A methodological framework for the valuation of transportation infrastructure
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Transportation infrastructure, a vital component to sustain economic prosperity, represents the largest public-owned infrastructure asset in the U.S. With over a trillion invested dollars invested into long-lived physical assets such as roads and bridges, transportation agencies are tasked with maintenance and rehabilitation efforts to ensure that the access to transportation facilities is readily available and that the infrastructure is properly preserved. The management of these assets and the determination of their value, however, have been at the forefront of discussions in many state agencies and local governments. As a consequence, asset valuation has become a key component in asset management because it links the performance of infrastructure and deterioration process with the value of the infrastructure and its depreciation, providing critical information for decision makers at various levels to make more informed decisions. A utility-based methodological framework for the valuation of transportation infrastructure is presented along with a case study to demonstrate its applicability. A general framework is presented with emphasis on the valuation of pavement infrastructure. The results from the framework is then compared to existing valuation methods in addition to a series of sensitivity analysis on the variation of performance measures and their effect on the value of an asset. The development of this valuation approach serves as a starting point for assessing, in addition to the physical condition of an asset, the operational measures that can often make an asset less useful to its customers and managing agency. Utility theory can be utilized to combine the effect of performance indicators of varying measures and scales on the value of an asset. The proposed framework can assist state and local transportation agencies in the optimization of resource allocation procedures for better coordination of asset investments, facilitating benefit-cost analyses to quantify the impact of infrastructure 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 may need further refinement or possibly elimination.