JUNE 2015

ASSET MANAGEMENT FINANCIAL REPORT SERIES

Financial Planning

for Transportation

Asset Management:

Components of a Financial Plan

REPORT 2
Notice

This document is disseminated under the sponsorship of the U.S. 

Department of Transportation in the interest of information 

exchange. The U.S. Government assumes no liability for the use 

of the information contained in this document.

The U.S. Government does not endorse products or manufacturers. Trademarks or manufacturers’ names appear in this report 

only because they are considered essential to the objective of 

the document.

Quality Assurance Statement

The Federal Highway Administration (FHWA) provides highquality information to serve Government, industry, and the public 

in a manner that promotes public understanding. Standards and 

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Table of Contents

1. Introduction and Overview to Report Series ........... 1

2. Report Outline .................................... 3

3. Components of a Financial Plan to Support Sustainable 

Transportation Asset Management .................... 5

Uses of Funds................................... 6

Historical Trends for the Uses of Funds............. 9

Transportation Agency Examples.................. 17

Projected Uses for the Financial Plan Period ....... 22

Examples from Minnesota and Colorado 

DOT TAMPs.................................... 29

Sources of Revenue.............................. 31

Future Projections for Revenues.................. 36

Risks and Assumptions.......................... 37

Estimates of Projected Funding for Plan Period .... 38

Gaps and Surpluses.............................. 41

Alternative Investment and Funding Scenarios with 

Consequences ................................. 44

Additional Scenarios ............................ 50

4. Final Plan......................................... 51

State Agency Examples ......................... 52

5. Summary and Conclusions......................... 60

6. References....................................... 62
ii Financial Planning for Transportation Asset Management

Figures

Figure 1. Example of Uses of funds from Colorado 

DOT’s 2013 Annual report............................. 8

Figure 2. Historical OCR and Pavement Budgets ........ 18

Figure 3. Historical Bridge Budgets and Performance .... 19

Figure 4. Historical Pavement Conditions in Colorado ... 20

Figure 5. Historical Pavement Conditions and Costs 

incurred in Utah ..................................... 21

Figure 6. Overall Historical OCI and Breakdown of 

Pavement Conditions ................................ 21

Figure 7. MN Construction Cost Index vs Consumer Price Index 

(All Items) .......................................... 24

Figure 8. Minnesota Historical Road Construction 

Expenditures with and without Inflation ............... 25

Figure 9. The Estimated Impact of Inflation on Projected 

Pavement Program Costs and PCR for a sample DOT ... 25

Figure 10. Conceptual Model of Pavement 

Deterioration....................................... 29

Figure 11. Highway Trust Fund Balances and Projected 

Shortfalls .......................................... 34

Figure 12. Relative Distribution of funds between State, 

Federal and Local Sources for a Sample State DOT for 

the 10 Year Plan Period .............................. 40
Report 2: Components of a Financial Plan iii

Figure 13. Aggregate Gap between Needs and Available 

Funding for Colorado DOT (2016-2040)............... 44

Figure 14. Sample State DOT—Impact on Overall PCR 

due to Reduction in Investment (Scenario 2) ........... 48

Figure 15. Sample State DOT—Impact on Structural

Deficiency of Bridges due to Reduction in Investment

(Scenario 2)........................................ 48

Figure 16. Sources and Uses for MnDOT ............... 52

Tables

Table 1. CDOT Inventory and Asset Conditions on State 

System ............................................. 12

Table 2. Illustrative Example of Historical Uses of Funds 

for Sample State DOT ................................ 16

Table 3. Illustrative Example of Projected Uses of Funds 

for Sample State DOT to meet “Aspirational” Targets.... 27

Table 4. MnDOT Asset Management Targets and Related 

Investment Needs ................................... 31

Table 5. Colorado DOT Projected 10 Year Asset 

Management Investments and Estimated Revenues .... 32

Table 6. Historic Sources of Funds for Sample 

State DOT ......................................... 35
Table 7. Projected Sources of Funds for Sample 

State DOT for 10 Year Plan Period .................... 39

Table 8. Gap between Projected Sources and Aspirational 

Needs for Sample DOT .............................. 42

Table 9. Gaps between Needs and Available Funding for 

Operations and Maintenance for MnDOT .............. 43

Table 10. Gaps between Needs and Available Funding for 

various categories for Colorado DOT (2016-2025) ...... 43

Table 11. Expenditures Reduced with Lower Asset Goals 

to Address the Gaps ................................ 47

Table 12. MnDOT—Existing and Recommended Pavement 

Condition Targets................................... 49

Table 13. MnDOT—Existing and Recommended Bridge 

Condition Targets................................... 50

Table 14. Summary View Showing Sources and Uses of 

10 Year Financial Plan for Sample State DOT along with 

Key Targeted Performance Metrics for Bridges 

and Pavements ..................................... 55

Table 15. 10 Year Asset Management Planned Funding 

and Investment..................................... 57

Table 16. CDOT Objectives and Targets as detailed in its 

TAMP ............................................. 59

iv Financial Planning for Transportation Asset Management
Report 2: Components of a Financial Plan 1

1. Introduction and Overview 

to Report Series

Transportation agencies have the responsibility and the 

challenging task to maintain, preserve and improve infrastructure assets (assets) for current and future generations. 

While maintaining existing assets is an overriding concern for 

transportation agency officials, most agencies are grappling 

with funding issues. Considering the fact that assets such as 

pavements and bridges have long useful lives, a sound asset 

management practice will necessitate the development of 

long-term asset management plans. Practices and experiences from other countries with mature asset management 

processes and also from transportation agencies within the 

U.S. show that implementing and sustaining the performance 

and condition of assets requires long-term financial plans 

that support and are linked to long-term asset management 

strategies. Comprehensive transportation asset management 

plans (TAMP) could show the expected and desired projections of asset performance and condition for ten or more 

years in to the future. A pragmatic TAMP would address the 

amount of investment required each year for the rehabilitation, preservation and maintenance of assets during their 

useful life. The associated financial plan can be linked to the 

targeted performance and conditions of the assets identified 

in the TAMP. 

The financial plan can show the expected and desired funding projected for the future, often for ten or more years. To 

be useful to decision-makers, the financial plan can establish 

how the agency will address the resources needed to achieve 

and sustain the long-term asset management objectives. It 

could clearly illustrate the financial state of the agency and 

express the financial needs for the plan period, shedding 

light on the gaps, and the funds needed to bridge the gaps 

between the current conditions and those established in the 
2 Financial Planning for Transportation Asset Management

asset management plan to sustain and cost effectively 

extend the useful life of the assets. The elements of the 

financial plan can succinctly highlight the actions that need 

to be taken over the long-term to maintain the health, performance and condition of the assets. The financial plan also 

can address financial risks. It could enable the agency to 

monitor and compare the funding available to the expected 

funding projections throughout the life of the plan, make 

tradeoffs, and take corrective actions to accomplish the 

agency’s asset management objectives. The financial plan is 

thus critical to the successful implementation of the agency’s 

TAMP. Finally, well developed financial plans would allow 

agencies to communicate with the public and the stakeholders, the value of transportation assets, the current, projected 

and desired performance and condition of assets, the funding required to support the projected and desired performance and condition targets, the financial risks, and the level 

of performance and condition that stakeholders can expect. 

It also can summarize any changes in strategy that may be 

required to address changing financial realities.

This second report in the five part financial report series 

discusses the main components of a financial plan and shows 

how they can support a sustainable asset management plan 

for a transportation agency.
Report 2: Components of a Financial Plan 3

2. Report Outline

This report discusses the various components of a financial 

plan prepared to support an agency’s transportation asset 

management plan. TAMPs will detail how a state agency 

intends to maintain, preserve and keep its bridges, pavements and other assets at certain condition and performance 

levels over the long-term. Given the long lives of transportation assets and the strategic nature of TAMPs, this report 

considers a ten-year period for the financial plan. Agencies 

may change the period of the financial plan based on their 

TAMP and other considerations. However, a period shorter 

than 10 years is not recommended.

In the simplest form, the financial plan and the investment 

strategies detailed therein should support achieving the 

agency’s needs and objectives for the condition of assets 

detailed in the TAMP. By its very nature, the exercise of asset 

management planning and the related financial planning, is 

interactive and iterative. Realistically, the political, economic, 

environmental and other internal and external factors that are 

expected to impact the decisions relating to the agency’s 

long range plan will be reflected in the TAMP. While a long 

range plan will address additional issues such as safety and 

capacity needs, the TAMP will provide details and summarize 

the existing condition and state of the assets. The current and 

projected economic conditions, freight movement, environmental and other factors in the long range plan including 

risks associated with each, will influence the TAMP. Funding 

amounts for those programs will not be developed by the 

TAMP financial plan but the TAMP financial plan will illustrate 

how funds for those other needs “come off the top” and are 

not available for achieving asset condition targets. Significant 

influencing factors relate to current and future costs of 

maintaining targeted system conditions and the availability 

of funds to meet those costs. These factors will translate into 

strategies for 1) the preservation and maintenance of existing 
4 Financial Planning for Transportation Asset Management

assets, and 2) rehabilitation and reconstruction. The financial 

plan will address various financial elements that support how 

the agency plans to achieve the objectives in the TAMP.

This report will also provide context for the need to include 

various elements of the financial plan. It uses common 

accounting terminology of “sources and uses” because of 

its wide acceptance in financial practice. 

This report will describe an approach to be followed in preparing projections of investments or “Uses” and available funding, 

or “Sources” for the plan period. It will show how a financial 

plan can help an agency communicate externally and internally, it’s funding needs, projected revenues and gaps (if any). 

Such a communication can be facilitated by the inclusion of a 

summary that provides a quick view of the financial state and 

ability (or inability) of an agency to meet its long-term TAM 

needs. It can allow an agency to communicate to the stakeholders and the public, the future state of the system and what 

services they should expect from the agency and its transportation assets based on the projections of available funding. 

It can also allow the agency to succinctly communicate the 

implications of the level of funding available, the related 

sustainability of its transportation assets, and as a result, what 

financial burden, if any, they will leave for future generations.

Definitions

SOURCES represent what funding will be available to an 

agency and include the actual source (federal funds, tax 

revenues, etc.) and the amount. 

USES represent the amounts an agency projects it will 

spend (purpose and amount) 

SOURCES AND USES provide a summary of where the 

capital used to fund an agency’s projects, operations 

and activities will come from (the sources), and what 

this capital will purchase (the uses). 
Report 2: Components of a Financial Plan 5

3. Components of a Financial 

Plan to Support Sustainable 

Transportation Asset 

Management

A comprehensive financial plan that supports long-term 

transportation asset management (TAM) will at a minimum 

include the following primary components: 

1. The various uses of funds based on forecasted system 

conditions and performance targets. It will include 

assumptions related to future projections.

