Asset Sustainability Index: 

QUICK GUIDE

Proposed Metrics for the Long-Term Financial 

Sustainability of Highway Networks

APRIL 2013
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 use of the information contained in this 

document. This report does not constitute a standard, 

specification, or regulation.

Quality Assurance Statement

The Federal Highway Administration provides high-quality 

information to serve Government, industry, and the public 

in a manner that promotes public understanding. Standards 

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Technical Report Documentation Page

1. Report Number

FHWA-HEP-13-030

2. Government Accession No. 3. Recipient’s Catalog No.

4. Title and Subtitle

Asset Sustainability Index: Quick Guide

Proposed Metrics for the Long-Term Financial 

Sustainability of Highway Networks

5. Report Date

April 2013

6. Performance Organization Code

7. Author (s)

Gordon D. Proctor and Shobna Varma

8. Performing Organization Report No.

9. Performing Organization Name and Address 10. Work Unit No. (TRAIS)

Gordon Proctor & Associates

7825 Wiltshire Drive

Dublin, Ohio 43016

StarIsis Corp

3737 Woodstone Drive

Lewis Center, Ohio 43035

11. Contract or Grant No.

DTFH61-10-00036

12. Sponsoring Agency Name and Address

FHWA Surface Transportation Environment Planning 

Cooperative Research Program and the Office of Asset 

Management, Pavements and Construction

13. Type of report and period covered

2013

14. Sponsoring Agency Code

15. Supplementary Notes

16. Abstract

This report provides a Quick Guide to the concept of asset sustainability metrics. Such metrics 

address the long-term performance of highway assets based upon expected expenditure levels. 

It examines how such metrics are used in Australia, Britain and the private sector. It also reviews 

asset management data from selected states to illustrate that long-term sustainability metrics 

could be produced using available U.S. asset management data.

17. Key Words

Asset Sustainability, Asset 

Management, Long-Term 

Performance, Sustainable 

Infrastructure Performance 

18. Distribution Statement

No restrictions. This document is available to the public 

from the: FHWA Surface Transportation Environment and 

Planning Cooperative Research Program and the Office of 

Asset Management, Pavements and Construction.

http://www.fhwa.dot.gov/asset/pubs.cfm

http://www.fhwa.dot.gov/planning/processes/statewide/

practices/asset_sustainability_index/index.cfm

19. Security Classification (of this report)

Unclassified

20. Security Classification (of this 

page)

Unclassified

21. No. of Pages

32

22. Price

Free
ii | Proposed Metrics for the Long-Term Financial Sustainability of Highway Networks

Contents

Introduction .................................................................................. 1

Defining a Sustainability Index and Its Ratios................................................. 3

Private Sector Precedents ................................................................. 6

Analogous Railroad Capital Performance Measures ....................................... 7

Balanced Score Card Analogies and Triple Bottom Line ................................... 8

International Examples of Sustainability Metrics .......................................... 9

Producing U.S. Sustainability Metrics ........................................................ 12

Pavement Sustainability Ratio Analyses ................................................. 13

Bridge Sustainability Ratios ................................................................ 16

Ohio Bridge Analyses ................................................................. 16

North Carolina DOT Analysis .......................................................... 17

Maintenance Sustainability Ratios .......................................................... 19

Combining Ratios into an Index ........................................................... 23

Combining the Sustainability Index with Asset Valuation Analysis ............................. 24

Implementing Sustainability Ratios and Forecasting Asset Values ............................. 26

Conclusion ............................................................................. 29
Asset Sustainability Index: Quick Guide | 1

The sustainability of key government 

programs dominates the public agenda. 

The long-term cost and solvency of 

Social Security, Medicaid, Medicare and 

the overall federal budget overshadow most 

national debates.

Inherent in these discussions are long-term forecasts of the future viability of these programs. Each 

may be in budgetary balance for the current year or 

biennium but that short-term condition does not 

define the debate. Instead, the concerns focus upon 

the long-term consequences of income, costs and 

expected service levels. In many cases, the forecasts indicate that service levels must decrease, 

income must increase or significant new efficiencies 

must be found.

To date, the long-term financial sustainability of 

highway infrastructure has not been prominent in 

the public discourse. In part, the long-term sustainability of highway infrastructure has been masked 

by a lack of common forecasting processes and 

metrics. Current national highway infrastructuremeasurement systems produce lagging indicators. 

They track past trends in bridge or pavement 

conditions but they don’t commonly include 

forecasts of future conditions, costs or need.

Although leading indicators of sustainability are 

rare in the public infrastructure-reporting arena, 

they are common in the corporate world. Insurance 

companies must keep enough capital invested to 

cover anticipated future claims. Banks must retain 

balances for future withdrawals. Publicly traded 

railroads must report their investment in railways 

and rolling stock to assure investors of their longterm viability. Cutting maintenance in railways 

could increase short-term profits but it would 

threaten future performance and could cause 

stock prices to fall. Stock analysts and institutional 

investors reward sound long-term corporate 

investments and punish companies whose 

long-term sustainability is suspect. Corporations 

also must report long-term liabilities in pension or 

bond obligations that affect future profitability.

Internationally, states in Australia require local 

governments to produce long-term financial sustainability measures to ensure they are not accruing 

infrastructure deficits that require costly repairs 

in the future. They must indicate the forecasted 

physical condition of their assets, the future value 

of their physical assets and the financial investment 

necessary to sustain both.

This Quick Guide for an Asset Sustainability Index 

(ASI) illustrates how metrics can be developed in 

the United States (U.S.) to forecast the long-term 

financial sustainability of highway networks. It 

borrows concepts from the private sector and from 

Australian local government practices to develop 

long-term indicators of infrastructure performance, 

investment and financial sustainability. The full 

report is available at http://www.fhwa.dot.gov/

planning/processes/statewide/practices/asset_

sustainability_index/index.cfm.

The ASI also can serve to enhance the usefulness of 

asset valuation. The Government Accounting 

Standards Board statement 34 (GASB 34) requires 

state transportation departments to report on 

whether investments are adequate to sustain the 

financial value of infrastructure. The sustainability 

metrics build from the often-overlooked GASB 34 

reports by adding a forecasting component to 

them. The sustainability metrics and asset valuation 

can indicate whether the public’s “equity” in infrastructure is being sustained or is eroding.

The financial sustainability metrics as seen in 

Figure 1 (see next page) also can serve as a complement to major new requirements in MAP-21, Moving 

Ahead for Progress in the 21st Century. It requires 

states to develop risk-based long-term asset management plans, at least for the National Highway 

Introduction
2 | Proposed Metrics for the Long-Term Financial Sustainability of Highway Networks

System (NHS) and optionally for their entire network. The legislation also requires development of 

performance measures.

Corporate performance measurement systems 

often emphasize leading indicators, instead of 

lagging ones. With leading indicators, policy makers 

can predict consequences and take action to 

forestall undesirable outcomes. With lagging indicators, only a rearview-mirror perspective is possible 

with no guarantee that past performance is an 

indicator of future outcomes.

A risk-based approach will likely lead state agencies 

to recognize that long-term financial uncertainty is 

a significant risk to achieving their asset management performance targets. The asset sustainability 

metrics allow them to help quantify and illustrate 

those risks. The sustainability metrics are intended 

to answer some key questions:

◗ “Will current investment levels and practices 

lead to a sustainable highway infrastructure?” 

◗ “Is the current generation leaving future 

generations with a well-maintained and 

robust transportation system like the one 

they inherited?”

◗ “What deferred maintenance costs are 

being transferred to future generations?”

◗ “Is the long-term value of society’s 

infrastructure rising or falling?”

◗ “How much investment in which assets is 

necessary to sustain asset conditions?”

$0

$4,500

$9,000

$13,500

$18,000

$22,500

$27,000

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

Trends of Asset Valuation and Sustainability Index

▲ ▲ ▲ ▲

▲

▲ ▲ ▲ ▲ ▲ ▲

1.00

.90

.80

.70

.60

.50

.40

.30

.20

.10

0

_ Asset Valuation _Investment Backlog _

▲ Asset Sustainability Index

Millions of Dollars

Asset Valuation $25,000 $24,500 $23,770 $22,590 $21,920 $20,620 $18,610 $16,260 $14,680 $13,250 $12,580

Investment Backlog $0 $69 $243 $534 $961 $1,539 $2,289 $3,233 $4,393 $5,798 $6,600 

Asset Sustainability Index 1 0.98 0.96 0.94 0.93 0.91 0.89 0.87 0.86 .84 .83

Figure 1. This graphic represents how Asset Valuation and a Sustainability Index can illustrate future trends. The gold 

line is the Sustainability Index, declining from being adequate in 2000 to being only 83% of need in 2020. As a result, 

the value of this highway network represented by the green bars falls. The tan bars represent the investment shortfall, 

or additional need.
Asset Sustainability Index: Quick Guide | 3

As British guidance[i] states, “A fundamental 

component of long term planning is to ensure 

the asset base is preserved and replenished in a 

sustainable way without imposing an undue financial burden on future generations.” The guidance 

notes that the mere assigning of monetary value to 

highway assets casts them as an important public 

resource worthy of preservation. Monitoring how 

the value of highway infrastructure is rising or 

falling indicates if assets are being maintained or if 

maintenance costs are being unduly passed on to 

future users. It also provides compelling arguments 

for sound asset management and sufficient investment. As such, the asset valuation and forecasting 

process can produce important metrics that 

support sustainability, performance management 

and asset management.

This Quick Guide illustrates the concept of sustainability metrics and how they can be produced in 

the United States using data from state asset 

management programs.

Defining a Sustainability Index

and Its Ratios

The ASI as proposed in this report is a simple ratio 

of the amount budgeted for highway infrastructure 

renewal and preservation divided by the amount 

needed to adequately sustain infrastructure at a 

targeted condition over the long term. Although 

simple in concept, such ratios are commonly used 

for financial or investment analysis. Benefit/cost 

analyses are widely used to evaluate investment 

or project options and they conclude with a 

simple division of project benefits by project 

costs. In the investment world, a company’s 

Price-to-Earnings Ratio, or PE Ratio, is a common 

shorthand for a stock’s attractiveness. The stock’s 

share price is divided by the company’s earnings 

per share. The Return on Equity (ROE) divides 

the company’s profits by the amount of equity 

or capital needed to generate it. Many of the 

investment world’s key metrics are derived by 

dividing profit or earnings by the costs or expenditures needed to generate them. The ASI provides 

such a ratio for infrastructure. It is similar to the 

coverage or liquidity ratios that are critical measures for banks and insurance companies for 

demonstrating they can meet long-term financial 

obligations. To generate them, obligations are 

divided by assets. Similarly, with the ASI, the 

amount of needed investment is divided by the 

amount actually invested.

As an index, the ASI is comprised of three ratios. 

These are a Pavement Sustainability Ratio, a Bridge 

Sustainability Ratio and a Maintenance Sustainability Ratio. Each is generated in the same way as the 

overall ASI. Budget is divided by need. When 

combined, the ratios comprise the index.

As will be illustrated later, each ratio can include 

components. For maintenance, these could be 

ratios for individual maintenance items or activities. 

For pavements, the ratio could include program 

components such as pavement preservation ratios, 

preventive maintenance ratios, resurfacing ratios or 

rehabilitation ratios. The composite nature of the 

overall index allows results to be “rolled up” into 

one metric. Or, the user could “drill down” into 

components of the ratios to compare the adequacy 

of investment in individual program categories.

The ratios allow a value of 1.0 to represent the 

optimum level of investment. A value of less than 

1.0 represents an investment gap or shortfall. 

Values above 1.0 could represent overspending. 

