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AUSTROADS RESEARCH REPORT

Valuation of Road Infrastructure Assets in Australia and New Zealand AP-144/00

Valuation of Road Infrastructure Assets in Australia and New Zealand First Published 2000

© Austroads Inc. 2000 This work is copyright. Apart from any use as permitted under the Copyright Act 1968, no part may be reproduced by any process without the prior written permission of Austroads. National Library of Australia Cataloguing-in-Publication data:

Valuation of Road Infrastructure Assets in Australia and New Zealand ISBN 0 85588 532 7 Austroads Project No. BS.A.70 Austroads Publication No. AP–144/00
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The Austroads Asset Management Reference Group Mr Paul Smith, DMR Qld (Convenor) Mr John Wilson, VicRoads Mr Ron Ferguson, RTA NSW Mr Gary Norwell, MR WA Mr Peter Tymukas, TSA Mr Michael Bushby (until mid 1998), DIER Tas Mr Rodney McGee (after mid 1998), DIER Tas Mr Peter Bosmajian, DTW NT Mr Leigh Palmer, ACT City Services, DUS ACT Mr Paul Blair, CDoTRS Mr John Howard, ALGA Mr Dave Robertson, Transit NZ Dr John McLean, ARRB TR Project Manager Mr Michael Bushby, DIER Tas (until mid 1998), RTA NSW (from Sep 1998) Consultant Mr Laurie Dowling, LB Dowling & Associates, Newcastle, NSW Published by Austroads Incorporated Level 9, Robell House 287 Elizabeth Street Sydney NSW 2000 Australia Phone: +61 2 9264 7088 Fax: +61 2 9264 1657 Email: austroads@austroads.com.au www.austroads.com.au

Austroads believes this publication to be correct at the time of printing and does not accept responsibility for any consequences arising from the use of information herein. Readers should rely on their own skill and judgement to apply information to particular issues.

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VALUATION OF ROAD INFRASTRUCTURE ASSETS IN AUSTRALIA AND NEW ZEALAND

Sydney 2000

Personal use licence only. Storage. MEMBER ORGANISATIONS Licensed to Prof Stephen Emery on 12 Apr 2006. management and operation of the Australian and New Zealand road system — through the promotion of national uniformity and harmony. Austroads aims to provide strategic direction for the integrated development. distribution or use on network prohibited. elimination of unnecessary duplication. Within this ambit. Energy and Resources Tasmania Department of Transport and Works Northern Territory Department of Urban Services Australian Capital Territory Commonwealth Department of Transport and Regional Services Australian Local Government Association Transit New Zealand . Austroads is governed by a council consisting of the chief executive (or an alternative senior executive officer) of each of its eleven member organisations.AUSTROADS INCORPORATED Austroads is the association of Australian and New Zealand road transport and traffic authorities whose mission is to contribute to development and delivery of the Australasian transport vision by: • • • supporting safe and effective management and use of the road system developing and promoting national practices providing professional advice to member organisations and national and international bodies. and the identification and application of world best practice. ! ! ! ! ! ! ! ! ! ! ! Roads and Traffic Authority New South Wales Roads Corporation Victoria Department of Main Roads Queensland Main Roads Western Australia Transport South Australia Department of Infrastructure.

...........1..............................................7. Current action by OECD on valuation of road infrastructure ...................... ....... Trends in values ............................. ............... 5 3............................................... Scope ................ ...... 14 6............ Infrastructure categories valued and reported .....................................2.....................................CONTENTS Executive summary ......................................... 17 6.................. Trends in costs ........4.................................................................................. ..4.......... 21 7.... 5 3... 14 6.. 21 7........................ 6 4..................6....................................... . ............................................. Technical obsolescence .......................... ........................................................... ......... 28 13.................................... 21 7. .. Practices used in valuing ............... Aims .......................1...3.......... Factors affecting road asset values ................ 9 5..2................... 29 14............................ distribution or use on network prohibited... . Financial summaries ......................... Depreciation of road infrastructure assets ........................................ 26 11.............3............................................. Conclusions ................ 3 3.. ............. 1 2....... Valuation of Local Roads .. ................... 20 7................. 23 9.................. ........... General ........... 11 6............... Land under roads and within road reserves ..................... Personal use licence only..........................3...................................... 19 6..................................................................................... 30 ........ 14 6....... 24 10.. Background .......................... 14 6............... The meaning of depreciation in accounting terms ......................................2....................... 7 5................................................. Directions for future action ................................................................... Issues to be resolved in valuation of road infrastructure ..................................1................................ 27 12...............................................2. Current AARF reviews of Australian accounting practice .......... Trends in values and costs ........ Storage.......... 5.. ....... Land ...................................................... .............................. Current position in Australia and New Zealand ..................... Depreciation methods ....... Asset management and valuation ....... The use of asset valuation in Performance Indicators ......................................4....................... Bridge values as a proportion of road infrastructure assets ..... A discussion of depreciation of depreciation in physical terms ...................................... 9 Licensed to Prof Stephen Emery on 12 Apr 2006................................................. .................. ................................. ....... ............. References ................................................................. v 1... General ............. Benefits of valuation ....1................................ 22 7.. 3 3.......... 1 3....... 15 6........................................................... ................ ...... ...........5.... ......................... 22 8....

... 8 Reported written down values of total road infrastructure ....................... 6 A framework of asset value....... 18 Performance Indicators with asset value as an input ..................... distribution or use on network prohibited................ 11 Comparison of road sector cost indices in use in Australia and New Zealand .................................... 20 Licensed to Prof Stephen Emery on 12 Apr 2006........... 13 Road infrastructure categories with valuations in Annual Reports at June 1997 ........................ maintenance budget options and user costs .................... 16 Depreciation methods in use by Austroads Member Agencies (June 1997) ......................................... 10 Accumulated depreciation as a proportion of replacement value (roads sub-category) ................. Personal use licence only................................ 2 Pavement asset valuation process ................... 10 Reported written down values of bridges .................. 12 ........... Storage..................................................................................................................... 4 Comparison of road sector cost indices in use in Australia and New Zealand ............................TABLES Table 1 Table 2 Table 3 Table 4 Table 5 Table 6 Progress by Austroads MAs with reporting road infrastructure valuation information .......... 19 Written-down values of roads and bridges at 30 June 1997 ........... FIGURES Figure 1 Figure 2 Figure 3 Figure 4 Figure 5 Figure 6 Figure 7 The role of valuation in asset management ................

MR WA Program Performance Indicators using valuation of road infrastructure. Licensed to Prof Stephen Emery on 12 Apr 2006. Responses to Questionnaire issued with the June 1998 draft of this report. Current practice of MAs in valuing land under roads and within road reserves. own. Northern Territory Department of Urban Services. bridges. Extract from VicRoads 1998 Annual Report on depreciation. Appendix 11 Appendix 12 ABBREVIATIONS AARF ALGENZ BOOT BTE CMPI DMR Qld DIER Tas DTW NT DUS ACT IMEA LGA MA MR WA PSASB QML RTA NSW SMH TNZ VG VicRoads vkt Australian Accounting Research Foundation Association of Local Government Engineers. Storage. Possible formats for financial data summaries for Australasian roads. New Zealand Build. distribution or use on network prohibited.points of agreement. Energy and Resources. roads. Western Australia Public Sector Accounting Standards Board Queensland Motorways Limited Roads and Traffic Authority of New South Wales Sydney Morning Herald Transit New Zealand Valuer General Roads Corporation of Victoria vehicle kilometres of travel . Personal use licence only.A. Tasmania Department of Transport and Works.70 The Use of Valuation in Asset Management. Checklist for compliance with Austroads 1994 policy.Value of Assets Summary of responses from Australian MAs to OECD questionnaire Valuation of land under roads and within road reserves . Extracts from RTA NSW 1995. traffic signals and street lighting. operate and transfer Bureau of Transport Economics (formerly BTCE) BTE Road Construction and Maintenance Price Index Department of Main Roads. OECD project on Performance Indicator PI12 . DIER Tas approach to asset valuation Summary report following 1996/97 review Extracts from Finance Policy manual.APPENDICES Appendix 1 Appendix 2 Appendix 3 Appendix 4 Appendix 5 Appendix 6 Appendix 7 Appendix 8 Appendix 9 Appendix 10 Charter for Austroads Project BS. Australian Capital Territory Institute of Municipal Engineering Australia Local Government Authority Member authority (of Austroads) Main Roads Department. Summaries of MAs’ road infrastructure asset valuation data. 1996 and 1998 Annual Reports on depreciation. and definitions of bridges. Queensland Department of Infrastructure. work in progress.

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government bodies in Australia have moved from cash accounting to accrual accounting. government departments have begun to capitalise their infrastructure. and came into force in 1996. • More study is required. • The meaning of depreciation in physical as well as accounting terms is discussed. Personal use licence only. As a consequence. highlighting areas of consistency and inconsistency. • Austroads is supporting effort by AARF and PSASB to develop a policy on the valuation of land associated with road infrastructure. • It is now appropriate to examine the valuation process to identify how the resulting information can be used to enhance asset management. Storage.Valuation of Road Infrastructure Assets in Australia and New Zealand Executive Summary • Over about the last 10 years. ⇒ identify benefits of valuation as an asset management tool. as proposed in the Austroads Strategic Plan 1998 . and ⇒ provide a basis for a review of valuation methods for road infrastructure. depreciation and investment. • Australian Accounting Standard AAS 29 . distribution or use on network prohibited. particularly for road pavements which represent the largest single component of road asset value and investment. was issued in 1993. • The aims of this report are to: ⇒ facilitate informed discussion on the relevance of road asset valuations to the needs of road users and to an agency’s ability to deliver road services to meet those needs. • The potential benefits of the valuation process are listed. by suggesting areas where changes to existing valuation practices would enhance the benefits generated by the valuation process. • In 1994. • The report summarises the practices of State road agencies in Australia and Transit New Zealand as at 30 June 1997 in arriving at values for road infrastructure and depreciation. as well as politicians who represent road users and the broader community.Financial Reporting by Government Departments. involving road asset management and accounting professionals. . • A number of issues are identified where further work is necessary to improve consistency in deriving and reporting valuation information. entitled Capitalisation of Infrastructure. • A format is presented for annual financial summaries of national road assets showing valuation. • Valuations of road infrastructure assets were first reported in Australasia in 1990. • AAS 29 requires Government departments to recognise and depreciate infrastructure assets in their annual reports. • The report encourages asset managers to use the valuation process and resulting information to facilitate effective communication with financial and general managers. • The major road agencies in Australia and New Zealand report annually the value of road infrastructure assets under their control. Austroads issued a policy and framework for valuation of road assets.2001 (Ref 23). on the relative merits of condition-based and age-based approaches to the calculation of accumulated depreciation. Licensed to Prof Stephen Emery on 12 Apr 2006.

VicRoads reviewed some aspects of its infrastructure valuation practices. Transit New Zealand and a small number of local government bodies in Australia and New Zealand. Areas of consistency and inconsistency are identified. 3. a questionnaire was distributed in June 1998 to the Australian State and Territory road agencies. 2. Transit New Zealand and Devonport City Council. as proposed in the Austroads Strategic Plan 1998 . Licensed to Prof Stephen Emery on 12 Apr 2006. The practices used by local government Councils are not specifically covered. and that some agencies have introduced improvements since 30 June 1997. Personal use licence only. It is acknowledged that valuation practices are under continuing review. as at 30 June 1997. distribution or use on network prohibited. and to provide a basis for a review of valuation methods for road infrastructure. 2. The report focuses on the potential for infrastructure valuation to assist road agencies in formulating asset management strategies which will meet the needs of road users while minimising the long term costs of providing and maintaining the road networks. A draft version of this report was distributed in June 1998 for comment to a reference panel of approximately 40 people in the Australian State and Territory road agencies. In addition. Storage. The Questionnaire and responses are in Appendix 11. Aims The aims of this report are: • • • to facilitate informed discussion on the relevance of road asset valuations to the needs of road users and to an agency’s ability to deliver road services to meet those needs. Appendix 12 contains extracts from the VicRoads Annual Report to 30 June 1998. Scope This report examines practices by State and Territory road agencies in Australia and by Transit New Zealand in valuation of road infrastructure assets. by suggesting areas where changes to existing valuation practices would enhance the benefits generated by the valuation process. Notes: 1.2001 (Ref 23).Valuation of Road Infrastructure Assets in Australia and New Zealand Valuation of Road Infrastructure Assets in Australia and New Zealand 1. The Project Charter for this report is in Appendix 1. During 1998. to identify benefits of valuation as an asset management tool. —1— .

Personal use licence only. Physical Treatments Management of Road Use Level of Investment Decisions on Asset Management Strategy Maintenance Standards. and Levels of Service Road Transport Taxation Road Use Other Tools Valuation Process and Information Other Tools Figure 1 .Valuation of Road Infrastructure Assets in Australia and New Zealand Needs of Road Users and Community Benefits Asset Features and Condition Road User Costs Licensed to Prof Stephen Emery on 12 Apr 2006. distribution or use on network prohibited. Storage.The Role of valuation in asset management —2— .

These Austroads polices are consistent with AAS 27 (Ref 14) and AAS 29 (Ref 15).Valuation of Road Infrastructure Assets in Australia and New Zealand 3.) —3— . At 30 June 1997 for the first time. Background 3. as one means of achieving a “reduction in the whole-of-life cost of road supply. (Ref 14) places similar requirements on local government Councils in Australia (see Clause 3. All Australian State and Territory road agencies value National Highways separately from other roads. generally in line with the policies and rationale in the 1994 Austroads publication Capitalisation of Infrastructure. and proposed the formats in Appendix 2 for the annual presentation of national summaries of road infrastructure financial information.1 General AAS 29 . State Highways.2). AAS 29 also requires that infrastructure assets be recognised and depreciated. maintenance and operation”. The 1994 Austroads report Capitalisation of Infrastructure (Ref 6) established policies on: (i) a framework for valuation of road infrastructure assets in Australia in the following categories: Land under roads and within road reserves Work in progress Roads and bridges Privately funded road infrastructure assets Licensed to Prof Stephen Emery on 12 Apr 2006. These requirements came onto effect for Australian State and Territory road authorities for financial reports relating to the year ending on 30 June 1996. The 1995 Austroads Working Papers Road Asset Management in Australia . valuations of National Highways are not reported separately. all of the State and Territory road agencies in Australia and Transit New Zealand issued data on the valuation of road infrastructure. (ii) determining valuations in each category (iii) determining depreciation in each category (iv) periodic revaluation of road infrastructure assets.Financial Reporting by Local Governments.Financial Reporting by Government Departments. requires Government Departments in Australia to prepare general purpose financial reports that are useful in making and evaluating decisions about the allocation of resources. The Austroads Strategic Plan 1998 . Personal use licence only. Transit New Zealand reports the value of only one class of roads. Table 1 shows the history of reporting road infrastructure valuation information by the larger Member Agencies of Austroads.2 (Asset Management).State of the Nation 1994/95 (Ref 9 & 10) identified practices current in 1994/95. Storage. AAS 27 . (The term ‘National Highway’ is not used in New Zealand. In most cases.2001 (Ref 23). distribution or use on network prohibited. calls for a review of valuation methods for elements of road infrastructure. (Ref 15) first issued in December 1993. in Strategy 4 under Issue 3.

and introduced a modified replacement cost estimation model in 1996/97 * TNZ re-values the network in 2 of the 14 Regions each year. Storage. 90/91 # 91/92 # 92/93 # 93/94 # 94/95 # ## #! # 95/96 # 96/97 # ##! !# ## ! # # #* !# # # # !# ! # #! # #! # #! !# # #* !# !# #* #* #* # #* # unaudited valuation reported # valuation audited and reported ! first audited valuation ## revaluation ! DIER Tas measures road asset condition annually.Valuation of Road Infrastructure Assets in Australia and New Zealand Table 1 Progress by Australian State Road Agencies and Transit New Zealand in reporting road infrastructure valuation 89/90 RTA NSW DMR Qld T SA DIER Tas VicRoads MR WA TNZ Licensed to Prof Stephen Emery on 12 Apr 2006. by rotation —4— . Personal use licence only. distribution or use on network prohibited.

and contain guidance on the valuation of Local Road infrastructure.Financial Reporting by Local Governments. —5— . It is interesting to note that the Highways Agency in England intended to change from cash accounting to resource accounting from 1 April 1998. requires Local Governments to prepare general purpose financial reports that are useful in making and evaluating decisions about the allocation of resources.Valuation of Road Infrastructure Assets in Australia and New Zealand 3. Licensed to Prof Stephen Emery on 12 Apr 2006. Appendix 3 contains a summary of responses prepared in 1998 by Australian road agencies to a questionnaire from the OECD project team on the “Value of Assets” Performance Indicator. valuation of road assets has not been reported for the motorway and trunk road networks in England.4b (Ref 11. In Tasmania alone. The value of Local Roads in New Zealand has been estimated at NZ$18.3 Current action by OECD on valuation of road infrastructure In 1998. Personal use licence only.2 Valuation of local roads This report does not specifically cover the practices used in the valuation of Local Roads. Storage. p 31). AAS 27 . (Ref 14) first issued in July 1991. Some Auditors-General are also taking an active interest (Ref 25). “Value of Assets” (designated PI 12) is one of the Indicators being examined. Depreciation of Local Roads is widely determined on a linear basis. to date. Organisations such as the IMEA and ALGENZ have been active in reviewing valuation methodologies since the two Manuals were issued. However there is considerable support for condition based depreciation (Ref 7. p 4. AAS 27 also requires that road infrastructure assets be recognised and depreciated. OECD has listed the intended purpose of Indicator PI 12 as “to establish the existence of standard and applicable methods to calculate and measure the value of assets of road infrastructure”. OECD conducted an international survey of practices among road agencies around the world relating to valuation of road infrastructure. or more than double the value of the State Highway network. By length Local Roads represent 74% and 88% respectively of the total road networks in Australia and New Zealand. 3. In Australia. the aggregate value of Local Roads in Australia has not been determined. At this time. Accordingly. The Australian National Asset Management Manual (Ref 7) and the New Zealand Infrastructure Asset Management Manual (Ref 24) focus on local government assets. It appears that all Local Governments in Australia and New Zealand now value their road infrastructure. distribution or use on network prohibited. the value of Local Roads is estimated at A$2b (Ref 25). This survey is part of OECD Project IR7 on Performance Indicators. These requirements came onto effect for financial reports relating to the year ending on 30 June 1996.37).

