Status: Dry Mo|st, wet Snow Dr|t|ng snow - warn|ng Dr|t|ng snow - a|arm Frost lce Error

Surf. temp.:
O
Above 1,5 C 0,5 to 1,5 -0,5 to 0,5 -0,5 to -1,5 -1,5 to -2,5 -2,5 to -3,5 Be|ow -3,5 Error
81 www.masterbu||der.co.|n The Masterbu||der - February 2012 80 The Masterbu||der - February 2012 www.masterbu||der.co.|n
lnrastructure Asset Management lnrastructure Asset Management
or ma|ntenance. ln the current t|mes,
ocus has now sh|ted to |normat|on,
asset reg|sters, va|uat|on, |normat|on
co||ect|onanddatasystems. But rea||z|ng
the |nsu|c|ency o |normat|on a|one,
compan|es e|t the need to have syste-
mat|c processes and procedures |n
p|ace, wh|ch wou|d enab|e bus|ness
dec|s|ons based on the |normat|on
ava||ab|e. Th|s |ed to the deve|opment
o GlS |ntegrated Asset Management
Systems (AMS) |mprov|ng over the |rst
generat|on Pavement Management
systems (PMS) and the second
generat|on lnrastructure Management
systems (lMS).
To overcome the cha||enges aced
by transportat|on |nrastructure ||ke
damage & deter|orat|on, |ncreas|ng
demand, shr|nk|ng budgets and heavy
pub||c expectat|ons, Governments are
p|ac|ng greater pressures on road
adm|n|strat|onsto|mprovethee|c|ency
o, and accountab|||ty or, the manage-
ment o th|s prec|ous asset and the
expertsknowthat account|ngandva|ua-
t|on o assets |n monetary terms |s the
key to successu| asset management.
Roadasset management: Thebusiness
outlook
ln bas|c terms, asset management
sets out the approach to be used |n
acqu|r|ng, ma|nta|n|ng, operat|ng,
|mprov|ng and d|spos|ng o an asset by
comb|n|ng eng|neer|ng pr|nc|p|es w|th
sound bus|ness pract|ce and econom|c
rat|ona|e. Asset management |n respect
o road |nrastructure may be de|ned
as "A structured, |ong term approach to
p|ann|ng opt|ma| ma|ntenance and
eventua| renewa| o |nrastructure".
a||ocat|on o resources to bu||d and
ma|nta|n the nat|ons road network. The
preva|||ng cond|t|ons have enab|ed the
road adm|n|strators |n the country to
ma|nta|n, operate, |mprove, rep|ace
and preserve th|s asset wh||e, at the
same t|me, careu||y manag|ng the
scarce |nanc|a| and human resources
needed to ach|eve these ob|ect|ves.
The ear|y 1990s ocused ma|or|y on
he lnd|an road network, spann|ng
a |ength o over 2.059 m||||on
Tm||es |s one o the three |argest
road networks |n the wor|d and
thus const|tutes one o the pr|mary
commun|ty assets o the country. ln the
past 16 years, the lnd|an road sector
has w|tnessed tremendous growth
ow|ng to the support|ve governmenta|
|n|t|at|ves and po||c|es a||ow|ng the
the construct|on o newassets and ||tt|e
or no |mportance was g|ven to manag|ng
the ex|st|ng ones. Gradua||y, as the
cap|ta| ceased to be read||y ava||ab|e,
more attent|on was d|verted to
ma|ntenance and ||e extens|on.
Further budget t|ghten|ng and demand
|ncrements requ|red contractors to be
more accountab|e and prov|de cost
|ust||cat|on beore a||ocat|ng resources
8oad Assat Va|uat|on and Nanagamant:
Tha 0omprahans|va Approach to |nIrastructura hand||ng
Chaitanya GoyaI
Picture Courtesy: civildefence.govt.nz
Poad adm|n|strat|ons today are
mov|ng rom pure|y government-
contro||ed organ|zat|ons w|th the|r own
execut|ve departments to agency
status and, |n the most ar-reach|ng
mode|, to a pr|vate enterpr|se. Such
changes have been |nstrumenta| |n
reduc|ng the Government |nput,
|ncreas|ng pr|vate r|sks and the
|nrastructure user |s |ncreas|ng|y
regarded as the customer. Poad asset
management has thus grown over the
years and has turned out to be a
bus|ness |n |tse|. Poad and h|ghway
network management act|v|t|es are
now regarded as a serv|ce be|ng
supp||ed to a c||ent, |.e., the trave|ers.