2. Projected revenues from all available and anticipated 

sources of funds including related assumptions.

3. Projected gaps or surpluses based on the above.

4. Scenarios reflecting adjustments necessary to address 

gaps, if any, along with related consequences.

5. Final proposed financial plan to support the agency’s 

asset management plan

Discussing each of these areas in the financial plan should 

help an agency provide a realistic picture of its projected 

future financial health. The plan will also present the agency’s financial ability to meet its long-term performance and 

condition goals and sustain its assets in the future. In addition, providing a summary of the highlights of the financial 

plan and the related implications to the state of an agency’s 

transportation system and assets can help to convey the 

performance and conditions that can be expected from 

the TAMP.
6 Financial Planning for Transportation Asset Management

Uses of Funds

Though the details of specific uses will vary from state to 

state, there are many common areas of expenditure across 

transportation agencies relative to asset management 

activities. The uses encompass the assets being addressed 

and the investment needs associated with maintaining those 

assets at some desirable condition levels as established by 

the agency’s TAMP. The amount of funds needed for various 

categories and their relative proportions will vary across 

agencies and will depend on the agencies’ approach to 

asset management. State and local transportation agencies 

are organized differently and they differ in how they operate 

and manage the preservation and maintenance of their 

assets. Some agencies perform most of their maintenance 

of assets using in-house personnel, while others contract 

out these activities. Some do significant amount of preservation activities in-house while others contract out such 

work. Also, the way work is contracted differs across states. 

Some agencies combine maintenance and preservation 

activities in the contracts while others keep them separate. 

These differences have a bearing on how the uses are 

reflected in the financial plan. The examples used in this 

report are for illustrative purposes and agencies should 

apply their own perspectives and variances as appropriate 

as they develop their plans. Following are some of the 

example categories of uses of funds compiled from the 

DOTs in Colorado, Ohio and Rhode Island: 

1. Pavement preservation and maintenance 

(These can be further detailed into interstate 

system, priority system, urban, rural, etc.) 

2. Pavement rehabilitation and replacement
Report 2: Components of a Financial Plan 7

3. Bridge preservation and maintenance

4. Major bridge construction

5. New capital program (construction/expansion)

6. Traffic engineering and maintenance

7. Drainage maintenance

8. Rest areas

9. Operations and maintenance 

(winter operations, ditching, pothole patching)

10. Safety/guardrail, cable barriers, signs, intelligent 

transportation systems (ITS)

11. Noise walls

12. Slides, slip remediation

13. Tunnels

14. Program delivery/administration

15. Payroll and other administrative expenses

16. Pass through funds 

17. Debt service and bond payments

18. Emergencies and contingencies to cover 

unplanned expenditures 
8 Financial Planning for Transportation Asset Management

Figure 1 shows the primary categories of uses of funds from 

the Colorado DOT.

Figure 1. Example of uses of funds from 

Colorado DOT’s 2013 Annual report

SOURCE: COLORADO DOT
Report 2: Components of a Financial Plan 9

For illustrative purposes, this report will summarize the 

activities into the following major categories of uses. For 

simplicity, this report combines maintenance and preservation activities specific to bridges and pavements. Agencies 

can add categories and details as may be applicable to them.

1. Bridge preservation and maintenance 

2. Rehabilitation and replacement of bridges 

3. Pavement preservation and maintenance

4. Pavement rehabilitation and replacement

5. Safety (Traffic engineering, signs, signals, ITS)

6. Other Assets (culverts, rest areas)

7. Operations & Maintenance 

(snow maintenance, ditching, pot hole patching)

8. Debt service

9. Local projects (includes pass-through to local 

and other agencies)

10. Administrative and Payroll

Historical Trends for the Uses of Funds

If past expenditures were based on strategic funding 

decisions, then the historical performance and condition of 

assets, the amount of funds invested each year in relation to 

those assets, and the trends related to these parameters can 

provide valuable information that can be useful in estimating 

the investment needed in the future. Strategic asset management deals with addressing the life-cycle of assets through 
10 Financial Planning for Transportation Asset Management

timely maintenance and preservation. They help to cost 

effectively extend the useful life of assets. If past expenditures resulted in acceptable asset condition levels then they 

can be benchmarks for extrapolating future needs, however, 

care should be taken because past performance is no guarantee of future results. To the contrary, if past conditions 

declined, historic expenditures may not have been adequate 

and may need to be increased in the future. Irrespective, a 

review of the past conditions and performance trends for 

assets and the investments made to support various preservation and maintenance programs, help to provide context to 

the realistic state of repair of those assets. It provides important insight into future long-term treatments needed to cost 

effectively extend their useful life. The historic trends also 

shed light on trade-offs that can be made to maximize the 

use of limited resources. Such information will be very helpful 

in developing the related long term treatments and the 

financial plan that details the amount of funds that will be 

needed to support the long-term asset management plan.

Historical information can be critical for three reasons. First, 

it can illustrate whether past expenditures were adequate, 

and if not they need to be increased. Second, state agencies 

operate under scrutiny of state budgeters, who will want to 

know why the agency is indicating it needs to substantially 

change asset expenditures, and not rely on more traditional 

incremental growth in those budget categories. Third, the 

more historic trend line information an agency has regarding 

past investments and the asset conditions achieved, the 

more confidence it will have on forecasting future investment 

needs and the resulting asset conditions. 

Many state agencies track the expenditure and performance 

of their assets by category. State agencies vary in how they 

categorize their roadway network and other assets. For 

example, Utah DOT categorizes the pavements as being on 

the National Highway System (NHS), or as Level 1 or Level 2, 
Report 2: Components of a Financial Plan 11

based on the number of vehicles or trucks that travel on the 

system each day. Colorado DOT categorizes the system 

when discussing investments as Interstate, NHS, On-State 

System-Non-NHS, and On-state highway system[1]. The 

performance goals that states establish for such categories 

can vary, with higher performance and condition goals for 

the NHS and for more used parts of the network. States also 

may combine treatments related to pavements differently. 

Most states track at least their high value assets and the 

performance achieved by the investments made into those 

assets. Typically, state agencies track the investments made, 

and the performance and condition improvements achieved 

in the following categories:

 Pavements

 Bridges

 Other Assets

 Maintenance

 Safety

Historical information is integral to making future projections 

and such information on the asset conditions, performance 

and related investments for these categories along with other 

information can be used as valuable input in estimating:

a. The condition targets pursuant to the TAMP,

b. The needed investments to meet those condition 

targets, and

c. The implications on performance if those investments 

are not made at the desired levels.
12 Financial Planning for Transportation Asset Management

Table 1 summarizes the performance in 2013 of various 

categories in the Colorado DOT’s state system and shows 

how it tracks the condition and performance of its assets.

Asset Inventory Unit 2013

Inventory

Performance 

Measure

2013 

Performance

Pavement Lane-miles 23,024

Percent with high or 

moderate drivability 

life

82%

Bridge Number of 

bridges 3,438

Percent deck area on 

bridges classified as 

structurally deficient

6.3%

Maintenance N/A N/A Level of service BFleet Number of 

vehicles 3,299 Percent of useful life 96%

ITS 

Equipment

Number of 

devices 2,024 Percent of useful life 143%

Buildings Building 1,174 Letter grade C or Better

Tunnels Length in 

miles 6.9 Condition of manned 

tunnels Good

Culverts Number of 

culverts 6,668 Percent critical 4.4%

Rockfall Sites/

Corridors 760/38 Percent risk reduction 

of occurrence TBD

Table 1. CDOT Inventory and Asset Conditions on State System

SOURCE: COLORADO DOT, DECEMBER, 2013 TAMP

In addition, states will also track expenses incurred on new 

construction, administrative categories and debt service 

payments such as bond payments.

The asset conditions, treatments and the related investments 

of the past can provide insight into the amount of funds that 

will need to be expended by the agency in future years. The 

information can thus be used as input to estimate the investment needs to meet desired targets for future years. 

States differ in the amount of funds that have historically 

been expended on asset management activities. Most states 

have not been able to invest the funds that they deemed 
Report 2: Components of a Financial Plan 13

necessary to meet desired system conditions in the past 

several years. This typically results in a downward revision of 

the performance targets that they try to achieve. With aging 

infrastructure and limitations in funding, agencies have 

typically had to prioritize and make decisions on where to 

invest the limited funds available and how much to expend 

by category. States differ in the size and inventory of various 

assets and programs and the priority given to various assets. 

Some states have more aging bridges and pavements than 

others. For some states, floods are a priority, whereas for 

others tunnels, slips and slides and rock-falls may be a 

priority. The programs, the budgets and the historic budget 

trends will reflect these differences amongst states. Appropriate utilization of the historical data about asset expenditures and the resulting conditions in projecting for the future 

can thus help set expectations for the performance and 

conditions that can be achieved in future years. Based on the 

historical data and forecasted asset condition, long-term 

preservation techniques and appropriate levels of and maintenance can be programmed to maximize the performance 

of priority assets.

Table 2 (see page 16) summarizes the various historical uses 

of funds for a sample state DOT for the 2010-2014 period as 

an illustrative example. The budget established by that state 

for 2015 is also shown. It is to be noted that the specific 

amounts and trends shown in this table do not bear resemblance to any state DOT and are shown purely for illustrative 

purposes. To help provide context and to facilitate comparative analysis involving the preparation of a financial plan, 

illustrative data for this sample DOT is presented through 

other sections of this report.

The expenditures in Table 2 are broken down by some of the 

major asset and expense categories common to most DOTs. 

These categories will of course vary across states. The 

categories in Table 2 for the sample State DOT include:
14 Financial Planning for Transportation Asset Management

1. Pavement program

2. Bridge Program

3. Maintenance

4. ITS

5. Safety

6. Other assets

7. New Construction

8. Local Projects

9. Debt Servicing

10.Programming/Project Delivery

11. Administrative Expenses.

The example shows that the total uses of funds for 2010 

through 2014 averaged $626 million each year and totaled 

approximately $3.13 billion for the five year period. By 

contrast, the total funds allocated for 2015 is $620 million. 

The presentation of the historic expenditures in a summary 

table as used in Table 2 can be valuable to decision makers. 

Pavements and bridges are typically the highest valued 

assets for transportation agencies. Maintaining and preserving these assets take a significant portion of agency funds 

and are therefore the highest priority. Agencies will focus 

their analysis on the performance, condition and age of these 

high-value assets and devise plans for replacing, preserving 

and maintaining them. In view of the importance of these 

two categories, they have been specifically highlighted in 
Report 2: Components of a Financial Plan 15

Table 2 which provides an at-a-glance financial view of the 

historic uses of funds and the overall performance that was 

achieved for the two major asset categories. Table 2 also 

shows the Dollar amounts that were used to fund maintenance activities, new construction, local programs, administrative and other obligations that were accrued by the 

agency to meet its needs.