Valuation of Road Infrastructure Assets in Australia and New Zealand 3. on a suitable method for valuing “land under roads”. representatives of five Australian States have agreed on a number of matters relating to the valuation of land under roads and within road reserves.1). As shown in Table 3 and Appendix 7 (Table 7. recognises some diversity of opinion on the question of whether “land under roads” should be recognised as an asset. in particular introduction of the concept of “Raw Land Value” which is supported by several Australian State Valuers General. and if so. Storage. in conjunction with the Australian Accounting Research Foundation (AARF).714m Asset valuation $5. a number of agencies did not recognise the value of land under roads and within road reserves in their financial reports at 30 June 1997. distribution or use on network prohibited. as described in Appendix 4. Significant progress ahs been made in this area. Personal use licence only. However. Licensed to Prof Stephen Emery on 12 Apr 2006.151m Asset condition 1994/95 Restore to “as new” $2. Austroads is cooperating with the PSASB and AARF in work to resolve these matters.4 Land under roads and within road reserves The 1994 Austroads report Capitalisation of Infrastructure (Ref 6) notes that “the issue of land under roads and within road reserves has not been fully resolved in some States”.178km Replacement cost $7. The Public Sector Accounting Standards Board (PSASB).563m Figure 2 Pavement asset valuation process (Source: VicRoads) —6— . Asset inventory 22.

the purpose of the road network is to facilitate delivery of community benefits such as accessibility. and road user costs. Austroads defined the following eight strongly inter-related elements of asset management in a 1994 report Road Asset Management Guidelines (Ref 5): • • • • community benefits road system performance asset features asset condition • • • • asset use physical treatments management of use asset management strategy. the long term performance of the road network. Storage. Valuation plays an important role in asset management because one of the main purposes of valuation is to enable reporting in monetary terms to reflect the physical condition of the road network. and funding. —7— . The practice of asset management in road agencies centres on decisions about strategies and actions to achieve a balance between the needs of road users. shows a simplified version of the pavement valuation process. other structures and traffic control devices). Figure 3 shows a framework also developed by VicRoads connecting asset value. The focus in asset management is on the purpose of the asset as part of a road network. Figure 2. economic development and social justice. asset condition and use. These elements encompass the asset itself (particularly high value components such as pavements. thereby assisting asset managers to inform asset owners of the effects of current levels of financing and management strategies. Valuation information is also an indicator of the remaining life or service potential of a road network. In turn. bridges. Figure 1 illustrates the role of the valuation process and the resulting information in the asset management decision making process. Licensed to Prof Stephen Emery on 12 Apr 2006. Asset Management and Valuation Austroads uses the term “asset management” to mean a comprehensive and structured approach to the delivery of community benefits through management of road networks. Personal use licence only. maintenance budget options.Valuation of Road Infrastructure Assets in Australia and New Zealand 4. developed by VicRoads. mobility. distribution or use on network prohibited.. as well as strategies and actions to maintain and improve asset performance.

Storage.A Framework of Asset Value.Valuation of Road Infrastructure Assets in Australia and New Zealand Licensed to Prof Stephen Emery on 12 Apr 2006. Figure 3 . Maintenance Budget Options and User Costs (Source: VicRoads) —8— . Personal use licence only. distribution or use on network prohibited.

As a general observation from the trends in accumulated depreciation in Figure 6. RTA NSW reported a significant reduction in total asset value in 1996 reflecting its loss of control of the regional road network to local government. for most of the agencies shown.from 1 July 1997. For Transport SA. accumulated depreciation represents a significantly higher ratio of replacement cost than for other MAs in roads and bridges. Trends in Values and Costs 5. the condition of road networks has been reasonably stable in recent years. Figure 5 shows the corresponding trends for the bridge sub-category.1 Trends in values Appendix 5 contains summaries of road infrastructure asset valuation data for seven Austroads MAs since the valuation process began. Storage. distribution or use on network prohibited. giving a break in its time series for the roads sub-category. Fluctuations are evident in the values. 5 and 6 and in Appendices 5 and 7. due largely to difficulties in the valuation process in the early years.Valuation of Road Infrastructure Assets in Australia and New Zealand 5. while MR WA has reduced the life of earthworks from 200 to 100 years. The following observations have been drawn from Figures 4. Changes by MR WA and VicRoads in the depreciation of earthworks may distort the trends . Figure 6 shows accumulated depreciation as a proportion of replacement value for the roads subcategory for the six Australian States and Transit New Zealand. • • • • • —9— . as shown in Figures 4. VicRoads treats earthworks as having infinite life. Personal use licence only. 5 and 6 and Appendices 5 and 7: • Licensed to Prof Stephen Emery on 12 Apr 2006. Figure 4 shows trends in the reported written down values of total road infrastructure for six of the Austroads MAs. DIER Tas adopted a revised model for calculation of replacement value in 1996 and reported infrastructure valuations using both the old and new models.

Valuation of Road Infrastructure Assets in Australia and New Zealand 50 45 40 35 30 $b 25 20 15 10 5 0 1990 NSW TNZ Vic Tas 1 Tas 2 WA SA 1991 1992 1993 Year 1994 1995 1996 1997 Licensed to Prof Stephen Emery on 12 Apr 2006.00 3.50 1.Reported written down values of bridges — 10 — .00 1990 NSW TNZ Vic Tas WA SA NSW 1991 1992 1993 Year 1994 1995 1996 1997 Figure 5 .50 4.Reported written down values of total road infrastructure 4.50 3. Storage.00 1. distribution or use on network prohibited.50 0.50 2. Personal use licence only.00 $b 2. Figure 4 .00 0.

and TNZ) have their own indices of road construction costs.00 NSW 40. RTA NSW. as described in BTE Information Paper 41 (Ref 16). with corresponding values of the BTE Road Construction and Maintenance Price Index and the Australian CPI (weighted average for eight capitals).00 1990 1991 1992 1993 Year 1994 1995 1996 1997 Figure 6 .00 WA SA 20. The BTE has published a similar index for more than 20 years.00 50. Transport SA. distribution or use on network prohibited.00 Percentage VIC TAS 1 TAS 2 30.2 Trends in costs Four MAs (DMR Qld. Main Roads WA uses indices issued by ABS for roads and road furniture. 0.Accumulated depreciation as a proportion of replacement value (roads sub-category) 5. Recent values of these indices are in Figure 7 and Table 2. The BTE Road Construction and Maintenance Index (RCMPI). was restructured in 1994.00 QLD NZ 10. — 11 — .00 Licensed to Prof Stephen Emery on 12 Apr 2006.Valuation of Road Infrastructure Assets in Australia and New Zealand 60. Personal use licence only. and the Rawlinsons Building Price Index for bridges. Storage. These indices are used to update valuations from year to year between revaluations.

Personal use licence only. Storage.Comparison of road sector cost indices in use in Australia and New Zealand Index Movement Trends 14 12 BTE CPI 10 DMR Qld GNFP (WA) % change from previous year 8 Raw' BPI RTA NSW TSA 6 TNZ Rds TNZ Brdgs 4 2 0 1985/86 1986/87 1987/88 1988/89 1989/90 1990/91 1991/92 1992/93 1993/94 1994/95 1995/96 1996/97 1997/98 -2 -4 Year — 12 — . Valuation of Road Infrastructure Assets in Australia and New Zealand Figure 7 .Licensed to Prof Stephen Emery on 12 Apr 2006. distribution or use on network prohibited.

Personal use licence only.7 139.2 121.6 12.2 104. Valuation of Road Infrastructure Assets in Australia and New Zealand BTE Year BTE Trend RCMPI (%) ABS CPI Trend (%) DMR Qld Main Roads WA RTA NSW Transport SA Transit NZ Trend (%) Bridge Constr uction Index Trend (%) Road Trend Gross Trend Rawlins Trend Input (%) non(%) on’s (%) Cost farm Building Index product Price Index (72/73 = 100) (89/90 = 100) (89/90 = 100) 76.9 1996/97 104.1 0.8 2.49 106.02 Road Trend Price Trend Road Cost (%) Index (%) Constr Index uction Index (85/86 = 100) 100.2) 1.4 (85/86 = 100) 100.0 7.2 5.0 1.0 1.5 106.3 0.5 (2.5 109.9 1.4 7.6 7.8 2.1 1.2 97.1 122.2 96. Storage.9 5.5 0.5 611.1 2.66 95.2 102.2 2.4 80.0 9.1 89.2 1.4 1.04 106.3 117.2 144.9 1.3 137.7 6.3 0.4 116.8 3.3 145.3 7.04 106.6 7.0 2.8 1.7 135.1 7.1 4.0 107.8p 7.2 151.6 1.8 2.2 1.7 2.8 3.7 80.3 1995/96 102.2 113.3 1993/94 100.0 1.1 3.7 142.0 0.9 157.2 0.04 107.5 95.3 (89/90 = 100) 75.0 107.2 116.3 1339 1368 1369 1396 1412 1438 1456 0.0 1994/95 102.3 109.2 2.1 601.6 1.3 148.04 106.2 119.4 1.75 102.5 96.65 115.0 1.9 3.6 134.6 4.3 76.0 0.5 1.8 1.4 3.0 1.9 86.8 555.5 3. Transport SA and Transit NZ — 13 — .3 111.0 134.8 1.6 109. distribution or use on network prohibited.8 1328 0.6 1.7 6.2 0.6 88.3 153.9 124.5 0.5 3.00 5.6 108.7 591.7 4.0 6.9 4.1 110.7 5.6p 1327 1337 1371 1371 1396 1418 1442 1461 Base year 1985/86 1986/87 1987/88 1988/89 1989/90 1990/91 1991/92 1992/93 (93/94 = 100) 73.6 1.Comparison of the Australian Consumer Price Index and the BTE Road Construction and Maintenance Price Index with Cost Indices used by DMR Qld.2 116.5 2.9 6.7 3.2 572.Licensed to Prof Stephen Emery on 12 Apr 2006.0 1.2 618.9 2.1 100.63 111.0) (0.4 4.8 1.8 120. RTA NSW.9 2.8 0.8 2.1 6.7 137.5 156.5 0.6 82.0 2.0 582. MR WA.8 4.1 149.42 113.9 7.7 115.8 105.0 130.9 1.8 2.39 85.2 1997/98 Table 2 .2 529.9 5.0 98.7 1.0 106.9 6.7 135.6 1.

bridges. The TNZ approach to valuation and depreciation of road infrastructure assets is in Section 6. Personal use licence only. traffic signals. bridges. etc).5 gives the definitions of bridges used in the valuation process.roads. Accounting for property. including the separate recognition of the seal from the balance of the pavement. and generally in accordance with the 1994 Austroads policy (Ref 6). and reports under three headings . miscellaneous (traffic facilities. Licensed to Prof Stephen Emery on 12 Apr 2006. For example. Storage. the NZ Auditor-General’s Office is promoting specific valuation of a greater number of components in the roads and bridges category. TNZ therefore reports the value of the State Highway network in an annual “Statement of Resources” which forms part of each TNZ Annual Report.Valuation of Road Infrastructure Assets in Australia and New Zealand 6. MAs typically value more infrastructure categories than shown in Table 3 which lists only those categories with valuations shown as part of infrastructure assets in Annual Reports at June 1997. formation. land purchased for future roadworks and surplus land. All Australian State Road Agencies and Transit New Zealand report the value of “bridges” separately from “roads”. 6. work in progress. Also in Appendix 7. Additional detail is available from each MA. TNZ regards the State Highway network as being owned by the Crown and local authorities. drainage.2 Practices used in valuing The current practices of Australian State Road Agencies and Transit New Zealand for valuing land under roads and within road reserves. plant and equipment (Ref 27). Table 7. TNZ values land. other structures. Most MAs publish an outline of their valuation method and any changes as notes to the financial statements in Annual Reports. DIER Tas also values traffic signals.5 of the TNZ State Highway Asset Management Plan (Ref 26). A checklist for compliance with the 1994 Austroads policy is in Appendix 6. Current Position in Australia and New Zealand 6. road furniture. street lighting and earthworks are summarised and tabulated in Appendix 7. — 14 — . As a result of the NZ Institute of Chartered Accountants Exposure Draft 82. bridges and other. distribution or use on network prohibited. roads. 6. pavement.3 Infrastructure categories valued and reported Table 3 shows the infrastructure categories valued and reported by MAs in Annual Reports at June 1997.1 General All Australian State and Territory road agencies and TNZ now report the value of their road infrastructure assets in accordance with AAS 29.

Reference to Appendix 5 shows that the value of land under roads and within road reserves varies from approximately 10% (DIER Tas) to around 35% (MR WA and RTA NSW) of the total written down value of road infrastructure assets. — 15 — . VicRoads has agreed a valuation approach with the Victorian Valuer-General based on “Raw Land Value”. fibre optic cable network. distribution or use on network prohibited. Values reported under this category represent the RTA’s future right to assume full control of privately funded roads in Sydney (Sydney Harbour Tunnel. the lane changing system on the Sydney Harbour Bridge. including traffic signals (approximately 3. whereas the value of other land is included in property assets. expanding it to cover all infrastructure used for the dynamic control of traffic. and the Transport Management Centre. RTA NSW is the only MA to recognise assets at 30 June 1997 under the “privately funded road infrastructure assets” category. M4 and M5 at 30 June 1997) which have been developed and are being managed under BOOT (build. closed circuit TV systems. and control room equipment). Transport SA has reported that a complete valuation of its land under roads and within road reserves is intended by 30 June 2000. The valuation is yet to be audited pending a clearance from Victoria’s Treasury to include the value in VicRoads Annual Financial Statements.4 Land Road agencies typically have other land assets in addition to land under roads and within road reserves. etc). 6. particularly • Licensed to Prof Stephen Emery on 12 Apr 2006. Storage. M2. • • The value of land under roads and within road reserves is included in road infrastructure asset valuation. Personal use licence only.000 sets). operate and transfer) arrangements. and surplus land. depots. own. land acquired for future roadworks. and has placed a value on land under roads.Valuation of Road Infrastructure Assets in Australia and New Zealand RTA NSW intends to review its Traffic Signal Control Network classification (SCATS computers and communications equipment. land used for management purposes (offices.

drainage and pavement) Bridges Other (includes tunnels. traffic facilities. distribution or use on network prohibited. earthworks. Storage. culverts.000 at 30 June 1997 includes only land acquired since 1 July 1996. Personal use licence only.3) Road Pavements Bridges Traffic Control Systems Earthworks (from June 1998) Sound barriers (from June 1998) Roads Bridges VicRoads " # Not applicable DIER Tas Licensed to Prof Stephen Emery on 12 Apr 2006.Valuation of Road Infrastructure Assets in Australia and New Zealand Table 3 Road infrastructure categories with valuations in Annual Reports at June 1997 Land under Roads and Within Road Reserves # Agency Work in Progress # Roads and Bridges Privately Funded Infrastructure Assets # RTA NSW Roads Bridges Traffic Signal Control Network (see Clause 6. subways and other structures) Not applicable # Valuation reported for this category. road lighting installations. " # DUS ACT " Roads Bridges Other Roads Bridges Not applicable DMR Qld " Land cost is expensed when construction begins # Not applicable (Note 2) TNZ " Valuation carried out. " Valuation not reported for this category — 16 — . # # # # Not applicable Main Roads WA Roads Not applicable Bridges Road Furniture (covers traffic signals. a reversible lane system. and not disclosed separately Roads (includes land under roads and within road reserves. and the Narrows Interchange reticulation system) Roads Bridges and Culverts Traffic Signals Street Lighting Not applicable Transport SA Value of $253. but included with “Roads” in Annual Reports " Included in the relevant category.

For bridges. Amounts quoted in this report are those for the Consolidated accounts. and “Consolidated (includes QML)”. For roads. For traffic signals and street lighting. DMR Qld reported road infrastructure valuations under “Parent Entity”. straight line depreciation is used. that is. DIER Tas uses a parabolic depreciation curve. most MAs use bridge age to determine depreciation. they include the Logan Motorway and the Gateway Bridge. generally with assumed average life spans from 12 to 50 years. and RTA is planning to adopt a condition based methodology. of the eight MAs with details in Table 4. bridges and traffic signal control network) following a review of AAS10. One (Transport SA) is investigating a change from age to condition. Transport SA uses remaining life as the basis of depreciation. Storage. The RTA NSW approach is predominantly based on age at present. those MAs which value earthworks separately generally do not depreciate earthworks. VicRoads and Transport SA have reviewed their approach to the valuation of earthworks during 1997/98. Licensed to Prof Stephen Emery on 12 Apr 2006. At 30 June 1997. and the remaining five use a straight line for depreciation of bridges. Main Roads WA and Transport SA have conducted analyses to determine the service and maximum lives of roads (40 to 60 years) shown in Table 4 as inputs to the calculation of depreciation. distribution or use on network prohibited. — 17 — . Within the roads sub-category. QML is Queensland Motorways Limited.4). three use condition as the basis of depreciation for roads. and five use age. VicRoads. The other six MAs with details in Table 4 use age as the basis of depreciation. Personal use licence only. 2. RTA NSW subdivided the road category of infrastructure assets into three separate sub categories (roads. 6.Valuation of Road Infrastructure Assets in Australia and New Zealand Notes to Table 3: 1. as detailed in Table 4. and periodically reassesses the remaining life of individual bridges. Outlines of the proposed approaches to the valuation of earthworks are in Appendix 7 (Table 7.5 Depreciation methods Table 4 shows the practices of MAs at 30 June 1997 in depreciation of road infrastructure assets. Assets recognised in the categories “land under roads and within road reserves” and “work in progress” are not depreciated.

depreciation as the 25 years Associated estimate of cost of T-Beam 50 years electronics: restoring pavement to Historic 250 years straight line. as detailed in different (asphalt metropolitan).9). Formation 80 years. with service life. — 18 — . based on assumptions that these assets are maintained at near new condition. Straight line: Straight line. Zero annual tunnels. 30 years. which since 1920. 7. 58 yrs inspection). Straight line. Straight line . 90 years. Bridges Predominantly based on age (condition based method being developed). ranging different maximum life 50 years. First depreciated 1995/96. squared). Condition based. (rural and outer urban arterials). Straight line.100 Straight line.Depreciation methods in use by Austroads Member Agencies (June 1997) Agency RTA NSW Roads Condition based.see below.40 years type. lives are Other roads: depending on generic assigned to Straight line . up to 100 years. 36 Economic life depreciation. Condition based.10 years. Straight line. Straight line: Straight line. Personal use licence only. using Parabolic (age Traffic 4 categories of roads. Appendix 7 (Table components. Zero annual depreciation. arterials and Nat Hwys). “near new” condition in Major 100 years. First depreciated 1994/95. 24 years. Traffic Signals Straight line. gradient (remaining 53 yrs (rural and outer life reviewed at each urban Nat Hwys). maintained are assumed to represent at near new 70% of the pavement condition. 12 years (gravel roads). DTW NT does not depreciate its assets Straight line. one year.similar to DIER Tas . 25 years. Straight line. 60 years. Straight line. 100 years. Straight line.200 years (100 yrs. signals: PMS (FNOS) is used to Steel. and 90 that these of the cost of replacing years for bridges built assets are base and surface. Straight line. Surfacing 7 . Street Lighting VicRoads DIER Tas Licensed to Prof Stephen Emery on 12 Apr 2006. calculate accumulated Timber bridge 33 years. Investigating a move to condition-based. from 11 to Earthworks: 40 years. 70 . 40 yrs (inner urban years with changing 12 years. Pavement 30 years. 50 years. concrete 70 yrs straight line. 100 years. 30 years. Storage. Straight line. Zero for earthworks and Straight line. 100 years. using 6 subnetworks . Earthworks: Infinite life from 1 July 1997. Straight line. after 1997). distribution or use on network prohibited. replacement cost). 20 years.Valuation of Road Infrastructure Assets in Australia and New Zealand Table 4 . Main Roads WA Transport SA DTW NT DUS ACT DMR Qld TNZ Pavements: See Note 4. Sealed rural roads: Straight line over Straight line. years for pavements assumed to be 100 based on (TNZ assumes that years for bridges built assumptions restoration costs are 55% before 1920.

