# Presentation: 550817

## ASSET MANAGEMENT: WHAT IS THE FUSS?

**ASSET MANAGEMENT: WHAT IS THE FUSS?**

- Allan DeBlasio
- Sue McNeil
- Mary Lynn Tischer
- Transportation Research Board79th Annual Meeting
- January 10, 2000

## OUTLINE

- What is asset management?
- Ongoing asset management activities
- Valuing assets
- What state Departments of Transportation are doing
- Where do we go next

## WHAT IS ASSET MANAGEMENT?

-    Asset management is a systematic process of maintaining, upgrading and operating physical assets cost-effectively. It combines sound business practices and economic theory, and it provides tools to facilitate a more organized, logical approach to decision- making.  Thus, asset management provides a framework for handling short- and long-range planning.

## ONGOING ASSET MANAGEMENT ACTIVITIES

- History
- AASHTO/FHWA Workshops
- AASHTO Task Force on Asset Management

## History

- 1991 - ISTEA
- 1994- Road Asset Management Guideline - Austroads
- 1995 - Report on Current Practice - Australia
- 1995 - AASHTO/FHWA Workshop - Public Private Perspectives

- 1997 -
- AASHTO/FHWA Workshop - The Future
- AASHTO Task Force formed

## History 

- 1998
- New York State - Concept Plan
- AASHTO Task Force Strategic Plan
- TAC - Primer on Highway Asset Management
- APWA - Asset Management for the Public Works Manager
- 1999
- FHWA - Office of Asset Management formed
- OECD Asset Management Systems Working group
- FHWA/AASHTO Workshop (December)

## FHWA and AASHTO

**F****HWA and AASHTO**

- September 1996: Executive Seminar on Asset Management in Washington, DC
- Leaders from public, private, and quasi-governmental sectors came together to share ideas and expertise on systemic asset management

***Taking the First Step***

## What Are the Next Steps?

**W****hat Are the Next Steps?**

- Continued private and public sector alliance
- AASHTO: Clearly define Asset Management and AASHTO’s mission regarding Asset Management
- FHWA:  Continue to provide technical assistance and disseminate information to all modes of transportation

## FHWA and AASHTO

**F****HWA and AASHTO**

- October 1997: Executive Workshop on Asset Management at RPI
- High level officials from FHWA, AASHTO, State DOTs, national organizations and professional associations, representatives from the private sector and academia.

***Taking the Second Step***

## Where to Next?

- AASHTO Task Force
- Create a strategic plan
- Develop an AASHTO Guide
- Continue the workshop series
- Prepare an inventory of tools
- Define and co-ordinate interactions among asset management, strategic planning and quality improvement
- Develop a “lead state” model.

## ROLE OF TASK FORCE ON ASSET MANAGEMENT

*Mission*
**Champion concepts and practices that integrate transportation investment decisions regarding operation, preservation, and improvement of transportation systems for member agencies**
*Vision*
**Support AASHTO’s vision through the incorporation of asset management as an accepted way of managing the transportation system**

## Action Items
Create a strategic plan for the AASHTO Asset Management Initiative 
Develop an AASHTO Guide for Asset Management
Continue the executive workshops and conferences to promote communication and exchange of information on asset management 
Develop and utilize the lead state model to implement asset management within the member states as necessary

**Create a strategic plan for the AASHTO Asset Management Initiative **
**Develop an AASHTO Guide for Asset Management**
**Continue the executive workshops and conferences to promote communication and exchange of information on asset management **
**Develop and utilize the lead state model to implement asset management within the member states as necessary**

**ROLE OF TASK FORCE ON ASSET MANAGEMENT****(continued)**

## STRATEGIC PLAN

*Goal 1***Document and develop an understanding of asset management and how it can be used by member states**
*Goal 2***Communicate with and educate the member states on how they can use asset management**
*Goal 3***Assist member states as they assess and implement asset management within their state**

## VALUING ASSETS

- Driving forces
- Mechanisms
- Government Accounting Standards Board (GASB) 34

## Asset Valuation Driving forces

- Public skepticism of government
- Focus on the use of private sector management practices in the public sector
- Interest in privatization

## Asset Valuation Mechanisms

- Government Performance and Results Act and similar state legislation
- Self reporting of economic value
- GASB 34

## Asset Valuation GASB 34

- Requirements:
- state and local agencies to include the value of physical assets in their financial statements
- value based on depreciated historical cost, or historical cost without depreciation if the agency can demonstrate that they:
- have an inventory of assets
- perform condition assessment at least every 3 years
- have spent funds sufficient to maintain the infrastructure assets at an established level of condition.

