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A model for quality-related valuation and accounting of road capital

This paper deals with the issue of implementing a model for valuation, accounting and reporting of the road capital appropriate to transport asset management focusing on actual road capital values and costs (including life cycle costs). The first essay gives a background and a short overview of the thesis. It includes, for example a short review of the principles of the Swedish road managment during the last thirty years, a description of the problems, the requirements, and hypotheses. The second paper broadens the perspective to international road management; the idea of Transport Asset Management (TAM) process as a whole and three focus areas gathered under the names of Asset-related questions, Action-related questions (appendix 1), and Cash-related questions (appendix 2). The essay illuminates the actual situation and the needs of support for the TAM processes in general and the existing models and the development of valuation and accounting of the road capital in particular. The purpose in the third essay is to make the 1992 model for quality-related valuation and accounting of the road capital clear and to by full examples and discussions show that the model is feasible. The paper details some significant requirements that such an accounting method must be able to meet. One type of requirement deals with adequate internal control, simplicity, controllability, transparency, relevance, and reliability (quality). Another type has to do with being able to deduce from the accounts the cost of road management, the value of the road capital, deficiencies, risks, and changes in standard and condition. Information is also needed as a basis for specifying targets, performing different analyses, including projects, components' life cycle costs, differences in road management and effects, but also for understanding of road management's cost drivers. The model for internal quality-related accounting presented here is based on road components' acquisition values, in order for it to tie in with external financial reports. The model mainly makes use of the SNRA's existing computer programs, report generators, and data in the accounting systems and technical road databases. Knowledge of components' standard deficiencies, rectification costs, and replacement values, allows standard target values to be set for the road capital. A component's current physical condition is translated into a financial condition value using what is known about rectification costs and the component's current condition in relation to its "lowest acceptable condition". Conditions are described systematically according to defined description models. A component's "lowest acceptable condition" is determined on the basis of knowledge of known effects for road users, society and road management, and of risks and other, political, considerations. The accounting model has been studied in three case studies, of which the Ministry of Industry, Employment and Communications has been responsible for one (of the National Road Administration's road capital and the National Rail Administration's track capital respectively). This paper compares the model's accounting of the component pavement in one of the studies with how it is traditionally accounted. Some consequences of the differences for control, monitoring, and different types of analysis are also detailed and discussed. The paper also analyses a "valuation problem set" with regard to the existing road network, and issues of quality problems about the implementation and keeping data up to date. New techniques for data capture are among other things discussed. In conclusion, the question is raised of whether implementing a quality-related model for valuation and accounting of the road capital does not constitute the beginning of a paradigm shift in the field of road maintenance. (A). http://www.diva-portal.org/diva/getDocument?urn_nbn_se_kth_diva-291-1__fulltext.pdf

Language

  • English

Media Info

  • Pagination: 192p
  • Serial:
    • Issue Number: 5:65

Subject/Index Terms

Filing Info

  • Accession Number: 01083370
  • Record Type: Publication
  • Source Agency: Swedish National Road and Transport Research Institute (VTI)
  • ISBN: 91-975358-3-4
  • Files: ITRD
  • Created Date: Jan 7 2008 8:36AM