No Indicator 1. 2.Valuation of Road Infrastructure Assets in Australia and New Zealand Notes to Table 4: 1.6 Use of asset valuation in Performance Indicators Main Roads WA has reported annually since 1993/94 two performance indicators of “assets employed”. 6. The VicRoads depreciation model allows for revaluations based on condition information.3. Main Roads WA also uses asset value as a basis for determining the annual user fee for capital which is an input to the MRWA Performance Index. an indicator used in determining shifts in productivity pay for personnel.Performance Indicators with asset value as an input MA Licensed to Prof Stephen Emery on 12 Apr 2006. as shown in Table 5. 3. A straight line methodology is adopted between revaluations.B Title Asset value and vehicle travel Asset value and freight Description Vkt per $ of road network asset value Tonne-km per $ of road network asset value MR WA MR WA Details of these two Main Roads WA Program Performance Indicators are in an extract from the 1997 Annual Report in Appendix 8 to this report. Storage. Land under roads and within road reserves is not depreciated. it does take account of pavement condition when establishing the accumulated depreciation. Whilst VicRoads has adopted a straight line depreciation methodology. Table 5 .A Indicator 1.2002 nominates “asset value of the state-controlled road network” as a corporate performance measure. Personal use licence only.3. The DMR Qld Strategic Plan 1998 . — 19 — . Depreciation is not applicable for work in progress. 4. Depreciation is not applicable for privately funded road infrastructure assets. distribution or use on network prohibited.

387m A$13.85 23.47 62.106m A$9.870m A$2.514m A$1.391m A$6.396m A$9. distribution or use on network prohibited.58 38.301m A$59.7 Bridge Values as a Proportion of Road Infrastructure Assets All Australian State Road Agencies and Transit New Zealand report the value of “bridges” separately from “roads”.545m A$47.31 MA RTA NSW VicRoads Licensed to Prof Stephen Emery on 12 Apr 2006.452m DIER Tas MR WA Transport SA DMR Qld Total (6 States of Australia) TNZ Notes to Table 6: 1.839m A$11.16 17.928m Bridges as a % of Roads 21.494m NZ$1. Trends in the written down values of bridges are in Figure 5.508m A$2. Storage.63 Bridges as a % of Total 17. except for a high dependency on bridges in Tasmania. at 30 June 1997. Table 6 .37 22.145m Bridges A$3.45 10.06 18.970m A$2.454m A$5. The value of privately funded road infrastructure has also been excluded from total road infrastructure asset values used in Table 6. bridges. Roads A$18.823m NZ$6.69 18.29 14.106m NZ$7. In addition.Valuation of Road Infrastructure Assets in Australia and New Zealand 6.76 12.104m A$914m A$865m A$345m A$1.86 15. This indicates a fairly consistent proportion of bridge values (13% to 18% of total excluding land).Written-down values of roads and bridges at 30 June 1997 Total Road Infrastructure (Notes 1 & 2) A$22. Table 6 shows the written down replacement values for roads. and total road infrastructure excluding land under roads and excluding privately funded infrastructure assets. Personal use licence only.50 16.23 13. The value of land under roads and within road reserves has been omitted from total road infrastructure asset values used in Table 6 because at 30 June 1997 four MAs have not reported the value of land under roads and within road reserves.365m A$1. — 20 — . 2.09 19.549m A$11. and Queensland with the lowest proportion of bridge value. exclusion of land may give a more meaningful comparison.

Note however that an asset such as a fleet of motor vehicles (as distinct from each specific vehicle) can be restored to new condition. variations in quality of construction and maintenance. a uniform rate of depreciation will not give a true indication of asset value. — 21 — . is a measure of the loss of service potential of an asset since the asset was acquired or constructed. The non-linear nature of the pattern of deterioration of the condition of pavements over long periods is well documented. on the basis that wear and tear from physical use outweighs commercial or technical obsolescence (see Appendix 9). year on year. Depreciation of Road Infrastructure Assets 7. Accumulated depreciation is the part of the original cost of a non-current asset which has been treated as an expense in successive profit and loss accounts. Net movements in accumulated depreciation. Personal use licence only. at least for pavements. therefore. A non-current asset is an asset which has a useful life extending over more than one accounting period. Examples of these movements are shown in Appendix 5. Accumulated depreciation. personal computer). 7.2 A discussion of depreciation in physical terms Licensed to Prof Stephen Emery on 12 Apr 2006. especially pavements. that is the cost of restoring its as-new service potential. if calculated on a linear time basis. thereby diminishing the worth of accumulated depreciation as a management tool. Condition based depreciation is described by Burns (Ref 17). and pavement technology improving with time give rise to nonlinear deterioration at the network level. distribution or use on network prohibited. At the network level. therefore are potentially strong indicators of the change in condition of the network. in successive Annual Reports since 1993 (Ref 2). It can therefore be argued that. favouring condition-based depreciation.Valuation of Road Infrastructure Assets in Australia and New Zealand 7. axle loadings increasing with time. can be restored to as-new or near-new condition (or service potential) through physical treatments such as rehabilitation. Accumulated depreciation in the context of an asset such as a road network is an indicator of the future cost of restoring the network from its present actual condition to an as-new or near-new condition. Road assets.1 The meaning of depreciation in accounting terms Depreciation is the proportion of an asset consumed during an accounting period. Storage. Restoration to as-new or near-new service potential is not economical for many assets (eg motor vehicle. uniform pavement deterioration might theoretically be possible. or the change in service potential of the network. Expenditure on maintenance or rehabilitation of assets offsets consumption or depreciation of those assets. Pavement deterioration is always non-linear at the project level. but factors such as non-uniform distribution of traffic loading and pavement age. A robust method for calculating depreciation is therefore essential for accumulated depreciation to be a reliable management tool. RTA NSW has reported a strong objection to the use of age-based depreciation for long-life assets such as road pavements. For example.

Austroads (Ref 10) has defined “remaining life” for a road pavement as: Remaining life of a pavement may be defined as the period.Valuation of Road Infrastructure Assets in Australia and New Zealand 7. provided that appropriate routine and preventive maintenance are carried out. DIER Tas makes two calculations. Storage. age is the most common basis for calculating depreciation of bridges in Australia and New Zealand. but not necessarily all methods of condition based depreciation may not comply with relevant Accounting Standards. Age based depreciation is appropriate in these cases. DIER Tas reports depreciation of bridges on the basis of parabolic deterioration with age. Licensed to Prof Stephen Emery on 12 Apr 2006. and it is appropriate to dispose of or write off these assets for operational reasons notwithstanding their good condition. The current approach by RTA NSW to calculation of depreciation for roads effectively renders estimation of remaining life unnecessary. As shown in Table 4. 7. of “complex assets” such as road infrastructure. under current or stated traffic growth. Personal use licence only. the challenges are to determine the expected life and the rate of change of “provision for restoration”. as explained in the extracts from the 1995 and 1996 Annual Reports in Appendix 9. Condition based depreciation is not appropriate for assets which are likely to become technically obsolete. for valuations at 30 June 1994 and since. RTA NSW calculated depreciation for its road assets as the sum of a condition based amount “provision for restoration” (ie. The Australian Accounting Research Foundation (AARF) has initiated a review of condition based depreciation (Ref 29). RTA NSW has calculated depreciation for roads (dominantly pavements) only on the basis of condition.4 Current AARF reviews of Australian accounting practice There is concern in the Australian accounting profession that some. distribution or use on network prohibited. and bridge structures designed for axle loading standards which become superseded. With an age based system for calculating depreciation. — 22 — . This review is also closely related to recent AARF work on major cyclical maintenance (Ref 30). Transport SA reviews the remaining life of each bridge at the time of the regular inspection. restoration to provide as-new service potential is not practical or economic. A different measure of loss of service potential is necessary. rather than through deteriorating condition. For example. Examples include electronic control equipment used in intelligent transport systems such as traffic signals. and a straight line approach is usually used in calculating depreciation. However. during which the pavement condition is expected to remain within stated limits. For these assets.3 Technical obsolescence Some assets lose service potential through technical obsolescence. It is appropriate to conduct periodic reviews of the expected life of assets subject to age-based depreciation. Until June 1993. condition based deterioration) and an age based amount “provision for asset renewal” (ie a straight line based on a 100 year life before technical obsolescence). whereas the other Austroads MAs use a straight line. one using a straight line and one using a parabola (ie age2). This is explained in the RTA NSW Annual Report (p46) to 30 June 1993 (Ref 2).

distribution or use on network prohibited. changes in the methodology used to value any component of the asset. one using the old method and one using the new method.Valuation of Road Infrastructure Assets in Australia and New Zealand 8. page 46). 1996 RTA Annual Report. It has to be recognised that changes in standards impact service potential. a change in standards for say shoulder width on roads or bridges may result in changed estimates of replacement cost. Factors Affecting Road Asset Values Factors which may contribute to changes in reported asset values include: • changes in the quantity of asset . as shown in Figures 4. changes in the condition of components of the asset where depreciation is based on asset condition.a reduction in construction costs will result in reduced estimates of reproduction or replacement cost. For example.road networks can be extended or reduced either through commissioning newly constructed works. changes in the estimated remaining life of part of the asset where depreciation is based on remaining life. in NSW control of the regional road network passed from the State (RTA) to Local Government during 1995/96 (Ref 2. or through changes in classification. changes in the age of the asset where depreciation is based on asset age. For example. 5 and 6 and Appendix 5. and reported two valuations at that date. • • • • Licensed to Prof Stephen Emery on 12 Apr 2006. changes in standards . Changes in performance standards such as flood immunity or safety could potentially have a similar effect. • • — 23 — . Storage.for example where current written down costs are based on replacement costs rather than reproduction costs. DIER Tas adopted a revised valuation model on 30 June 1996. technology innovations which increase efficiency . Personal use licence only. closing old routes or sections of road.

10 and 11 in Appendix 11). bridge. though its value is expected to be recorded in the appropriate set of accounts. with the valuation process picking up changes in capital value as a result of changes in inventory. The algorithm and an explanation are in Appendix 10. A consistent approach to the definitions of maintenance. What does “construction has commenced” mean in relation to “land under roads and within road reserves”? . Storage. Is work in progress recognised and reported in historical (“out turn”) or indexed to current year dollars? (cf Responses to Questions 9. road class. being the responsibility of the Melbourne City Link Authority. Improved consistency and robust methods for calculating accumulated depreciation are desirable. As an example. and the output is a cost per sq m. etc) individually and aggregate them in spreadsheets or similar. What is capitalised? What is expensed? (Eg. f) g) h) i) — 24 — . distribution or use on network prohibited. some MAs value every asset (eg. For example. and adjacent landuse (rural/urban). The Auditor-General of Tasmania has accepted the algorithm. DIER Tas uses an algorithm where the inputs are surface area. For “roads”. traffic volume. However. With respect to the cost of service adjustments in association with road infrastructure construction. notably TNZ and VicRoads which do not include facilities for inter-island shipping in road asset valuations.presumably physical works. Should the costs of traffic control be included? See the responses to Question 8 in Appendix 11. Age based (usually straight line) depreciation can be over a fixed pre-determined life. road link.Valuation of Road Infrastructure Assets in Australia and New Zealand 9. which could make significant differences to the valuation of road infrastructure in urban situations. c) d) e) Licensed to Prof Stephen Emery on 12 Apr 2006. The responses to Question 8 in the Questionnaire in Appendix 11 indicate some diversity on this point. it is necessary to distinguish between the cost of adjustments and the cost of new utility assets. Varying approaches to the inclusion of specific road related infrastructure contribute to inconsistency between jurisdictions in total reported valuations of road infrastructure. In estimating the replacement cost of infrastructure assets in a particular category. Issues to be Resolved in Valuation of Road Infrastructure a) b) The degree of precision and integrity and the cost of the valuation process should be influenced by the purpose or intended use and the potential benefits of the resulting information. the Melbourne City Link. The 1994 Austroads report Capitalisation of Infrastructure stipulates that the cost of public utilities should not be included in the value of roads and bridges. others assemble like assets into generic groups. Criteria for recognising expenditure as “work in progress”. terrain. one MA proposes to expense all roadworks costs. allocate typical values and aggregate them. viz too late to sell land back. is not included in VicRoads valuation information. at least one MA reports that it is impractical or not economical to omit utility adjustment costs with existing costing arrangements. Personal use licence only. The busway in Adelaide is included in Transport SA’s infrastructure assets. not VicRoads. and some ferry-related infrastructure assets have been valued and reported by DIER Tas whereas corresponding assets are not included for other MAs. rehabilitation and construction is desirable. Construction of road infrastructure assets). a significant road infrastructure asset in Victoria. or over a “remaining useful life” which can be regularly reviewed and reassessed from time to time.

The concept of a renewal annuity. but describing it as replacement (see the responses to Question 6 in the Questionnaire in Appendix 11). b) c) d) Licensed to Prof Stephen Emery on 12 Apr 2006. Is there a case for the valuation process to be more rigorously applied to pavements than to other components? No attempt has been made in this report to use available valuation data to calculate indicators such as return on investment. Deferred maintenance tends to be concentrated in the pavement sub-category of road infrastructure assets. and typically represents around 80% of the total value of road infrastructure assets without land under roads and within road reserves. especially in relation to functional obsolescence. Local). This reflects significant differences in service lives. This is covered in Question 3 in the attached questionnaire (see Appendix 11). distribution or use on network prohibited. State. It appears that MAs do not make a clear distinction between replacement and reproduction in this context. in terms of the quantum of investment involved and the effect on asset depreciation. Some State Road Agencies in Australia also report traffic signals separately. Personal use licence only.Valuation of Road Infrastructure Assets in Australia and New Zealand a) Some MAs make no allowance for upgrading to current geometric or hydraulic standards in estimating the replacement cost of roads and bridges. differences in condition assessment. The relevant point here may be to distinguish between “reproduction cost” and “replacement cost” as used in the 1994 Austroads report Capitalisation of Infrastructure (Clause 3. it is opportune to test the possibility of agreement on sub-categories within “Roads and Bridges”. Rationalisation of the use of cost indices among MAs appears to offer an opportunity for cost savings. National. e) f) g) h) i) j) — 25 — .3(c)). A number of issues relating to land under roads and within road reserves have been identified as shown in Appendix 4. with most MAs using reproduction cost. What level of awareness is there among MAs of the use made by external entities of valuation information in Annual Reports? Are users satisfied with the extent of information available? Figure 7 compares the trends of the indices in Table 2. though there are at present major differences in the scope of assets included in traffic signals. A per capita approach is potentially useful for specific classes of roads (eg. While the separate values of roads and bridges can be added to give a value in accordance with the Austroads category “Roads and Bridges”. as being used in the Australian water industry. The cost of pavement restoration is easily the largest component of accumulated depreciation when calculated on the basis of road condition. the dominance of pavements in road valuations. Storage. and the consequential dominance of pavement management in asset management decisions. could be explored. possibly representing more than 90% of accumulated depreciation. including consideration of concepts such as “annual average asset consumption” and “sustainability index” (Ref 27). Pavement is the element of road assets with the highest value. Australian State Road Agencies and Transit New Zealand report the value of “bridges” separately from “roads”. and are being addressed by the PSASB Working Party on land under roads and within road reserves. The MR WA Performance Indicators on Table 5 appear appropriate to the concept of return on investment. Pavement life cycle costs are high.

and between government service provision sectors Raises awareness of movements over time in the condition of the road network particularly important with mature networks where physical deterioration may be accelerating Sharpens focus on key management issues such as remaining service potential and remaining life of components of the asset Facilitates more effective allocation of resources to match service potential with user needs Provides fundamental benefit in setting up road use charges reflecting the cost of providing road infrastructure Facilitates comparisons as a starting point to explore differences. and changes in condition Creates potential to study relative movements in asset value as a result of say wet seasons or significant changes in landuse and traffic patterns. senior management. Personal use licence only. Specific benefits of road infrastructure valuation in the Australian and New Zealand context are expected to include: • Facilitates more effective and credible communication between politicians. not only in a technical engineering sense. as a key contributor to the agency’s financial position Improves awareness of the overall condition of the road network. economic and management disciplines Includes asset consumption or asset performance (change in condition or remaining service life over time).Valuation of Road Infrastructure Assets in Australia and New Zealand 10. etc. road routes. Benefits of Valuation In an article about performance indicators for the road sector. thereby underpinning the process of benchmarking Differences year on year between accumulated depreciation (accounting terminology) or provision for restoration (asset management) indicate whether the network as a whole is moving towards or away from condition targets • • Licensed to Prof Stephen Emery on 12 Apr 2006. • • • • • • • • • — 26 — . principally the performance of road pavements and bridges (the dominant components of accumulated depreciation of non-current assets). distribution or use on network prohibited. and staff in road agencies with Finance and Asset Management responsibilities. in strategic planning and budgeting processes Provides a common language for communication about asset management of road networks between people with strong affiliations to accounting. but also in a commercial sense Creates potential to study relative movements in asset value between geographic areas. an OECD scientific expert group reported in 1997 that the trend in the value of road assets “has been found to be a most useful indicator which has many uses and is the best summary descriptor of the long term performance of the road program” (Ref 22). Storage. engineering.