To|| co||ect|on or many years had
been the monopo|y o the NHAl and
lnd|an state governments. But w|th the
advent o pr|vate-pub||c partnersh|ps
(PPP), today many road pro|ects are
awarded to pr|vate deve|opers, who
ra|se unds, construct the road and
co||ect to||s or adecadeor twotorecover
the|r |nvestment and pro|t rom |t. The
to|| revenue |s the on|y source to meet
a|| the|ncurredcosts, be|t debt payment
or any ma|ntenance act|v|ty. lt |s thus o
paramount |mportance to have an
expert|se at the sk||| o asset manage-
ment to susta|nth|s bus|ness.
Poad asset management systems |n operat|on
GlS lntegrated road asset management system
Status: Dry Mo|st, wet Snow Dr|t|ng snow - warn|ng Dr|t|ng snow - a|arm Frost lce Error
Surf. temp.:
O
Above 1,5 C 0,5 to 1,5 -0,5 to 0,5 -0,5 to -1,5 -1,5 to -2,5 -2,5 to -3,5 Be|ow -3,5 Error
81 www.masterbu||der.co.|n The Masterbu||der - February 2012 80 The Masterbu||der - February 2012 www.masterbu||der.co.|n
lnrastructure Asset Management lnrastructure Asset Management
or ma|ntenance. ln the current
t|mes, ocus has now sh|ted to
|normat|on, asset reg|sters, va|uat|on,
|normat|on co||ect|onanddatasystems.
But rea||z|ng the |nsu|c|ency o
|normat|on a|one, compan|es e|t the
need to have syste-mat|c processes
and procedures |n p|ace, wh|ch wou|d
enab|e bus|ness dec|s|ons based on
the |normat|on ava||ab|e. Th|s |ed to
the deve|opment o GlS |ntegrated
Asset Management Systems (AMS)
|mprov|ng over the |rst generat|on
Pavement Management systems
(PMS) and the second generat|on
lnrastructure Management systems
(lMS).
To overcome the cha||enges aced
by transportat|on |nrastructure ||ke
damage & deter|orat|on, |ncreas|ng
demand, shr|nk|ng budgets and heavy
pub||c expectat|ons, Governments are
p|ac|ng greater pressures on road
adm|n|strat|onsto|mprovethee|c|ency
o, and accountab|||ty or, the manage-
ment o th|s prec|ous asset and the
expertsknowthat account|ngandva|ua-
t|on o assets |n monetary terms |s the
key to successu| asset management.
Roadasset management: Thebusiness
outlook
sets out the approach to be used |n
acqu|r|ng, ma|nta|n|ng, operat|ng,
|mprov|ng and d|spos|ng o an asset by
comb|n|ng eng|neer|ng pr|nc|p|es w|th
sound bus|ness pract|ce and econom|c
rat|ona|e. Asset management |n respect
o road |nrastructure may be de|ned
as "A structured, |ong term approach to
p|ann|ng opt|ma| ma|ntenance and
eventua| renewa| o |nrastructure".
a||ocat|on o resources to bu||d and
ma|nta|n the nat|ons road network. The
preva|||ng cond|t|ons have enab|ed the
road adm|n|strators |n the country to
ma|nta|n, operate, |mprove, rep|ace
and preserve th|s asset wh||e, at the
same t|me, careu||y manag|ng the
scarce |nanc|a| and human resources
needed to ach|eve these ob|ect|ves.
The ear|y 1990s ocused ma|or|y on
he lnd|an road network, spann|ng
a |ength o over 2.059 m||||on
Tm||es |s one o the three |argest
road networks |n the wor|d and
thus const|tutes one o the pr|mary
commun|ty assets o the country. ln the
past 16 years, the lnd|an road sector
has w|tnessed tremendous growth
ow|ng to the support|ve governmenta|
|n|t|at|ves and po||c|es a||ow|ng the
the construct|on o new assets and
||tt|e or no |mportance was g|ven to
manag|ng the ex|st|ng ones. Gradua||y,
as the cap|ta| ceased to be read||y
ava||ab|e, more attent|on was d|verted
to ma|ntenance and ||e extens|on.