As can be observed from Table 2, the sample state DOT 

spent an average of $54 million annually for the rehabilitation 

and replacement of pavements and an average of $58 million 

on preservation and maintenance activities between 2010 

and 2014. For 2015, the DOT allocated $60 million and $45 

million respectively for these two categories. It shows that 

the overall (system-wide) percentage of pavements in “good” 

condition achieved during that period varied between 78 

and 74 percent. It also shows that for 2015, the sample DOT 

expects to improve its overall pavement condition rating to 

78 percent with the allocated budget of $105 million. 

Table 2 shows the amounts expended for rehabilitation and 

replacement of bridges and for their maintenance during the 

2010-2014 period. It also shows the percent of structural 

deficiency of bridges that the agency was able to achieve as 

a result of the investments made. Showing the condition and 

performance information alongside the investments provides 

a quick view of the correlation between the two parameters. 

This also provides perspective and sets expectation on future 

investment needs and related achievable asset performance. 

The impact of inflation is not displayed as a separate line 

item in the example. However, the performance achieved for 

pavements and bridges inherently reflects the declining 

purchasing power of the dollar as a result of inflation.

The third major category depicted in Table 2 is Maintenance, 

which is further broken down into traffic, drainage, and 

winter related maintenance separately. The remaining 
 

 

 

16 Financial Planning for Transportation Asset Management 

Uses of Funds 2010 2011 2012 2013 2014 2015 Total Average 

(2010-2014) 

Overall (NHS + Non-NHS) 

Pavement Condition Rating (%) 78% 76% 77% 76% 74% 78% N/A N/A 

Pavement Rehab & Replace 60 51 55 53 51 60 330 54 

Pavement Preservation 27 39 36 37 35 27 201 35 

Pavement Maintenance 18 26 24 25 23 18 134 23 

Subtotal Pavement Program 105 116 115 115 109 105 665 112 

Bridge Structural Deficiency– 

NHS and Non-NHS (%) 20% 17% 19% 17% 16% 20% N/A N/A 

Bridge Rehab & Replace 60 70 78 72 75 60 415 71 

Bridge Maintenance 45 45 49 48 43 45 275 46 

Subtotal Bridge Program 105 115 127 120 118 105 690 117 

Traffic Maintenance 10 15 12 11 9 10 67 11 

Drainage Maintenance 5 5 8 7 5 5 35 6 

Winter Maintenance 25 25 26 22 23 25 146 24 

Other Maintenance 50 40 33 45 42 55 265 42 

Subtotal Maintenance 90 85 79 85 79 95 513 84 

ITS 5 5 5 5 5 5 30 5 

Safety 10 11 13 12 9 10 65 11 

Other Assets 23 25 19 22 15 25 129 21 

New Construction 89 94 81 81 77 65 487 84 

Local Projects 24 19 22 30 33 40 168 26 

Debt Svc. Existing obligations 132 130 131 123 122 125 763 128 

Debt Svc. New State Bonds – – – – – – – – 

Subtotal Debt Servicing 132 130 131 123 122 125 763 128 

Programming/Project 

Delivery 

17 17 18 18 19 20 109 18 

Administrative Expenses 20 21 22 24 24 25 136 22 

TOTAL USES 620 638 632 635 610 620 3,755 627 

Table 2. Illustrative Example of Historical Uses of Funds for Sample State DOT 

(All figures in $ Millions) 
Report 2: Components of a Financial Plan 17

maintenance items combined under a line item called “other”. 

The specific line items under the Maintenance category will 

vary across states. States that do not have to address winter 

maintenance activities may not have a line item for it. Similarly agencies that have to address flooding, or the remediation of slips, slides and rock-falls may have specific line items 

in their version of the table. 

Other categories include Safety, Intelligent Transportation 

Systems, Other Assets, New Construction and Local Programs. States have specific obligations and goals for safety 

and many have been addressing mobility through ITS activities. In the sample DOT the budget for all assets not specifically listed has been combined and presented as “Other 

Assets”. Although the state agency may have specific goals 

for each of these categories, for convenience, the summary 

view in Table 2 does not show the performance conditions 

achieved for them. 

State agencies may choose to depict information in greater 

detail than shown in Table 2. They may have prioritized their 

assets based on valuation and/or on critical function. They 

may be tracking detailed information on performance as well 

as budget levels for each of these assets and may choose to 

show detailed information related to them. Providing the 

budget levels and the performance achieved highlights the 

importance of these assets. In the end, the analysis of the 

condition, the treatments and budget trends provides valuable insight into future investments needed. 

Transportation Agency Examples

The following are examples of reporting by various transportation agencies of performance of specific assets versus 

historic budgets.
18 Financial Planning for Transportation Asset Management

Colorado DOT

Figures 2 and 3 provide historical information from the 

Colorado DOT. Figure 2 shows the relationship between 

historical budgets and overall roadway conditions (OCR). 

Figure 3 similarly shows the historical budgets for bridges 

and the performance achieved versus the goals established 

for the percent of bridge deck area not structurally deficient. 

The agency also publishes an overall budget for asset 

management activities by asset class.

Figure 2. Historical OCR and Pavement Budgets 

SOURCE: COLORADO DOT

Colorado DOT’s Transportation Commission (TC) had 

established a goal to maintain 60 percent of the DOT’s 

23,000 lane miles in good or fair condition due to financial 

constraints. The chart in Figure 4 (see page 20) from 

the DOT’s 2012 Transportation Deficit Report shows the 
Report 2: Components of a Financial Plan 19

Figure 3. Historical Bridge Budgets and Performance

SOURCE: COLORADO DOT

pavement conditions in 2011 finishing with 48 percent in 

Good/Fair condition. The report states that system condition declined from a high in 2005 due to the decline in 

program budget and rising resurfacing cost resulting in 

system-wide deterioration. The report notes that a budget 

of $159.7 million was allocated in FY 2013 to the Surface 

Treatment Program. The DOT’s 2013 Transportation Deficit 

Report shows the network pavement condition dropping 

further to 47 percent in 2012 stating that the downward 

slide in pavement condition “portends a costly backlog of 

repair”. It also states that to make a measurable long-term 

difference in the pavement surface-treatment quality, additional significant and consistent funding is required over 

many years. The report also provides projections of future 

system conditions based on projected funding and justifies 

the case for increased funding. Such information is very 

useful in establishing realistic future targets and budgets 

that would be important for financial planning purposes.
20 Financial Planning for Transportation Asset Management

Figure 4. Historical Pavement Conditions in Colorado

Utah DOT

Utah has effectively used its historic budget information and 

related it to their system conditions. Providing trend lines of 

past investments and showing the link to the performance 

and conditions of assets enables decision-makers to better 

appreciate the need for investments in strategically managing their assets. Doing so also provides an agency the opportunity to explain the projected future conditions and the 

funding needs to meet various long term goals. Figure 5 

from Utah DOT shows the history of pavement rehabilitation 

and maintenance costs incurred between 2004 and 2010 

along with the trend of the Overall Condition Index (OCI). 

Figure 6 provides further detail of the number of lane miles 

in good, fair and poor condition and the variation of the 

average pavement OCI during the period. 

Several similar examples can be found for other state DOTs. 

Typically, states have detailed budgets for rehabilitation and 

replacement, and preservation and maintenance of their high 

value assets. Some agencies track the age along with the 

performance and condition of such assets. The amount of 
Report 2: Components of a Financial Plan 21

preservation and maintenance, versus rehabilitation and 

replacement needed, will also depend on where the asset is 

in its life-cycle. Depending on revenue constraints, agencies 

may not be able to allocate the required amount of funds to 

achieve targeted conditions for each asset. However, based 

on the historical data, they may be able to compute the 

amount needed for optimal treatment. For example, assets 

Figure 5. Historical Pavement Conditions and Costs incurred in Utah

SOURCE: UTAH DOT

Figure 6. Overall Historical OCI and Breakdown of Pavement Conditions 

SOURCE UTAH DOT
22 Financial Planning for Transportation Asset Management

in “good” to “fair” condition would normally benefit from 

proactive maintenance and preservation strategies. Such 

strategies of long-term maintenance and preservation can 

result in substantial savings for the DOT. In the end, decisions 

will almost always have to be made on how best to allocate 

limited resources available to the agency. 

Projected Uses for the Financial Plan Period

As can be seen from the discussion above, historical trends 

provide valuable information and context on the state of the 

system and the changes to the system conditions that result 

from the levels of investment made, be they for preservation 

and maintenance, or rehabilitation and replacement. In 

combination with needs/gap analysis, assets whole life 

analysis, risk management analysis, financial obligations, 

and system condition targets, historical information can be 

effectively utilized when projecting the investment needs 

for the future.

The needs of the users serviced by a DOT dictates the 

capacity, levels of service, and state of the transportation 

system that the agency must strive to provide. As seen from 

the agency examples shown above, state DOTs track performance measures and establish targets relating to those 

measures that they aim to achieve. Targeted capacity and 

performance can be further influenced by many other 

factors, including economic changes, population changes, 

changes in forecasted freight shippers using the system, 

environmental factors, political considerations, etc. These 

parameters are typically dealt with in considerable detail 

during the asset management planning effort and each 

transportation agency will have detailed information relative 

to the level of effort needed and the resultant costs to 

achieve such targets. In addition to the basic costs of achieving capacity and condition targets, each agency may want to 

consider the impact to those costs from various types of 
Report 2: Components of a Financial Plan 23

risks and uncertainties that might exist. Agencies may also 

consider that unknown factors such as extreme weather 

(floods, excessive snowfall, hurricanes, tornadoes, earthquakes, etc.) can also have an impact on the funds needed 

to meet and maintain the system within targeted conditions. 

Inclusion of an extreme weather cost category could have 

a significant impact on a financial plan as it may result in 

adjusting targets for other categories included in the plan. 

Many agencies will also incur financing costs, such as debt 

service payments on bonds, which must be included in 

estimating the projected needs. 

Management systems can provide valuable information about 

assets. They typically have information about asset age, 

historic investments and treatments, and about performance 

and condition achieved. They also provide information about 

asset deterioration, and performance and condition trendlines. These are important inputs for forecasting condition 

and performance achievable with different levels of investments each year and over the useful life of the asset. The 

information provided by management systems can help an 

agency project the appropriate level of investment needed 

for timely treatments to cost effectively extend the useful 

life of assets. 

Inflation can have a significant impact on the ability of an 

agency to deliver the program of projects it plans to implement in future years. The long-range plan and the TAMP set 

the expectation of the program that an agency will deliver. 

The TAMP also sets expectations on the asset condition that 

the legislators, public and other stakeholders expect from 

the agency. Over time, unless accounted for, inflation can 

significantly diminish the value of the funds available to the 

agency. Alternatively, inflation can be viewed as an increase 

in the cost of labor, materials and construction. A financial 

plan that shows increasing amounts but has not taken into 

consideration such risks will not reasonably reflect the 
24 Financial Planning for Transportation Asset Management

amount of work that can be completed with the funds 

indicated. Without showing the impact of inflation it may 

appear that an agency is not achieving the targeted goals 

even with increase in funds.