Personal use licence only. and improved effectiveness and efficiency in management of the road system (Ref 23. Licensed to Prof Stephen Emery on 12 Apr 2006. Issue 4. distribution or use on network prohibited. Storage. 11.2). eg vkt and tonne-km freight per $(value of assets) as used by Main Roads WA (see Appendix 8).2).Valuation of Road Infrastructure Assets in Australia and New Zealand • • • Assists in assessment of investment priorities between asset management of road infrastructure and other forms of community services Asset valuation data facilitates a balance between technical and commercial considerations in decisions about levels of investment and allocation of resources Gives potential for coarse inter-regional comparisons of returns on assets. Financial Summaries The availability of valuation information from all MAs enables compilation of annual financial summaries of Australasian Road Data in the formats along the lines suggested in Appendix 2. • Refinement of valuation methods may be expected to enhance these benefits. and as an aid to identification of Community Service Obligations. These formats show annual valuation. — 27 — . Issue 3. and a consistent approach to asset management. depreciation and investment by road class (National. Annual financial summaries of this type have the potential to generate discussion on what this data means (particularly the meaning in changes over time of this data) and how the data can be used in managing road assets. and Contributes to Austroads objectives such as a coordinated approach to administrative practice (Ref 23. State and Local) by agency. Agency staff would be more effectively motivated and committed to preparation of annual valuation reports if they were confident that the resulting valuation reports would be used as management tools.

pavement and drainage.3(c). to show separately earthworks. traffic signals (or more generically intelligent transport systems). bridges. — 28 — . Directions for Future Action 1. with effort focussed initially on the issues in Section 9 in this report. Work towards improved consistency in valuation methodologies and reporting. and compile annual financial summaries for incorporation in future editions of the Austroads series Road Facts (Ref 18) and elsewhere. year-on-year or inter-regional comparisons of ratios such as written down value/replacement value. particularly pavements and bridges. 7. For example: • • • It appears that most MAs are valuing roads and bridges at written down replacement cost rather than at written down current cost (the lower of reproduction. 2. etc. return on assets employed. rehabilitation and construction. etc). 9. Explore means of analysing valuation data to provide useful management information (eg. 5. Personal use licence only. value of assets per capita. 3. 8. net rates of road asset consumption. replacement or historical cost) in accordance with Clause 3. Territory and Local Governments in Australia and New Zealand.Valuation of Road Infrastructure Assets in Australia and New Zealand 12. Clarification of surplus land and land held for future infrastructure as a separate category of assets from land under roads and within road reserves. Explore the feasibility of adopting a single national index in Australia or a rationalised suite of indices for road costs. 6. Explore the potential for an Austroads National Performance Indicator based on road infrastructure valuation information. Review the suggested formats in Appendix 2. 4. Licensed to Prof Stephen Emery on 12 Apr 2006. and OECD PI 12. Develop a consistent approach among Austroads MAs to the definitions of key asset management terms such as maintenance. There appears to be a case for expanding the number of categories of road infrastructure assets. distribution or use on network prohibited. Continue current work to develop a consistent approach among Austroads MAs to the assessment of condition of the main components of road infrastructure. Storage. Gauge the use and potential use by external bodies of valuation information published by road agencies. but not forming part of infrastructure assets. Update and expand the 1994 Austroads policy booklet Capitalisation of Infrastructure. covering Commonwealth. State.

involving asset management and accounting professionals. — 29 — . The potential benefits to a road agency from both the valuation process and the resulting information are articulated. Conclusions A. distribution or use on network prohibited. Storage. complementing the traditional accounting perspective on capitalisation. D.Valuation of Road Infrastructure Assets in Australia and New Zealand 13. A number of other directions for future action are identified for consideration as part of the intended Austroads review of valuation methods for road infrastructure elements. C. E. This report sets out current practices in road infrastructure valuation. B. Licensed to Prof Stephen Emery on 12 Apr 2006. Personal use licence only. Valuation information is described from an asset management perspective. The relative potential of the different approaches to depreciation (condition based and age based) to support the use of valuation information as an effective input to road asset management decisions is worthy of further study. and identifies areas of consistency and inconsistency between the State road agencies in Australia and Transit New Zealand.

The Cost of Roading Infrastructure. Roads and Traffic Authority. Energy and Resources Tasmania (formerly DTW Tas and DoT Tas). 1996. November. plant and equipment. Annual Reports. 4. 1982. Ministry of Transport. 13. (formerly BTCE) 1996. 22. Annual Reports. References 1. 1994. Energy and Resources Tasmania (formerly DoT Tas). AARF. 1997. 1994. 20. June 1997 Valuation. 2. 17. 1993. Transport Infrastructure. Land Transport Pricing Study. AAS 27. 1997 and 1998. Condition-Based Depreciation . Annual Reports. Personal use licence only. 1997. State Highway Asset Management Plan (draft. International Conference of Maintenance Societies. 6. Abstract 26 and Issue Summary 98/8. Strategic Plan 1998 . Issue 99/7. August. 11. 1991 to 1997. Road Asset Management in Australia . Road Facts ’96. Department of Transport SA. Annual Reports. July 1998 (Final Draft). 30. March 1998 Exposure Draft 82. Austroads. 23. 1995. 18. Department of Infrastructure. 15. 27. Performance Indicators for the Road Sector. 19. 1996. 25. Transit New Zealand. Capitalisation and Reporting of Road Assets in Tasmania. NIMPAC Road Planning Model Manual (Page 2-C-8 et alia). Parliament of Tasmania. Austroads. Department of Infrastructure.5. June. 26. 8 September 1999. Facing the Renewal Challenge. Austroads. Austroads. Bureau of Transport Economics. March 1998).State of the Nation 1994/95. 1998. National Asset Management Manual. May 1998. 7. Main Roads WA. DMR Qld. 3. AP-109/94. 1997 and 1998. — 30 — . 28. Strategy for Improving Road Asset Management Practice.Valuation of Road Infrastructure Assets in Australia and New Zealand 14. P. Annual Reports.2001.Discussion Paper. Victorian Local Government Infrastructure Study. 1998. Annual Reports. AP-116/94. 1996 (Australian Accounting Standard) . Burns. Storage. Annual Reports. 8. 1997a. ALGENZ. NZ. 12. Austroads. 1994. Austroads. AAS 29. New Zealand Infrastructure Asset Management Manual. June 1999. 5. Austroads. Transit New Zealand. distribution or use on network prohibited. VicRoads. Urgent Issues Group. ICOMS-96. IMEA Australia. Accounting for major cyclical maintenance. AP18-97. Auditor-General Special Report No 26. 1994. 1998. 29. 1996. Road Asset Management Guidelines. Road Transport Research. 1995 to 1998. Managing for Asset Maintenance and Renewal. Skilmar Systems. Accounting for property. 1997 and 1998. 21. 1996 (Australian Accounting Standard) .State of the Nation 1994/95 Technical Supplement. Paper 48. AMQ International. Urgent Issues Group. and Jeff Roorda and Associates. Road Asset Management in Australia . 1995a. 14. 1995b. June.Financial Reporting by Government Departments (AARF). Office of Local Government. Licensed to Prof Stephen Emery on 12 Apr 2006. 9. AARF. 1990 to 1998. Capitalisation of Infrastructure. OECD. 1992. 24. BTE Road Construction and Maintenance Price Index (Information Paper 41). 1997b. Institute of Chartered Accountants of New Zealand and Financial Reporting Standards Board. 1995 to 1998. Section 6.Financial Reporting by Local Governments (AARF). 16. NSW. Melbourne. 10. NAASRA.

Valuation of Road Infrastructure Assets in Australia and New Zealand (September 1999) — 31 — .The Use of Valuation Licensed to Prof Stephen Emery on 12 Apr 2006.Valuation of Road Infrastructure Assets in Australia and New Zealand APPENDIX 1 Charter for Austroads Project BS. Storage. Personal use licence only.A.70 . distribution or use on network prohibited.

generally in line with the Policies and Rationale in the 1994 Austroads publication Capitalisation of Infrastructure. and effective communication and cooperation between finance and asset management staff in road authorities Licensed to Prof Stephen Emery on 12 Apr 2006. an Austroads report is proposed on the relevance of road asset valuations to the needs of road users and to an agency’s ability to deliver road services. Road Authority decision making in targeting investment decisions.Valuation of Road Infrastructure Assets in Australia and New Zealand AUSTROADS PROJECT . Financial summaries of this type will have the potential to generate discussion on what this data means (particularly the meaning in changes over time of this data) and how the data can be used in managing road assets. External users will use the data for lobbying. State and Local) by agency amongst other things. Personal use licence only. This will enable Austroads and others to compile annual financial summaries of Australasian Road Data in the formats such as that suggested in Appendix 11 in the Austroads 1994/95 State of the Nation Report on Road Asset Management in Australia.70 Use of Valuation in Asset Management Project Charter A. Storage. of the larger road agencies in Australia will issue data on the capitalisation of road infrastructure. Analysis could show annual valuation.BS. ISSUE/BACKGROUND In 1996/97 for the first time. This project will lead to such a report. most if not all. To help ensure that this discussion is well informed. B.A. distribution or use on network prohibited. — 32 — . knowledge regarding the effects of level of investment. This in part results from the adoption of accounting standard AAS 29. Time series analysis and reporting of movements in depreciation over time can be used to monitor changes in condition. depreciation and investment by road class (National. PURPOSE To promote wide and common understanding of the important role asset valuation can take in improving: (i) (ii) (iii) (iv) public knowledge of how well infrastructure is being managed.

METHODOLOGY As defined in D. OBJECTIVE The aim is to facilitate discussion on the relevance of capitalisation information. Although not finalised. in the context of the needs of road users and planning by road agencies to satisfy those needs. Storage.Valuation of Road Infrastructure Assets in Australia and New Zealand C.4 (Outcome and Strategy 2) Actions A10. Personal use licence only. rehabilitation and construction. AUSTROADS FIT Strategic Plan 1995-98: Strategy for Improving Asset Management Practice: Issues 1. workshop meaning of the financial data and how it can be used report national status and detailed benefits from valuation. E. even where methods comply with the Austroads report Capitalisation of Infrastructure and AAS 29. The crux is to establish rational links between asset valuation. — 33 — . CONSULTATION PROCESS Consultation is intended among the member authorities (MAs) through members of AUSTROADS AMRG and finance representatives. C5 D. asset use and investment in maintenance. Scope above the following methodology is proposed: (i) (ii) (iii) (iv) (v) assembly of data on asset valuation prepared by road agencies and the methods they use review methodologies compared with the 1994 ‘Capitalisation of Infrastructure’ document generate financial summaries for possible inclusion in future editions of the Austroads “Road Facts” publication. including annual valuations and movements in value of road infrastructure. Licensed to Prof Stephen Emery on 12 Apr 2006. Contact with external bodies interested in MAs financial reporting is proposed. and members of academia. this is likely to include user and accounting bodies. F. distribution or use on network prohibited.1 and 4. SCOPE Project scope consists of: (i) (ii) (iii) (iv) (v) assembly of data on asset valuation prepared by road agencies and the methods in use review methodologies compared with the 1994 ‘Capitalisation of Infrastructure’ document generate financial summaries workshop meaning of the financial data and how it can be used report national status and detailed benefits from valuation. asset condition. G. The Project would also examine the sensitivity of valuations to any variations in methods between agencies.

STAFFING AND RESOURCES Project Manager: Working Group: Michael Bushby DoT (Tas) To be assembled involving finance staff and asset managers. OUTPUTS A report on the potential to use infrastructure valuation data in planning asset management strategies. SUCCESS CRITERIA Increased acceptance of Asset Valuation as a public relations and network management tool. Common understanding of asset valuation as a tool. A balanced approach to the use of asset valuation data in decisions about levels of investment and allocation of resources. d.Valuation of Road Infrastructure Assets in Australia and New Zealand H. Consultant to facilitate and prepare report. Personal use licence only. I. b. OUTCOMES AND BENEFITS a. An increasingly credible and uniform approach to asset management. Licensed to Prof Stephen Emery on 12 Apr 2006. Improved opportunities for inter-agency benchmarking. K. — 34 — . with a view to an increased focus on the needs of road users. J. distribution or use on network prohibited. Storage. c.

distribution or use on network prohibited.Valuation of Road Infrastructure Assets in Australia and New Zealand APPENDIX 2 Possible Formats for Financial Data Summaries for Australasian Roads Licensed to Prof Stephen Emery on 12 Apr 2006. Valuation of Road Infrastructure Assets in Australia and New Zealand (September 1999) — 35 — . Storage. Personal use licence only.

. Storage. National Roads Land under roads Works in progress Roads and bridges Privately funded inf assets Total National Roads Value* ($’000) ($’000) Depreciatio n Constructio n Investment ($’000) Maintenanc e Investment ($’000) Rehabilitatio n Investment ($’000) Licensed to Prof Stephen Emery on 12 Apr 2006. State Roads Land under roads Works in progress Roads and bridges Privately funded inf assets Total State Roads Local Roads Land under roads Works in progress Roads and bridges Privately funded inf assets Total Local Roads GRAND TOTAL — 36 — .Valuation of Road Infrastructure Assets in Australia and New Zealand AUSTRALASIAN ROAD DATA FINANCIAL SUMMARY Year Ended 30 June ……. distribution or use on network prohibited. Personal use licence only.

Personal use licence only. distribution or use on network prohibited.Licensed to Prof Stephen Emery on 12 Apr 2006. Storage.. Valuation of Road Infrastructure Assets in Australia and New Zealand AUSTRALASIAN ROAD DATA 199? . Land Under Roads National Roads Works in Roads & Privately Progres Bridges Funded Infrastr s Assets Land Under Roads State Roads Works in Roads & Privately Progres Bridges Funded Infrastr s Assets Land Under Roads Local Roads Total Works in Roads & Privately Progres Bridges Funded Infrastr s Assets Land Grand Totals Queensland NSW Value $ m Qty ’000 km Value $ m Qty ’000 km Victoria Value $ m Qty ’000 km Tasmania Value $ m Qty ’000 km South Australia Western Australia Northern Territory Australian Cap Territory AUSTRALIA TOTAL NEW ZEALAND Value $ m Qty ’000 km Value $ m Qty ’000 km Value $ m Qty ’000 km Value $ m Qty ’000 km Value $ m Qty ’000 km Value $ m Qty ’000 km — 37 — .DISTRIBUTION OF ASSETS Year Ended 30 June …….

distribution or use on network prohibited. Storage.Value of Assets Summary of Australian Responses to OECD Questionnaire Licensed to Prof Stephen Emery on 12 Apr 2006. Personal use licence only. Valuation of Road Infrastructure Assets in Australia and New Zealand (September 1999) — 38 — .Valuation of Road Infrastructure Assets in Australia and New Zealand APPENDIX 3 OECD Project IR7 on Performance Indicators Performance Indicator PI 12 .

Valuation of Road Infrastructure Assets in Australia and New Zealand APPENDIX 3 OECD PROJECT IR7: PERFORMANCE INDICATOR "PI 12 .pavements? . new investments etc.unfinished structures (construction project) ? .project plans? .bridges and tunnels? .VALUE OF ASSETS" .FIELD TEST Tasmania Measuring Procedure (a) Is there a method in use to calculate and measure the value of assets of the road infrastructure: (1) Is the road infrastructure defined for asset value calculation? (2) Does the defined road infrastructure include classified engineering structures: YES South Australia YES New South Wales YES Western Australia YES Queensland YES Victoria YES Northern Territory YES YES YES YES YES YES YES YES YES .) defined for asset value calculation. Personal use licence only.Licensed to Prof Stephen Emery on 12 Apr 2006.road structures? . distribution or use on network prohibited.other engineering structures? . Storage.other? (5) Are the annual road investments (reconstruction.equipment or accessories? (3) Does the road infrastructure include land areas or other properties? (4) Does the road infrastructure include other elements: . (6) Is there a standard procedure for calculation of road investments? (7) Are the road investments calculated or reported annually? YES YES YES NO NO YES YES YES YES YES YES NO YES YES YES YES YES YES YES YES YES YES YES YES YES (Earthworks & Drainage) YES YES NO NO (included in others) YES YES YES YES YES YES YES YES YES YES YES YES YES NO YES NO NO YES YES NO NO YES YES NO NO YES YES NO NO YES YES YES NO NO YES NO NO NO NO NO YES NO NO YES YES YES YES YES YES YES YES YES YES N/A YES — 39 — .