Further budget t|ghten|ng and demand
|ncrements requ|red contractors to be
more accountab|e and prov|de cost
|ust||cat|on beore a||ocat|ng resources
8oad Assat Va|uat|on and Nanagamant:
Tha 0omprahans|va Approach to |nIrastructura hand||ng
Chaitanya GoyaI
Picture Courtesy: civildefence.govt.nz
Poad adm|n|strat|ons today are
mov|ng rom pure|y government-
contro||ed organ|zat|ons w|th the|r own
execut|ve departments to agency
status and, |n the most ar-reach|ng
mode|, to a pr|vate enterpr|se. Such
changes have been |nstrumenta| |n
reduc|ng the Government |nput,
|ncreas|ng pr|vate r|sks and the
|nrastructure user |s |ncreas|ng|y
regarded as the customer. Poad asset
management has thus grown over the
years and has turned out to be a
bus|ness |n |tse|. Poad and h|ghway
network management act|v|t|es are
now regarded as a serv|ce be|ng
supp||ed to a c||ent, |.e., the trave|ers.
To|| co||ect|on or many years had
been the monopo|y o the NHAl and
lnd|an state governments. But w|th the
advent o pr|vate-pub||c partnersh|ps
(PPP), today many road pro|ects are
awarded to pr|vate deve|opers, who
ra|se unds, construct the road and
co||ect to||s or adecadeor twotorecover
the|r |nvestment and pro|t rom |t. The
to|| revenue |s the on|y source to meet
a|| the|ncurredcosts, be|t debt payment
or any ma|ntenance act|v|ty. lt |s thus o
paramount |mportance to have an
expert|se at the sk||| o asset manage-
ment to susta|nth|s bus|ness.
Poad asset management systems |n operat|on
GlS lntegrated road asset management system
82 The Masterbu||der - February 2012 www.masterbu||der.co.|n
Therameworko asset management
has to be an organ|zed and systemat|c
procedure cover|ng aspects ||ke De|n|-
t|on and |nventory o assets, that |s, the
road network, other |nrastructure and
other |xed assets & resources, Poad
management systems or use, ma|nte-
nance and deve|opment o assets,
va|uat|on o the assets and report|ng
the va|ue |n monetary terms, that |s,
cap|ta||zat|on and deprec|at|on, lmp|e-
ment|ng account|ng by |ntegrat|ng
road management & account|ng, and
Systems and procedures or ut|||zat|on
o asset management |normat|on.
Monetary valuation critical for success-
ful asset management
Asset va|uat|on |s an essent|a|
management too|. lt ass|sts |n the
determ|nat|on and a||ocat|on o costs
and prov|des perormance/rate o
return report|ng, resource a||ocat|on,
shareho|der equ|ty and accountab|||ty.
H|stor|ca||y, assets have been va|ued at
the actua| spend on pro|ects rather
than what |t wou|d cost to rep|ace the
who|e asset.
Oneo thema|npurposeso va|uat|on
|s to enab|e report|ng |n monetary terms
to re|ect the phys|ca| cond|t|ons o the
road network, and to ass|st asset
managers |n |norm|ng asset owners o
the eects o d|erent |nanc|ng
strateg|es. va|uat|on o road assets |s
a|so based on the same e|ements as
those |nd|cated |n the ramework o asset
management.
The va|uat|on process, w|th |ts
emphas|s on econom|cs and |nance,
represents a sh|t |n th|nk|ng rom the
trad|t|ona| eng|neer|ng approach to
transport program deve|opment. The
asset va|ue and the change o the va|ue
are used when de|n|ng the need or
|nvestments and ma|ntenance o the
assets. The asset va|ue a|so states the
amount o cap|ta| |nvestments that have
been made and shows the year|y
expenses and year|y |nvestments
compared w|th the tota| va|ue o
assets. The road asset va|ue can there-
ore be usedwhen reason|ngthe annua|
need or road management |nanc|ng
w|th dec|s|on-makers and road users.