Determining “need” is an obviously complex and 

perhaps subjective process. Optimally, the need is 

determined from an asset management process 

and includes the following considerations:

◗Annual investment need is based on a lowestlifecycle cost approach for managing assets 

that includes a holistic combination of 

Maintenance Budget

Maintenance Needs

Pavement Budget

Pavement Needs

Amount Budgeted

Amount Needed

Asset Sustainability

Index

Pavement

Sustainability Ratio

=

=

Bridge Budget

Bridge Needs

Bridge

Sustainability Ratio

Maintenance

Sustainability Ratio

=

=
4 | Proposed Metrics for the Long-Term Financial Sustainability of Highway Networks

preservation, preventive maintenance, 

reactive maintenance, rehabilitation and 

replacement of assets at the appropriate 

points in their lifecycles;

◗Each year’s estimate of needed investment 

represents one year of a long-term financial 

plan, generally forecasting forward 10 years;

◗The estimate is only for asset condition, not 

asset expansion;

◗The estimates are based upon credible asset 

inventories to ensure they represent a defensible estimate of need;

◗ It excludes unique or hard-to-estimate assets 

such as large historic bridges, which create 

different unit costs and repair cycles. They 

must be accounted for separately.

The asset management process generates the 

numerator, which is need. The denominator, the 

amount budgeted, must come from a credible fiscal 

forecast that accounts for reasonably expected 

revenues adjusted for inflation. 

Although the numerator-divided-by-denominator 

is a simple concept, the process of developing 

a credible needs estimate and budget forecast 

is complex. 

Although the index and ratios are simple in concept, 

they can be informative metrics useful for longrange plans, short-term State Transportation 

Improvement Programs or for public budgeting 

decisions, particularly when tracked over time. 

They boil down complex, long-term infrastructure 

condition and investment analysis into a suite of 

easy-to-illustrate metrics. 

Generating the ASI relies on two credible forecasts. One is for the amount of needed investment, 

preferably developed from a credible Transportation Asset Management (TAM) analysis. The 

second element is a long-term fiscal forecast. 

Although complex, these two analyses are produced by capital-intensive private-sector corporations and are being developed by State and local 

governments in Australia and on an ad hoc basis 

by the U.S. agencies examined in this report. When 

the index is paired with asset valuation estimates, 

a complete financial picture is possible. Together 

they can quickly illustrate whether current investment is adequate to sustain conditions, the magnitude of any shortfall and the investment level’s 

effect upon the public’s equity in its highway 

infrastructure.

The insight the metrics provide increases with the 

length of the analysis period. As seen in Figure 1, 

year-to-year changes may not be significant. Over 

time, the compounding deterioration of assets 

accelerates because of the non-linear degradation 

of pavements and bridges once they reach a state 

of disrepair as seen in Figure 2. The pavement 

deterioration curve illustrates that for several years 

a pavement degrades slowly, then its condition 

deteriorates rapidly. This same trend can occur 

at a network level, causing accelerated degradation 

across the network if needed investments don’t 

occur. The results are two-fold. First, asset values 

decline and the cost to restore the pavement 

condition and value rises considerably.

With constrained budgets, many transportation 

agencies are investing considerably less in pavement and bridge programs than their management 

systems or analysis processes indicate is needed 

to sustain conditions over the long-term term. On 

a year-to-year basis, the impacts of the underinvestment are not readily apparent to legislators 

or the public. The Australian, British and private 

sector investment-need forecasting that will be 

described in the next two sections are intended 

to focus public attention upon the longer-term 

ramifications of current budget practices. Underinvestment in the short-term can free resources for 

other uses but the sustainability indices and assetThe sustainability index and its included 

ratios rely on the amount budgeted for 

the denominators, not the amount actually 

spent. The index and ratios are intended 

to be planning tools. Hence, they can rely 

on the more generalized and easier-toidentify budget numbers. Actual expenditures are more complex in that they 

include change orders, claims, settlements 

and other costs that may not be known 

for years after projects are completed. For 

simplicity’s sake, the index and ratios rely 

on program budget amounts, not detailed 

expenditures. They assume that over a 

number of years, program budget categories for asset classes reasonably represent 

the amount actually spent on those assets.
Asset Sustainability Index: Quick Guide | 5

valuation analyses are intended to draw attention 

to the opportunity costs and future impacts of 

those short-term budget decisions.

Figure 3 illustrates a theoretical state pavement 

network. The example is based upon data and 

budget levels from several state transportation 

agencies reviewed for this report. Figure 3 illustrates that in year 2000 the theoretical state had a 

rural pavement network value of 

$3 billion and a sustainability ratio of 1.0. That ratio 

indicates that budget is adequate to meet need, 

which is defined as the amount of investment 

necessary to meet long-term pavement condition 

targets. As seen in Figure 3, the sustainability ratio 

slowly declines over 20 years falling to .83, or 83 

percent of what is needed in a given year to meet 

long-term condition targets. The year-to-year 

shortfall is relatively small compared to the 

amount budgeted but it has a compounding, 

long-term impact on the pavement valuation. 

The condition and value of the pavement steadily 

declines as severe cracking, drainage failure and 

base failures increase through years of underinvestment. The resulting condition and value of the 

pavement illustrates more clearly the long-term 

effects of the annual underinvestment. Pavement 

values decline at an accelerating rate resulting in 

pavement values falling by nearly half by 2019. 

The impacts of long-term underinvestment in 

pavements could be expressed with other metrics 

commonly used. An agency could express the 

impacts in terms of miles of pavements not meeting 

targets, miles of “poor” pavement or a decline in a 

composite index such as the Pavement Sustainability Index (PSI) or International Roughness Index 

(IRI.) The use of the ASI and asset valuation allow 

the impacts to be expressed in monetary terms, 

both in what the cost to cure will be and what the 

lost value to society will be. 

The asset valuation illustrates that while society 

is “saving” money in the short term by reducing 

pavement expenditures, it is costing money in the 

longer term by reducing the value of society’s 

shared asset and increasing future costs to restore 

the asset to today’s condition. Under-investing 

today means that current users are consuming 

assets needed by future users. The ASI represents 

the degree of underfunding and the asset valuation 

illustrates the diminished equity available to future 

highway users.

Public agencies in recent years have been confronted with their long-term unfunded liabilities created 

by their pension funds. As health care costs rise, as 

people live longer and as taxpayers question higher 

tax rates, the long-term costs of pension obligations 

are creating long-term uncertainty for governments. Bond holders and others concerned with 

future solvency are pressing governments to 

account for their pension obligations that are 

manageable in the short-term but challenging in the 

Excellent

Good

Fair

Poor

Very Poor

Failed

100

20

0 5 10 15 20

PCI

40% Drop in Quality

40% Drop in Quality

75% of Life

12% of Life

...eliminates or delays

spending $6 or $10

on rehabilitation or

reconstruction here

Spending $1 on

preservation here...

Figure 2. The pavement deterioration curve illustrates the rapid decline in condition once a pavement reaches a poor 

condition state. Consistent under-investment in asset renewal results in this rapid deterioration occurring across a 

network of assets creating a substantial loss of overall network condition and asset value.
6 | Proposed Metrics for the Long-Term Financial Sustainability of Highway Networks

long term. The sustainability metrics put long-term 

infrastructure obligations on the agenda along with 

long-term pension or entitlement program needs. 

The index and its ratios complement modern 

performance management systems such as the 

Triple Bottom Line or Balanced Scorecard types of 

measurement systems. Both are holistic measurement systems intended to reflect a broad socially 

conscious management of resources. They can 

consider an operation’s effect upon not only the 

organization’s objectives but also wider social 

considerations such as impacts to the environment 

or to society. 

With the long-term focus of the sustainability index, 

the effect upon future system users and future 

system payers can be reflected in current-year 

performance scorecards. If long-term infrastructure 

needs are not sustainable, they can be quantified in 

current financial reports.

Private Sector Precedents

Although performance measurement is becoming 

common among State transportation departments, 

it has been a long-standing practice in the private 

sector. Decades of experience from the corporate 

world indicate that measures, such as the ASI, play 

an important performance-measurement role, 

particularly for capital-intensive organizations. A 

basic business-finance textbook would include 

numerous capital-investment metrics that are 

commonly used to evaluate the health, or sustainability, of a publicly traded company.

These would include metrics such as the Repair and 

Maintenance Ratio. This metric is directly analogous 

to the ASI in that it is derived by calculating: 

In this calculation, the expenditures for repairs and 

maintenance are tracked over time and compared 

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

0

0.2

0.4

0.6

0.8

1

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2019

Pavement Asset Valuation and Pavement Sustainability Ratio

▲ ▲ ▲ ▲

▲

▲ ▲ ▲ ▲ ▲ ▲

Asset Valuation $3,500 $3,430 $3,328 $3,163 $3,069 $2,886 $2,605 $2,278 $2,056 $1,855 $1,762

Pavement

Sustainability Ratio

1 0.98 0.96 0.94 0.92 0.91 0.89 0.87 0.85 0.84 0.83

_ Asset Valuation _

▲ Pavement Sustainability Ratio

Figure 3. Years of only minor underinvestment can cumulatively lead to substantial loss of asset value across a network.
Asset Sustainability Index: Quick Guide | 7

to the value of the company’s fixed assets, such as 

buildings, assembly lines or key assets such as 

railways for a railroad. Failure to invest adequately 

in this type of critical equipment will lead to future 

financial liability as unaddressed repairs accumulate 

creating higher future costs. In addition, the “book 

value” of the company declines because its assets 

are degraded and financially less valuable. Also, the 

reliability of the company decreases with aging 

infrastructure. In short, the Repair and Maintenance 

Ratio would be a common metric for a private-sector business.

Similarly, a Maintenance and Repair Index would roll 

up or combine several categories of asset types. 

Repair and Maintenance Ratios could be calculated 

for various categories such as buildings, rolling 

stock, manufacturing equipment, foundries or other 

asset types and rolled into an index. This index 

could include calculations such as:

Repairs and

Maintenance

Fixed Assets

Repair and

Maintenance Ratio =

Tracked over time the Maintenance and Repair 

Index could provide insight in at least three areas. 

First, if maintenance costs continue to rise, it can 

indicate that aging equipment is consuming disproportionate resources. Second, a lack of adequate 

investment could indicate future performance 

problems. Also, the index could indicate that certain 

assets within the company are not receiving adequate maintenance.

Labor, Equipment

to Maintain Assets

Total Labor and

Equipment Costs

Maintenance and 

Repair Index =

Several types of Fixed Asset Ratios are commonly 

used in private sector finance with each ratio 

providing different types of insight. When the value 

of fixed assets is divided by debt, the ratio provides 

insight into whether the company has incurred 

excessive debt to sustain its fixed assets.

Fixed Assets

Short or

Long-Term Debt

Fixed Assets

to Debt Ratio =

Another calculation indicates whether the company’s fixed assets are increasing or decreasing 

compared to the company’s net equity.

Fixed Assets

Net Equity = Fixed Asset Ratio

A change over time in this ratio could indicate 

whether the important physical assets of a company are increasing or decreasing. By itself, this 

change may not be of concern unless it indicates 

that the company has too much capital tied up in 

liquid physical assets.

Analogous Railroad Capital 

Performance Measures

The Class I railroads provide an analogous reporting example to transportation departments. Like 

transportation departments, railroads are capital 

intensive and their primary product is to provide 

mobility. While transportation departments are 

under scrutiny from the public and legislators, the 

railroads are under scrutiny from investors, who 

are provided significant disclosure by reporting 

requirements of the Securities and Exchange 

Commission (SEC). Railroads and other publicly 

traded companies must provide annual reports 

and other disclosures that allow investors to 

understand the performance of the company, and 

how it invests the company’s resources, which are 

actually owned by the millions of shareholders.

