THE ENGINEERING VALUATION OF HIGHWAY SYSTEMS - A PROBLEM IN PUBLIC UTILITIES VALUATION

HIGHWAY ENGINEERING SCIENCE IS STILL CRUDE AND IMPERFECT IN TWO IMPORTANT BRANCHES: FIRST, ENGINEERING VALUATION OF HIGHWAYS; SECOND, HIGHWAY ACCOUNTANCY. THE HIGHWAY SYSTEMS CONSTITUTE A PUBLIC UTILITY COMPARABLE TO THE RAILWAYS AND SURPASSING ALL OTHER UTILITIES IN MAGNITUDE OF INVESTMENT, YET HIGHWAY ENGINEERS DO NOT KNOW HOW TO ASCERTAIN THE CORRECT PRESENT VALUES OF THE HIGHWAY PROPERTIES NOR HAVE THEY DEVELOPED ANY STANDARD SYSTEM OF ACCOUNTANCY. THE SAME GENERAL PRINCIPLES OF VALUATION AND ACCOUNTANCY DEVELOPED FOR OTHER PUBLIC UTILITIES APPLY TO HIGHWAY VALUATION INCLUDING THE RULE THAT ALL FACTORS AFFECTING VALUE MUST BE GIVEN DUE CONSIDERATION AND SUCH WEIGHTS AS MAY BE JUST AND RIGHT; AS DETERMINED BY JUDGEMENT, NOT BY FORMULA. THE PHYSICAL VALUE OF THE SYSTEM MAY BE DETERMINED BY: (1) VALUING THE LAND OWNED AND USED; (2) DETERMINING THE ORIGINAL COST NEW LESS DEPRECIATION; (3) DETERMINING REPRODUCTION COST LESS DEPRECIATION; GIVING SUCH WEIGHT AS IS JUST TO ORIGINAL COST AND REPRODUCTION COST PRICE LEVELS. ALLOWANCE FOR PRELIMINARY EXPENSE AND GOING CONCERN INTANGIBLE VALUES ARE MATTERS FOR RESEARCH AND DISCUSSION AS IS ALSO THE WORKING CAPITAL OF HIGHWAY SYSTEMS. THE EARNING VALUES OF HIGHWAY SYSTEMS CAN BE DETERMINED BY ANALYZING THE REVENUES (FROM PROPERTY TAXES, LICENSE FEES AND FUEL TAXES), OPERATION COSTS AND ANNUAL "ACTUAL" DEPRECIATION COSTS. THE SERVICE-WORTH VALUES ARE WHAT THEIR EARNING VALUES WOULD BE IF THEIR REVENUES WERE JUST EQUAL TO THE "REASONABLE WORTHS" OF THEIR TOTAL HIGHWAY SERVICES RENDERED. TRAFFIC SURVEYS AND RESEARCH ON REASONABLE WORTHS OF DIFFERENT HIGHWAY SERVICES ARE NECESSARY TO DETERMINE TRUE SERVICE WORTH VALUES. A STANDARD ACCOUNTANCY SYSTEM SHOULD PROVIDE FOR CURRENT DEPRECIATION ACCOUNTANCY AND INCLUDE PROPERTY LEDGER SHEETS KEPT UP TO DATE. DEPRECIATION OF THE VARIOUS PROPERTY UNITS AND/OR AGE GROUPS OF LIKE UNITS SHOULD BE ESTIMATED BY MODERN METHODS. /AUTHOR/

  • Supplemental Notes:
    • Vol 13, ParT I, PP 43-57, 6 FIG
  • Authors:
    • MARSTON, A
    • Greenshields, B D
  • Publication Date: 1934

Media Info

  • Monograph Title: Proceedings of the Thirteenth Annual Meeting of the Highway Research Board Held at Washington, D.C. December 7-8, 1933. Part I: Reports of Research Committees and Papers
  • Serial:

Subject/Index Terms

Filing Info

  • Accession Number: 00200404
  • Record Type: Publication
  • Files: TRIS, TRB
  • Created Date: Aug 23 1971 12:00AM