A pavement management system called dTIMS has recently been acquired that may be used for investment option selection and for optimising fund distribution.Licensed to Prof Stephen Emery on 12 Apr 2006.) to calculate and measure the asset value? (12) Does the asset value calculation system record data history? YES YES NO YES YES NO NO YES YES NO NO YES YES YES NO YES YES YES NO YES YES NO NO YES NO NO NO NO YES NO YES YES NO YES YES YES NO YES YES YES YES NO YES YES YES Not the system itself. Personal use licence only. distribution or use on network prohibited. but copies of data files used for the calculation every year are kept. YES YES YES (13) Does the calculation system include: .hold times? .depreciation parameters? .salvage values? (9) Are the calculation parameters based on studied or measured information? (10) Is the asset value calculated or addressed for the physical road sections? (11) Is there a system (module. Valuation of Road Infrastructure Assets in Australia and New Zealand (8) Is there a standard procedure for asset calculation comprising calculation parameters: . Storage. NO NO YES NO NO NO . software etc.fund distribution optimisation techniques? NO NO YES see above NO YES NO — 40 — .analysis routines for investment option selection? YES NO NO NO YES YES YES Not the asset valuation model.possibility to adjust calculation parameters? .

planning for funding of road investments? . straight line depreciation. Personal use licence only. Storage. 2% depreciation N/A ARV ONLY — 41 — .road structures Included in pavements Yearly Depreciation Included in Expenditure pavements $US3. distribution or use on network prohibited. terrain type. 4.25%. Valuation of Road Infrastructure Assets in Australia and New Zealand (14)Is the asset value calculated for different type of structure? (15) Is the asset value calculated for different road classes? (16) Is the annual calculation and asset value reviewed and reported transparently depending on circumstances? YES YES YES YES YES YES YES YES YES YES YES YES YES YES YES YES YES YES YES YES YES (17) Is the asset value used for: . hold times (year) and salvage values(%): YES NO YES YES YES YES YES YES YES NO NO YES NO NO YES YES YES YES YES NO YES .Licensed to Prof Stephen Emery on 12 Apr 2006. yearly depreciation values (%). Calculation parameters=terrain factor. overheads.0M. ie.5% written down replacement cost. section length. formation width. unit rates.balance sheets of road authorities? C) Specify asset value calculation parameters.strategic planning for road management? . 80yr 60 years. Yearly depreciation = 0. clearing costs.5% Hold time = 200 years (changed to 100 years this year Formation/Drainage 1. soil type.

land $US64m ie. pavement age and roughness value. straight line replace less cost parabolic depreciation to restore depreciation Present Value = Replacement Cost x (1age/life)2 Calculation parameters Timber. straight line depreciation. distribution or use on network prohibited. formation width. 80yr = average unit replacement cost by type.pavements Carriageway Yearly depreciation Written down area.4m ie. Valuation of Road Infrastructure Assets in Australia and New Zealand . 30yr Hold time = varies according to road type. pavement type. Yearly depreciation = varies according to road type. Yearly depreciation = varies according to bridge type. 100.other engineering structures NIL Yearly depreciation $US0. 1.Licensed to Prof Stephen Emery on 12 Apr 2006. pavement age and roughness values. road type.3%. 3. — 42 — . soil type. . depreciation. section length. 1. condition based depreciation is employed Calculation parameter=pavement depth. unit rates. traffic straight line replace less cost volumes. Personal use licence only.5%. terrain. to restore National/State road. 90 years 1% depreciation . N/A Yearly depreciation = Concrete 1%. varies according to culvert type and environment type. 7. Yearly depreciation Written down base unit rates $US6.6%. but not more than 50 years. value = cost to for replacement. Hold time = varies according to bridge type from 50 to 100 years.7%. Hold time = varies according to culvert type and environment type from 30 to 100 years. overheads. Storage.25%. value = cost to use.13m ie. 2.bridges or tunnels class of structure.

59B WDV=$US1.32B WDV=$US1.76B WDV=$US0.644M $US2325M $US917M $US1378M $US6248M $US1.802M Included in bridges and (Traffic Facilities) culverts above RV=$US0.47B WDV=$US2.road infrastructure in total.bridges or tunnels .road structures . 4% depreciation .630B Included in pavements $US1225M $US226M $US2M $US2.pavements . Hold time = 25 years. Valuation of Road Infrastructure Assets in Australia and New Zealand . No depreciation N/A Not depreciated Surfacing 14% or 10%. N/A .47B Surfacing $US590M NIL $US63 — 43 — .unfinished structures ACTUAL COST To be determined N/A . No depreciation.534B $US11.land areas Average value/sq To be determined m for commercial.859B RV=$US2.057B WDV=$US0. Personal use licence only.other engineering structures . residential and urban areas.Licensed to Prof Stephen Emery on 12 Apr 2006.26B RV=$US2.project plans NIL To be determined N/A .035B RV=$US2.64 Billion . distribution or use on network prohibited. 7 or 10 .56B Formation/Draining $US4.26B RV=$US0.equipment or accessories NIL To be determined N/A Yearly depreciation = 4%. Calculation parameters = direct actual costs. Storage.land areas $US3. if not classified NIL N/A N/A d) Report asset value (1997) RV=Replacement Value WDV=Written Down Value Included in pavements $US952M $US599M NIL NIL $US186M $US9. Calculation parameters = average land values in the metropolitan area and nominal unimproved valuation rates for rural area.other NIL To be determined N/A N/A Traffic control systems 24years.equipment or accessories .

unfinished structures (construction projects) .28B WDV=$US6. Personal use licence only. The calculation method used for Infrastructure Assets must adhere to Australian Accounting Standards N/A Goal for value of assets ($USmillion) or road infrastructure.089B N/A N/A RV=$US8.089B WDV=$US0. if not classified Unit Number or percent of yes/no answers Value of assets in $US million $US16M NIL NIL NIL Yes 20.road infrastructure in total.project plans . N/A Goal for change of assets ($US million) or road infrastructure over a time period.92B WDV=$US6. Valuation of Road Infrastructure Assets in Australia and New Zealand .Licensed to Prof Stephen Emery on 12 Apr 2006.70B $US236M $US149M N/A Gross Value $US3144M.64 Billion Target Value Goal for standard of the method to calculate or measure value of assets of road infrastructure.40B RV=$US7. distribution or use on network prohibited. No 10 $US1753M $US114M $US372M RV=$US0. and to better determine the remaining life and value of pavements by improving the current deterioration model that is based only on roughness and pavement age.other . Written down value $US1567M $US24. there is no be preserved at corporate target for this least to current indicator value N/A — 44 — . Storage. if any? NIL Not developed The goal is to ensure accurate calculation of the replacement value and the depreciated value. if any? NIL Currently. if any? NIL Existing asset to Currently. there is no corporate target for this indicator Value based on deprival method at current replacement cost and any capital works in progress at current cost.42B $US8712M $US7838M $US1.

0.48B Asset valuation was ($US/$A .56B (not depreciation for earth works) Not available Not Available 1993 UNAVAILABLE UNAVAILABLE $US26.71b $US7.0.655) RV=$US6.09B ($US/$A . Not available Not Available — 45 — .0b 1995 UNAVAILABLE UNAVAILABLE $US27.75b $US1. Storage.0.77B ($US/$A .74B ($US/$A .70B $US8.550km of road was taken from Local Government at 30 June 1996 as result of a road classification review. distribution or use on network prohibited.0.Licensed to Prof Stephen Emery on 12 Apr 2006.655) RV=$US8.91B (Approximately 1.84b 1996 $US1.28B WDV=$US6.655) applied from 1994 onwards.40B ($US/$A . Valuation of Road Infrastructure Assets in Australia and New Zealand Trends Value of assets ($US billion) of road infrastructure (structures/land areas): 1998 1997 $US1.74b $US1.0.64b $US23.0.42B Not available $US6.655) $US24.37B WDV=$US5.) Not available Not Available 1994 UNAVAILABLE UNAVAILABLE $US26.57b $US26. Personal use licence only.655) WDV=$US5.92B WDV=$US6.18B RV=$US6.67B ($US/$A .655) RV=$US7.

Nat Highways 19. $US400. and Texture) $US200. Unincorporated Regional 510km.757km. completion report Systematic collection of pavement treatment data. 3 lasers.470km Nat Highways 10. Secondary 6.010km. However. Management State the lengths of different classes of roads under the above management Authority authority relevant to the indicator. Developmental Roads 8. $US100. only roughness is used for calculating the remaining life of pavements.000 $US160.815km.273km State State State government State State Nat. Unincorporated Local 2. Total 20.760kms. State roads 14. Visual and automated data collection (roads) and manual data collection (bridges) Laser profile.17c) is updated annually. 3.649 km National Highways 4.242kms — 46 — .650km State Highways 6.Licensed to Prof Stephen Emery on 12 Apr 2006. Storage.461km.547km Total 17.000 to existing systems maintain and update the and performing the road inventory system calculations (annual).001kms. Toll roads 58km.000 Road Condition Survey (Roughness. Other road inventory data used in the valuation (see qu.000 approx. Highways 2753 km.135km. Rural Arterial 8633km.610km. Rutting. Freeways 623kms. Personal use licence only. RoadCrack Survey $US170. Arterials 132km.000 Major collecting roughness additional cost in and rutting data (every 2 extracting data from years).000/year Bridges not available. $US350. Most data sourced from existing Asset Management Information Systems Data collected with assistance of VicRoads Regions and consultants Costs Approximate administration authority level (national/state/provincial/regional/local) relevant to indicator.000 for $US120.440kms. Main Roads 27. State the lengths of different classes of Road Classification roads under the above management authority relevant to the indicator. and Rural Local 10328km National Highways 3.273km Main roads 6. National & state roads National Hwy 320kms. Tourist Roads 3. distribution or use on network prohibited. Urban Local 24km. Subarterials 67kms. Valuation of Road Infrastructure Assets in Australia and New Zealand Data Collection Report data collection methods for annual road investments Inventory and Annual condition capitalisation of surveys.000 to maintain and update the bridge management system (annual). $US200000/year $US65. for collecting roughness and rutting. works work in progress. Urban Arterials 890km. State Rds. Main 7.

For financial measurement method of asset value and the budget statements. distribution or use on network prohibited. MRWA recognises the potential use of asset valuation in calculating the return on invbestment. Personal use licence only.655 — 47 — . For reported value of assets. $US/$A exchange rate used of 0. as a result of the allocation of funds for preservation works (calculated as a percentage of replacement value). Used in the following: RTA Annual Report and in Asset Management for Resource Allocation Asset valuation is used Government mainly for financial Financial reporting and to Statements highlight trends in the value of the asset. Valuation of Road Infrastructure Assets in Australia and New Zealand How is the indicator used? Describe the utilisation of the calculation or Annual report.Licensed to Prof Stephen Emery on 12 Apr 2006. negotiations and strategic funding strategic planning assessment. Storage. The valuation of infrastructure assets is being used as a budgeting tool for depreciation. in a general sense.

Valuation of Road Infrastructure Assets in Australia and New Zealand APPENDIX 4 Valuation of Land under Roads and Within Road Reserves Points of Agreement Licensed to Prof Stephen Emery on 12 Apr 2006. Valuation of Road Infrastructure Assets in Australia and New Zealand (September 1999) — 48 — . distribution or use on network prohibited. Storage. Personal use licence only.

A six-page report was produced. The main points are: • • • Land under roads and within road reserves should be recognised as an infrastructure asset (all agreed except NT). The benefits of valuing land will exceed the costs involved provided the valuation methodology reflects the purpose of the valuation. partly because of an interdependence of values between land within a road reserve and land adjacent to a road reserve. Land in road reserves of all roads whether freeways. All land in road reserves. Recognition of land under roads is considered likely to benefit users of financial reports. Storage. The current market price of adjacent land is not normally the best indicator of the current market price for land in a road reserve. DMR Qld and Transport SA met on 15 April 1998 at VicRoads to develop an Austroads consensus for submission to the PSASB Working Party on valuation of land under roads and within road reserves. Recognition of land under roads may influence road pricing but would have no real impact on day to day asset management decisions. Current market price could be applicable to land for future roadworks. Land in road reserves should be valued using an average of rateable values for a wide area such as a local government area or a postcode area.Valuation of Road Infrastructure Assets in Australia and New Zealand APPENDIX 4 Valuation of Land Under Roads and Within Road Reserves Representatives of VicRoads. DIER Tas. Land under roads is essential to the provision of road services and there are no legal impediments to road authorities gaining benefit from land under roads or denying or regulating access by others to the benefits embodied in the land. The potential future economic benefits of land in a road reserve would be overstated if recorded at current market price when the road agency is restricted in its use of the land (as in the case of the majority of public roads where there is a common law right of access to the road from adjoining land). and a single common approach should be used. regardless of the method of acquisition. Personal use licence only. • • • • • • • • • • • • • — 49 — . The value of land under roads is unlikely to be useful in assessing the efficiency of an agency in providing road services. surplus land and land held for future infrastructure are accountable for those assets as resources. RTA NSW. Agencies that control land within road reserves. • Licensed to Prof Stephen Emery on 12 Apr 2006. Land under roads and within road reserves should be separated into “Land in Road Reserves” and “Surplus Land and Land held for Future Infrastructure”. arterial or local roads including National and State roads can be reliably valued. Surplus land and land held for future infrastructure can be valued reliably. including land contributed without cost by for example a developer. The value of land under roads and within road reserves would have no real impact on day to day asset management decisions. surplus land and land for future roadworks should. be recognised and valued. distribution or use on network prohibited. Land under roads will represent a significant item in balance sheets and profit and loss statements.

Personal use licence only. distribution or use on network prohibited.Valuation of Road Infrastructure Assets in Australia and New Zealand APPENDIX 5 Summaries of MAs’ road infrastructure asset valuation data Licensed to Prof Stephen Emery on 12 Apr 2006. Storage. Valuation of Road Infrastructure Assets in Australia and New Zealand (September 1999) — 50 — .

910 2.449 3.738 13.346 3.080 8.104 1.252 927 476 450 2.346 3.893 3.306 9.970 9.714 Queensland (Department of Main Roads) (A$m) ROADS BRIDGES LAND WORK PRIVATELY TOTAL Replacement Cost Accumulated Depreciation Written Down Value Replacement Cost Accumulated Depreciation Written Down UNDER ROADS Value IN PROGRESS FUNDED INFRASTRUCTURE Replacement Cost Accumulated Depreciation Written Down Value 1997 19.786 3.543 1.539 6.246 9.841 2.595 25 728 738 Victoria (VicRoads) (A$m) EARTHWORKS Replacement Cost Accumulated Depreciation Written Down Value PAVEMENTS (pre '98.250 included in roads included in roads 4.996 0 4.029 298 299 288 218 208 826 865 854 831 821 3.681 3.454 1.902 2.737 9.743 0 4.208 5.142 1.433 2.859 3. distribution or use on network prohibited.171 10.982 3.543 — 51 — .446 4.829 1.089 1.) 1996 1995 (adj) 1995 1994 1993 1992 2.960 5.537 1.323 11.248 3.192 5.181 3. Energy anmd Resources) (A$m) ROADS BRIDGES LAND WORK PRIVATELY TRAFFIC SIGNALS Accumulated Depreciation Written Down Value TOTAL Replacement Cost Accumulated Depreciation Written Down Value Replacement Cost Accumulated Depreciation Written Down UNDER ROADS Value IN PROGRESS FUNDED Replacement INFRASTRUCTURE Cost Replacement Cost Accumulated Depreciation Written Down Value 1997 1996 (A.195 3.284 1.446 2.507 3.151 2.443 3.4) 191 229 515 577 224 224 217 157 138 128 66 45 86 96 151 112 92 5 88 #VALUE! #VALUE! #VALUE! 15.117 762 728 665 705 2.837 3.864 9. Storage.Licensed to Prof Stephen Emery on 12 Apr 2006.001 4.365 9.512 2.788 2.079 2. DRAINAGE & SEAL Replacement Cost BRIDGES LAND WORK PRIVATELY ROAD FURNITURE Accumulated Depreciation Written Down Value TOTAL Accumulated Depreciation Written Down Value Replacement Cost Accumulated Depreciation Written Down UNDER ROADS Value IN PROGRESS FUNDED Replacement INFRASTRUCTURE Cost Replacement Cost Accumulated Depreciation Written Down Value 1998 1997 1996 1995 1994 3.103 1.164 11.933 1.563 6.542 3.945 1.235 4.089 1.307 1.058 936 874 753 189 177 178 164 42 914 911 911 911 894 874 285 284 284 276 276 265 249 274 24 9 9 21 21 31 16 6 21 11 10 3.833 2.861 1.193 2. Valuation of Road Infrastructure Assets in Australia and New Zealand REPORTED VALUES OF ROAD INFRASTRUCTURE ASSETS Tasmania (Department of Infrastructure.070 5.687 2.040 8.396 359 22.044 3.738 12.859 2.046 1.625 1.562 739 732 779 793 793 753 750 985 1.569 3.942 9.047 3.950 2.798 3.259 3. Personal use licence only.586 1.235 4.301 Western Australia (Main Roads Department) (A$m) EARTHWORKS Replacement Cost Accumulated Depreciation Written Down Value PAVEMENT.743 7.018 1.898 3.831 3.308 3.826 3.523 244 137 79 19 41 86 87 78 68 65 30 33 26 20 20 56 54 52 48 45 12.251 4.449 11.545 1.869 8.123 1.711 10.213 939 909 957 957 835 753 775 985 2.097 2.467 2.050 1.653 4.412 (see Clause 6.165 1.279 12.812 415 1.878 1.980 2. "Roads") Replacement Cost BRIDGES LAND WORK Accumulated Depreciation Written Down Value Replacement Cost Accumulated Depreciation Written Down UNDER ROADS Value IN PROGRESS TRAFFIC CONTROL SYSTEM FUNDED Replacement INFRASTRUCTURE Cost PRIVATELY SOUND BARRIERS Accumulated Depreciation Written Down Value Replacement Cost Accumulated Depreciation Written Down Value TOTAL Replacement Cost Accumulated Depreciation Written Down Value 1998 1997 1996 1995 (unaudited) 4.313 13.250 9.577 1.252 3.837 3.415 3. R.439 3.552 12.563 5.403 2.202 2.924 1.044 3.626 3.