For railroads, performance data necessary to 

calculate asset-investment measures are reported. 

For instance in the 2010 annual report of the 

Norfolk Southern Railroad, the degree and 

adequacy of its capital investment are among 

the key metrics presented.

The capital expenditures on track, railcars, locomotives and other long-term assets grew 25 percent 

over the preceding five years. They were predicted 

to rise to $2.2 billion for 2011, which would be an 

87 percent increase compared to 2006. The amount 

spent on capital ranges between 80 percent and 

120 percent of the company’s net income or profit. 

The insight such metrics provide to investors is to 

inform them whether the company is sustaining its 

critical assets for long-term viability. On paper, the 

company could nearly double its net income or 

profits in the short-term by cutting its capital 
8 | Proposed Metrics for the Long-Term Financial Sustainability of Highway Networks

investments. However, such a short-term move 

would not translate into higher stock prices 

because investors could see that the long-term 

viability of the company was sacrificed. The condition of track, locomotives, switches, dispatching 

computers and radios are key components of rail’s 

reliability. Without high reliability ratios, the railroad 

would lose market share to trucking or other competitors. In short, the adequacy of capital investment to ensure their long-term viability is a key 

railroad performance metric valued by investors.

Norfolk Southern breaks down its capital investments to provide important granularity for stock 

analysts and investors. These expenditures include 

both capital investments and maintenance activities 

such as maintaining the rail surfaces, replacing ties 

and investing in rolling stock. An average of 5,000 

miles of track is resurfaced annually. Resurfacing 

consists of maintaining and adjusting rails and ties 

to be level and parallel which prevents derailments 

and other problems. A steady and predictable 

amount of preservation and maintenance of track 

surface and ties is regularly set aside from the 

company’s finances. More than 5,000 miles of 

resurfacing annually means that every mainline mile 

would be resurfaced approximately every 5.1 years. 

In 2009, famous investor Warren Buffet of the 

Berkshire Hathaway, Inc. made the largest single 

investment ever for the company when he purchased the outstanding shares of Burlington Northern Santa Fe(BNSF) Railway for $34 billion. In his 

annual letter to shareholders in 2010, Buffet said he 

was attracted to BNSF as a long-term investment 

because of likely long-term economic growth that 

will increase freight volume, of which BNSF moves 

approximately 11 percent of all intercity ton miles. 

He also noted that the BNSF will remain profitable 

and attractive if Berkshire Hathaway continues the 

substantial infrastructure investment in BNSF that 

has made the company successful in recent 

decades. He referred to the “social compact” 

Berkshire Hathaway has with society to continue 

sustaining the infrastructure 

of this important railroad.

In its final company annual report before being 

bought by Berkshire Hathaway, BNSF reported 

that its total capital expenditures had risen 

significantly over the past 5 years, resulting in 

unprecedented system efficiencies. It reported 

the following metrics: 

Table 1. BNSF capital investment figures

BNSF Railway Capital Investment Trends

2008 2007 2006

Rail $429 $376 $304

Ties $358 $316 $311

Surfacing $230 $235 $214

Signals, Bridges, ROW $544 $432 $397

Total Engineering $1,561 $1,359 $1,226

Mechanical $168 $141 $152

Other $133 $105 $121

Total Replacement Capital $1,882 $1,605 $1,499

Annual Capital Increase 16% 7.1%

Balanced Scorecard Analogies and 

Triple Bottom Line

The Balanced Scorecard was proposed by two 

authors (Norton and Kaplan) as a way to improve 

managers’ decision-making.[ii] Their research 

indicated that focusing narrowly on only a few 

performance measures could skew organizational 

performance. The Balanced Scorecard addresses 

the need to balance competing objectives whenever decisions are made, or when performance 

metrics are reviewed. For instance, a company 

wants to be profitable but not to the point that 

it overcharges customers and cuts quality, which 

over the long-term would endanger the firm’s 

success. The Balanced Scorecard provides 

“ALL OF THIS ADDS UP TO A HUGE

responsibility,” he wrote in his shareholders 

letter. “We are a major and essential part of 

the American economy’s circulatory system, 

obliged to constantly maintain and improve 

our 23,000 miles of track along with its 

ancillary bridges, tunnels, engines and cars. 

In carrying out this job, we must anticipate 

society’s needs, not merely react to them. 

Fulfilling our societal obligation, we will 

regularly spend far more than our depreciation, with this excess amounting to $2 billion 

in 2011. I’m confident we will earn appropriate returns on our huge incremental investments. Wise regulation and wise investment 

are two sides of the same coin.”
Asset Sustainability Index: Quick Guide | 9

managers with sets of performance metrics 

that allow them to balance competing interests 

and to “chose a happy medium” between 

competing objectives.

Measures such as the ASI and its related ratios 

would have private sector analogies within a Balanced Scorecard approach. Four major areas of 

performance are reviewed and considered within a 

balance Scorecard including financial performance, 

internal process performance, learning and growth, 

and customer satisfaction. An organization would 

need to balance performance within all four areas, 

and not just one or two of them to be successful 

for the long term. For instance, with the addition 

of sustainability metrics, agencies could consider 

whether they are balancing both short-term and 

long-term asset condition targets. Or, they could 

balance short-term pavement smoothness targets 

with long-term pavement performance targets. 

A balanced scorecard approach to performance 

measurement focuses on optimizing the tradeoffs 

between competing performance areas and 

between short-term and long-term objectives.

The financial metrics often used in a Balanced 

Scorecard relate to short-term issues such as 

company profitability but also to long-term issues 

such as customer satisfaction and the company’s 

“learning” through research and development or 

investing in employee skills that many not produce 

short-term benefits. An ASI directly relates to such 

long-term metrics. Metrics that only evaluate 

current and past pavement or bridge conditions are 

inherently lagging metrics. An ASI is a leading index 

and provides insight into the likely future outcomes 

of current decisions. 

The Balanced Scorecard has some similarities to 

the triple bottom line approach. It originated in the 

1990s and addressed measuring organizational 

performance based on “profits, people and planet.” 

For a private sector organization, it would mean 

measuring the company’s profitability but also its 

impact on its community and employees, as well 

as its impact environmentally. Some public-sector 

organizations have adopted the triple bottom line 

by measuring their impact environmentally, upon 

communities and by measuring their long-term 

fiscal sustainability. An organization that is not 

financially sustainable creates future liability for 

its stakeholders. Measures such as the ASI lend 

insight into the long-term sustainability of critical 

public assets.

International Examples of Sustainability 

Metrics

Australian and British sustainability guidance 

contend that sustainability only is achieved if the 

infrastructure is managed today to ensure that 

extraordinary expenditures are not necessary in the 

future to provide users the economic benefits of a 

sound transportation system. In effect, investing 

adequately today to protect the needs of future 

users is the essence of infrastructure sustainability.

The three Australian states of Queensland, Victoria 

and New South Wales have been known for more 

than a decade for their Transportation Asset Management (TAM) practices. Those practices gradually expanded to include elements of long-term 

financial sustainability.

The Queensland (Australia) Local Government Act 

of 2009 advances earlier state-required infrastructure reporting statutes to include reports of 

whether local governments are investing sufficient 

amounts in infrastructure to ensure their financial 

sustainability for future generations. As the Act 

says[iii] to ensure that local governments are financially sustainable, each must implement a system 

to ensure that financial risks are prudently managed and financial policies enacted to:

◗ensure a reasonable degree of equity, stability 

and predictability;

◗ensure that current services, facilities and 

activities are financed by current users;

◗consider the effect policies have on future 

users;

◗publish on the government’s website full, 

accurate and timely information about the 

government’s finances.

It summarizes by saying, “Local government is 

financially sustainable if the local government 

is able to maintain its financial capital and 

infrastructure capital over the long term.”

The State statute requires that the local governments develop a 10-year financial forecast that 

complements a 10-year asset management plan. 

The agencies’ budgets and financial plans must 

include reports of capital expenditures and 

whether they balance with asset depreciation 

charges. The decline or change in asset conditions 

is to be reported on balance sheets and compared 
10 | Proposed Metrics for the Long-Term Financial Sustainability of Highway Networks

against the levels of infrastructure investment. 

Such reporting provides transparency as to the 

long-term sustainability of each government’s 

assets, including highway assets. Also, an annual 

report as to the implementation of the plans 

is required.[iv]

The Queensland Department of Local Government and Planning’s 

implementation guidelines stress that 

the State now considers long-term 

sustainability of assets to be an important component of determining the 

health of governments. 

“The existence of asset management 

plans for key infrastructure assets is a 

necessary predecessor to local governments having a comprehensive longterm financial plan that supports planning and decision-making processes,” it 

states. “This long-term planning for the 

infrastructure assets allows councils to 

understand the future financial commitments, and to develop strategies that 

address key strategic issues such as the 

local government’s approach to service 

provision and service levels, its debt 

borrowing policy and revenue policy—

including its rating methodology. A local 

government needs to clearly understand 

what its future commitments are in 

order to prepare budgets properly.”

The lack of complete, long-term asset management 

plans was the most common problem faced by 

local governments in developing sustainability 

metrics.[v] The Queensland Department of Local 

Government and Planning said agencies were more 

accustomed to measuring current infrastructure 

conditions, but those provide only point-in-time 

information. There is considerable difference in 

measuring current conditions and in ensuring their 

future performance. The department noted that the 

emphasis is to be on maintaining service capacity of 

assets into the future by developing a sound longterm asset management plan tied credibly to a 

long-term financial plan. 

The Queensland framework allows for analysis of a 

number of indicators of a community’s health. The 

analytics are similar to those that a stock analyst 

would review for a publicly traded company to 

assess the company’s worthiness as an investment 

candidate. The Queensland analysis looks at issues 

such as the community’s financial reserves, its 

working capital and its debt-coverage ratios. 

Similar metrics are applied to the infrastructure, 

among them:

◗An Asset Sustainability Ratio;

◗An Asset Consumption Ratio;

◗Asset Renewal Funding Ratio.

The Australian definition of a sustainability ratio 

differs from that used in this report. The Australian 

version relies on asset valuation concepts less 

commonly used in the U.S. The Australian 

sustainability ratio is calculated as:

Capital Expenses on Renewal of Assets

Depreciation of Assets

In other words, the agencies calculate the amount 

of depreciation in their assets over a given period 

and divide that into the amount budgeted for 

renewal of assets. 

The Asset Consumption Ratio is the value of 

infrastructure assets divided by gross current 

replacement cost of those assets: 

Current Value of Assets

Replacement Cost of Assets

It is expressed as a percentage. This ratio shows 

the current value of a government’s depreciable 

assets relative to their “as new value” in current 

prices. This ratio seeks to highlight the aged 

condition of the stock of physical assets.

The Asset Renewal Funding Ratio is the net present 

value of the planned capital expenditures on renewals over 10 years divided by the Net Present Value 

(NPV) of the required capital expenditures on 

renewals over the same period. 

NPV of Capital Invested Over 10 Years

Needed Investment to Sustain Assets

It is expressed as a percent and it represents the 

extent to which the required capital expenditures 
Asset Sustainability Index: Quick Guide | 11

on renewals per the asset management plans have 

been incorporated into the 10-year financial model 

of the local government. 

These and other related financial metrics required 

of Queensland local governments contribute to 

annual reports similar to the annual reports of 

publicly traded corporations. They allow stakeholders to understand the long-term viability of the 

organization, its assets, its expected income and 

its long-term financial obligations. Collectively, this 

information allows a forecast of the financial and 

asset-condition projections for the organization. 