Due to such |mportance |t becomes
cruc|a| or determ|n|ng the pr|or|t|es or
uture |nvestment.
Asset nventory
De|n|ng the road assets and the|r
|nventory orms the bas|s or the|r
va|uat|on. The road assets, usua||y
d|v|ded |nto the road substructures,
runn|ng suraces, equ|pment and
accessor|es, cons|st o the carr|age
ways, tunne|s, ootways, ootpaths &
cyc|eways, br|dges, cu|verts, street||ghts,
|||um|nated s|gns & bo||ards, car parks,
tra|c s|gna|s, road gu|||es and
|andscapes. These assets m|ght a|so
conta|n road structures under construc-
t|on. Other |xed assets |nc|ude rea|
estate, bu||d|ngs, mach|nes and
equ|pment.
Assets shou|d be d|v|ded |nto
Poad assets and to|| p|aza
Heavy |oads on pavements
lnrastructure Asset Management
Silicone Concepts Int'l.Pvt.
Ltd
severa| asset |tems or groups. The
assets be|ong|ng |n one |tem shou|d
have s|m||ar purpose o use and the
same est|mated |ength o serv|ce ||e.
Th|s can be done through v|deo GPS
and/or deta||ed wa|ked surveys to
prov|de a comp|ete asset lnventory
wh|ch acts as the oundat|ons o a
Poads Asset Management P|an.
lnventor|es can e|ther be done at
certa|n |xed t|me |nterva|s or on the
bas|s o change |n road cond|t|on. The
roads and other assets shou|d be
||sted or reg|stered, and updated ater
each |nventory. Ma|nta|n|ng an |nventory
o assets and the|r cond|t|on, de|n|ng
opt|ma| rep|acement strateg|es and
meet|ng statutory report|ng requ|re-
ments are a|| ob|ect|ves that the Asset
Manager must ach|eve.
Methods of Valuation
Accurate asset va|uat|on requ|res a
robust and comp|ete |nventory. l gaps
ex|st |n the |nventory, an est|mate o the
|nventory |normat|on shou|d be made
to enab|e va|uat|ons to be comp|eted,
wherever pract|ca|.
There are a number o approaches
prescr|bed to va|ue |nrastructure assets,
and no s|ng|e approach |s un|versa||y
acceptedby the|nternat|ona| commun|ty.
The two most common methodo|og|es
or the va|uat|on o road assets are the
Fa|r va|ue and the Book va|ue. The Fa|r
va|ue |s the amount or wh|ch an asset
cou|d be exchanged between knowab|e,
w||||ng partners |n an arms |ength
transact|on wh||e the Book va|ue |s the
va|ue o an asset usua||y based on the
or|g|na| acqu|s|t|on cost, wh|ch has
been ad|usted or deprec|at|on, or by
any other |ncrease or decrease |n va|ue.
The acqu|s|t|on cost a|so |nc|udes the
expenses o the purchase or manuac-
ture o the asset.
Someother, not very popu|ar methods
|nc|ude, ca|cu|at|ng the Market va|ue -
the current market pr|ce o an asset,
Pep|acement va|ue- thepresent market
pr|ce o a s|m||ar asset to rep|ace an o|d
asset, Present va|ue - the present va|ue
o payments made at a |ater date thus
d|scount|ng the uture payments |nto
thepresent, Nom|na| va|ue- thepurchase
va|ue o an asset on the purchase date,
Pea| va|ue - converted romthe nom|na|
va|ue by tak|ng |nto account the |n|at|on
s|nce the purchase date, Taxab|e va|ue
- the monetary va|ue o an asset
determ|ned or taxat|on purposes and
the t|||ty va|ue represent|ng the
quant|tat|ve or qua||tat|ve bene|t o an
asset or theuser andcanvarydepend|ng
on the user. l the |nvestment expend|-
ture o the ex|st|ng road network cannot
be determ|ned to |nd the Book va|ue,
the road asset va|ue can a|so be
ca|cu|ated as the rep|acement va|ue or
as the present va|ue.