The Minnesota Department of Transportation (MnDOT) 

articulates inflation trends in its 20 Year Investment Plan 

(2009-2028). These are illustrated in Figures 7 and 8 and 

provide valuable insight on the purchasing power of the 

funds available to the state.

The impact of inflation is also illustrated in the projections 

for costs of implementing the pavement program for the 

sample DOT as shown in Figure 9. This figure shows that at 

an assumed annual inflation rate of 3%, the effective costs 

of implementing its pavement program go up. 

Figure 7. MN Construction Cost Index vs Consumer Price Index (All Items)

SOURCE: MNDOT
Report 2: Components of a Financial Plan 25

Figure 8. Minnesota Historical Road Construction Expenditures 

with and without Inflation

SOURCE MINNESOTA DOT

Figure 9. The Estimated Impact of Inflation on Projected Pavement 

Program Costs and PCR for a Sample DOT
26 Financial Planning for Transportation Asset Management

Conversely, if such increased costs were not invested, it 

would result in a commensurate reduction in the achievable 

Pavement Condition Rating (PCR).

The TAMP prepared by an agency will articulate its asset 

goals for future years. The budget needs for the state agency 

will depend on the projected goals reflected in the TAMP. 

Projections of such needs for the next 10 or more years will 

provide perspective and help decision makers plan investments for the long-term condition and performance of 

assets. Agencies can analyze what the long-term condition 

and performance targets should be based on good asset 

management practices and life cycle analysis that focuses on 

whole life of assets and their needs at various stages of the 

assets’ life. Based on these analyses and targets, agencies 

can compute the annual investment required over the longterm. Long-term financial plans that are linked to strategic 

performance and condition of assets are valuable in planning 

long-term investments. They are also extremely useful in 

communicating the long-term investment needs for asset 

management activities with legislators and other stakeholders. They can serve as tools to also convey the seriousness of 

the needs and set expectations on the conditions and performance the traveling public should expect if the needs are not 

met or the appropriate investments are not made. 

As an initial step in the interactive process of financial 

planning, the agency can estimate its needs to meet all 

of its future targets. Such an estimate will be based on the 

various factors detailed above and the related assumptions 

used by the agency, and will represent the “future needs” 

of the agency for the plan period. Table 3 summarizes 

the future needs for the 2015-2025 period for the sample 

state DOT.

The funding needs summary in Table 3 shows the investment needed in rehabilitation and replacement and in
 

 

 

 

 

 

Report 2: Components of a Financial Plan 27 

Funding Needs 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Total 

Overall (NHS + Non-NHS) 

Pavement Condition 

Rating (%) 

77% 80% 82% 84% 86% 87% 87% 87% 88% 88% 88% N/A 

Pavement Rehab & Replace 60 85 90 95 95 95 95 95 85 85 90 970 

Pavement Preservation 36 44 48 56 64 68 72 72 60 60 64 644 

Pavement Maintenance 9 11 12 14 16 17 18 18 15 15 16 161 

Subtotal Pavement Program 105 140 150 165 175 180 185 185 160 160 170 1,775 

Bridge Structural Deficiency– 

NHS and Non-NHS (%) 18% 18% 16% 14% 13% 12% 12% 12% 12% 12% 12% N/A 

Bridge Rehab & Replace 60 110 125 150 150 170 160 120 100 95 90 1,330 

Bridge Maintenance 45 75 90 95 100 110 105 90 75 75 80 940 

Subtotal Bridge Program 105 185 215 245 250 280 265 210 175 170 170 2,270 

Traffic Maintenance 10 15 15 15 15 20 20 20 20 20 20 190 

Drainage Maintenance 5 5 10 10 10 12 12 15 15 20 20 134 

Winter Maintenance 25 25 30 30 35 35 35 35 35 40 40 365 

Other Maintenance 55 45 45 50 50 55 55 55 60 60 65 595 

Subtotal Maintenance 95 90 100 105 110 122 122 125 130 140 145 1,284 

ITS 5 5 5 5 5 5 5 5 5 5 5 55 

Safety 10 35 30 25 25 25 25 25 30 30 30 290 

Other Assets 25 25 20 20 15 20 20 20 25 25 25 240 

New Construction 65 80 80 95 100 120 135 120 110 105 105 1,115 

Local Projects 40 40 45 55 50 50 45 50 50 50 50 525 

Debt Svc. Existing obligations 125 85 85 80 30 – – – – – – 405 

Debt Svc. New State Bonds – – – 24 50 84 122 141 139 133 127 819 

Subtotal Debt Servicing 125 85 85 104 80 84 122 141 139 133 127 1,224 

Programming/ 

Project Delivery

 20 20 20 20 20 20 25 25 25 25 25 245 

Administrative Expenses 25 28 28 30 30 32 32 35 35 35 35 345 

TOTAL USES 620 733 778 869 860 938 981 941 884 878 887 9,368 

Table 3. Illustrative Example of Projected Uses of Funds for Sample State 

DOT to meet “Aspirational” Targets (All figures in $ Millions) 
28 Financial Planning for Transportation Asset Management

preservation and maintenance for pavements and bridges. 

The improvement in pavement goals illustrated in the table 

are based on an assumption of strategically replacing and 

rehabilitating pavements in “poor” condition while maintaining the pavements in “good” condition. The assumption is 

also that of improving pavements in “fair” condition where 

possible and bringing them up to “good” condition while 

trying to avoid those in “fair” dropping to “poor” condition. 

This example does not show separate line items for Interstate, NHS (non-interstate), and other systems. Similarly the 

targets for bridges assume that systematically the bridge 

deficiencies on all the bridges are reduced. As before, this 

example is shown purely for illustrative purposes and does 

not bear any resemblance to actual needs of any particular 

state agency. States can break the information down to 

sub-systems to illustrate the funding needed to meet targets set for each of those sub-systems. Presenting the 

financial needs for the ten year period alongside the forecasted system condition targets provides perspective and 

valuable information to decision makers.

The projections of funding needed to meet aspirational 

goals as computed above represents an important step in 

the financial planning effort. However, the plan cannot be 

sustainable and implementable if funds are not available to 

meet these investment needs. A similar process of evaluating the historical sources, trends and related projections 

will help determine if sufficient revenues will be available to 

meet these needs or if adjustments will be necessary to the 

projected uses of funds in order to establish a sustainable 

financial plan. These aspects are detailed in subsequent 

sections below. At the time of writing of this report, few 

U.S. examples of financial plans for TAMP exist. Two 

examples[2] that exist are from the Colorado and 

Minnesota DOTs, and are discussed in the following 

section of this report. 
Report 2: Components of a Financial Plan 29

Examples from Minnesota and Colorado DOT TAMPs

The 2014 Minnesota DOT (MnDOT) Draft TAMP illustrates 

various aspects of the financial planning effort described 

above. It clearly articulates the investment priorities for 

the agency with an emphasis on preservation in all asset 

management categories (Pavement Condition, Bridge 

Condition and Roadside Infrastructure Condition) for the 

next 10 years. It further emphasizes that the investment 

direction taken by the agency is to address high-priority 

improvements in all investment categories. MnDOT’s asset 

investment strategies are developed on the basis of these 

priorities and direction.

In the case of pavements, MnDOT assumes a conceptual 

model of pavement deterioration illustrated in Figure 10.

Figure 10. Conceptual Model of Pavement Deterioration

SOURCE: MINNESOTA DOT
30 Financial Planning for Transportation Asset Management

It further accounts for various trade-offs to be considered 

while developing a “balanced investment plan”:

 Constrained Budget,

 Pavement Age and Condition,

 Length of Pavement Segment,

 Performance Targets, and

 Pavement Preventive Maintenance

MnDOT’s strategies to ensure that its bridges are structurally 

sound and safe include:

 Conduct frequent and regular inspections,

 Invest in preventive maintenance,

 Invest in rehabilitation at appropriate times in a bridge’s 

life-cycle,

 Refine its Bridge Replacement and Improvement 

management System (BRIM) to help identify improvements that minimize life-cycle costs, meet performance 

targets, and address the highest-risk bridges, and

 Defer some long-term fixes and impose occasional 

weight restrictions to avoid hazardous conditions, 

as needed.

Similarly, strategies are also described for MnDOT’s Roadside 

Infrastructure assets.

The financial plan contained in the Draft TAMP also provides 

a summary of MnDOT’s asset management targets and the 

estimated investment needed to achieve those targets 

during the plan period (See Table 4).
 

 

 

 

 

 

 

 

 

Report 2: Components of a Financial Plan 31 

Asset 

Current 

Condition 

Target 

Recommendation Investment* 

Pavement: Interstate 2.45% Poor ≤ 2% Poor $392 million 

Pavement: 

Non-Interstate NHS 4.3% Poor ≤ 4% Poor $1.13 million 

Pavement: Non-NHS 7.5% Poor ≤ 10% Poor $1.38 billion 

Pavement: Total N/A N/A $2.9 billion 

Bridge: NHS 4.7% Poor ≤ 2% Poor $1.10 million 

Bridge: Non-NHS 2.1% Poor ≤ 8% Poor $430 million 

Bridge: Total N/A N/A $1.53 billion 

Hydraulic Infrastructure: 

Highway Culverts 

10% Poor, 

6% Very Poor 

≤ 8% Poor, 

≤ 3% Very Poor $400 million 

Hydraulic Infrastructure: 

Deep Storm Water Tunnels 

39% Poor, 

14% Very Poor 

≤ 8% Poor, 

≤ 3% Very Poor 

$35 million 

(condition) + 

$1.6 million 

(inspection) 

Other Traffic Structures: 

Overhead Sign Structures 

6% Poor, 

8% Very Poor 

≤ 4% Poor, 

≤ 2% Very Poor $8 million 

Other Traffic Structures: 

High Mast Tower Structures 

6% Poor, 

15% Very Poor 

TBD TBD 

Table 4. MnDOT Asset Management Targets and Related 

Investment Needs 

*Pavement and bridge figures represent 10 year planned investment to meet targets, hydraulic 

infrastructure and other traffic structures figures represent 10 year needed investment to 

meet targets. 

SOURCE: MNDOT 

Similar to Minnesota, the ten year (2015-2024) funding and 

asset management spending projections by the Colorado DOT 

as detailed in its TAMP, are shown in Table 5 (see page 32). 

