3.3.1 What is asset valuation?

The principle purpose of asset valuation is to document the financial value of the road infrastructure assets owned by an organization and included on the organization’s financial balance sheet. Placing a monetary value on road assets emphasizes their importance and the potential cost to replace them and to return them to new condition. This cost is reported through the depreciation of the road asset, which represents the consumption of the asset in delivering services to road users and other stakeholders. It is essential that asset valuation for road infrastructure assets comply with the financial reporting requirements relevant to that particular country.

Monitoring how the asset value changes with time can indicate if the investment required to maintain the appropriate value of the asset is being provided. As such, monitoring can provide compelling arguments for investing in the preservation of the asset base to senior decision makers in the organization.

Experience in some countries, such as Finland, New Zealand, Australia, the U.S. (AASHTO 2013), and Canada (TAC 2015), has shown that implementing financial reporting of asset values for infrastructure assets has a significant impact on how maintenance and renewal work is funded. This reporting has generally resulted in an improvement in the maintenance of assets.