3.3 2 Why do assets require valuation?

Asset valuation may be required to support the financial reporting requirements of an organization. It also provides the opportunity to describe the importance of the road asset and investment in that asset in financial terms. This will provide senior decision makers with appropriate information to understand the financial implications of their decisions. It will also provide the opportunity for presenting the case for the development of more cost-effective maintenance and replacement programs that will maintain the value of the transportation asset (PIARC 2008-a). The benefits of adopting this approach include the following:

• Long-term financial planning and budgeting;
• Influence over senior decision makers’ investment decisions;
• Performance assessment and benchmarking;
• Prioritization of resource allocation, locally, regionally, and nationally;
• Production of transparent information for stakeholders on the organization’s management of its road assets; and
• Production of financial information that is compliant with local or International Financial Reporting Standards (IFRS)