Sources of Revenue 

This section discusses the next major component of a financial plan—the sources of revenue. Transportation agencies 

have several sources of funds. While developing their financial plans, agencies will have to articulate the revenue trends 

of the past and depending on the developments taking place 

in their states, the forecasted revenue sources that are 
32 Financial Planning for Transportation Asset Management 10 Year Estimate (Millions) 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Total CDOT Estimated Revenue $1,104.8 $1,110.8 $1,132.7 $1,099.2 $975.9 $981.4 $986.8 $974.6 $977.3 $978.9 MLOS $251.3 $254.4 $262.0 $269.9 $277.9 $286.3 $294.9 $303.8 $312.9 $322.3 Surface Treatment $235.2 $235.9 $240.0 $240.0 $240.0 $240.0 $240.0 $240.0 $240.0 $240.0 Bridge $53.3 $49.1 $55.3 $41.5 $41.5 $41.5 $41.5 $41.5 $41.5 $41.5 Culverts $9.6 $8.2 $9.5 $7.1 $7.1 $7.1 $7.1 $7.1 $7.1 $7.1 Tunnels $12.4 $5.2 $12.2 $9.1 $9.1 $9.1 $9.1 $9.1 $9.1 $9.1 Walls – $2.4 $3.0 $2.3 $2.3 $2.3 $2.3 $2.3 $2.3 $2.3 Bridge Enterprise $114.9 $115.0 $132.3 $134.6 $136.9 $139.3 $141.8 $144.5 $147.2 $149.9 Rockfall Mitigation $9.1 $9.2 $9.0 $5.1 $5.1 $5.1 $5.1 $5.1 $5.1 $5.1 Fleet (Road Equipment) $20.9 $18.4 $18.7 $14.0 $14.0 $14.0 $14.0 $14.0 $14.0 $14.0 Buildings (Property) $20.8 $12.9 $15.5 $7.2 $7.2 $7.2 $7.2 $7.2 $7.2 $7.2 ITS Maintenance $27.6 $21.4 $27.3 $14.8 $14.8 $14.8 $14.8 $14.8 $14.8 $14.8 Asset Management Total $755.1 $732.1 $784.8 $745.6 $755.9 $766.7 $777.8 $789.4 $801.2 $813.3 Table 5. Colorado DOT Projected 10 Year Asset Management Investments and Estimated Revenues SOURCE: COLORADO DOT
Report 2: Components of a Financial Plan 33

expected to support their transportation needs. Some of the 

common sources of funds for state transportation agencies 

include the following:

 State fuel taxes

 Federal funding

 Other state revenues (Sales taxes, tolls, permits)

 Grants

 Bonds

It may be noted that for most states, state fuel tax revenues 

which continued to increase up to about 2008, have declined 

since then till 2014. A weakened global economy, increasing 

fuel economy standards, and increasing use of transit or 

personal transportation have been identified as the primary 

causes for this decline. Other state revenue sources, which 

include state vehicle registration, trucking permit fees and 

toll revenues, have also not been immune to such decline.

On Federal funding sources, besides Federal-aid, there also 

have been some short-term revenues from the American 

Recovery and Reinvestment Act (ARRA) in the recent past. 

This influx of funds has significantly helped some states 

address their transportation needs. Past revenue trends from 

Federal sources will show these funds as a temporary influx. 

Federal revenue also includes any amounts received from the 

annual Federal redistribution of funds that states receive. 

Revenue from the Federal Highway Trust Fund is a big 

component of the sources of funds for state transportation 

agencies. Reduction and increase in this source of revenue 

has a significant effect on some states where the percentage 

of their transportation revenue is more tilted towards Federal 

funds. Examples include the state of Rhode Island and the 

territory of Puerto Rico. Historic trends and projections as 
34 Financial Planning for Transportation Asset Management

detailed in Figure 11 indicate that unless additional revenues 

are provided to the Trust Fund, or appropriations from the 

fund are curtailed, it would face inevitable deficits that are 

unsustainable. This uncertainty may lead to states emphasizing the risks inherent in their financial forecasts. Historical 

sources such as the Federal Highway Trust fund may not be 

as reliable or consistent as in the past. This uncertainty 

further emphasizes the need to take a risk-based approach 

to forecasting revenue and in the management of assets. 

Each state will have many common sources of funds as 

highlighted above and some that are unique to their state. 

The main revenue sources for MnDOT as articulated in its 

2014 Draft TAMP include Federal-aid (gas tax and General 

Funds), State gas tax (motor fuel excise tax), state tab fees 

(motor vehicle registration tax) and state motor vehicle sales 

tax. The financial plan will need to reflect all sources of 

revenue. Because the permanency or temporary nature of

Figure 11. Highway Trust Fund Balances and Projected Shortfalls

SOURCE: CONGRESSIONAL BUDGET OFFICE
 

Report 2: Components of a Financial Plan 35 

funds has an impact on how and when transportation needs 

can be met, the plan should reflect the permanency or 

temporary nature of these revenues. 

Table 6 shows the historic funding sources for the period 

from 2010 to 2014 and the funds allocated for the current 

year (2015) for the sample State DOT discussed earlier in 

the report. 

Sources of Funds 2010 2011 2012 2013 2014 2015 Total Average 

(2010-2014) 

State Fuel Tax 134 134 135 132 119 120 775 129 

State Sales Tax 8 34 51 51 51 60 255 43 

State License and 

Registration Fees

 55 55 55 55 55 55 330 55 

State Toll Revenues 30 30 30 30 30 30 180 30 

State General Funds 60 60 60 60 60 60 360 60 

State Bonds – – – – – – – – 

Subtotal State 

Funds

 287 313 331 328 315 325 1,900 317 

Federal Programs 268 300 291 297 285 285 1,726 288 

Other Federal 

Programs (ARRA) 55 15 – – – – 70 35 

Federal Bonds – – – – – – – – 

Subtotal Federal 

Funds

 323 315 291 297 285 285 1,796 299 

Local Match 10 10 10 10 10 10 60 10 

Subtotal Local 

Funds

 10 10 10 10 10 10 60 10 

Total 620 638 632 635 610 620 3,756 626 

Table 6. Historic Sources of Funds for Sample State DOT 

(All figures in $ Millions) 
36 Financial Planning for Transportation Asset Management

The sources in Table 6 are categorized as state, Federal and 

local funds. The state sources for the period for the sample 

DOT shown are state fuel tax, state sales tax, license and 

registration fees, toll revenues, general fund and bonds. In 

the period shown, there were no revenues from state bonds. 

The table illustrates that the funding levels available to the 

DOT in 2015 were more or less similar in the aggregate to 

those in the previous five years.

An evaluation of the historic funding trends can provide an 

insight on what state agencies may expect in the future, 

albeit they may be affected by the current fiscal environment 

in the state.

Future Projections for Revenues

The ability of a transportation agency to meet its future 

performance and condition goals are closely tied to availability of future funds. The number of such sources and amounts 

available from them will vary from state to state. During the 

writing of this report, some states have either passed or are 

in the process of approving legislation to increase taxes to 

fund their transportation needs. These include, Utah, which 

has approved $0.05/gallon gas tax increase with effect from 

January 1, 2016 and allowed local governments to go to 

voters for a $0.25 sales tax increase to fund transportation 

projects; Idaho, where a $0.07 per gallon increase in gas 

taxes and increases in vehicle registration fees will fund 

approximately $94 million of roadway and bridge maintenance needs (out of a projected need of approximately 

$262 million); and Mississippi, which authorized $200 million 

in bonds for bridges and roadway infrastructure. Yet others 

are in the process of trying to find additional sources of 

revenue to address their transportation needs. The future 

projections of sources and amounts of revenue estimated to 

be available from them will determine an agency’s financial 

ability to meet the future asset performance and condition 
Report 2: Components of a Financial Plan 37

goals detailed in its TAMP. Inability to do timely treatment 

will have an impact on the deterioration of assets and the 

amount of resources required to bring assets that may 

have deteriorated beyond a certain condition back to an 

acceptable operational level. 

Risks and Assumptions

While historical trends might shed light on the levels of 

funding to expect in the future from known and available 

funding sources, specific factors surrounding each of those 

sources may have a major impact on whether similar funding 

levels can be expected in the future and should be appropriately considered. 

As noted in Figure 11 and the factors surrounding the Highway Trust Fund, the availability of Federal funding at historical levels in the future may be prone to significant risk owing 

to the declining balances in the Trust Fund. Similarly, ARRA 

funds were temporary and these are no longer a source of 

future funds for states. 

States vary in their ability to raise monies through bonds. 

Depending on its current financial exposure, a state DOT 

may or may not have the authority and ability to raise funds 

through issuance of new bonds for a period of time. 

The demographics and age of the population and the 

increases in other transit options may pose risks to the 

extent of funds that were historically available through 

licensing and vehicle registration for some states. Similarly, 

as observed in many states, increasing fuel economy 

standards of vehicles have resulted in lower fuel tax 

revenues and the historical trends may not be sustainable.

It would be informative for transportation agencies to list all 

risks associated with future revenue sources. They could also 
38 Financial Planning for Transportation Asset Management

present their assumptions about future sources and the 

amounts they are projecting will be available. It would be 

informative for states to show all such potential increases and 

decreases in the plan and explain any related assumptions. 

Any impact of other national or international factors that may 

have an influence on future revenue also could be presented.

Based on the assumptions and risk analysis, reasonable 

projections of future revenues for the plan period can be 

estimated for use in the financial plan.

Estimates of Projected Funding for Plan Period

Based on the information available, including the assumptions and analysis of various funding risks, state agencies 

can estimate the level of funding that they can reasonably 

expect to receive from various sources for each year of 

the plan period. Depending on the risks, agencies may be 

considering alternative strategies to mitigate the impact 

of those funding risks. Various funding scenarios, and their 

impacts on investments towards maintaining system conditions to the established targets for each of those scenarios, 

can be separately considered and incorporated into the 

plan before its final adoption.

Table 7 illustrates the projected funding for the 10 year 

period from 2016 through 2025 along with the funds allocated for the current year (2015) for the sample State DOT. 