The Role of Asset Valuation as a Measure of

Sustainability

Integral to the Australian and British sustainability 

reporting is a reliance on forecasts of asset valuation. These are similar to the GASB 34 standards 

which requires the value of infrastructure assets to 

be depreciated by their age and condition, then 

compared against levels of investment. The intent is 

to determine if governments are accruing unreported long-term liabilities in the form of asset investment needs that do not appear on short-term 

balance sheets. 

Unlike GASB 34 that requires reporting of past 

expenditures and depreciation, the “Australian and 

British” guidance emphasize forecasts of future 

depreciation and spending. These international 

examples provide leading indicators necessary for 

assessment of infrastructure sustainability. As seen 

in Figure 4, the intent is to illustrate the trajectory 

of public asset valuates. 

The Austroads Guide to Asset Management

includes a Chapter 8 on Asset Valuation and Audit. 

Austroads is the association of state and territorial 

transportation agencies in Australia and the 

national transportation agency in New Zealand. 

It is similar to the American Association of State 

Highway and Transportation Officials (AASHTO) 

in the US. It helps set national standards, facilitates 

peer interaction and conducts research on emerging issues.

Two of the Austroads guide concepts are the 

capturing of “useful life” and “economic life” of 

assets. Presently, data bases such as the U.S. 

National Bridge Inventory report on the number, 

size and condition of bridges. From the condition 

of the bridges, some inference into the “useful life” 

or the “economic life” of the bridges can be made. 

Bridges with a structural deficiency rating of a 3 or 

a 4 clearly would have shorter useful or economic 

lives than a bridge rated a 9. The Austroads guidelines and other Australian asset valuation efforts 

seek to quantify and summarize the useful and 

economic life in a clear fashion. In short, if a new 

bridge at a given location would be valued at 

$1 million but the existing bridge at that location 

is deteriorated and only valued at $100,000, then 

clearly the existing bridge has less value to the 

public than a new bridge. If proper repair and 

maintenance that costs $200,000 can make the 

bridge function like a newer bridge, then the investment clearly increases the value of the public’s 

assets. Using proper maintenance and repair to 

leave future generations with a higher-valued set 

of assets is among the key objectives of the asset 

valuation process.

As with the Queensland guidelines, the Austroads 

guidelines spend considerable effort describing 

depreciation of assets. Once the full depreciation 

of an asset is documented, the value of the agency’s assets can be compared to its liabilities and 

the overall financial health of the organization can 

be determined. Although couched in financial 

terms, the guidelines are intended to provide 

insight into important public policy and public 

budgeting concerns. These financial ratios are 

actually performance measures that can be used 

to judge the health of the infrastructure, the 

performance of the agency and the performance 

of the overall government’s maintenance of its 

infrastructure. The “end game” of the Austroads 

financial guidelines is to allow the measurement of 

individual assets, the measurement of the agencies 

that manage the assets and the measurement of 

the overall government’s long-term approach to 

managing its entire network of assets. 

British asset valuation guidance notes that the mere 

assigning of monetary value to highway assets 

casts them as an important public asset worthy of 

preservation. Monitoring how the value of highway 

infrastructure is rising or falling indicates if costs 

are being unduly passed on to future generations. 

It also provides compelling arguments for sound 

asset management and sufficient investment.

As in Queensland and as with the GASB 34 requirements, the British valuation guidance for local 

governments emphasizes that asset valuation is 

about accountability and transparency in support of 

sound infrastructure policy. It says in part:
12 | Proposed Metrics for the Long-Term Financial Sustainability of Highway Networks

$1,300

$1,400

$1,500

$1,600

$1,700

$1,800

$1,900

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Asset Value of Bundaberg Australia

$Thousands

= Asset Value

Figure 4. The Australian city of Bundaberg provides taxpayers this forecast of the value of its physical assets. These 

forecasts are to be refined by separating out new assets, such as new buildings, to focus on whether the value of 

existing assets is being preserved.

“A fundamental component of long term planning 

is to ensure the asset base is preserved and 

replenished in a sustainable way without imposing 

an undue financial burden on future generations. 

The preservation of the asset base can be measured and monitored over time using a robust 

asset valuation procedure that provides a true 

and fair value of the assets.”[vi]

Producing U.S. Sustainability Metrics

State transportation agencies will need to develop 

asset management plans for the NHS as a result of 

MAP-21 legislation. 

The new transportation authorization act does not 

require sustainability metrics but does require an 

asset management plan, a financial plan and asset 

condition targets. Sustainability metrics could be 

useful components of the asset management and 

financial plans.

A review of data produced by state transportation 

departments with mature TAM processes shows 

that it is possible to produce sustainability metrics 

with existing U.S. asset management practices. The 

agencies examined included those in Utah, Minnesota, Ohio and North Carolina. These agencies 

have robust asset inventories with good condition 

assessments, they have the ability to forecast future 

asset conditions, they have sound unit cost data 

and they have reasonable forecasts of asset program budgets. Taken together, these components 

allow estimates of future asset conditions, the cost 

to achieve asset condition targets and the financial 

gaps, if any, in budgets necessary to meet the 

targets. Although none of the agencies produce 

sustainability metrics at this time, all displayed the 

potential ability to do so. In some cases below, 

actual sustainability ratios and indices are shown. 

In other examples, the agencies had precursor data 

indicating that with several subsequent steps of 

analysis they could produce sustainability metrics. 

The results shown below, however, illustrate that it 

is possible in the U.S. to produce sustainability 

metrics using the asset management processes 

typical in many agencies.
Asset Sustainability Index: Quick Guide | 13

Pavement Sustainability Ratio Analyses

Pavement Sustainability Ratios are examined using 

data from the departments of transportation in 

Ohio and Utah. 

Sustainability ratios were recreated from Ohio 

Department (ODOT) data as seen in Table 2. The 

department produces annual and multi-year reports 

that illustrate past, current and projected future 

pavement conditions. The long timeframe of the 

ODOT reporting is intended to complement its 

long-standing policy of placing infrastructure 

preservation as the central focus of its long-term 

budgeting.

Inherent in the ODOT infrastructure management 

process is a long planning horizon of 20 years. It 

tracks a lagging trend line of performance back to 

1991 and forecasts results 10 years into the future. 

The past years provide a trend line of investment 

levels and resulting infrastructure conditions that 

yield a solid analytical baseline for future forecasts. 

By extrapolating from a long trend line, the agency 

builds confidence in its pavement deterioration 

curves and other inputs for its forecasts of future 

performance. By looking at least a decade into the 

future for many of its major system elements such 

as bridges and pavements, it keeps the agency 

focused upon substantive planning to ensure 

steady, long-term conditions. 

ODOT reports expenditure levels in a fashion 

similar to that required by GASB, by some of the 

international financial reporting processes, and 

similar to what is envisioned for the ASI. As seen in 

Table 2 from its 2006-2007 business plan, it 

forecasts pavement budgets and conditions for 10 

years. It funded pavement adequately from 2005 

through 2010 

to meet its various pavement-condition targets. 

Beginning in 2011, it forecasts a shortfall that 

collectively total $837 million between 2011 and 

2015. At that time, pavement prices were sharply 

rising and forecasted inflation was eroding purchasing power. The department’s sustainability 

ratio for pavements fell from 1.0, or adequate, to 

as low as .72, or a 28 percent shortfall in needed 

pavement expenditures. 

ODOT updated its Business Plan for the 2008-2009 

and 2010-2011 biennia to address the earlier forecasts of impending pavement shortfalls. ODOT 

increased pavement expenditures substantially, by 

an average of $109 million annually from 2010-2017, 

with a commensurate closing of the Sustainability 

Gap and the achievement of its pavement targets. 

Spending rose by between $139 million in 2011 to 

as much as $296 million in 2017 to fill the “sustainability gap” and to achieve the target of a Pavement Sustainability Ratio of 1.0. The calculation of 

the PSR and the computation of the delta to close 

the gap illustrate clearly the degree of additional 

investment necessary to sustain the pavement 

assets at the targeted condition through 2017. In 

2006, ODOT forecasted the gap that was likely to 

occur if inflation continued as predicted. In 2010, 

when the effects of inflation had not diminished, 

ODOT increased pavement spending. If ODOT had 

been unable to re-direct the resources into the 

pavement program, the sustainability ratio would 

have reported to policy makers the future consequences of the under-investment and the relative 

size of the under-investment.

ODOT balanced several ever-changing variables to 

develop the updated 2008-2017 budget estimate 

and pavement forecast. It noted that inflation 

continued to be a concern but that it had subsided 

substantially, which reduced the impacts of material 

costs that were experienced in the earlier Business 

Plan. However, rising costs on top of the already 

significant price increases of the past years remain 

a substantial influence on the pavement program. 

ODOT further reduced its Major New Construction 

Program, or the capacity-adding projects, in order 

to address the pavement gap.

Table 2. This table shows ODOT pavement budgets for 2005-2015 with budget shortfalls and sustainability ratios calculated.

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Total

Budget $457 $499 $510 $526 $556 $570 $497 $502 $507 $511 $516 $4,185

Shortfall $0 $0 $0 $0 $0 $0 -$139 -$152 -$166 -$182 -$198 -$837

Ratio 1.0 1.0 1.0 1.0 1.0 1.0 .78 .77 .75 .74 .72
14 | Proposed Metrics for the Long-Term Financial Sustainability of Highway Networks

Utah Pavement Sustainability Ratio

The Utah Department of Transportation (UDOT) is 

another agency with a mature asset management 

program that can generate pavement sustainability 

ratios out to the year 2030. It measures pavement 

conditions in a composite index it calls the Overall 

Condition Index, or OCI. It is a composite index of 

various distresses. The Department also manages 

pavements based upon a four-tiered hierarchical 

network of roadways of:

◗ Interstate Highways

◗Level 1 NHS > 2,000 AADT 

◗Level 1 Non NHS > 2,000 AADT

◗Level 2 < 2,000 AADT (mostly non-NHS).

With most passenger and freight traffic on the 

Interstates and Level 1 highways, the department 

prioritizes them for treatment. It has produced 

extensive analyses of optimum investment levels 

to sustain all four networks. However, it has not 

received sufficient budgets to sustain all four 

network levels to its target conditions so it takes 

a risk-based approach to investment. It invests 

disproportionately into the Interstate, Level 1 and 

Level 2 routes while accepting lower investments 

and lower conditions on the Level 2 routes of less 

than 2,000 vehicles a day. It reports upon the 

results to the legislators and public so that the 

consequences of the investment levels are understood. Its forecasts indicate that the miles of poor 

pavements on the Interstates are zero in 2012 rising 

to 27 in 2020 and 100 miles by 2030. For the NHS, 

the number of poor-condition miles rise from only 

18 in 2012 to 39 in 2020 and 100 in 2030. By investing its limited pavement budgets into these higher 

functional classes, it forecasts indicate that it can 

sustain their conditions through 2030.

However, the results of the investment tradeoffs 

are significant for the lesser-volume routes. For the 

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1.0

$0

$25 

$50

$75

$100

$125

$150

$175

$200

$225

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Ohio Pavement Sustainability Index and Sustainability Gap

_ Pavement Sustainability Ratio _ Sustainability Gap

Pavement Sustainability

Ratio

1.0 1.0 1.0 1.0 1.0 1.0 .78 .77 .75 .74 .72

Sustainability Gap $0 $0 $0 $0 $0 $0 $139 $152 $169 $182 $198

Figure 5. The ODOT pavement sustainability ratio was 1.0 from 2005-2010, falling after that to a low of .72, 

for a $198 million annual investment shortfall. 
Asset Sustainability Index: Quick Guide | 15

Level 2 highways, the number of poor-condition 

miles rise from 155 in 2012, to 1063 by 2020 and 

2527 by 2030. 