729 3.775 3.840 11.913 43.415 2.176 2.120 3.719 47.703 14.354 1.150 2.958 1.035 22.924 3.944 2.922 568 493 522 692 925 766 302 498 484 469 455 262 269 8 7 10 10 8 7 6 6 2 1 6 6 10 10 8 7 6 6 41.356 2.344 1.094 21.816 1.076 2.337 4.933 3.336 1.135 3. Valuation of Road Infrastructure Assets in Australia and New Zealand Transport South Australia (A$m) ROADS BRIDGES LAND WORK PRIVATELY TRAFFIC SIGNALS Replacment Cost Accumulated Depreciation Written Down Value STREET LIGHTING Replacment Cost Accumulated Depreciation Written Down Value TOTAL Replacment Cost Accumulated Depreciation Written Down Value Replacment Cost Accumulated Depreciation Written Down UNDER ROADS Value IN PROGRESS FUNDED INFRASTRUCTURE Replacment Cost Accumulated Depreciation Written Down Value 1997 1996 1995 1994 1993 1992 1991 1990 3.696 5.088 8.922 1.836 2.051 6.906 3.726 4.039 1.968 1.253 2.616 2.898 1.126 4.Licensed to Prof Stephen Emery on 12 Apr 2006. Personal use licence only.906 3.778 4.565 6.193 4.432 4.964 21.538 9.959 1. distribution or use on network prohibited.302 2.395 2.193 4.462 1.282 2.071 27.614 5.933 3.473 1.673 1.922 1.957 40.270 2.373 500 435 372 354 355 341 341 120 105 74 72 80 72 70 380 330 298 282 275 269 271 12.350 7.671 1.056 10.481 1.456 17.826 14.022 2.792 570 848 943 351 18.496 9.540 42.417 18.050 1.878 3.286 2.153 11.411 1.775 3.305 2.568 1.049 8.135 3.064 42.764 New South Wales (Roads and Traffic Authority) (A$m) ROADS BRIDGES LAND WORK Replacement Cost Accumulated Depreciation Written Down Value Replacement Cost Accumulated Depreciation Written Down UNDER ROADS Value IN PROGRESS TRAFFIC SIGNAL CONTROL SYSTEM FUNDED Replacement INFRASTRUCTURE Cost PRIVATELY TOTAL Accumulated Depreciation Written Down Value Replacement Cost Accumulated Depreciation Written Down Value 1997 1996 1995 1994 1993 1992 1991 1990 22.070 4.922 20.786 2.970 43.337 4.904 7.853 570 848 943 351 0 37.870 3.776 4.762 4.415 2.106 17.219 1.838 4.190 9.420 4.750 36.430 7. Storage.756 1.389 2.278 2.940 1.368 — 52 — .059 3.806 8.395 20.756 1.876 40.743 16.803 13.778 3.108 1.713 7.692 41.420 Transit NZ (NZ$m) ROADS BRIDGES LAND WORK PRIVATELY OTHER TOTAL Replacement Cost (incl land under roads) Accumulated Depreciation Written Down Value Replacement Cost Accumulated Depreciation Written Down UNDER ROADS Value IN PROGRESS FUNDED Replacement INFRASTRUCTURE Cost Accumulated Depreciation Written Down Value Replacement Cost Accumulated Depreciation Written Down Value 1998 1997 1996 1995 1994 1993 1992 9.895 1.150 2.906 3.714 14.382 8.714 54 52 61 3.701 10.042 7.032 991 951 1.253 174 305 44 40 54 36 33 27 8 7 27 57 61 61 36 37 31 21 24 30 4.797 14.849 20.906 3.036 5.453 1.886 21.382 2.281 40.253 2.851 41.746 9.915 6.415 42.474 18.105 17.272 933 903 862 832 805 817 791 1.258 9.839 1.940 1.764 623 607 591 278 264 248 345 344 343 0.440 1.465 1.354 7.696 21.679 20.786 4.465 1.176 2.175 21.729 3.057 7.022 1.810 40.484 2.918 9.749 3.089 5.387 2.407 2.786 2.630 41.

Valuation of Road Infrastructure Assets in Australia and New Zealand (September 1999) — 53 — . Storage. Personal use licence only.Valuation of Road Infrastructure Assets in Australia and New Zealand APPENDIX 6 Checklist for compliance with Austroads 1994 policy Licensed to Prof Stephen Emery on 12 Apr 2006. distribution or use on network prohibited.

Is the land valued on basis of area of road reserve at average VG’s average rateable value of land in the LGA.Valuation of Road Infrastructure Assets in Australia and New Zealand APPENDIX 6 Checklist for Compliance with Austroads 1994 Policy (Reference: 1994 Austroads report Capitalisation of Infrastructure) General 1. and Privately funded infrastructure assets? Licensed to Prof Stephen Emery on 12 Apr 2006. historical indexed. irrigation. or construction has commenced? Work in Progress 4. Are all actual costs shown. Work in progress. including overheads and pre-construction activities. pavement. sewer. Are road infrastructure assets recognised under four categories: Land under roads and within road reserves. is the source of the index shown? Are the costs of public utilities (eg. 6. street lighting. but excluding land? Roads and Bridges 5. eg. categorised as “urban” or “non-urban”? 3. 8. signs. distribution or use on network prohibited. road formation. other structures. Valuation Land Under Roads and Within Road Reserves 2. replacement or reproduction) for the various components of road and bridge assets? Is the depreciation rationale described for the various components which are depreciated differently. water. electricity. drainage. Storage. gas. Is land included only where road is in use. Roads and Bridges. Personal use licence only. signals. — 54 — . 9. bridges. Are current costs shown for all road and bridge assets? Is the rationale explained for arriving at current cost (eg. etc) excluded? 7. etc? Where indexing is used. communications.

work in progress. and street lighting Definitions used by MAs for bridges Service lives of structures assumed by MR WA Licensed to Prof Stephen Emery on 12 Apr 2006. distribution or use on network prohibited. traffic signals. bridges. Personal use licence only. roads. Storage.Valuation of Road Infrastructure Assets in Australia and New Zealand APPENDIX 7 Current MA practices in valuing land under roads and within road reserves. earthworks. Valuation of Road Infrastructure Assets in Australia and New Zealand (September 1999) — 55 — .

distribution or use on network prohibited. Table 7.1 Valuations of land under roads and within road reserves category at 30 June 1997 Valuations of work in progress category at 30 June 1997 Valuations of roads sub-category at 30 June 1997 MA approaches to the valuation of earthworks Valuations of bridges sub-category at 30 June 1997 Definitions of bridges adopted by Member Agencies for valuation purposes Valuations at 30 June 1997 of traffic signals/facilities and MR WA road furniture sub categories Valuations at 30 June 1997 of Transport SA street lighting and TNZ culverts.9 — 56 — .8 Table 7.2 Table 7.7 Table 7. Storage. Personal use licence only. subways and other structures sub-categories Service lives of structures assumed by MR WA for depreciation purposes Table 7.4 Table 7.6 Licensed to Prof Stephen Emery on 12 Apr 2006.3 Table 7.Valuation of Road Infrastructure Assets in Australia and New Zealand APPENDIX 7 CONTENTS Table 7.5 Table 7.

VicRoads adopted the “Raw Land Value” concept as a basis for valuation of land under roads and within road reserves at 30 June 1998 (see Clause 3.Valuation of Road Infrastructure Assets in Australia and New Zealand Table 7. NSW Qld Tas No Yes 285 Note 11. not described in 1997 Annual Report).97 (A$m) 14. distribution or use on network prohibited.00 (ref SMH. Personal use licence only.1 Valuations of Land Under Roads and Within Road Reserves category at 30 June 1997 Value Reported at 30.439 (NZ$1. Note 1 (d)(i). Simplified approach in rural area. p67 in Annual Report to 30 June 1997 - Accords with Austroads 1994 policy.703 Reference Note 12(b).568) — 57 — . 28 June 1997). SA Licensed to Prof Stephen Emery on 12 Apr 2006. Urban is subdivided to “residential” and “commercial”.97 Yes Value at 30. WA Yes 3. Storage. DMR Qld “expenses” land cost when construction begins. p42 in Annual Report to 30 June 1997 Note 3(b). & Note 4.4). Aust dollar amount based on conversion rate of NZ$1. No Vic No VicRoads did not use this category at 30 June 1997. pp64 & 65 in Annual Report to 30 June 1997 Table 6.6.6. Intended to be reported by 30 June 2001. p60.6 in draft State Hwy Asset Management Plan (March 1998) Accords with Austroads 1994 policy in metropolitan area.798 TNZ Not shown in TNZ Annual Report 1.09 = A$1. p77 in Annual Report to 30 June 1997 Comment Accords with Austroads 1994 policy (see p48 in 1996 Annual Report.

land under roads has been included only where the land was acquired immediately before site works commenced.97 (A$m) 568 Reference Note 12(b). WA Yes 137 Appears to comply with Austroads 1994 policy (At 30 June 1997. p74 in Annual Report to 30 June 1997 Note 8.11. p82 in Annual Report to 30 June 1997 Note 11. TNZ does not use this category. Personal use licence only.Valuation of Road Infrastructure Assets in Australia and New Zealand Table 7.6. Accords with Austroads 1994 policy. Storage.6. p60 in Annual Report to 30 June 1997 Comment Accords with Austroads 1994 policy. p77 in Annual Report to 30 June 1997 Note 3(j). TNZ No - — 58 — . p42 in Annual Report to 30 June 1997 Note 14.Valuations of Work in Progress category at 30 June 1997 Value Reported at 30.97 Yes Value at 30. and the works continue beyond one year). p68 in Annual Report to 30 June 1997 Note 1(d) (v). distribution or use on network prohibited.2 . NSW Qld Yes 359 Appears to accord with Austroads policy. Tas Yes 25 SA Licensed to Prof Stephen Emery on 12 Apr 2006. Yes 174 Vic Yes 230 Accords with Austroads 1994 policy.

981 2.226 5. and are intended to be included at 30 June 1998.6 in Includes earthworks. intersections. pavement. surfacing. etc and all traffic to 30 June 1997 signals. drainage.11.743m (unaudited).081 1. pp63 Includes earthworks. Earthworks are not included.4(b).900 Tas Licensed to Prof Stephen Emery on 12 Apr 2006.97 (A$m) NSW Replacement Cost: 22.451 6. p77 Includes pavement.514 TNZ Note 1: VicRoads reported the value of earthworks at 30 June 1995 as $4. seal.Valuation of Road Infrastructure Assets in Australia and New Zealand Table 7.403 Written Down Value: 9. p80 & Initial valuation.942 Accum Depreciation: 3. — 59 — . Note 11.454 3. in Annual Report drainage.545 Replacement Cost: Accum Depreciation: Written Down Value: Replacement Cost: Accum Depreciation: Written Down Value: 2. distribution or use on network prohibited. Note 14. p74 in Includes pavement. Note 3(j). SA Vic1 Replacement Cost: 12.175 Accum Depreciation: 4. Storage. Includes all components 30 June 1997 except bridges.7).539 WA Replacement Cost: Accum Depreciation: Written Down Value: Replacement Cost: Accum Depreciation: Written Down Value: 7.346. Includes roads Note 18. The VicRoads 1997 valuation includes $2. drainage & TNZ draft Asset pavement.106 Reference Comment Qld Replacement Cost: 19.2m Plan (March replacement cost. as described in Table 7. p68 (partial in 1997 (no earthworks in Annual Report included in 1996 valuation1)). Excludes Report to 30 road furniture. to 30 June 1997 drainage. Dollar amounts are Management based on NZ$7. VicRoads reviewed its approach to the valuation of earthworks during 1997/98. Movement since 1996 largely influenced by Road Cost Index. bridges and 30 June 1997 construction works in progress. roadside furniture.855m for earthworks (representing earthworks above formation level only) which was not included in the 1996 valuation.6. and a 1998) conversion rate of NZ$1. Note 2. Note 12(b). to 65 in Annual pavement and seal. Personal use licence only. Note 1(d). Complies with Austroads 1994 policy. but excludes “Traffic Signal Control Network” (cf Table 7.3 . p88 in (surface. 28 June 1997). & which includes earthworks Note 8. Reported as “road pavement” pp60 & 61. June 1997 Table 6. Depreciation is on the basis of a straight line with an assumed average life of 60 years. street lighting and 30 June 1997 busway. p42 in Complies with Austroads 1994 Annual Report to policy.100 5.070 Written Down Value: 18. design and surveillance costs.552 2.869 Accum Depreciation: 8. pavement and Annual Report to formation).4.00 (ref SMH.740 1.323 Written Down Value: 11.09 = A$1. earthworks. Annual Report to drainage.193 739 1.Valuations of Roads sub-category at 30 June 1997 Value at 30.

Model Road State (using 9 of the 19 Austroads Model Road States (Ref 1)) and road configuration. varied to reflect location. drainage (other than bridges). Estimates of comprehensive replacement costs are based on current unit construction costs per square metre of pavement for a range of terrain types and regional circumstances. and so earthworks are effectively not depreciated. PMS is used to calculate accumulated depreciation. each Region and road type. signs. hilly. DMR Qld values earthworks on the basis of unit rates for terrain type (3 classes . and apply generic unit costs for pavement area to each length. undulating and mountainous).flat.Valuation of Road Infrastructure Assets in Australia and New Zealand Table 7. Allowances are included for clearing. — 60 — . undulating. a minor effect and has been applied as an overhead on the total rates. based on only one variable (terrain type . The quantities are broadly reported checked using available road construction contract data separately from the past 5 years (although this tends to be limited).flat. analysis. Four terrain types are used . hilly and mountainous as defined by Austroads (Ref 1). Included in Road sections have been grouped into classes based on “road function and cross-section. Storage. at 30 June undulating. distribution or use on network prohibited. width. terrain and foundation conditions. Proposed to report National Highways and State Roads separately. undulating and hilly/mountainous). comprising Revalued regional and project staff. etc when estimating the gross replacement cost of the road subcategory of its road infrastructure assets. Transport SA is nearing completion of a review of its approach to the valuation of earthworks. undulating. Two terrain types are used (flat/undulating) and hilly/mountainous). with unit rates for lane-kilometres. hilly and mountainous). Victoria Licensed to Prof Stephen Emery on 12 Apr 2006. The proposal is to sort the road network into lengths with similar earthworks characteristics. Earthworks are depreciated on a straight line basis over 80 years. at 30 June Likewise. unit costs ($/m3) are determined for each functional and terrain class. Western Australia In Use South Australia In Use Queensland In Use New Zealand In Use MR WA uses volumes of general earth.4 . At this stage no depreciation of the earthworks is proposed. Earthworks are considered to have an indefinite life. hilly or mountainous is calculated using a GIS 1997. In Use DIER Tas uses a similar approach to RTA NSW with earthworks included in the overall estimate of road replacement costs in accordance with the algorithm in Appendix 10. Earthworks are depreciated on a straight line basis over 100 years (formerly 200). and are not depreciated. TNZ values earthworks on the basis of unit costs per square metre of pavement. Tasmania RTA NSW includes the value of earthworks with pavement.MA Approaches to the valuation of earthworks State/ Territory/ In Use/ Nation Proposed NSW In Use Valuation Methods for Earthworks Description Depreciation of Earthworks Earthworks are considered to be a long term asset and are not depreciated. Earthworks are not depreciated. silt and rock per square metre of road formation are estimated for terrain type (flat. For each road section the pavement” proportion of adjacent terrain is classed as flat. Excavation in rock is seen as 1998.flat. quantities are estimated for each and functional and terrain class. Using an expert working group. Personal use licence only.

Valuations of Bridges sub-category at 30 June 1997 Value at 30. p74 in Annual Report to 30 June 1997 Vic Replacement Cost: Accum Depreciation: Written Down Value: 2. Personal use licence only. Bridges depreciated for the first time at 30 June 1996.97 (A$m) NSW Replacement Cost: Accum Depreciation: Written Down Value: 3.6.924 54 3. Includes bridges and culverts with spans greater than 1.8m or a waterway area > 3 sq m.165 299 865 Note 1(d). Includes approximately 1. Straight line depreciation used. p81 & 88 in Annual Report to 30 June 1997 Note 11. with remaining life and age assessed periodically for each structure. jetties. Appears to include only bridges. & Table 6.161 828 1. Depreciation method understood to be partly based on condition. Straight line depreciation used. distribution or use on network prohibited. slipways.870 Reference Note 12(b). SA Replacement Cost: Accum Depreciation: Written Down Value: 623 278 345 Note 14.396 1. Depreciated on a straight line basis.833 728 2.6 in TNZ draft Asset Management Plan (March 1998) TNZ Replacement Cost: Accum Depreciation: Written Down Value: 2. Straight line depreciation. culverts.11.5 . p39 in Annual Report to 30 June 1997. Includes all bridges and culverts with span length equal to or more than 1. Dollar amounts are based on conversion rate of NZ$1. pp63 to 65 in Annual Report to 30 June 1997 Note 1. p68 in Annual Report to 30 June 1997 WA Replacement Cost: Accum Depreciation: Written Down Value: 1.Valuation of Road Infrastructure Assets in Australia and New Zealand Table 7. Qld Replacement Cost: Accum Depreciation: Written Down Value: Replacement Cost: Accum Depreciation: Written Down Value: 1.8m or waterway area greater than 3 sq m. parabolic) as shown in Table 4.09 = A$1. Storage. and other structures with clear openings greater than 3m.230 structures (bridges. p77 in Annual Report to 30 June 1997 Comment Includes all bridges and culverts 6m or more long on the road centreline. Depreciation based on age squared (ie. Westgate Bridge valued separately.332 — 61 — . boat ramps. subways or other structures. sign gantries and concrete safety barriers). Straight line depreciation with assumed average life of 100 years. Replacement cost does not include any allowance for improved geometry or hydraulic capacity.00 (ref SMH. Includes bridges. retaining walls. p42 in Annual Report to 30 June 1997 Tas Licensed to Prof Stephen Emery on 12 Apr 2006. and partly based on age/assumed remaining life. not culverts or other structures.104 Note 8. but not culverts. 28 June 1997). assuming a 90 year life (cf 80 years in 1994/95. Includes box culverts and arches with spans greater than 6m.103 189 914 Notes 3 & 18.812 415 1.

This Austroads definition for bridges was adopted on the basis that structures shorter than 15m are unlikely to have a significant impact on the performance of a road at network level. RTA NSW VicRoads Licensed to Prof Stephen Emery on 12 Apr 2006. boat ramps. DIER Tas Main Roads WA Transport SA DMR Qld Cellular structures or sets of pipes built as part of a road formation to allow for drainage in case of flooding or general wet conditions are culverts. jetties. Structure to carry a road over an obstacle by spanning it. Storage. piers. — 62 — . distribution or use on network prohibited. etc.4 sq m or greater. Structure with a span or diameter 1. eg bridges. decks. lights. or a waterway area 3 sq m or greater All structures where detail structural design input has been involved. subways. etc. beams. not bridges. stream or other obstruction.8 m or greater. Footbridges and pedestrian underpasses are included. For the purpose of road infrastructure asset valuation. TNZ Structure with a waterway area 3. A bridge is a structure built to cross an obstacle in the road network. culverts.Definitions of bridges adopted by Member Agencies for valuation purposes Agency Austroads (1994 Interim Efficiency Measures (AP-110-94) Definition of Bridge A clear span structure greater than 15 m in length (not a culvert or series of culvert runs). with a clear length of 6m or more. railway.6 . For the purpose of road infrastructure asset valuation. measured between faces of abutments and in the direction of the road centreline. Structure with a span or diameter 1. slipways. and has a clear opening in any span of more than 3 m (more than 6 m for an arch or box culvert). sign gantries and concrete safety barriers. The Austroads definition for bridges may not be appropriate for the purposes of infrastructure valuation. Personal use licence only. All structures which carry a road over a road. Sign gantries are not included. retaining walls. railing.Valuation of Road Infrastructure Assets in Australia and New Zealand Table 7.8 m or greater. bridges consist of: • • structural elements such as abutments. and ancillary elements such as footways. culverts are part of the road formation and are valued as part of the Road classification.