The table shows an anticipated increase (20%) in the State 

Fuel Tax with effect from 2016. Similarly, State Sales Taxes, 

License and Registration Fees, and Toll Revenues are also 

shown to increase by 10% in 2016. Assuming a repayment 

of existing liabilities to a level when the state will be in a 

position to issue new bonds, the sample projections show 

an aggregate of $1 billion coming from the issuance of 

new bonds progressively between 2018 and 2022.
Report 2: Components of a Financial Plan 39 Sources of Funds 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Total State Fuel Tax 120 144 144 144 144 144 144 144 144 144 144 1,560 State Sales Tax 60 66 66 66 66 66 66 66 66 66 66 720 State License & Registration Fees 55 61 61 61 61 61 61 61 61 61 61 660 State Toll Revenues 30 33 33 33 33 33 33 33 33 33 33 360 State General Funds 60 60 60 60 60 60 60 60 60 60 60 660 State Bonds – – – 189 171 239 272 129 – – – 1,000 Subtotal State Funds 325 364 364 553 535 603 636 493 364 364 364 4,960 Federal Programs 285 294 302 311 321 330 340 351 361 372 372 3,639 Other Federal Programs – – – – – – – – – – – – Federal Bonds – – – – – – – – – – – – Subtotal Federal Funds 285 294 302 311 321 330 340 351 361 372 372 3,639 Local Match 10 11 5 5 5 5 5 5 5 5 5 66 Subtotal Local Funds 10 11 5 5 5 5 5 5 5 5 5 66 Total 620 668 671 869 860 938 981 848 730 740 740 8,665 Table 7. Projected Sources of Funds for Sample State DOT for 10 Year Plan Period (All figures in $ Millions)
40 Financial Planning for Transportation Asset Management

Table 7 illustrates the projected funding for the 10 year 

period from 2016 through 2025 along with the funds 

allocated for the current year (2015) for the sample State 

DOT. The table shows an anticipated increase (20%) in the 

State Fuel Tax with effect from 2016. Similarly, State Sales 

Taxes, License and Registration Fees, and Toll Revenues are 

also shown to increase by 10% in 2016. Assuming a repayment of existing liabilities to a level when the state will be in 

a position to issue new bonds, the sample projections show 

an aggregate of $1 billion coming from the issuance of new 

bonds progressively between 2018 and 2022.

Figure 12 shows the percentage split between the three 

main sources of funds for the sample State DOT. It signifies 

a higher reliance on state sources (primarily bonds) until 

2022, beyond which state sources more or less match 

revenues from Federal sources. 

Figure 12. Relative Distribution of funds between State, Federal and 

Local Sources for a Sample State DOT for the 10 Year Plan Period
Report 2: Components of a Financial Plan 41

Gaps and Surpluses

The next step in determining the sustainability of the 

financial plan elements is to determine if the projected 

funding levels are sufficient to enable the agency to cover 

the investment needs it has estimated for meeting its 

aspirational goals. To the extent that the revenue sources are 

sufficient to meet an agency’s needs over the course of the 

plan period, the sources and uses of funds estimated by the 

agency can make their way into the financial plan supporting 

its TAMP. However, if gaps in funding exist, or if the identified 

risk factors can result in gaps in funding during the plan 

period, the agency will need to evaluate and implement 

alternative strategies to address such gaps or to mitigate 

the impact of the anticipated risks. 

The illustrations for the sample DOT present a convenient 

example to explain the process of identification of gaps and 

strategies that may be utilized to mitigate them. Table 3 

showed the funds needed to meet the aspirational longterm asset goals. The needs were based on taking into 

account the current and historic treatments, the age, other 

asset conditions, and performance factors. The annual 

condition and performance targets shown in the example 

state DOT are assumed to have been developed taking into 

consideration the life cycle cost and the cost effective 

treatment approaches to extending the useful life of assets. 

However, when the projections of the extent of available 

sources of funds detailed in Table 7 for the sample State 

DOT are compared with the needs associated with the 

aspirational targets projected in Table 3, it is found that 

there is a gap between the amount of funds projected to 

be available for the ten year period and the total needs to 

meet the optimal life cycle cost and asset performance and 

condition targets. Table 8 (see page 42) summarizes the 

Total Revenues and the Total Uses, and also computes 

the gap between the two for the plan period.
42 Financial Planning for Transportation Asset Management

Description 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Total

Total 

Revenues 620 668 671 869 860 938 981 848 730 740 740 8,665 

Total Uses 620 733 778 869 860 938 981 941 884 878 887 9,368 

Gap between 

Projected 

Sources and 

Aspirational 

Needs

 0 (65) (107) (0) 0 0 0 (93) (154) (138) (147) (703)

Table 8. Gap between Projected Sources and Aspirational Needs for 

Sample DOT (All figures in $ Millions)

With the funding resource limitations observed across 

the nation, such scenarios are common for most states. 

Articulating the gaps and the treatments needed to bridge 

the gaps and create a balanced funding plan thus become 

very important. 

MnDOT’s 2014 Draft TAMP projects that while the revenues it 

receives from the State Highway Trunk Fund will increase at 

approximately 2% per year for the next 10 years, associated 

construction costs are growing at 3% per year, thus creating 

a gap. Further, it estimates the gap between its operations 

and maintenance needs and available funding over a fouryear period to be approximately $90 million, which equates 

to approximately $94 million after accounting for inflation 

(See Table 9).

Similarly, Colorado DOT has completed a specific exercise 

to identify the gaps between investment needs and 

revenues projected for a 25 year period between 2016 and 

2040. These are more fully described in a Needs and Gap 

Technical Memorandum[3]. Extracts of illustrations from this 

report are shown in Table 10 and Figure 13 (see page 44) 

to amply illustrate the projected gaps in Colorado DOT’s 

financial projections.
Report 2: Components of a Financial Plan 43 

Investment Area 

Current 

Budget 

Need Beyond 

Current Budget 

Current 

Gap 

Gap Including 

Inflation 

Drainage $43.9 $68.0 $24.1 $25.3 

Safety and 

Guidance: Lighting $19.0 $39.8 $20.8 $21.8 

Smooth Roads: Roads $77.8 $86.0 $8.2 $8.8 

Smooth Roads: Shoulders $29.9 $40.0 $10.1 $10.6 

Structures: Bridge 

Preventative $16.1 $27.4 $13.0 $13.6 

Structures: Bridge Reactive $20.4 $33.6 $8.6 $9.0 

Structures: 

Other Infrastructure– 

Inspection/Inventory 

$21.2 $26.0 $4.8 $94.1 

TOTAL $228.3 $320.8 $89.6 $94.1 

Table 9. Gaps between Needs and Available Funding for 

Operations and Maintenance for MnDOT (All figures in $ Millions) 

SOURCE: MNDOT 2014 DRAFT TAMP 

Category Needs Revenue Gap Annual 

Highway Asset 

Maintenance $5,840,780,000 $3,761,544,700 $(2,079,235,300) $(207,923,530.03) 

Highway 

Maintenance $2,745,610,000 $2,544,000,000 $(201,610,000) $(20,161,000.00) 

Highway 

Expansion $8,620,080,000 $661,517,754 $(7,958,562,246) $(795,856,224.65) 

Highway 

Operations $321,640,000 $257,978,544 $(63,661,456) $(6,366,145.63) 

Highway 

Safety $1,203,000,000 $1,013,710,723 $(189,289,277) $(18,928,927.69) 

Transit $384,177,826 $384,177,826 $ – $ – 

Flexible $ – $1,720,616,554 $1,720,616,554 $172,061,655.38 

TOTAL $19,115,287,826 $10,343,546,100 $(8,771,741,726) $(877,174,172.63) 

Table 10. Gaps between Needs and Available Funding for various 

categories for Colorado DOT (2016-2025) (All figures in $ Millions) 

SOURCE: COLORADO DOT 2015 NEEDS AND GAPS TECHNICAL 

MEMORANDUM 
44 Financial Planning for Transportation Asset Management

Figure 13. Aggregate Gap between Needs and Available Funding 

for Colorado DOT (2016-2040)

SOURCE: COLORADO DOT 2015 NEEDS AND GAPS TECHNICAL 

MEMORANDUM

Alternative Investment and Funding Scenarios 

with Consequences

State agencies can consider various scenarios specific to 

the estimated sources and uses based on the assumptions 

and risk factors that they have considered in preparing their 

projected sources and uses for the plan period. As previously discussed, these will typically include a revision in the 

achievable targets by re-aligning investment priorities and 

direction, much like those articulated by MnDOT in its 2014 

Draft TAMP. They may also include revisions in the estimates 

of available funding based on information specific to the 

assumptions used in preparing initial revenue projections, 

including accommodations for mitigation of various risks. 

Ultimately, the final plan will need to balance the adjustments to both revenues and investments, so as to arrive at 

a financial plan that can be reasonably sustained. The final 

plan can also incorporate some flexibility that will allow 

for the incurring of certain investments and the resultant 

improvement in system conditions should any of the uncertain funds become available in the future. A dynamic plan of 
Report 2: Components of a Financial Plan 45

this nature can also help set the appropriate expectations 

of achievable system conditions based on the funding that 

actually becomes available.

In the discussion that follows, different scenarios are 

described, once again for illustrative purposes only, using 

the sample State DOT data presented previously.

Scenario 1—Bridge the Gap with Increased Funding

One of the choices available to agency decision makers 

would be to communicate and convince the public and other 

stakeholders to find additional sources of revenue to bridge 

the identified funding gap. The TAMP and the financial plan 

presented using the aspirational needs (Tables 3 and 7) 

can serve as good resources in such communication efforts. 

Scenarios, explained later in this section, can be used to 

convey the outcome and impact of not addressing these 

gaps. If this effort is successful and the agency leadership 

feels confident that the gaps can be filled, then the revenue 

projections can be suitably revised to reflect such increased 

funding. The revised revenue projections and the projected 

investment needs can then form the essence of the final 

financial plan prepared by the agency in support of its TAMP.

Scenario 2—Targets Reduced to Align Uses with 

Projected Funding

This scenario assumes that the funding levels originally 

projected by the agency are reasonably achievable. This 

would mean that the projected investment needs cannot be 

fully met because the projected sources are less than the 

projected uses. In such an event, the agency will need to 

re-prioritize its asset management objectives and determine 

how to optimize the various treatments it intends to implement, so as to be able to work within available funding levels. 

The tradeoffs that will need to be made will necessarily mean 
46 Financial Planning for Transportation Asset Management

a slippage in the achievement of condition or service levels 

for various assets. Table 11 shows the reduction to various 

categories of uses for the sample State DOT and the resulting implications of reductions to different priorities to close 

the funding gaps. Reductions are applied largely during the 

period prior to and after the period when the revenues from 

bonds are available to the state agency.

Assumptions for Scenario 2 

The following assumptions are made for the scenario in 

Table 11 for the sample state DOT:

 All projected revenues will be available

 Condition and performance goals have been adjusted 

to prioritize preservation and maintenance of bridges 

on the NHS and other critical assets. This is reflected in 

a slight overall increase for both bridge and pavement 

preservation and maintenance programs, while cuts 

have been made to rehabilitation and replacement 

programs. This has resulted in a reduction in the overall 

pavement condition rating and increase in the percentage of total deck area that is structurally deficient for 

bridges (structural deficiency for bridges) (See Figures 

14 and 15 on page 48)

 Cuts have been applied to New Construction, Local 

Programs and expenditure on rehabilitation and 

replacement of bridges and pavements.