From this data, UDOT can produce a pavement 

sustainability ratio as seen in Figure 6. It illustrates 

with the tan bars the amount of needed investment to meet target for all the networks. The 

green bars represent the amount of available 

budget, with the red showing the investment gap. 

The black line represents a sustainability ratio of 

1.0 that would be achieved if the optimum investment were available. The gold line represents the 

Pavement Sustainability Ratio that results from 

the available pavement budget. 

The pavement sustainability ratio rises from a 

low of near 0.5 in 2012 to nearly 0.85 from 2013 to 

2015, falling to nearly 0.8 for the remainder of the 

forecast period.

The Utah example illustrates the discussion on page 

5 of how the cumulative effect of steady underinvestment creates disproportionate impacts in later 

years. The ratio and its analysis illustrate an under 

investment of between 15 and 20 percent annually 

after 2013. However, the number of poor-condition 

miles increase by 1600 percent over approximately 

20 years. The number of deficient lanes miles and 

the cumulative “cost to cure” begin growing at an 

increasing rate. Underinvestment today creates 

liabilities for future highway users. With the UDOT 

data, legislators and the public can understand the 

annual degree of under-investment, the cost to 

close the investment gap and the long-term 

consequences of the investment decisions. 

The UDOT analysis also illustrates a key point of 

the Australian sustainability guidance. The intent of 

the sustainability ratios are to improve long-term 

decision making. With the analysis, Utah legislators 

$0

$50

$100

$150

$200

$250

0

0.2

0.4

0.6

1

 0.8

1.2

2012 2013 2014 2015 2020 2025 2030

Utah Pavement Sustainability Ratio

_ Budget Deficit for Optimal OCI _ Budgeted Minor + Preservation

_ Budget Required for Optimal OCI _ Pavement Sustainability Ratio

_ Pavement Sustainability Goal 

Millions of Dollars

Asset Sustainability Index

Figure 6. The UDOT pavement sustainability ratio, in gold, varies between 0.5 and 0.85. The red investment gap 

illustrates the annual and cumulative shortfall in needed pavement investment. 
16 | Proposed Metrics for the Long-Term Financial Sustainability of Highway Networks

can understand more than a decade in advance 

what the consequences will be of current investment decisions. Although budget levels today may 

not be adequate to meet 2030 needs, the sustainability ratios provide years of advance notice for 

evaluating investment decisions, and understanding 

their consequences. 

Bridge Sustainability Ratios

The sustainability ratios illustrated so far are 

cumulative, “rolled up” numbers that depict 

aggregate, long-term investment issues. This 

section will illustrate not only how bridge sustainability ratios can be produced but also how one 

can “drill down” into components of the ratio to 

understand the adequacy of investment into 

particular asset classes, asset components or 

even geographic regions.

Ohio Bridge Analyses

The ODOT manages more than 14,000 bridges out 

of a statewide inventory of approximately 28,000 

bridges over 20 feet in length. For planning purposes, it evaluates bridges by four primary categories, 

General Appraisal (GA), Floor Condition (FC), 

Wearing Surface (WS), and Paint. The General 

Appraisal, or GA, comprises substructure and 

superstructure items. The Deck comprises what 

many departments call the floor, or the main horizontal elements. The Wearing Surface is the riding 

surface on the deck. Paint, of course, refers to the 

paint condition. 

The ODOT has used a performance-based approach 

to managing its bridge inventory since the mid1990s. Statewide, overall bridge budgets were set 

to achieve steady progress toward reaching statewide bridge-condition targets. Each of 12 districts 

were given bridge budgets and condition targets to 

meet in the four condition categories. Annual 

bridge inspections results were totaled and compared against condition targets to measure progress. Amounts budgeted statewide and by each 

district were reevaluated annually to ensure 

achievement of targets without overspending. 

Table 3 illustrates with a “heat map” the ability to 

generate sustainability ratios by bridge category 

by year from 1997 through 2016. In the mid-1990s 

when the department was adopting a performancebased bridge management approach, it could 

evaluate not only overall bridge expenditure needs 

but could drill into the categories of deficiencies to 

target its project-development and bridge maintenance activities. As seen, the greatest investment 

need in 1997 was in the General Appraisal, or suband-superstructure category. At that time, only 

about 80 percent of the needed investment was 

occurring in that category to achieve long-term 

GA condition targets. Districts were encouraged to 

focus upon their deficiencies and as a result steady 

progress can be seen in Table 3 across all categories but particularly in the General Appraisal area. 

Deficiencies fell steadily while expenditures graduTable 3. A heat map illustration of sustainability ratios by bridge category in Ohio from 1997-2016. (in $millions)

ODOT Bridge Condition and Expenditures

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Bridge Budget $175.00 $174.47 $174.40 $10.00 $185.00 $190.00 $196.00 $201.88 $141.00 $141.00

GA Sustainability Ratio 0.80 0.85 0.86 0.86 0.88 0.89 0.9 0.9 0.91 0.92

FC Sustainability Ratio 0.99 0.98 0.97 0.98 0.98 0.98 0.99 0.99 1.00 1.00

WS Sustainability Ratio 1.00 1.00 1.00 0.99 0.99 0.99 1.00 0.99 1.00 1.00

Paint Sustainability Ratio 0.95 0.94 0.96 0.96 0.99 1.01 1.02 1.02 1.02 1.03

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Bridge Budget $170.41 $185.00 $193.00 $204.89 $211.00 $224.00 $235.00 $247.00 $259.00 $272.00

GA Sustainability Ratio 0.93 0.94 0.95 0.96 0.97 0.98 0.99 1 1.01 1.02

FC Sustainability Ratio 1.00 1.00 1.01 1.01 1.01 1.00 1.00 0.99 0.99 0.99

WS Sustainability Ratio 1.00 1.01 1.01 1.01 1.01 1.01 1.01 1.01 1.01 1.01

Paint Sustainability Ratio 1.04 1.04 1.04 1.04 1.04 1.04 1.04 1.04 1.04 1.04
Asset Sustainability Index: Quick Guide | 17

ally increased and the department achieved its 

condition targets across all four areas.

Table 4 illustrates the analysis with greater granularity, taken down to the district level. It illustrates 

the condition of floors or decks across all 12 districts 

from 1997 to 2010 with a sustainability ratio calculated for each district’s floor inventory. As can be 

seen, Districts 4 and 12 experienced the lowest 

sustainability ratios and also lowest conditions 

statewide. The “Statewide” category shows that the 

department met its statewide targets of 90 percent 

but conditions were substantially lower in two 

districts. Figure 7 illustrates how the statewide 

bridge budget was calibrated between districts to 

achieve steadily improving conditions in each 

district. Districts that had achieved targets were put 

into a preventive maintenance mode and encouraged to sustain conditions with sound preservation 

activities and projects. 

The districts with already poor decks were treating 

them with a “worst-first” approach until they 

achieved target. Then funds were re-shifted to 

districts with greater needs, resulting in the undulating shifts in district budgets caused by periodic 

trade-off analyses. 

North Carolina DOT Analysis 

The North Carolina DOT (NCDOT) applies its bridge 

management system’s forecasting capability to 

produce long-term scenarios of bridge needs that 

allow it to generate analyses very similar to a 

Bridge Sustainability Ratio. The department reported in 2010 that if then-current funding levels remain 

the same, bridge condition improvements of the 

past decade are likely to reverse as shown in 

Figure 8 (see next page). Additional long-term 

investments of up to 45 percent higher than past 

investment levels were projected to be needed to 

sustain current bridge network conditions. The 

NCDOT sustainability ratio-like analyses depict both 

the magnitude and the cost of long-term investments to sustain bridge conditions. 

NCDOT’s analyses allow for substantial granularity 

into which structures and which types of activities 

are needed to sustain its bridge conditions. Table 5 

(see page 19) illustrates just a few examples of the 

specific types of bridge investment categories, 

activities and preservation actions needed to 

achieve the desired bridge-condition targets from 

2011 through 2018. This would allow the department 

to calculate separate investment ratios for each 

category by year. Such analysis supports targeted 

decision-making and tradeoffs to spread limited 

funds across competing categories of need. Using 

its management system forecasting capability, the 

department estimated in 2010 that between 2012 

and 2021, bridge investments will need to total 

$3.918 billion, compared to the $2.169 billion spent 

in the preceding 10 years. These numbers allow the 

depiction of Bridge Sustainability Ratios to be 

illustrated based upon different spending scenarios. 

If the expenditures are flat, the Bridge Sustainability 

Ratio for the next decade would be only .55. 

Table 4. This heat map illustrates floor conditions and sustainability ratios by each of 12 ODOT districts.

Ohio DOT Floor Condition “Heat Map”

DISTRICT 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

1 98.5% 98.6% 99.0% 98.5% 98.6% 99.2% 99.4% 99.4% 99.8% 99.8% 99.8% 99.8% 99.1% 99.8%

2 98.9% 98.6% 97.5% 97.4% 97.2% 96.4% 96.4% 96.2% 96.4% 96.9% 96.9% 96.6% 96.8% 95.6%

3 96.6% 96.5% 95.7% 96.0% 96.1% 96.1% 96.2% 96.4% 96.4% 96.5% 96.3% 96.7% 97.4% 97.9%

4 86.7% 82.3% 81.0% 78.2% 79.6% 80.4% 82.0% 82.5% 89.7% 90.7% 92.3% 92.5% 93.6% 94.9%

5 95.8% 96.0% 98.1% 98.6% 98.4% 98.5% 98.8% 99.0% 98.9% 99.0% 98.5% 98.4% 98.6% 97.1%

6 99.5% 99.4% 99.3% 99.2% 99.4% 99.5% 99.6% 99.7% 99.7% 99.6% 98.9% 99.0% 98.6% 98.3%

7 97.3% 97.1% 96.6% 96.9% 97.2% 97.3% 97.3% 97.1% 97.0% 97.2% 97.3% 96.7% 97.1% 97.8%

8 98.7% 98.4% 97.3% 97.6% 97.4% 97.6% 96.6% 96.7% 97.0% 96.8% 97.4% 97.8% 98.1% 98.7%

9 98.2% 98.2% 98.2% 98.1% 98.2% 98.4% 98.4% 98.4% 97.9% 97.1% 97.0% 97.8% 97.6% 97.6%

10 99.5% 98.5% 96.3% 97.6% 97.4% 98.4% 97.9% 98.4% 97.6% 97.7% 98.3% 99.1% 99.2% 99.3%

11 97.9% 97.2% 97.0% 96.4% 96.6% 96.5% 98.2% 97.7% 97.7% 97.5% 97.3% 97.2% 97.3% 96.0%

12 85.1% 84.4% 83.9% 90.7% 92.0% 91.6% 93.4% 93.9% 94.4% 94.6% 94.9% 96.0% 96.3% 96.4%

Statewide 95.1% 94.3% 93.7% 94.2% 94.5% 94.7% 95.1% 95.3% 96.3% 96.5% 96.7% 96.9% 97.2% 97.3%
18 | Proposed Metrics for the Long-Term Financial Sustainability of Highway Networks

Figure 7. This illustrates how budget allocations were shifted between ODOT districts to achieve specific, targeted 

bridge conditions. 

Figure 8. NCDOT predicted a steady decline in network-wide bridge conditions if investment levels remained static. 

