A Methodology for Highway Asset Valuation in Indiana

The Government Accounting Standards Board (GASB) requires transportation agencies to report the values of their tangible assets. Numerous valuation methods exist which use different underlying concepts and data items. These traditional methods have a number of shortcomings, such as their implicit assumption that assets are monolithic and their inability to simultaneously consider a satisfactory range of value‐related asset attributes. In a bid to address these limitations, this report proposes a number of valuation methods. The elemental decomposition and multi‐criteria (EDMC) method carries out asset valuation on the basis of cost, remaining service life, and the condition of the individual components of an asset. The proposed replacement‐downtime‐salvage (RDS) method considers only the life‐cycle costs, including user cost during work zones and recycling benefits or disposal costs. The third proposed method, decommission‐and‐reuse (D&R), is based on the real‐estate value of the land occupied by the asset. The total value of Indiana’s state highway assets was determined in this study using the traditional and proposed methods; using the EDMC, this was estimated as approximately $68 billion. The value of pavements and bridges were $47.1B and $7.83B, respectively; together, these “large assets” constituted approximately 81.34% of total asset value. The total value of smaller assets was approximately $0.6B, constituting approximately 0.83% of the total value of assets; the breakdown was as follows: guardrails, $0.318B; underdrains, $0.005B; culverts, $0.214B; and road signs, $0.019B. The total value of the right‐of‐way was estimated at $12.04B. Using the straight line depreciation (SLD) method (the most common method used by other agencies), INDOT’s pavement and bridge values were determined as $12.4B and $9.59B, respectively. It was observed that the EDMC yields values that are significantly different from those from the traditional method, which could be due to the former explicitly considering the asset as an assemblage of components and thus carries out valuation for each component rather than considering the structure as a monolithic entity. On the basis of the unit asset values derived for Indiana, the existing asset inventory of other states, and the state‐specific cost factors, the total estimated value of state‐owned highway bridge and pavement assets in the United States was estimated at $1.4T or $4.4T using the traditional SLD and the EDMC methods respectively. For all highways in the United States, the estimated values were found to be $6.54T and $20.8T for the SLD and the EDMC methods, respectively. The study also explored ways by which asset value could be incorporated in investment evaluation.

  • Record URL:
  • Corporate Authors:

    Purdue University

    Joint Transportation Research Program
    West Lafayette, IN  United States  47907-2051

    Indiana Department of Transportation

    State Office Building
    100 North Senate Avenue
    Indianapolis, IN  United States  46204

    Federal Highway Administration

    1200 New Jersey Avenue, SE
    Washington, DC  United States  20590
  • Authors:
    • Dojutrek, Michelle S
    • Makwana, Parth A
    • Labi, Samuel
  • Publication Date: 2012-11


  • English

Media Info

  • Media Type: Digital/other
  • Edition: Final Report
  • Features: Appendices; Figures; References; Tables;
  • Pagination: 80p

Subject/Index Terms

Filing Info

  • Accession Number: 01486911
  • Record Type: Publication
  • Report/Paper Numbers: FHWA/IN/JTRP‐2012/31
  • Contract Numbers: SPR‐3427
  • Created Date: Jul 2 2013 10:17AM