Such representations (Figures 14 and 15) of the impact of 

reduction in investment to asset and system conditions can 

help decision-makers see the trend in the asset conditions at 

a glance. The information can also be used to articulate the 

importance of additional investment to the public and other 

stakeholders. 
Report 2: Components of a Financial Plan 47 Uses 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Total 

Overall (NHS + Non-NHS) Pavement Condition Rating (%) 77% 78% 77% 79% 81% 83% 85% 83% 81% 78% 76% N/A 

Pavement Rehab & Replace 60 60 60 95 95 95 95 72 60 65 65 822 Pavement Preservation 36 52 52 56 64 68 72 76 68 68 68 680 Pavement Maintenance 9 13 13 14 16 17 18 19 17 17 17 170 Subtotal Pavement Progra

m 105 125 125 165 175 180 185 167 145 150 150 1,672 

Bridge Structural Defi ciency - NHS and Non-NHS (%) 18% 21% 22% 19% 17% 15% 14% 14% 16% 18% 21% N/A 

Bridge Rehab & Replace 60 70 78 150 150 170 160 95 71 75 75 1,154 Bridge Maintenance 45 90 95 95 100 110 105 100 85 82 83 990 

Subtotal Bridge Program 105 160 173 245 250 280 265 195 156 157 158 2,144 

Traffi c Maintenance 10 15 15 15 15 20 20 20 20 20 20 190 

Drainage Maintenance 5 5 10 10 10 12 12 15 15 20 20 134 Winter Maintenance 25 25 30 30 35 35 35 35 35 40 40 365 Other Maintenance 55 40 40 50 50 55 55 55 60 60 65 585 Subtotal Maintenance 95 85 95 105 110 122 122 125 130 140 145 1,274 ITS 5 5 5 5 5 5 5 5 5 5 5 55 SAFETY 10 35 30 25 25 25 25 25 30 30 30 290 OTHER ASSETS 25 25 20 20 15 20 20 20 25 25 25 240 NEW CONSTRUCTION 65 70 60 95 100 120 135 70 – – – 715 LOCAL PROJECTS 40 30 30 55 50 50 45 40 40 40 40 460 Debt Svc. Existing obligations 125 85 85 80 30 – – – – – – 405 Debt Svc. New State Bonds – – – 24 50 84 122 141 139 133 128 820 Subtotal Debt Servicing 125 85 85 104 80 84 122 141 139 133 128 1,225 Programming/Project Delivery 20 20 20 20 20 20 25 25 25 25 25 245 

Administrative Expenses 25 28 28 30 30 32 32 35 35 35 35 345 Total Uses 620 668 671 869 860 938 981 848 730 740 741 8,665 

Table 11. 

Expenditures 

Reduced with Lower Asset Goals to Address the 

Gaps (All figures in $ Millions) 
48 Financial Planning for Transportation Asset Management

Figure 14. Sample State DOT—Impact on Overall PCR due to 

Reduction in Investment (Scenario 2)

Figure 15: Sample State DOT—Impact on Structural Deficiency of 

Bridges due to Reduction in Investment (Scenario 2)
 

Report 2: Components of a Financial Plan 49 

The July 2014 version of the Minnesota DOT’s TAMP explains 

that for the four year budget cycle (2012-2015), the budget 

for maintenance and operation was approximately $860 

million, while the needs totaled to $1.25 billion, with a budget 

gap of $390 million ($410 million with inflation). This includes funds for assets in the TAMP such as drainage, lighting, smooth roads and shoulders, and bridge preventative 

and reactive maintenance. The TAMP also explains that it 

will meet the NHS and Interstate pavement condition targets, 

however with the emphasis on the higher volume NHS roads, 

the Non-NHS roads will see a performance drop. Tables 12 

and 13 (see page 50) show the existing and recommended 

pavement and bridge condition targets respectively. The 

tables show the existing target, the aspirational target and 

the constrained target that shows reductions in targets that 

have to be made to close the anticipated gap between the 

future revenues and the amounts that would be needed to 

meet the aspirational goals. 

System 

MNSHIP 

2012 

Condition 

(% Poor) 

MNSHIP 

Aspirational 

Target (%) 

MNSHIP 

Constrained 

Target/ 

10 year 

Anticipated 

Outcome 

(% poor) 

TAMP 

Target 

recommendation 

(% Poor) 

TAMP 

Plan 

Outcome 

(% Poor) 

Interstate 2.4% < 2% 2% < 2% 2% 

Non-Interstate NHS 4.3% <=4% 4% <=4% 4% 

Non- NHS 7.5% NA 12% <=10% 12% 

Table 12. MnDOT—Existing and Recommended Pavement 

Condition Targets 

SOURCE: MNDOT DRAFT 2014 TAMP 
 

 

50 Financial Planning for Transportation Asset Management 

System 

MNSHIP 

2012 

Condition 

(% Poor) 

MNSHIP 

Aspirational 

Target (%) 

MNSHIP 

Constrained 

Target/ 

10 year 

Anticipated 

Outcome 

(% poor) 

TAMP 

Target 

recommendation 

(% Poor) 

TAMP 

Plan 

Outcome 

(% Poor) 

NHS 4.7% <2% 2% <2% 2% 

Non- NHS 2.1% <=8% 6% <=8% 6% 

Table 13. MnDOT—Existing and Recommended Bridge 

Condition Targets 

SOURCE: MNDOT DRAFT 2014 TAMP 

Additional Scenarios 

State agencies may consider several other scenarios that are 

reasonably likely and estimate the impacts resulting therefrom. These may include further reduction in revenues to 

account for the anticipated funding risks, or conversely, a 

partial increase in funding based on new sources becoming 

available. The impacts on system conditions can also be 

presented. Ultimately the scenario representing sources and 

uses that are most reasonably likely to be achieved along 

with the implications to the asset conditions can be used to 

establish the final financial plan. 
Report 2: Components of a Financial Plan 51

4. Final Plan

Having evaluated the various scenarios specific to a state 

agency, the agency can select the plan options that are most 

realistically achievable for the state. In doing so, the agency 

could explicitly articulate the various assumptions that are 

pertinent to the estimates and projections arrived at in the 

plan. To the extent trade-offs are being planned to balance 

the investments with reasonable projections of available 

funding, specific details of such trade-offs must be 

described. These may involve redefining investment priorities, focus on preservation and maintenance over rehabilitation and replacement, and other such strategies. These 

assumptions and strategies may need to be articulated in 

greater detail to cover specific assets or asset categories, 

so that clarity in the direction being taken by the agency in 

completing its TAMP and related financial plan are evident. 

Given that the planning is expected to cover an extended 

period of time, such as a ten or twenty year period, the 

agency may incorporate flexibility for dealing with a variety 

of scenarios, including, increases or decreases in available 

funding, increases or decreases in investment needs based 

on demands to the system, and such other factors it considers pertinent. Based on the projected levels of funding and 

investments the agency plans to make, projections covering 

the state of the system and specific asset categories based 

on the performance metrics it has established would also be 

pertinent. While these can be described in sufficient level of 

detail in the plan document to communicate specifics of 

the plan to its community of stakeholders (traveling public, 

agency officials, legislators, etc.), the agency may also 

consider presenting a summary view of the key elements 

of the financial plan. A summary presentation can provide 

at-a-glance information pertaining to important elements 

of the plan that the agency wishes to communicate.
52 Financial Planning for Transportation Asset Management

Table 14 summarizes the projected Sources and Uses for the 

sample State DOT (Assuming funding and investment from 

Scenario 2). The summary illustrates that the agency has a 

balanced plan that eliminates gaps, but with the gaps in 

funding persisting for the plan period, trade-offs needed to be 

made in overall system conditions achievable by the agency.

State Agency Examples

The MnDOT financial plan associated with the Draft 2014 

TAMP does not provide details of projected sources and uses 

in the format as presented for the sample DOT. However, the 

primary sources and uses are depicted in Figure 16 provided in 

the MnDOT TAMP. Pertinent information is summarized for the 

plan period in Table 4 (discussed previously). Table 4 shows 

the summary of the ten year targets established by the MnDOT and the investments required to achieve those targets. 

Figure 16. Sources and Uses for MnDOT

SOURCE: 2014 DRAFT MNDOT TAMP
Report 2: Components of a Finan

cial Plan 53

Sources 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Total 

State Fuel Tax 120 144 144 144 144 144 144 144 144 144 144 1,560 State Sales Tax 60 66 66 66 66 66 66 66 66 66 66 720 State License & Registration Fees 55 61 61 61 61 61 61 61 61 61 61 660 State Toll Revenues 30 33 33 33 33 33 33 33 33 33 33 360 State General Funds 60 60 60 60 60 60 60 60 60 60 60 660 State Bonds – – – 189 171 239 272 129 – – – 1,000 

Subtotal State Funds 325 364 364 553 535 603 636 493 364 364 364 4,960 

Federal Programs 285 294 302 311 321 330 340 351 361 372 372 3,639 Other Federal Programs – – – – – – – – – – – – Federal Bonds – – – – – – – – – – – – Subtotal Federal Funds 285 294 302 311 321 330 340 351 361 372 372 3,639 

Local Match 10 11 5 5 5 5 5 5 5 5 5 66 

Subtotal Local Funds 10 11 5 5 5 5 5 5 5 5 5 66 

Total 620 668 671 869 860 938 981 848 730 740 741 8,665 
54 Financial Planning for Tr ansportation Asset Management Uses 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Total Overall (NHS + Non-NHS) Pavement Condition Rating (%) 77% 78% 77% 79% 81% 83% 85% 83% 81% 78% 76% N/A Pavement Rehab & Replace 60 60 60 95 95 95 95 72 60 65 65 822 Pavement Preservation 36 52 52 56 64 68 72 76 68 68 68 680 Pavement 

Maintenance 9 13 13 14 16 17 18 19 17 17 17 170 

Subtotal Pavement Program 105 125 125 165 175 180 185 167 145 150 150 1,672 

 Bridge Structural Defi ciency— NHS and Non-NHS (%) 18% 21% 22% 19% 17% 15% 14% 14% 16% 18% 21% N/A

 Bridge Rehab & Replace 60 70 78 150 150 170 160 95 71 75 75 1,154  Bridge 

Maintenance 45 90 95 95 100 110 105 100 85 82 83 990 

Subtotal Bridge Program 105 160 173 245 250 280 265 195 156 157 158 2,144 

Traffi c Maintenance 10 15 15 15 15 20 20 20 20 20 20 190 

Drainage Maintenance 5 5 10 10 10 12 12 15 15 20 20 134 

 Winter Maintenance 25 25 30 30 35 35 35 35 35 40 40 365 

Other Maintenance 55 40 40 50 50 55 55 55 60 60 65 585 

Subtotal Maintenance 95 85 95 105 110 122 122 125 130 140 145 1,274 ITS 5 5 5 5 5 5 5 5 5 5 5 55 
Report 2: Components of a Finan

cial Plan 55 

Uses 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Total Safety 10 35 30 25 25 25 25 25 30 30 30 290 Other Assets 25 25 20 20 15 20 20 20 25 25 25 240 New Construction 65 70 60 95 100 120 135 70 – – – 715 Local Projects 40 30 30 55 50 50 45 40 40 40 40 460 Debt Svc. Existing obligations 125 85 85 80 30 – – – – – – 405 Debt Svc. New State Bonds – – – 24 50 84 122 141 139 133 128 820 Subtotal Debt Servicing 125 85 85 104 80 84 122 141 139 133 128 1,225 Programming/Project Delivery 20 20 20 20 20 20 25 25 25 25 25 245 Administrative Expenses 25 28 28 30 30 32 32 35 35 35 35 345 

Total Uses 620 668 671 869 860 938 981 848 730 740 741 8,665 

Table 14. Summary View Showing Sources and Uses of 10 Year Financial Plan for Sample State DOT along with 

Key Targeted Performance Metrics for Bridges and Pavements (All figures in $ Millions) 
56 Financial Planning for Transportation Asset Management

Table 15 summarizes the aggregate anticipated revenues 

from various sources and projected expenses for different 

asset management categories for a ten year plan period 

used by Colorado DOT in its TAMP. Note that expenditures 

associated with items other than for asset management 

items are not shown on this table. In Table 16 (see page 58), 

Colorado DOT highlights current performance, aspirational 

and constrained targets, and projected performance gaps 

for various asset categories. Through these two tables, and 

specific details pertaining to funding gaps as demonstrated 

in Table 10, Colorado DOT is able to communicate the gaps 

in performance that result from the gaps in funding. Further 

details are also provided by Colorado DOT for the plan 

period for each of its asset management categories, such 

as pavements, bridges and Maintenance.