0

10

20

30

40

50

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 

Change in Bridge Allocations Over Time

Annual District Bridge Budget in Millions of Dollars

_ D1 _ D2 _ D3 _ D4 _ D5 _ D6

 

_ D7 _ D8 _ D9 _ D10 _ D11 _ D12

30

35

40

45

50

55

60

65

2011 2012 2013 2014 2015 2016 2017

Percent of Bridges in Good Condition at Current Budget

% Bridges Good 61 60.5 59 58 57 56 54
Asset Sustainability Index: Quick Guide | 19

The NCDOT example illustrates how sustainability 

ratios could be used for both on-going preservation 

activities as well as for reactive repairs. The Department has an active Bridge Preservation Program 

that consists of minor, low-cost treatments performed on bridges that are in relatively good 

condition. These activities include painting structural steel, cleaning bearings, repairing and replacing expansion joints, applying materials to slow 

corrosion, waterproofing, and resurfacing decks. 

The other category is Bridge Rehabilitation, which 

includes treatments to restore bridge components 

to “like new” conditions. Rehabilitation is cost 

effective when some portions of a bridge are in 

good to fair condition but other components are in 

poor condition. The poor condition components 

can be rehabilitated without having to replace the 

entire bridge. If a bridge is deteriorated to the point 

that it is not economical to bring it to acceptable 

condition through preservation, maintenance or 

rehabilitation, it becomes a candidate for replacement. Those structures are matriculated to the 

replacement program and are funded through the 

capital programs, largely the STIP.

Summary

The granularity of the Ohio and North Carolina 

analyses illustrate how the sustainability ratios 

can be broken down to asset class, asset items or 

geographically by regions. Conversely, the subtotals can be summed to produce one statewide, 

long-term measure. This ability to “drill down” 

and “roll up” will be further elaborated in the next 

session on maintenance and in the following section 

on forecasting department wide investment needs 

using sustainability ratios.

Maintenance Sustainability Ratios

A Maintenance Sustainability Ratio can be 

computed using data from a state’s maintenance 

management system. With proper interpretation, a 

maintenance sustainability ratio can be combined 

with pavement and bridge sustainability ratios to 

produce a statewide asset sustainability index.

The definition of what constitutes “maintenance” 

has varied between the individual states examined 

in the larger report. Generally, the report considers 

maintenance items to be physical non-pavement 

or bridge appurtenances such as drainage devices, 

traffic control devices, or roadside elements such 

as shoulders or guardrail. Because agencies include 

many different physical elements and differing 

activities into their particular definition of maintenance, a maintenance sustainability ratio could be 

calculated in different ways. All the ways, however, 

would involve dividing the amount needed for 

maintenance by the amount budgeted for it.

The examples from the full report illustrate that 

caution must be used in interpreting short-term or 

localized values. Sample-based maintenance management systems may produce accurate statistical 

Table 5. NCDOT forecasts needed investment levels by bridge maintenance category.

North Carolina DOT Forecasts of Recurring Bridge Maintenance Needs Through 2018

2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18

Recurring Bridge Activities

 Culverts $2.35 $2.45 $2.55 $2.66 $2.77 $2.89 $3.01

 Clearing & Slp Prot $1.72 $1.79 $1.87 $1.95 $2.03 $2.11 $2.20

 Drawbridges $2.79 $2.91 $3.03 $3.16 $3.29 $3.43 $3.57

 Bridge Repl. $6.29 $6.55 $6.83 $7.12 $7.42 $7.73 $8.05

 Bridge Inspect. $2.37 $2.47 $2.57 $2.68 $2.79 $2.91 $3.03

 Approach Slabs/Surfacing $0.24 $0.25 $0.26 $0.27 $0.28 $0.29 $0.31

 Drift and Debris Removal $1.81 $1.89 $1.97 $2.05 $2.13 $2.22 $2.32

 Small Pipe Maint & Repl’t $6.15 $6.41 $6.68 $6.96 $7.25 $7.55 $7.87

 Walls and Tunnels $0.22 $0.23 $0.24 $0.25 $0.26 $0.27 $0.28

 Walkways $0.13 $0.14 $0.14 $0.15 $0.15 $0.16 $0.17

 Bridge Fender Systems $3.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00

Total (in $millions) $27.07 $26.08 $27.13 $28.23 $29.38 $30.57 $31.81
20 | Proposed Metrics for the Long-Term Financial Sustainability of Highway Networks

values statewide but the accuracy may diminish for 

a localized sample. Also, localized weather events 

such as floods can quickly affect maintenance 

conditions. Therefore, the ability to “drill down” into 

localized or asset-specific maintenance component 

ratios may be more limited than for the less variable 

bridge and pavement assets.

When data are examined over a longer timeframe 

and larger geographic area, the short-term or 

site-specific fluctuations in asset conditions tend to 

normalize and become more representative of 

long-term trends.

North Carolina Maintenance Analysis

The NCDOT uses its Maintenance Management 

Systems to forecast detailed estimates of the levels 

of capital and labor necessary to sustain its roadway maintenance conditions. With these estimates, 

it produces forecasts that are similar to Maintenance Sustainability Ratios and which illustrate the 

necessary level of effort to sustain maintenance 

conditions over time.

The NCDOT manages the maintenance activities on 

a large, sprawling, and growing highway network. It 

manages 79,185 miles of highways, far more than is 

handled by the average department because it 

manages the local highway network.

The NCDOT relies on a mature maintenance 

management system to help it address the thousands of maintenance condition items for which it 

is responsible. It has developed targets for 18 

major maintenance categories, and it measures 

conditions, activities and budgets for many other 

maintenance categories that do not lend themselves to targets. Its maintenance management 

process involves inspecting a statistically valid 

sample of roadways and measuring the conditions. 

From those measurements, it calculates the numbers of deficiencies and calculates a level of effort 

to bring them to targeted levels. 

“Maintenance” in the NCDOT vocabulary includes 

minor pavement and bridge repair and preservation 

activities, treatment of drainage and culverts, 

maintaining roadside items such as guardrail and 

cable barrier, mowing, litter, pavement markings, 

traffic control devices, and other such activities 

and features.

NCDOT’s annual Maintenance Condition Assessment Report (MCAP) provides the legislature and 

public an assessment of the condition of the 

highway infrastructure and an estimate of the 

funding needed to meet and sustain its maintenance targets.

Table 6 is an information-rich summary of the 

categories of maintenance items tracked, their 

conditions, and a breakdown of whether the conditions met the targets by three highway systems, 

the Interstate, Primary, and Secondary. 

As can be seen, four major maintenance categories 

are tracked: drainage, roadside, traffic, and bridge. 

Within each category, between four and six categories of items are measured. 

From each category, an estimate of needed investment can be calculated and compared to available 

budget to produce a specific sustainability ratio. 

The overall maintenance needs are compiled into 

the Maintenance Condition Assessment Report to 

produce a statewide composite estimate of needed 

investment as shown in Figure 9. The 2010 assessment estimated overall maintenance expenditures 

need to rise from approximately $1 billion in 2011-12 

to more than $1.7 billion by 2017-18 to achieve the 

statewide maintenance condition targets. With the 

need and the forecasted budget available, the 

statewide maintenance sustainability ratio could 

be calculated as shown in the gold line.

Table 6 and Figure 9 (see page 22) illustrate the 

granularity and the summation possible with North 

Carolina’s maintenance management processes. 

When combined with a sustainability ratio, they 

can depict future needs and the amount of investment necessary for sustainable maintenance 

conditions.

Although the NCDOT report does not produce an 

actual sustainability index, its narrative and its 

interpretation provide policy makers with the 

bottom line of the long-term consequences. 

North Carolina stands at a crossroads of funding 

and system condition. The Department recognizes 

that as funding has remained constant, system 

condition decreases, possibly jeopardizing the 

safety and mobility of North Carolina’s citizens. 

A comprehensive, balanced funding program 

of maintenance preservation, rehabilitation 

and replacement is necessary to operate 

and maintain the highway system at an 
Asset Sustainability Index: Quick Guide | 21

acceptable level.”

Utah Maintenance Analysis

UDOT has worked for several years to continually 

refine its maintenance management system to 

produce accurate estimates of both conditions and 

necessary level of effort to achieve maintenance 

condition targets. To work towards a common goal 

for performance of maintenance activities, statewide targets are set for each maintenance activity. 

Targets are expressed as letter grades A, B, C, D, or 

F. The targets at the statewide level are generally 

set to be A through C. These statewide targets also 

apply to the regions and stations. Each route is 

divided into segments, and stations are responsible 

for multiple segments of a route. 

The expectation is for each station to achieve, but 

not exceed, its performance target. Station personnel inspect assigned routes and record both 

the total number of features that need to be 

maintained, as well as the number of deficient 

features. The data from the inspection are entered 

into the statewide maintenance management 

system. The system then computes the level of 

maintenance and assigns a score from A through 

F. Reports generated by the system allow the 

agency personnel at different levels of the organization to review the performance achieved for 

each maintenance activity. Reports also provide 

valuable information to manage available budget 

and other resources. It also allows the stations to 

prioritize and focus on specific activities based on 

agency priorities, current conditions, available 

budget, and achievement targets.

The agency tracks nearly 20 maintenance features. 

Table 6. NCDOT reports on maintenance condition targets and results.

Roadway Conditions

Interstate Primary Secondary

2010

State

Avg. 2010

State

Avg. 2010

State

Avg.

Performance Measures Target Score Target Score Target Score

Unpaved Shoulders No dropoffs greater than 3 inches and no 

shoulders higher than 2 inches 95 91 90 89 85 91

Ditches (Lateral Ditches) No blocked, eroded or non-gunctioning ditches 95 98 90 94 85 94

Crossline Pipe (Blocked) Greater than 50% diameter 95 87 90 78 85 74

Crossline Pipe (Damaged) No damage or structural deficiency affecting 

functionality 95 93 90 95 85 91

Curb & Cutter (Blocked) No obstructure greater than 2 inches for 2 feet 95 97 90 96 85 96

Boxes (Blocked or Damaged) Grates and outlet pipe conditions 95 82 90 87 85 85

Vegetation (Brush & Tree)

Freeways, 45 feet from travelway; 5 feet behind 

guardrail. Not blocking signs. Non-freeways 15 

feet over roadway and 10 feet back of ditch 

centerline or shoulder point

90 90 85 85 80 80

Vegetation (Turf Condition) Areas free of erosion 95 84 90 83 85 86

Stormwater Devices Functioning as designed 90 94 90 94 90 94

Landscape Plant Beds Achieving score of 2 or higher on inspection 90 90 80 90 N/A N/A

Rest Areas & Welcome 

Centers Condition rating of 90 90 96 90 95 N/A N/A

Long Line Pavement Markings Present, visible 90 93 85 90 80 81

Words and Symbols Present, visible 90 73 85 85 80 77

Pavement Markers Present and reflective 90 84 85 59 N/A N/A

Ground Mounted Signs Visible and legible 90 94 85 91 85 85

Overhead Signs Visible and legible 90 93 85 80 85 100

NBIS Culverts Condition Rating > = 6 85 86 85 86 85 89

Non-NBIS Culverts Condition Rating = Good 80 84 80 74 80 56

Overhead Sign Structures Condition Rating = Good 95 95 95 93 95 88

 Totals 91.27 89.79 87.28 86.04 84.49 85.04

Bridge Traffic Roadside Drainage
22 | Proposed Metrics for the Long-Term Financial Sustainability of Highway Networks

For this study and proof of concept of the Maintenance Sustainability Ratio, the following five maintenance features/activities were examined:

◗Shoulder Work

◗Pavement Striping

◗Pavement Markings

◗Signs and Posts

◗Guardrail Maintenance

Table 7 shows the target, score and expenditure for 

2009 through 2011 for Shoulder Work. It also shows 

the target and the amount budgeted for Shoulder 

Work for 2012. The variations in expenditures 

represent the department attempting to achieve 

an acceptable target without overspending. Over 

several years, it varied expenditures in an attempt 

to calibrate needed investment to achieve an 

acceptable, and not excessively high or low condition level.

