Novel Utility-Based Methodological Framework for Valuation of Road Infrastructure

Abstract

Transportation infrastructure assets are the largest publicly owned infrastructure assets in the United States. The management of these assets and the determination of their value have been at the forefront of discussions in many state agencies and local governments. However, existing valuation approaches are mostly based on physical condition and neglect the effect of factors such as functionality and overall use on the asset's value. This paper presents a utility-based methodological framework for the valuation of transportation infrastructure. The proposed valuation methodology uses the asset replacement cost as the base value. Value is then added to the base value by considering three key factors associated with the infrastructure: physical condition, functionality, and overall asset use. Each factor is characterized by appropriate indicators that can be quantified with specific performance measures. Then, the utility theory is applied to combine the effect of performance indicators of varying measures and scales on the value of an asset. The proposed framework can assist state and local transportation agencies in optimizing their resource allocation procedures for better coordination of asset investments within or across infrastructure assets.