As can be observed from the Minnesota and Colorado 

examples, pertinent information relating to projected 

Sources and Uses, performance targets, funding gaps, and 

trade-offs necessary are communicated through a variety 

of means both at the aggregate level and also at the asset 

category level. The format and detail to which such information is communicated varies from state to state, however, 

information relating to how the agency is able to meet 

its TAM goals is very effectively communicated by the 

financial planning effort.
Report 2: Components of a Financial Plan 57 10 Year Estimate (Millions) 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Total CDOT Estimated Revenue $1,104.8 $1,110.8 $1,132.7 $1,099.2 $975.9 $981.4 $986.8 $974.6 $977.3 $978.9 MLOS $251.3 $254.4 $262.0 $269.9 $277.9 $286.3 $294.9 $303.8 $312.9 $322.3 Surface Treatment $235.2 $235.9 $240.0 $240.0 $240.0 $240.0 $240.0 $240.0 $240.0 $240.0 Bridge $53.3 $49.1 $55.3 $41.5 $41.5 $41.5 $41.5 $41.5 $41.5 $41.5 Culverts $9.6 $8.2 $9.5 $7.1 $7.1 $7.1 $7.1 $7.1 $7.1 $7.1 Tunnels $12.4 $5.2 $12.2 $9.1 $9.1 $9.1 $9.1 $9.1 $9.1 $9.1 Walls – $2.4 $3.0 $2.3 $2.3 $2.3 $2.3 $2.3 $2.3 $2.3 Bridge Enterprise $114.9 $115.0 $132.3 $134.6 $136.9 $139.3 $141.8 $144.5 $147.2 $149.9 Rockfall Mitigation $9.1 $9.2 $9.0 $5.1 $5.1 $5.1 $5.1 $5.1 $5.1 $5.1 Fleet (Road Equipment) $20.9 $18.4 $18.7 $14.0 $14.0 $14.0 $14.0 $14.0 $14.0 $14.0 Buildings (Property) $20.8 $12.9 $15.5 $7.2 $7.2 $7.2 $7.2 $7.2 $7.2 $7.2 ITS Maintenance $27.6 $21.4 $27.3 $14.8 $14.8 $14.8 $14.8 $14.8 $14.8 $14.8 Asset Management Total $755.1 $732.1 $784.8 $745.6 $755.9 $766.7 $777.8 $789.4 $801.2 $813.3 Table 15. 10 Year Asset Management Planned Funding and Investment SOURCE: COLORADO DOT 
58 Financial Planning for Tr ansportation Asset Management 

Asset 

Measure Current Performance Aspirational 

Target 

Fiscally 

Constrained

Target 

Performance 

Gapb 

BRIDGES Percentage of deck area on structurally defi cient CDOTowned bridges 6% 5% 10

%a 5% 

BRIDGES Percentage of deck area on structurally defi cient bridges on the NHS 5% 5% 10

%a 5% 

BRIDGES Percentage of CDOT-owned bridges over waterways that are 

scour critical 6% 1% 5% 4% 

BRIDGES

Percentage of bridge crossings over Interstates, U.S. routes 

and Colorado state highways with a vertical clearance less than the statutory maximum vehicle height of 14 feet-6 inches 

1% 0% 1% 1% 

BRIDGES

Percentage of bridge crossings over Interstates, U.S. Routes 

and Colorado state highways with a vertical clearance less than the minimum design requirement of 16 feet-6 inches 

8% 2% 7% 5% 

BRIDGES Percentage of CDOT-owned bridges posted for load 0% 0% 0% 0% 

BRIDGES Percentage of CDOT-owned bridges with a load restriction 3% 1% 3% 2% BRIDGES Percentage of leaking expansion joint by length on CDOTowned bridges 18% 5% 15% 10% BRIDGES Percentage of CDOT-owned bridge deck area that is unsealed or otherwise unprotected 41% 5% 30% 25% 
Report 2: Components of a Finan

cial Plan 59 

Asset Measure Current Performance Aspirational Target Fiscally Constrained Target Performance Gapb 

PAVEMENT

Percentage high-moderate drivability life for Interstates based 

on condition standards and treatments set for traffic volume 

categories 

86% 90% 80% a 10% 

PAVEMENT

Percentage high-moderate drivability life for CDOT-owned NHS, excluding Interstates based on condition standards and 

treatments set for traffi c volume categories 

83% 90% 80% a 10% 

PAVEMENT

Percentage high-moderate drivability life for the State highway system based on condition standards and treatments set for traffic volume categories 

82% 90% 80% a 10% 

MAINTENANCE Statewide Letter Grade B­ B- B- a None 

BUILDINGS Statewide Letter Grade 86% C or Better 100% C or Better 90% C or Better 10% 

ITS Average Percent Useful Life 143% 80% 104% 24% 

FLEET Average Percent Useful Life 96% 70% TBD TBD 

CULVERTS Percentage Critical Culverts 4.4% 2% 5% 3% 

ROCKFALL Vehicle Exposure Score TBD TBD TBD TBD 

TUNNELS TBD TBD TBD TBD TBD 

Table 16. CDOT Objectives and Targets as detailed in its TAMP

a These objectives and targets are from PD 14, adopted by the Transportation Commission. Others are staff recommended, and subject to 

available funding.

b CDOT defines the performance gap as the difference between aspirational and fiscally constrained targets. 

SOURCE: COLORADO DOT 
60 Financial Planning for Transportation Asset Management

5. Summary and Conclusions

Transportation assets represent by far one of the largest 

investments in the nation’s infrastructure. Aging of this 

infrastructure is resulting in increasing demands on maintenance, preservation, rehabilitation and replacement, while at 

the same time funding limitations are not showing any signs 

of easing. Being a primary driver of the nation’s economic 

health, effective management and maintenance of these 

transportation assets is vital to the nation’s economy. It 

therefore becomes important to not only be strategic in the 

way these assets are managed, but also to establish clear 

priorities based on which they can be managed optimally 

to extract the highest levels of performance within the 

constrained budgets seen across the nation. To do so 

effectively, it becomes important to track the performance 

of various assets in detail and also to optimize the manner 

in which investments are made to extract the best 

performance possible for the long term.

Financial planning provides a means to accomplish these 

objectives effectively. The elements of a financial plan 

should be such as to not only facilitate the preparation of 

an objective long-term plan to support strategic TAM objectives, but also to communicate the essence of the planning 

effort to stakeholders. This will entail demonstrating the 

realistic asset management needs based on an objective 

evaluation of the necessary investments to keep the assets 

performing at certain desired levels. At the same time, 

realistic projections must be prepared to recognize the 

level of funding that can be expected to meet these investment needs. To the extent that there are gaps in funding 

observed, steps will need to be taken to optimize the use 

of limited funds. Not only will the proper planning and 

objective, data based financial projections allow an agency 

to accomplish this, it will also allow an agency to project 

the consequences of not making the needed investments. 
Report 2: Components of a Financial Plan 61

Inevitably, reduced investment will result in a decline in 

performance. As seen from the examples referenced in 

the report, documenting the historical trends, the factors 

influencing the achievement of performance targets, gaps 

in funding, trade-offs to be made in the final plan, and the 

details of the final plan prepared which balances all these 

considerations, allows an agency the means to do that. In so 

doing, an agency is able to inform its stakeholders and user 

community of what might be expected from the transportation assets over the long term. It also provides decision 

makers the basis on which to request for and obtain the 

necessary funding to preserve, protect, maintain and manage the nation’s transportation assets at desired levels of 

performance. In addition, the financial plan related to the 

TAMP highlights the responsibilities faced by transportation 

agencies and their financial ability to leave transportation 

assets in a state of good repair for future generations.
62 Financial Planning for Transportation Asset Management

6. References

[1]CDOT’s Risk Based Asset Management Plan, December 9, 

2013, Colorado DOT.

[2]At the present time the FHWA is in the process of 

rulemaking, and the regulations pertaining to the TAMP 

certification have not been finalized. Therefore, references 

to the current State DOTs’ TAMPs are solely for the purpose of illustration and do not indicate that these TAMPs 

have been certified by FHWA. Needs and Gap Technical 

Memorandum, Transportation Matters”, March 23, 2015, 

Colorado DOT.

[3]Needs and Gap Technical Memorandum, Transportation 

Matters”, March 23, 2015, Colorado DOT.
Report 2: Components of a Financial Plan 63

Nastaran Saadatmand

Asset Management Program Manager

Office of Asset Management, Pavements, and Construction

Federal Highway Administration

1200 New Jersey Avenue, SE

Washington, DC, 20590

(202) 366-1337

nastaran.saadatmand@dot.gov

Stephen Gaj

Leader, System Management & Monitoring Team

Office of Asset Management, Pavements, and Construction

Federal Highway Administration

1200 New Jersey Avenue, SE

Washington, DC 20590

(202) 366-1336

stephen.gaj@dot.gov

Prepared by:

Shobna Varma

StarIsis Corporation

and

Gordon Proctor

Gordon Proctor & Associates, Inc.

Administrative and Contract Support by:

Greenman Pedersen Inc.


Office of Asset Management, Pavements and Construction

Federal Highway Administration

1200 New Jersey Avenue, SE • Washington, DC 20590

FHWA-HIF-15-017

ASSET MANAGEMENT FINANCIAL REPORT SERIES