A similar calibration effort is seen in Table 8 that 

illustrates pavement marking expenditures. When 

conditions dropped from a score of A- to a C, the 

department increased expenditures for 2012 to 

restore conditions. These results show that year-toyear fluctuations make annual precision in expenditure and condition results uncertain but that over a 

longer timeframe such data can provide estimates 

of the amounts needed to sustain maintenance 

conditions over the long term. Based on such data 

as from Tables 7, 8 and the other Utah maintenance 

categories, a long-term Utah maintenance needs 

estimate can be derived. 

Summary 

Modern maintenance management systems allow 

departments to measure their labor and material 

costs and compare them to achievement of specific maintenance outcomes. Although the roadway maintenance conditions can be significantly 

Figure 9. An overall maintenance sustainability ratio can be computed from NCDOT’s reports on network-wide 

maintenance needs compared to expected budget. The gold line illustrates the declining sustainability ratio.

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

$2,000

0

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0.80

0.90

1.00 

2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18

NCDOT Maintenance Sustainability Ratio

Expenditures in Millions of Dollars

_ Maintenance Needs _ Expenditures _ Maintenance Sustainability Ratio

Maintenance Needs $1,392 $1,447 $1,506 $1,568 $1,632 $1,699 $1,768

Expenditures $1,062 $1,062 $1,062 $1,062 $1,062 $1,062 $1,062

Maintenance 

Sustainability Ratio

0.76 0.73 0.71 0.68 0.65 0,63 0.60
Asset Sustainability Index: Quick Guide | 23

affected year-to-year by weather and other 

events, the examples show that over time the 

needed maintenance expenditures can be calculated to achieve specific maintenance-condition 

targets. Forecasting forward from this baseline of 

expenditure-and-results, the departments can 

inform their decision makers of the needed investment to sustain highway maintenance conditions 

into the future.

Combining Ratios into an Index

With the ASI comprising the ratios of pavement, 

bridge and roadway maintenance, the concept of 

how to compile them into a composite index is 

relatively straightforward. Figure 10 illustrates how 

the values of the three major ratios are combined 

and a weighted index is computed (see Figure 10).

A simple, theoretical example is shown in Table 9. 

The amount needed for pavement investment is 

$500 million, the needed amount for bridges is 

$250 million and the roadway maintenance need is 

$225 million. Each is shown as one year’s component of a 10-year asset management plan to sustain 

the assets over the 10-year horizon. Each of the 

three has a different Sustainability Ratio, with 

maintenance and bridges receiving a higher percentage of their overall need than do pavements. 

The weighted sustainability index is the simple 

weighted average of the three Sustainability Ratios 

combined into one overall ASI. In this example, the 

ASI for this one year is .88. 

The index also can help satisfy calls for accountability and performance measurement. To date, most 

highway condition performance measures have 

been narrowly focused upon specific assets, or even 

only characteristics of specific assets. International 

Roughness Index measures provide insight into 

pavement roughness, but not into pavement structure, skid quality, or remaining service life. Likewise, 

a bridge may be rated structurally “fair” today, but 

may be on the verge of decline into a “poor” rating 

that creates need for imminent investment. Providing metrics about these individual characteristics 

yields insight into condition but only for narrow 

components of the highway network, and generally 

only for current conditions. The ASI provides an 

overall picture for whether the asset management 

needs for the system as a whole are being adequately addressed. Its forward-looking aspect when 

used in a time-series forecast allows it to be a 

leading measure predicting the outcome of current 

investment decisions. 

Table 7. Targets, conditions and expenditures for UDOT shoulder work.

2009 2010 2011 2012

Shoulder Work—Letter Target B- B- B- BShoulder Work—Letter Score A+ B+ B+

Shoulder Work—Target 20.01 20.01 20.01 20.01

Shoulder Work—Score 0.3475 10.665 13.1625

Shoulder Work—$ Spent $1,582,355.75 $1,467,542.00 $1,116,167.65 $1,590,000.00

Table 8. Targets, conditions and expenditures for UDOT pavement markings.

2009 2010 2011 2012

Pavement Markings—Letter Target A- A- A- APavement Markings—Letter Score A+ A- C

Pavement Markings—Target 10.02 10.02 10.02 10.02

Pavement Markings—Score 2.75 10.02 26.7

Pavement Markings—$ Spent $597,368.86 $524,566 $486,754 $672,195
24 | Proposed Metrics for the Long-Term Financial Sustainability of Highway Networks

Combining the Sustainability Index 

with Asset Valuation Analysis

The ASI and its related ratios are considered in this 

report as evolutionary next steps to further enhance 

the reporting of transportation asset management 

needs and issues. The practice of asset management 

has steadily evolved from the mid-1990s in the U.S. 

and has at several points of its development intersected with other important reporting frameworks. 

One such intersection is with the GASB 34. GASB 34 

went into effect in 2001 and represented a major 

change in government accounting for infrastructure.

The Asset Sustainability Ratio represents a 

complementary mirror image of the GASB 34 

reporting process. While the ASI is forward looking, the GASB 34 reports are backward looking. 

They report upon past changes in highway asset 

values, conditions and expenditures. If the two 

were reported in a coordinated fashion, they could 

provide a long-term perspective on where infrastructure conditions have been and where they 

are heading. The GASB reports would provide 

a 10-year summary of changes in asset values 

and expenditures while the ASI forecasts would 

provide a similar projection into the future.

The GASB 34 standards were intended when 

adopted in 1999 to provide new insights into whether U.S. public agencies were accruing future liabilities in the form of deteriorated assets. Among the 

objectives of GASB 34 was to improve public 

decision-making by treating long-term capital 

assets, such as highways, as items to be reported 

on an agency’s balance sheets. If the assets were 

deteriorating at a faster rate than they were being 

repaired, it would create a long-term liability that 

should be disclosed in annual financial reports. 

GASB 34 also emphasizes Asset Valuation, or the 

assignment of monetary value to infrastructure 

assets. The concept is that if roadway elements are 

described as public assets and valued in monetary 

terms, the public imperative to preserve them in 

Figure 10. The three ratios combine into the index.

Asset

Sustainability

Index

Pavement

Sustainability Ratio

The Pavement Sustainability 

Ratio is comprised of the budget 

or budgets for all the needed 

capital expenses for pavements 

divided by the amount spent 

on pavements.

Maintenance

Sustainability Ratio

The Maintenance Sustainability 

Ratio is comprised of the total 

amount of capital budgeted 

for maintenance divided by the 

amount needed to sustain all 

maintenance condition targets.

Bridge

Sustainability Ratio

The Bridge Sustainability Ratio 

is comprised of the total amount 

of capital budgeted for bridge 

repair, preservation, rehabilitation 

and replacement divided by 

the amount needed.

Table 9. Calculating the index.

Budget Need Calculation Ratio ASI

Pavement $415 $500 $415/500 0.83

Bridge $225 $250 $225/250 0.90

Maintenance $214 $225 $214/225 0.95

Total $854 $975 $854/975 0.88

Millions$
Asset Sustainability Index: Quick Guide | 25

sound condition is enhanced.

The 1999 standards added a new requirement for 

agencies to include a clear, non-technical Management Discussion and Analysis (MD&A) addressing 

basic facts regarding whether the infrastructure 

conditions were improving, declining or sustaining. 

The MD&A was to report, among other things, 

significant changes in the assessed condition of 

assets from earlier assessments, how conditions 

compare to targets, and any significant differences 

between what was budgeted to be invested in 

preservation from what actually was spent.

This concept in U.S. public accounting represented, 

at the time, a major shift in focus. In the past, 

accounting reports represented only short-term 

balances of accounts for the current year, or biennium. As the GASB guidance made clear, snapshots 

of short-term account balances provide the public 

or policy makers little insight into whether current 

investment levels and maintenance practices are 

sufficient to ensure the long-term performance of 

major infrastructure. As the GASB 34 guidance 

explains, “...the citizenry, legislative and oversight 

bodies, and investors and creditors, also need 

information about the probable medium-and 

long-term effects of past decisions on the government’s financial position and financial condition. 

Without that information, these groups cannot 

assess the probable effect of current-period activities on the future demand for resources, or whether 

the government can continue to meet its service 

objectives and financial obligations in the future.” 

GASB guidance at the time summarized the rationale for the reporting standards in the following 

way. “In short, the new annual reports should give 

government officials a new and more comprehensive way to demonstrate their stewardship in the 

long term in addition to the way they currently 

demonstrate their stewardship in the short term 

and through the budgetary process.”[vii]

In 2008, NCHRP Report 608, GASB 34: Methods 

for Condition Assessment and Preservation, examined how States were implementing the GASB 34 

standards. It reported that states that were strong 

practitioners of TAM tended to have robust GASB 

34 reports, while those that were not tended to 

have more perfunctory depreciation reports.[viii]

Agencies have two ways to report. The first 

approach is the depreciation method that generally applies “straight line” depreciation to categories of assets and assigns a value to the depreciation. The value of the depreciation is compared 

to what is spent on infrastructure preservation 

to determine if preservation expenditures are 

adequate. The second approach, the modified 

approach, is more sophisticated and generally 

relies on more detailed comparison of expenditures and depreciation. In the modified approach, 

the agency’s management systems often provide 

condition and depreciation information that is 

more robust. 

The GASB 34 requirements call for the MD&A to 

be included in the agency’s Comprehensive Annual 

Financial Reports (CAFR.) These were envisioned 

to serve like a publicly traded corporation’s annual 

report to shareholders. They would allow the public 

to understand the long-term health of the infrastructure, and receive a snapshot of biennial fund 

changes and balances.

However, the transportation agencies interviewed 

in NCHRP 608 reported that their CAFRs received 

little attention and had become “just one more 

administrative task.” “We also find that the agencies 

report that they receive very little interest in this 

information from outside entities such as legislative 

bodies, the investment community, or the general 

public. It was widely hoped that provision of this 

information would spark interest in the condition 

and preservation of infrastructure assets—the 

factors that seem to have precluded interest 

are discussed in this report.”

A review of NCHRP 608 and several of the individual State CAFRs reveal reasons for the possible lack 

of interest including:

◗Many of the CAFRs read like accounting 

reports that are heavily laden with tables of 

numbers and accounting categories that do 

not state simply whether roadway conditions 

are declining or improving. 

◗Asset class values are grouped in ways that 

tend to obscure whether particularly important 

asset classes are improving or degrading. For 

instance, the overall value of highway assets 

includes the value of new construction and the 

underlying land, earthworks and buildings 

owned by the State. These categories increase 

the value of overall assets and tend to mask 

the decrease in value of key asset categories, 

such as pavement surfaces, bridge decks, or 

maintenance appurtenances, such as signage. 
26 | Proposed Metrics for the Long-Term Financial Sustainability of Highway Networks

◗Several States set lower threshold values for 

GASB 34 targets than they set for their internal 

asset management targets. The result is that 

lower levels of expenditures are needed to 

prove “sufficiency” in GASB reports. 

◗ If a State fails to meet a GASB condition target, 

the GASB rules state it should shift from using 

the more sophisticated “modified approach” to 

the less sophisticated “depreciation approach.” 

Therefore, the States that want to retain the 

more robust reporting process face a disincentive if they candidly report that asset condition 

targets are not met. 

◗The CAFRs of some States address only two to 

three years, obscuring long-term trends. 

◗The CAFRs are inherently backward looking 

and do not include forecasts. Therefore, only 

assumptions of future performance can be 

inferred from them.