TNZ Replacement Cost: Accum Depreciation: Written Down Value: Australian dollar amounts are based on NZ$134. footpaths. emergency telephones and other electrical assets (SCATS. except for associated electronics which have assumed average service lives of 20 years. a reversible lane system. and 41 school crossings.7 . sight rails. p42 in Annual Report to 30 June 1997 Licensed to Prof Stephen Emery on 12 Apr 2006.Valuations at 30 June 1997 of traffic signals/facilities and MR WA road furniture sub-categories Value at 30. traffic islands and other road furniture. Covers approximately 400 sets of intersection type and 228 sets of pedestrian traffic signals. chevrons. Storage. First depreciated in 1995/96.10. p74 in Annual Report to 30 June 1997 Vic Replacement Cost: Accum Depreciation: Written Down Value: Replacement Cost: Accum Depreciation: Written Down Value: 224 128 96 87 33 54 Note 8. Covers 247 sets of traffic signals. Straight line depreciation. sign supports. p77 in Annual Report to 30 June 1997 Comment Labelled as “Traffic Signal Control Network”.000 traffic control signal installations is of the order of $300m. in Annual Report Covers 633 (603 at 30 June 1994) to 30 June 1997 sets of traffic signals. safety barrier systems.00 (ref SMH. and the Narrows Interchange reticulation system. lighting. median barriers.97 (A$m) NSW Replacement Cost: Accumulated Deprec: Written Down Value: 8 2 6 Reference Note 12(b). Personal use licence only. SA Replacement Cost: Accum Depreciation: Written Down Value: 44 36 8 Note 14. All components are depreciated on a straight line basis with assumed average lives of 25 years. pavement markings and markers. p68 in Annual Report to 30 June 1997 WA Note 4. based on average life of 24 years. and is included in “Roads”.6. based on average life of 12 years. Table 6. Note that the value of RTA’s approximately 3.6 in TNZ draft Asset Management Plan (March 1998) Labelled as “Traffic facilities”. pp63 to 65 Labelled as “Road Furniture”. all signs. Straight line depreciation. medians.26m replacement cost and a conversion rate of NZ$1. berms. All components are depreciated on a straight line basis with assumed average lives of 33 years. Covers traffic signals. CCTV and variable message signs).500 sets of traffic signals and traffic control systems. 28 June 1997) 123 58 65 — 63 — . Covers approximately 2.09 = A$1. Tas Replacement Cost: Accum Depreciation: Written Down Value: 21 11 10 Note 11. Covers only assets associated with coordination of traffic signals. guide posts. Also covers 164 (138 at 30 June 1994) road lighting installations. distribution or use on network prohibited.Valuation of Road Infrastructure Assets in Australia and New Zealand Table 7.

Valuations at 30 June 1997 of T SA Street Lighting and TNZ Culverts. distribution or use on network prohibited.92m replacement cost and a conversion rate of NZ$1. Subways and Other Structures sub-categories Value at 30. A total of 164 (138 at 30 June 1994) installations with 3. Table 6.Valuation of Road Infrastructure Assets in Australia and New Zealand Table 7. p74 in Covers 11. Storage.6 in TNZ draft Asset Management Plan (March 1998) Covers culverts. Personal use licence only.737 at 30 June 1994) poles is included in “Road Furniture”. Straight line 30 June 1997 depreciation. as shown in Table 7.00 (ref SMH. subways and Other Structures.6. 28 June 1997) — 64 — .7 TNZ Replacement Cost: Depreciation: Written Down Value: 400 96 304 Licensed to Prof Stephen Emery on 12 Apr 2006.7.020 at 30 June Annual Report to 1995) poles.982 (3.8 . Australian dollar amounts are based on NZ$435. WA See Table 7.09 = A$1.97 (A$m) SA Replacement Cost: Depreciation: Written Down Value: 57 36 21 Reference Comment Note 14. based on average life of 25 years.936 (10.

2m) manufactured prior to 1985 Small box culverts (spans <= 1. distribution or use on network prohibited.Service lives of structures assumed by MR WA for depreciation purposes Assumed Average Service Life 60 years 50 years Generic Structure Type Timber bridges Specific Structure Type Timber bridges Refurbished timber bridges (from the date of concrete overlay construction) Timber stingers and reinforced concrete slabs Environment All All All All All all all non-aggressive aggressive non-aggressive aggressive non-aggressive aggressive non-aggressive aggressive non-aggressive aggressive non-aggressive aggressive all 100 years 100 years 100 years 100 years 100 years 75 years 55 years 60 years 35 years 75 years 55 years 60 years 45 years 75 years 70 years 65 years 30 years 100 years Concrete and steel bridges Concrete and steel road bridges Concrete steel and footbridges Concrete pedestrian underpasses Licensed to Prof Stephen Emery on 12 Apr 2006.9 .2m) manufactured after 1985 Large box culverts (spans > 1. Personal use licence only.2m) manufactured after 1985 Large box culverts (spans > 1.Valuation of Road Infrastructure Assets in Australia and New Zealand Table 7.2m)manufactured prior to 1985 Large box culverts (spans > 1.2m) manufactured after 1985 Small box culverts (spans <= 1.2m) manufactured prior to 1985 Small box culverts (spans <= 1.2m) manufactured after 1985 Corrugated metal pipe culverts Steel Steel Aluminium — 65 — .2m)manufactured prior to 1985 Large box culverts (spans > 1. Storage. Corrugated steel pedestrian underpasses Concrete Pipe Culverts Reinforced concrete box culverts Reinforced concrete pipe culverts Reinforced concrete pipe culverts Small box culverts (spans <= 1.

Personal use licence only. distribution or use on network prohibited. Valuation of Road Infrastructure Assets in Australia and New Zealand (September 1999) — 66 — . Storage.Valuation of Road Infrastructure Assets in Australia and New Zealand APPENDIX 8 Main Roads WA Program Performance Indicators using Road Infrastructure Asset Valuation Licensed to Prof Stephen Emery on 12 Apr 2006.

Such a comparison can provide an indication of the return on the public’s investment in the road network.2 0 93/94 Licensed to Prof Stephen Emery on 12 Apr 2006. Storage.3B .Asset Value and Freight 1.6 0.4 0. Personal use licence only. Indicator 1.2 0.9 0.Asset Value and Vehicle Travel 1 VKT per $ of Road Network Asset Value 0.5 Tonne-km per $ of Road Network Asset Value 1.3B shows a steady increase in the amount of freight hauled on the network compared with the growth in asset value over the same period.8 0. Indicator 1.3A shows that there is little variation in the value of the asset and total vehicle travel on National and State Roads.3 0 93/94 94/95 95/96 96/97 Financial Year (National and State roads only .1997 dollars) Indicator 1. distribution or use on network prohibited. This highlights the relatively rapid growth in freight on Western Australian roads. — 67 — .1997 dollars) The overall effectiveness of the road network in Western Australia can be assessed by comparing the amount of travel and freight on National Highways and State Roads with the value of those roads.Valuation of Road Infrastructure Assets in Australia and New Zealand APPENDIX 8 Main Roads WA Program Performance Indicators using Road Infrastructure Asset Valuation Indicator 1.6 0. 94/95 95/96 96/97 Financial Year (National & State roads only .3A .

Personal use licence only. distribution or use on network prohibited.Valuation of Road Infrastructure Assets in Australia and New Zealand APPENDIX 9 Extracts from RTA NSW Annual Reports to 30 June 1995. Valuation of Road Infrastructure Assets in Australia and New Zealand (September 1999) — 68 — . 30 June 1996 and 30 June 1998 on depreciation Licensed to Prof Stephen Emery on 12 Apr 2006. Storage.

Provision for Asset Restoration This provision recognises the expense each year of normal wear. Storage. the Authority has developed an industry methodology and approach which is considered to provide an appropriate disclosure of the loss of service potential of the infrastructure assets. distribution or use on network prohibited. Licensed to Prof Stephen Emery on 12 Apr 2006. The total amount of this provision represents the movement in condition since the base year. consolidate and calculate road network data which facilitates the measurement of both the movement in condition and replacement cost of the road network.“Depreciation of Non Current Assets” outlines factors which should be considered in assessing the useful life of an asset for depreciation purposes. While it is acknowledged that technological obsolescence does occur to some extent in road infrastructure the evidence available suggests that it is not material. These factors include wear and tear from physical use and technological and commercial obsolescence. To address this situation. especially when compared to the impact of physical wear and tear. the disclosure (by way of a note only) of a 1% Provision for Asset Renewal.Valuation of Road Infrastructure Assets in Australia and New Zealand ASSESSING THE USEFUL LIFE OF AN ASSET FOR DEPRECIATION PURPOSES 1. will form the basis for the assessment of depreciation of Authority infrastructure. This latter provision was intended to provide for the technological obsolescence of the road network. physical wear and tear as measured by the Provision for Asset Restoration. at this time. The basis of this methodology has been subject to ongoing review and has involved the determination and disclosure of a Provision for Asset Restoration and. Personal use licence only. terrain and usage factors. The annual movement in this provision is calculated from the Authority’s Pavement Management System (PMS) which is used to collate. In the case of road infrastructure the dominant factor in the loss of service potential is wear and tear from physical use. AAS4 is not considered appropriate for the raising of depreciation expense against the Authority’s infrastructure assets which comprise a network of roads and bridges which vary across a range of pavement types. It is not possible to determine the “useful life” of these long lived assets with any degree of certainty and it is considered that depreciation expenses based on this concept would not provide useful information for the management of the assets nor for external users of the Authority’s financial statements. It has therefore been determined that. tear and deterioration which has occurred since the base year in 1989/90 when the Authority’s infrastructure was first capitalised and the written down value brought to account. Extract from the RTA NSW 1995 Annual Report (p45) DEPRECIATION POLICY Infrastructure The existing Accounting Standard AAS4 . — 69 — . prior to 1993/94.

distribution or use on network prohibited. The annual movement in this provision is calculated from the RTA’s Pavement Management System (PMS) which is used to collate. It is not possible to determine the “useful life” of the majority of these long lived assets with any degree of certainty and it is considered that depreciation expenses based on this concept would not provide useful information for the management of the assets nor for external users of the Authority’s financial statements. A provision for depreciation of bridges has been raised in the accounts for the first time this year for consistency with roads. The calculation is based on the total cost to restore the road network from its current condition to near new. While it is acknowledged that technological obsolescence does occur to some extent in road infrastructure the evidence available suggests that it is not material.“Depreciation of Non Current Assets” outlines factors which should be considered in assessing the useful life of an asset for depreciation purposes. the RTA has developed an industry methodology and approach which is considered to provide an appropriate disclosure of the loss of service potential of roads. — 70 — . the provision for depreciation recognises the total accumulated depreciation of the road asset due to wear. especially when compared to the impact of physical wear and tear. the current methodology is based on a formula of age and construction type augmented with information gained from an ongoing bridge inspection program.Valuation of Road Infrastructure Assets in Australia and New Zealand 2. Extract from the RTA NSW 1996 Annual Report (p48) ASSET MANAGEMENT POLICY Authority Infrastructure The existing Accounting Standard AAS4 . tear and deterioration as at 30/6/96. Formerly referred to as the provision for asset restoration (refer Note 2(ii) c). consolidate and calculate the road network data which facilitates the measurement of both the movement in condition and the replacement cost of the road network. In the case of road infrastructure the dominant factor in the loss of service potential is wear and tear from physical use. Personal use licence only. The RTA is implementing a Bridge Information System (BIS) which includes the collection and recording of relevant condition data. To address this situation. These factors include wear and tear from physical use and technological and commercial obsolescence. Licensed to Prof Stephen Emery on 12 Apr 2006. This information will form the basis of a review of depreciation rates for implementation in 1996/97. In the case of bridges. Storage.

Storage. The RTA’s traffic control signal network is valued using written down replacement cost. which is currently disclosed as land under roads. The determination of road. the RTA has developed an industry methodology and approach which is Licensed to Prof Stephen Emery on 12 Apr 2006. The existing Accounting Standard AAS4 .“Depreciation of Non Current Assets” outlines factors to be considered in assessing the useful life of an asset for depreciation purposes. bridge and traffic control signal infrastructure valuations is carried out annually by suitably qualified engineers of the RTA. In respect of land under roads and within road reserves. These factors include wear and tear from physical use and technological and commercial obsolescence. without improving the road. such replacement cost is based on the structural type. Extract from the RTA NSW 1998 Annual Report (pp 54 & 55) ASSET MANAGEMENT POLICY (iii) Authority Infrastructure The RTA. Major works in progress are valued at construction cost and exclude the cost of land. To address this situation. The valuation policies provide for roads and bridges to be valued using the written down replacement cost method. distribution or use on network prohibited. — 71 — . being responsible for the development and management of the State’s road network. has recognised the control aspect of some infrastructure assets and the ownership of other infrastructure assets when formulating policy in respect to the valuation and reporting of infrastructure. In the case of bridges. valuations are assessed according to the average rateable value per hectare of urban and rural areas within each local Government Area. While it is acknowledged that technological obsolescence does occur to some extent in road infrastructure the evidence available suggests that it is not material.Valuation of Road Infrastructure Assets in Australia and New Zealand 3. In the case of road infrastructure the dominant factor in the loss of service potential is wear and tear from physical use. It is not possible to determine the “useful life” of the majority of these long lived assets with any degree of certainty and it is considered that depreciation expenses based on this concept would not provide useful information for the management of the assets nor for external users of the Authority’s financial statements. Personal use licence only. Such valuations are undertaken annually by RTA’s registered valuers. This valuation method has been adopted because it reflects the current minimum economic valuation of the infrastructure. Each road is assigned a value which equates to the cost of replacing that road to its current condition. especially when compared to the impact of physical wear and tear.

the RTA values the asset by reference to the RTA’s emerging share of the written down replacement cost of each asset apportioned over the respective period of the concession agreement. Personal use licence only. This information will form the basis of a condition based depreciation methodology which is consistent with the approach taken in respect of roads. In the case of bridges. Storage. It has been valued at the present value of the estimated written down replacement cost of the Tunnel at the date of transfer to the RTA in 2022. (iv) Private Sector Provided Infrastructure The RTA has recognised an infrastructure asset in respect of the Sydney Harbour Tunnel. The calculation is based on the total cost to restore the road network from its current condition to near new. the current methodology is based on a formula of age and construction type augmented with information gained from an ongoing bridge inspection program. Licensed to Prof Stephen Emery on 12 Apr 2006. In respect of the M2. — 72 — . distribution or use on network prohibited.Valuation of Road Infrastructure Assets in Australia and New Zealand considered to provide an appropriate disclosure of the loss of service potential of roads. The RTA is implementing a Bridge Information System (BIS) which includes the collection and recording of relevant condition data. The annual movement in this provision is calculated from the RTA’s Pavement Management System (PMS) which is used to collate. The provision for depreciation recognises the total accumulated depreciation of the road asset due to wear. consolidate and calculate the road network data which facilitates the measurement of both the movement in condition and the replacement cost of the road network. M4 and M5 Motorways. tear and deterioration as at 30/6/98.

Personal use licence only. Storage. distribution or use on network prohibited.Valuation of Road Infrastructure Assets in Australia and New Zealand APPENDIX 10 DIER Tas approach to asset valuation: Summary report following 1996/97 review Extracts from Finance Policy Manual Licensed to Prof Stephen Emery on 12 Apr 2006. Valuation of Road Infrastructure Assets in Australia and New Zealand (September 1999) — 73 — .

Valuation of Road Infrastructure Assets in Australia and New Zealand — 74 — . distribution or use on network prohibited. Storage. Personal use licence only.Licensed to Prof Stephen Emery on 12 Apr 2006.

Licensed to Prof Stephen Emery on 12 Apr 2006. Personal use licence only. Storage, distribution or use on network prohibited.

Valuation of Road Infrastructure Assets in Australia and New Zealand

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Licensed to Prof Stephen Emery on 12 Apr 2006. Personal use licence only. Storage, distribution or use on network prohibited.

Valuation of Road Infrastructure Assets in Australia and New Zealand

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Licensed to Prof Stephen Emery on 12 Apr 2006. Personal use licence only. Storage, distribution or use on network prohibited.

Valuation of Road Infrastructure Assets in Australia and New Zealand

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Personal use licence only. distribution or use on network prohibited.Licensed to Prof Stephen Emery on 12 Apr 2006. Storage. Valuation of Road Infrastructure Assets in Australia and New Zealand — 78 — .

Licensed to Prof Stephen Emery on 12 Apr 2006. Valuation of Road Infrastructure Assets in Australia and New Zealand — 79 — . Personal use licence only. Storage. distribution or use on network prohibited.

distribution or use on network prohibited. Personal use licence only. Valuation of Road Infrastructure Assets in Australia and New Zealand — 80 — .Licensed to Prof Stephen Emery on 12 Apr 2006. Storage.

Storage.Licensed to Prof Stephen Emery on 12 Apr 2006. distribution or use on network prohibited. Valuation of Road Infrastructure Assets in Australia and New Zealand — 81 — . Personal use licence only.

distribution or use on network prohibited. Personal use licence only. Valuation of Road Infrastructure Assets in Australia and New Zealand — 82 — . Storage.Licensed to Prof Stephen Emery on 12 Apr 2006.

Storage. Valuation of Road Infrastructure Assets in Australia and New Zealand — 83 — .Licensed to Prof Stephen Emery on 12 Apr 2006. distribution or use on network prohibited. Personal use licence only.

