monte Carlo simulation in asset valuation is an innovation of this work and a contribution to the practice. This is a valid method for agencies to use to calculate value as it overcomes the variability in condition and cost data.