Depreciating the road infrastructure
assets
Asset deprec|at|on can be de|ned
as the annua| |oss o the va|ue and the
annua| wear|ng o the assets. lt shou|d
be we|| p|anned and must con|rm
84 The Masterbu||der - February 2012 www.masterbu||der.co.|n
Deter|orat|ng road |nrastructure
Poad ma|ntenance
lnrastructure Asset Management
Bharat Road Development Combines
Pvt Ltd BRDC
accord|ng to |oca| account|ng standards
and requ|rements. S|m||ar to the var|ous
approaches ava||ab|e or va|uat|on,
deprec|at|on can a|so be ca|cu|ated by
d|erent methods. Thetwomost common
methods be|ng the Stra|ght-||ne depre-
c|at|on where the va|ue o an asset
deprec|ates at a constant rate over t|me
and Cond|t|on-based deprec|at|on
where the va|ue o an asset deprec|ates
accord|ng to |ts cond|t|on.
Acomb|nat|ono thesetwomethods
|s genera||y preerred. The cho|ce o
method genera||y depends on the type
o asset. For examp|e, |t may be
appropr|ate to app|y stra|ght ||ne
deprec|at|on to assets that are not
sub|ect toveh|c|e|oad|ng, suchas tra|c
s|gna| systems and h|ghway ||ght|ng,
whereas cond|t|on-based deprec|at|on
may be more appropr|ate or assets
such as pavements and br|dges. When
us|ng the stra|ght-||ne method, the
deprec|at|on |s ca|cu|ated as a |xed
percentage e|ther o the acqu|s|t|on
va|ue or o the acqu|s|t|onva|ue reduced
by the res|dua| va|ue. The percentage
o the acqu|s|t|on va|ue |s determ|ned
by the econom|ca| or expected ||et|me
||ke 20-50 years or road substructures,
10-20 years or runn|ng suraces, 50-
100 years or br|dges and 5-20 years
or equ|pment and accessor|es.
ln add|t|on, an asset can be
cons|deredtohaveares|dua| va|ue. The
res|dua| va|ue |s the va|ue o an asset at
the end o |ts expected ||et|me, |.e. at
the moment when a|| the p|anned
deprec|at|on has been wr|tten o rom
the va|ue o the asset.
Financial Reporting
The |nvestments |ncreas|ng the road
va|ue and the deprec|at|on reduc|ng
the va|ue usua||y need to be stated |n
both the ba|ance sheet and pro|t and
|oss account o the year-end |nanc|a|
statements. Consumpt|on o assets, or
deprec|at|on, |s reported |n the |nanc|a|
statements as an expense, and |s a
charge aga|nst present and uture users
o the assets. Most countr|es |nc|ud|ng
lnd|a prov|de ba|ance sheets where the
va|ue o assets |s |nc|uded.
The va|ue o a nat|ons road asset |s
akey |nd|cator o |ts econom|c we||be|ng
and capac|ty to transport |ts peop|e and
goods. Pecent|y, the Nat|ona| H|ghways
Author|ty o lnd|a has taken our ma|or
|oans rom the Wor|d Bank and many
rom the As|an Deve|opment Bank to
support |ts new construct|on program.
Wh||e ocus|ng on new construct|on,
the NHAl |s aware o the need or
ongo|ng asset management |nterms o
ma|ntenance and |s to|||ng the roads to
assure a regu|ar source o unds or
ma|ntenance. W|th ma|or eorts current|y
underway to expand the countrys road
|nrastructure, lnd|a p|ans to spend
approx|mate|y S$70 B||||on by 2013 to
modern|ze |ts h|ghway network.
W|th the |ncreased |nvo|vement o
pr|vate sector |n bu||d|ng, ma|nta|n|ng,
manag|ng and operat|ng road |nra-
structure, more emphas|s |s be|ng |a|d
onuser or|entat|onandthedeve|opment
o methods to commun|cate w|th roads
users to take |nto account the|r needs
and concerns |n the prov|s|on o road
|nrastructure thus ensur|ng a smooth
dr|veor thetrave|ers andwea|thshowers
or the NHAl and pr|vate deve|opers
thereby creat|ng a w|n-w|n s|tuat|on a||
the way.
Poad ma|ntenance near K|nnaur |n H|macha|
86 The Masterbu||der - February 2012 www.masterbu||der.co.|n
lnrastructure Asset Management