Figure 11 restates how a forward-looking asset 

valuation forecast would add considerable insights 

into the management discussion, a long-range plan 

or to legislative budget testimony. It shows not only 

the past asset valuation trends but also the future 

forecast. 

Implementing Sustainability Ratios 

and Forecasting Asset Values

A highly condensed summary of the steps needed 

to produce a sustainability index accompanied by 

an asset valuation forecast is shown in Figure 12. 

The steps incorporate sound asset management 

practices, strong elements of performance management combined with an overriding focus upon 

long-term sustainability. The composite metrics 

produced through the forecasting of asset 

sustainability ratios combined with asset valuation 

analysis allows an agency to produce summary, 

leading measures that can inform the public and 

policy makers of the long-term consequences of 

current budget decisions. The same types of 

long-term discussions occurring over the solvency 

Figure 11. A forecast of asset valuation and a sustainability index can illustrate the long-term consequences of investment levels. 

$0

$4,500

$9,000

$13,500

$18,000

$22,500

$27,000

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

Trends of Asset Valuation and Sustainability Index

▲ ▲ ▲ ▲

▲

▲ ▲ ▲ ▲ ▲ ▲

1.00

.90

.80

.70

.60

.50

.40

.30

.20

.10

0

_ Asset Valuation _Investment Backlog _

▲ Asset Sustainability Index

Millions of Dollars

Asset Valuation $25,000 $24,500 $23,770 $22,590 $21,920 $20,620 $18,610 $16,260 $14,680 $13,250 $12,580

Investment Backlog $0 $69 $243 $534 $961 $1,539 $2,289 $3,233 $4,393 $5,798 $6,600 

Asset Sustainability Index 1 0.98 0.96 0.94 0.93 0.91 0.89 0.87 0.86 .84 .83
Asset Sustainability Index: Quick Guide | 27

of Social Security or Medicare could be conducted 

regarding the long-term sustainability of highway 

infrastructure.

At least three methods for generating asset sustainability metrics are possible, depending upon the 

sophistication of the agency’s asset management 

systems. They are:

◗Using the outputs from modern pavement, 

bridge and maintenance management systems to generate the needed levels of investment by asset class. Utah and North Carolina 

use such systems to produce the analyses 

seen in this report.

◗Using data bases and spreadsheets to replicate 

some aspects of the management systems to 

the extent that deterioration curves are applied 

to existing assets, and their future conditions 

are forecast. The ODOT bridge analyses seen in 

this report are generated in this way. These 

forecasts produce estimated levels of treatments that would be required to sustain conditions. The levels of effort are multiplied by 

known unit costs of treatments to generate the 

financial need. This very generalized description can be relatively simple and be based on 

only a few asset classes and few deterioration 

curves, or it can be much more detailed with 

multiple asset classes, many deterioration 

curves and multiple iterations of applying 

treatment types to generate need and costs. 

◗Simplified application of depreciation to classes of 

assets as described in the GASB 34 guidance for 

agencies using the depreciation, versus modified, 

method of reporting. This method would apply 

generalized depreciation rates to major asset 

classes to determine the level of estimated annualized depreciation they experience. This depreciation is totaled and compared to the amounts 

actually invested in infrastructure preservation 

annually to determine if it is adequate. This method 

is commonly used by U.S. turnpikes to satisfy bond 

holders and rating agencies that they are investing 

adequately to sustain their roadways. Similarly, 

these simplified methods could produce “rule of 

thumb” investment estimates that would be appropriate to a smaller network, such as a small city or 

county. Although lacking in detail, they do provide 

benchmarks of needed investment over the long 

term.

The sustainability index and reporting of asset 

Figure 12. Producing asset sustainability indices incorporates steps common in both asset management and 

performance management. It begins with setting targets and concludes with incorporating into the planning 

and reporting process the estimates of future sustainability.

Set short-term, intermediate, and long-term asset condition targets.

Forecast future conditions based on projects and expenditure levels.

Produce forecasts of estimated budgets and needed investment.

Illustrate adequacy or gaps in funding by program to achieve targets.

Produce sustainability ratios and index.

Calculate future asset values based on projected program.

Incorporate forecasts into planning and reporting processes.
28 | Proposed Metrics for the Long-Term Financial Sustainability of Highway Networks

values are not assumed to replace traditional 

performance measures such as pavement, bridge 

and maintenance appurtenance conditions. Rather, 

they are intended to complement those measures 

and be incorporated with them into a mosaic of 

performance indicators.

As a composite metric, the ASI sits at the apex of a 

complex asset management analysis. Because the 

ASI is a “condensed” measure, it allows for the 

disaggregation or the “drilling into” of its components for greater understanding as to the consequences of under-investment. If the ASI is effective 

at communicating the overall trend lines of investment, it will spur additional questions from policy 

makers. As the components of the ASI are examined, 

it is possible to understand which assets are underfunded, and by how much. The final ASI is actually 

the weighted average of a series of component 

sustainability ratios each braided into a large rope. 

Each strand can be examined separately to illustrate 

the trade-offs that have been made and the consequences of them. The granularity of the detailed 

analysis allows decisionmakers to understand how to 

calibrate additional investment to achieve very 

specific results—those results being an adequately 

funded highway program that sustains all asset 

classes at a steady state of acceptable conditions. 

Nearly every highway agency in the U.S. today 

faces serious unmet needs. Officials in these 

agencies make difficult tradeoffs to allow some 

assets to decline in condition so that they can focus 

investments on even more pressing ones. Such 

tradeoffs were evident in the Utah example where 

officials reluctantly decided to allow rural pavement 

conditions to decline in order to sustain conditions 

on higher functional classes. The granularity of the 

ASI allows for the drilling into its components to 

illustrate which asset classes are being underfunded 

and by approximately how much.

Table 10 illustrates how the information from a 

hypothetical scenario can be portrayed with greater 

granularity to clarify which asset classes are most 

adequately funded and which are the least. As can 

been seen in Table 10, the major categories of 

Pavements, Bridges and Maintenance are broken 

further into sub-categories by major asset class. 

The sustainability ratios of the individual classes are 

Table 10. A heat map of program sustainability ratios for a representative transportation agency.

Sustainability Ratios Over Time By Asset Class Or Activity

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Pavements 0.83 0.82 0.81 0.81 0.80 0.79 0.78 0.77 0.77 0.76

 Major Routes 0.80 0.79 0.78 0.78 0.77 0.76 0.75 0.75 0.74 0.73

 Arterials 1.00 0.99 0.98 0.97 0.96 0.95 0.94 0.93 0.92 0.91

 Collectors 1.00 0.99 0.98 0.97 0.96 0.95 0.94 0.93 0.92 0.91

 Pavement Rehabilitation/Replacement 0.40 0.40 0.39 0.39 0.38 0.38 0.38 0.37 0.37 0.37

 Pavement Preventive Maintenance 1.00 0.99 0.98 0.97 0.96 0.95 0.94 0.93 0.92 0.91

Bridges 0.90 0.89 0.88 0.87 0.86 0.85 0.84 0.83 0.82 0.81

 Preventive Maintenance/Preservation 0.90 0.89 0.88 0.87 0.86 0.85 0.84 0.83 0.82 0.81

 Sub and Superstructures 0.87 0.86 0.85 0.84 0.84 0.83 0.82 0.81 0.80 0.79

 Decks 0.89 0.88 0.88 0.87 0.86 0.85 0.84 0.83 0.82 0.82

 Painting 1.00 0.99 0.98 0.97 0.96 0.95 0.94 0.93 0.92 0.91

Maintenance 0.95 0.94 0.93 0.92 0.91 0.90 0.89 0.88 0.87 0.86

 Guardrail 0.95 0.94 0.93 0.92 0.91 0.90 0.89 0.88 0.87 0.86

 Pavement Markings 0.95 0.94 0.93 0.92 0.91 0.90 0.89 0.88 0.87 0.86

 Drainage 0.95 0.94 0.93 0.92 0.91 0.90 0.89 0.88 0.87 0.86

 Signage 0.95 0.94 0.93 0.92 0.91 0.90 0.89 0.88 0.87 0.86

 Vegetation/Roadside 0.95 0.94 0.93 0.92 0.91 0.90 0.89 0.88 0.87 0.86

 Pavement Surfaces 0.95 0.94 0.93 0.92 0.91 0.90 0.89 0.88 0.87 0.86

Overall ASI 0.88 0.87 0.855 0.84 0.83 0.82 .81 0.79 0.77 0.75
Asset Sustainability Index: Quick Guide | 29

shown, and are aggregated in the bottom line into 

an ASI for this hypothetical roadway network. The 

tradeoffs made by the highway agency are clear 

with the color coding. Green cells indicate adequate 

investment ratios while ones in red indicate the 

degree of underfunding. In this scenario, Pavement 

Rehabilitation and Replacement are underfunded 

acutely throughout the forecast period. Asset 

classes of resurfacing of major routes, bridge 

sub-and-superstructure repair, bridge preventive 

maintenance, and bridge decks are scheduled for 

significant declines in investment levels as compared to their needs.

Although Table 10 is theoretical, it very closely 

approximates the type of analysis that was “teased 

out” of the data from the transportation departments examined for this report. An actual analysis 

that resembled Table 10 would give a policymaker 

an at-a-glance summation of the adequacy of 

investment by major asset class for each year of 

the next decade. 

Conclusion 

Using examples teased from existing asset management programs, this report illustrates that it’s 

possible to produce asset sustainability metrics in 

the U.S. These metrics can indicate the future 

results of current investments.

The concept of sustainability metrics is not 

original, having been used since at least 2009 

in Australia. The Australian precedents reflect 

the growing interest in the financial sustainability 

of programs so they do not impose undue costs 

upon future users. The European debt crisis 

rocked international financial markets because 

of concerns that some European government 

expenditures were financially unsustainable. 

In the U.S., concerns over the national debt and the 

long-term solvency of entitlement programs 

override all other policy debates. In 

the private sector, the long-term solvency of 

the mortgage bond market led to a financial 

downturn that reverberates throughout the 

economy.

All of these issues involve analysts concluding that 

the current path of spending and investment is 

unsustainable and creates long-term deficits that 

will be passed on to future generations. A growing 

perspective is that responsible governance 

includes an obligation to create sustainable programs that do not impose undue costs upon future 

taxpayers. Financial sustainability metrics can be 

one additional tool contributing to increased 

understanding of the long-term consequences of 

current transportation policies, programs and 

investment levels.

ENDNOTES
30 | Proposed Metrics for the Long-Term Financial Sustainability of Highway Networks

i County Surveyors Society/TAG Asset Management 

Working Group”, 2005 Edition,, pg. 4

ii Kaplan, Robert S. and David P. Norton, “The Balanced 

Scorecard—Measures that Drive Performance, “ Harvard 

Business Review on Measuring Corporate Performance, 

1998, Harvard Business School Press, pg. 123-145

iii Queensland Australia Local Government Act of 2009 

Part 3 Section 101

iv Queensland Australia Local Government Act of 2009 

Part 3 Section 101

v Queensland Department of Infrastructure and 

Planning, “Report on the Annual Return on Financial 

Management (Sustainability) 2009, accessed at http://

www.dsdip.qld.gov.au/resources/guideline/sustainability/financial-management.pdf pg.2

vi County Surveyors Society, pg. 2

vii Government Accounting Standards Board Statement 

34, 1999, “Summary Statement No. 34 Basic Financial 

Statements and Management’s Discussion and Analysis 

for State and Local Governments,” preface.

viii Chait, Edward P. “Report 608 GASB Methods for 

Condition Assessment and Preservation,” National 

Cooperative Highway Research Program, pg. 1

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