## Asset Valuation GASB 34

- Issues
- Confusion between economic and financial value
- Implications for policy making, funding etc
- Cost to implement

## WHAT STATE DOTS ARE DOING

- Anecdotal evidence
- Survey

## SURVEY QUESTIONS

**Inventory of Assets**
**Investment Decisions**
**Workshop Agenda**

## SURVEY QUESTIONS(CONTINUED)

**Inventory of Assets**
- Asset management responsibilities and contacts
- Inventories and condition by type of asset
- Management systems and performance by type of asset
- Asset valuation

## SURVEY QUESTIONS(CONTINUED)

**Investment Decisions**
- Integration with management systems
- Decision-making tools for investment
- How tools are used
- Use of tools across modes
- Analysis to make allocations to capital versus maintenance

## SURVEY QUESTIONS(CONTINUED)

**Investment Decisions ****(continued)**
- Quantitative evaluation of capital, operational or maintenance expenditures needs to improve performance
- Comparison of effectiveness of investments
- Relationship of budget expenditures to system performance
- Mechanisms to provide feedback

## SURVEY QUESTIONS(CONTINUED)

**Workshop Agenda**
- Areas respondent would be willing to discuss experiences
- Areas respondent would find of interest.

## SURVEY RESPONSES

- Received responses from states in peach

## SURVEY RESPONSES(CONTINUED)

- Number of Responses -- 33
- Points of Contact for Asset Management
- none         -- 	12
- one           -- 	13
- more than one   --	8

## SURVEY RESPONSES(CONTINUED)

- States with Inventories -- 33
- average per state -- 9
- percent of inventories with conditions -- 64
- Predominant Inventories (with conditions)
- bridge            --	33	(32)
- pavement          --	32	(32)
- road and highways   --	32	(24)
- traffic signals       --	27	(15)
- grade crossing      --	25	(16)

## SURVEY RESPONSES(CONTINUED)

- States with Management Systems -- 33
- average per state -- 7
- percent of inventories with performance indicators -- 70
- Predominant Systems (with performance)
- pavement          --	33	(30)
- bridge             --	33	(30)
- safety              --	26	(17)
- maintenance       --	25	(17)
- traffic monitoring    --	23	(11)

## SURVEY RESPONSES(CONTINUED)

- States Attempting Asset Valuation -- 13
- replacement cost      --	10
- historic expenditures   --	6
- equivalent value       --	5
- other              --	2
- 	Other includes HPMS Financial Analysis package and investment/fair market basis.

## SURVEY RESPONSES(CONTINUED)

- States Attempting Asset Valuation -- 13
- four methods      --	1	(La)
- three methods --	8
- two methods   --	2
- one method       --	2

## SURVEY RESPONSES(CONTINUED)

- States Using Decision-making Tools -- 32
- cost-benefit analysis           --	29
- life-cycle costing             --	28
- trade-off analysis              --	9
- quantitative investment analysis  --	 4
- other                     --	9
- 		Other includes citizen and political input, value engineering, grade crossing hazard ratings, first cost, threshold levels, and highway needs analysis.

## SURVEY RESPONSES(CONTINUED)

- States Using Decision-making Tools -- 32
- four tools           --	3
- three tools          --	13
- two tools           --	12
- one tool             --	 4

## SURVEY RESPONSES(CONTINUED)

- Apply tools across modes -- 7
- Analysis to allocate capital vs. maintenance -- 10
- CBA of major maintenance expenditures -- 11
- CBA for operational improvements -- 11
- Evaluate how expenditure improves system -- 17
- Relate budget expenditures to system performance -- 22
- Automatic updating of systems based on expenditures -- 13

## SURVEY RESULTS

- Identified Asset Management Activities
- Identified Persons Willing to Present
- Helped Refine Workshop Agenda
- optional plenary session on GASB
- topics for plenary sessions
- definition of breakout sessions

## WHERE DO WE GO NEXT

- Arizona Workshop (Session #132)
- Executive Summary and Proceeding should be published in March
- Guide is under contract
- AASHTO Task Force is developing an action plan
- Interest in establishing a TRB task force