Valuation of Road Infrastructure Assets in Australia and New Zealand — 84 — . Storage. distribution or use on network prohibited.Licensed to Prof Stephen Emery on 12 Apr 2006. Personal use licence only.

Valuation of Road Infrastructure Assets in Australia and New Zealand APPENDIX 11 Responses to Questionnaire issued with the June 1998 draft of this report Licensed to Prof Stephen Emery on 12 Apr 2006. Valuation of Road Infrastructure Assets in Australia and New Zealand (September 1999) — 85 — . distribution or use on network prohibited. Storage. Personal use licence only.

A. distribution or use on network prohibited.A.70) by Laurie Dowling 28 Wrightson Avenue NEWCASTLE NSW 2300 Ph: 02 4926 5194 Fax: 02 4929 7651 E-Mail: lbdowli@ibm.Valuation of Road Infrastructure Assets in Australia and New Zealand Responses to Questionnaire Austroads Project No BS.70 The Use of Asset Valuation Licensed to Prof Stephen Emery on 12 Apr 2006. Personal use licence only. Storage.net — 86 — . Compiled during preparation of a report for Austroads on Valuation of Road Infrastructure Assets in Australia and New Zealand (Austroads Project BS.

The time and effort spent in completing this questionnaire are very much appreciated. Licensed to Prof Stephen Emery on 12 Apr 2006. Storage. RTA NSW) during January 1999.Valuation of Road Infrastructure Assets in Australia and New Zealand Preamble Responses to this questionnaire were used in 1998 to finalise an Austroads report on the benefits of valuing road infrastructure assets. The report is nearing completion. distribution or use on network prohibited. Tasmania Main Roads Department. Queensland Department of Infrastructure. The Charter for Austroads Project BS. Energy and Resources. Western Australia Roads and Traffic Authority. Business Systems (Rolf Lunsmann. RTA NSW) and the Program Manager. prepared under Austroads Project BS. and is expected to be submitted to the Project Manager (Michael Bushby. New South Wales Transport South Australia The Roads Corporation of Victoria Transit New Zealand Devonport City Council MR WA RTA NSW T SA VicRoads TNZ DCC — 87 — .A.A. Personal use licence only. The likely title is Valuation of Road Infrastructure Assets in Australia and New Zealand. The following abbreviations are used in this summary: DMR Qld DIER Tas Department of Main Roads.70 is in Appendix 1 to the report.70.

Does your organisation gain benefits from valuation information that are not covered in Section 10 in the June 1998 draft? Can Section 10 be amended to better reflect any benefits to your organisation from the valuation process? If so. — 88 — . Responses have been used to complete Clause 6. Table 4 and/or Appendix 8. Question 2 Benefits of valuation Licensed to Prof Stephen Emery on 12 Apr 2006.Valuation of Road Infrastructure Assets in Australia and New Zealand Question 1 Performance indicators Does your organisation use asset value as an input for any Performance Indicator which is not already in Table 4 in the June 1998 draft? If so. distribution or use on network prohibited. please provide brief descriptions for inclusion in Section 6.5 and Table 4 in the January 1999 draft of the Austroads report. Personal use licence only. Storage. how? The responses to this question have been incorporated in Clause 10 in the January 1999 draft of the Austroads report.5.

Data for sign valuation is available only for metropolitan area. as defined in the 1994 Austroads report Capitalisation of Infrastructure. However the fewer sub-categories there are the better because we do not separately assess values of lighting. Therefore is Work in Progress sufficiently material to warrant separate identification? No response DIER Tas MR WA RTA NSW T SA VicRoads TNZ DCC Comments: 1. intelligent transport systems. DMR Qld Licensed to Prof Stephen Emery on 12 Apr 2006. road furniture. Yes. drainage and kerbs). land held for future infrastructure. TSA supports a number of standard subcategories . land within road reserves and work in progress. etc? See Section 6. not initially. This seems a good idea. VicRoads would support establishing a number of standard sub-categories for recognition of infrastructure assets. marine and others) which could be useful for TSA to have additional asset classes. The cost of collecting this information in sub-categories has to be commensurate with the benefit derived from the use of the information. for example bridges. earthworks. with ongoing asset management primarily related to pavement. bridges. The main categories need review to separate roads and bridges. Storage. etc.this is particularly useful under the “roads and bridges” category. Only TNZ has queried the merit of “work in progress” as a distinct category. Work in Progress represents approximately 2. Yes. Personal use licence only. Reference to Appendix 5 shows that “work in progress” represents less than 5% of the replacement value of roads and bridges. because it represents a sunk cost.Valuation of Road Infrastructure Assets in Australia and New Zealand Question 3 Asset classes Four main categories presently in use. Would your organisation support establishing a number of standard sub-categories for recognition of infrastructure assets in financial reports. surplus land. ITS systems. traffic signals. TSA is not opposed to the existing four asset categories but does maintain other non road assets (eg. — 89 — . viz • Land under roads and within road reserves • Work in progress • Roads and bridges • Privately funded road infrastructure assets. 3. Each agency’s definition for “bridge” is in Table 7. MRWA reports on earthworks. pavement.3 and Table 2 in the June 1998 draft. Further work is required to ensure that the DMR could capture and value data at this level. Any such list of standard sub-categories would be subsidiary to and would not alter the four main categories defined by Austroads. those agencies which responded (listed above) already recognise roads and bridges separately. No.5% of TNZ’s asset value. distribution or use on network prohibited. There appears to be scope for agreement to standardise significant sub-categories such as pavement and traffic control equipment. Within the Austroads category “roads and bridges”.6 in the draft Austroads report. 2. Formation should also be separate. pavements (including seal.

Differences in movements in these indices over time appear to be marginal. The responses to this question have been incorporated in Clause 5. ABS or ARRB TR. Comment: DMR QLD. The responses to this question have been incorporated in the January 1999 draft of the Austroads report. distribution or use on network prohibited. Does your organisation use an index which is not included in Table 6 and Figure 7 in the June 1998 draft? If so. Main Roads WA uses indices issued by ABS and Rawlinsons. (A marked up copy will suffice). please provide details for inclusion in Table 6 and Figure 7.2 in the January 1999 draft (Figure 7. Question 5 Cost indices Licensed to Prof Stephen Emery on 12 Apr 2006. Personal use licence only. or that you consider should be amended? If so. BTE also maintains its own “Road Construction and Maintenance Price Index”. Storage.Valuation of Road Infrastructure Assets in Australia and New Zealand Question 4 Are there any references to the practices of your organisation in the June 1998 draft which you consider to be incorrect. If an index is not used. and Table 2). please describe how values are updated between revaluations. RTA NSW. please provide details. and so consideration could be given to some rationalisation. Transport SA and Transit NZ maintain cost indices. — 90 — . perhaps multi-lateral adoption of a common index maintained by BTE.

Replacement cost is used. The cost reported represents the cost of an equivalent concrete structure with the same deck area. Use of current replacement cost is valid where a similar asset is not available or is available but is technologically outdated. replacement costs are the costs incurred when replacing an existing structure with a new structure. replacement costs are the costs incurred when replacing and existing segment with a new segment. For roads. hydrology standards? Or. distribution or use on network prohibited. The one clear exception to the use of reproduction costs is timber bridges. do you allow for improvements to satisfy current standards . Personal use licence only.) MR WA The road and bridge asset is generally valued at reproduction cost although it may be argued that the distinction between reproduction cost and replacement cost is not clear cut because improvements in technology are reflected in current contract rates. Storage. where a one lane timber bridge is to be replaced by a one lane concrete bridge.Valuation of Road Infrastructure Assets in Australia and New Zealand Question 6 Replacement cost vs reproduction cost In determining the written down current cost of road and bridge assets. and then having them accepted by the Auditor-General. Licensed to Prof Stephen Emery on 12 Apr 2006. in estimating the replacement value of a bridge. based on existing configurations with no allowance for improvements.replacement or reproduction? Any reason? Is the same used for all road and bridge assets? DMR Qld Our valuation methodology is based on replacement cost. based on current technology. no discontinuity of the replacement cost needs to take place even though the new concrete structure may have a greater load carrying capacity than the existing timber bridge. in estimating the replacement value of a road. Qld Treasury guidelines define “current replacement cost” as the cost per unit of future economic benefits of the most appropriate modern replacement facility. It applies where the asset being valued would be replaced at balance date by a different asset in terms of scale and technology. and accordingly. It represents the actual replacement cost. DIER Tas Replacement costs are used for both roads and bridges. (One of the influences is the difficulty in objectively measuring improvements across the network. based on current technology. For example. there is no change in functionality of the new replacement asset. do you allow for improvements to satisfy current width standards where the existing road is narrower than a modern equivalent? Which do you use .geometric standards. not an idealised replacement cost. RTA NSW — 91 — . Replacement cost is used for roads and bridges.3 (c) in the 1994 Austroads report Capitalisation of Infrastructure? For example. including construction and administration costs. does your organisation distinguish between “replacement” and “reproduction” costs as described in Section 3. Replacement cost is used for timber bridges because MR WA no longer builds timber bridges. For structures.

with replacement value determined on the basis of current traffic volumes and composition. Every other year the replacement cost is calculated using cost indices. except for pavement thickness. It is also TSA policy that the valuation of replacement pavement includes reuse of retained pavement. and allows the use of tendered prices where some residual pavement is incorporated into the replacement pavement. Unit costs of constructing a reference asset are applied based on the physical quantities and useful life of the existing asset. It appears MAs do not make a clear distinction between replacement and reproduction in this context. Replacement costs are calculated every 3 years using current unit rates. bridge waterway area) are not allowed for. The method of carrying out this valuation requires some clarification to be consistent with other states. The unit rate based replacement cost (every 3 years) is checked against the cost index based replacement cost to track the reliability of the cost indices. Replacement cost: the current cost of the service potential. using the Austroads Pavement Design Guide. This in effect recognises any residual value of the old pavement being replaced through a cheaper replacement cost. Storage. TNZ TNZ uses replacement cost. TSA acknowledges using road construction unit rates to value replacement costs may be limited due to the low number of replacement projects on a mature network. road alignment or width. most MAs actually use “reproduction” cost to determine the written down value of roads and bridges. Improvements to satisfy current standards of service (eg.Valuation of Road Infrastructure Assets in Australia and New Zealand TSA The basis for current valuations is replacement to the same standard for both roads and bridges. and modern technology. — 92 — . This is also the case for drainage and earthworks. but current construction techniques are allowed for. on the basis of these definitions. The same method is used for roads and bridges. DCC would value a deficient asset at existing standard and not a desired upgraded standard. Comment: The 1994 Austroads report Capitalisation of Infrastructure gives the following definitions in Clause 3. that is replacement value using current materials and methods. as a consequence replacement costs may be under-estimated. whereas.3 (c) Valuation Policies for Roads and Bridges: Reproduction cost: determined by calculating the current cost of constructing or acquiring a copy of the existing asset. VicRoads works on the basis of replacement cost using: • • current service capacity. of the most appropriate modern equivalent asset. VicRoads For all infrastructure assets. Personal use licence only. DCC DCC uses deprival value. with the mostly used word being “replacement”. Licensed to Prof Stephen Emery on 12 Apr 2006. distribution or use on network prohibited.

The amount by which the optimisation process changes the valuation may be an indication of how perceived user needs have changed over time and the quality of past investment decisions. Storage. technological and functional obsolescence. Given the size of the roading network and the variety of assets to be valued. Condition based means of estimation because most decisions on maintenance expenditure are driven by condition and not age. the work required to bring it up to standard can only be captured in the valuation once it has been carried out. The experience in NZ across all the infrastructure sectors that have undertaken and ODRC based valuation has been the reduction in value from that determined on a pure DRC basis. For both roads and bridges the current method of depreciation is straight line over an estimated economic life.Valuation of Road Infrastructure Assets in Australia and New Zealand Question 7 Ensuring that financial statements are of benefit to users What form of estimating current written down value does your organisation regard as best suited to ensuring that financial statements are of benefit to users of those financial statements? DMR Qld Straight line adjusted for known material reductions in useful lives. That is. an ODRC valuation would be an extremely complex. A similar experience could occur in an ODRC valuation of roads. lengthy and expensive undertaking. surplus assets. roads and bridges which are to be replaced as part of the Pacific Motorway project are being fully depreciated over the next 3 years. As described in Table 3 in the draft Austroads report. VicRoads TNZ DCC DCC uses actual costs or estimates for annual revaluations. Use of the deprival value concept (cost of replacing infrastructure assets if an entity is deprived of them). Where part of the network is substandard. including duplication. and perhaps straight line based on periodic assessment of remaining useful life with condition used as one factor. that is the depreciated replacement cost. condition based. By definition optimisation is all about providing the same level of service in the least expensive manner. by eliminating surplus capacity. Written down value is calculated as the depreciated replacement/reproduction value (refer also to Q 6). ODRC is based on an estimate of the replacement cost. Personal use licence only. — 93 — . Dollar values must reflect the actual physical condition to be of benefit to users. obsolescence. distribution or use on network prohibited. “Optimised Depreciated Replacement Cost” (ODRC). after allowances are made for over design. and in some cases reconfiguration and relocation. Options for depreciation that will be debated by TSA shortly include the existing straight line method. DIER Tas MR WA RTA NSW T SA Licensed to Prof Stephen Emery on 12 Apr 2006. less than optimal routes. over design.

VicRoads TNZ DCC VicRoads does not include costs such as service adjustments and traffic control in the valuation of infrastructure. design. Personal use licence only. five “no” and one mixed response. — 94 — . TSA needs to explore this further as ignoring these costs on replacement would under-value individual projects. water reticulation. energy lines. etc) which are not controlled by the road organisation should not be included in the value of road infrastructure. Storage. supervision. communications. distribution or use on network prohibited. TSA Costs of service alterations are excluded from the valuation. but do not add value to the asset. Replacement cost is based on total project costs which include the cost of associated minor activities such as service adjustments and traffic control.Valuation of Road Infrastructure Assets in Australia and New Zealand Question 8 Costs of service adjustments and traffic control Does your organisation include costs such as service adjustments and traffic control in its estimation of replacement cost for road assets? [It is acknowledged that the value of services (eg. but not utility adjustment or property adjustments or land. No. Licensed to Prof Stephen Emery on 12 Apr 2006. Comment: With two “yes”. Traffic control is included as part of the all-up unit rates for road construction. geotechnical investigations. Traffic control is regarded as a necessary cost similar to survey. and are sunk costs.] DMR Qld DIER Tas MR WA RTA NSW Yes. Costs of traffic control during construction are excluded from the valuation. there is scope for review of this aspect. No. etc. These costs are often significant. which potentially could have a significant impact on valuations in urban areas. No.

When roads/bridges are open to traffic the completed costs per project are transferred to "completed" infrastructure assets. distribution or use on network prohibited. Storage. DIER Tas includes only those works involving a deviation as “work in progress”. except that RTA NSW uses the “work in progress” category only for works valued at more than A$5m.Valuation of Road Infrastructure Assets in Australia and New Zealand Question 9 Work in progress What criteria does your organisation use to identify expenditure which is recognised as “work in progress”? DMR Qld The Capital Work in Progress figure represents incomplete Roads and Bridges under construction (or work which represents a capital improvement which will be capitalised to the asset). practice appears to be generally consistent with works capitalised at the next balance date after completion or opening to traffic. Transit New Zealand does not use the “work in progress” category in its financial reporting. “Work in progress” is work that continues beyond one year. — 95 — . RTA NSW T SA VicRoads TNZ DCC Comment: Except for TNZ which does not use the “work in progress” category. including partial opening to traffic. while DIER Tas and VicRoads uses the “work in progress” category only for deviations (ie. Expenditure on these works is recognised as “work in progress” until the works are opened to the public. because works on existing alignment return incremental benefits to customers as the work proceeds. This is an annual event and occurs at 30 June each year. Personal use licence only. Work in progress is that work which extends beyond one year. All capital work is work in progress until capitalised. VicRoads selects only those works involving a deviation. DIER Tas MR WA Licensed to Prof Stephen Emery on 12 Apr 2006. works where it is clear that traffic derives no benefit until the works are completed). Capital works projects with a value greater than A$5m.

Valuation of Road Infrastructure Assets in Australia and New Zealand Question 10 Work in progress For work extending over more than one year. Indexed through inflation adjustment to present year dollars. is “work in progress” recognised and reported in historical (“out turn”) dollars or indexed to current year dollars? DMR Qld DIER Tas MR WA RTA NSW T SA VicRoads TNZ DCC Recorded at historical dollars. In this situation. Licensed to Prof Stephen Emery on 12 Apr 2006. Personal use licence only. distribution or use on network prohibited. not indexed. DCC reports work in progress carried over to the following year at historical cost. “Work in progress” is reported in historical dollars. Transit New Zealand does not use the “work in progress” category in its financial reporting. Historical or out-turn dollars. Work extending over more than one year is reported as historical and not indexed. — 96 — . Comment: RTA NSW is the only respondent which indexes amounts recognised as “work in progress” which carry forward from one year to the next. “work in progress” is recognised and reported in historical dollars. Ideally this should be part of current cost adjustments. Storage.

or when put into service whichever comes first.Valuation of Road Infrastructure Assets in Australia and New Zealand Question 11 Work in progress When does your organisation capitalise “work in progress” . When open to traffic. When open to traffic. bridges that are completed may be capitalised if they form part of traffic staging. Storage. there is uniformity in this aspect of road infrastructure valuation. or when finally completed? DMR Qld DIER Tas MR WA RTA NSW T SA Licensed to Prof Stephen Emery on 12 Apr 2006. At the time of opening to traffic. Capitalisation occurs at contract practical completion or when the road is open to traffic. at practical completion.eg. Personal use licence only. When open to traffic. This information is collected through a formal procedure at asset handover. distribution or use on network prohibited. When physical works are complete. VicRoads TNZ DCC Comment: Except for TNZ which does not recognise or report “work in progress” as a separate category. Work in progress is capitalised in the year costs are incurred. However. Work is capitalised when it is completed. — 97 — . at the time of opening to traffic. DCC capitalises subdivisions (donated assets) when accepted at practical completion (on to maintenance period).

T SA VicRoads TNZ DCC Comment: Except for DMR Qld where land is expensed. RTA NSW Licensed to Prof Stephen Emery on 12 Apr 2006. land under work in progress is reported under separate asset category “land acquired for roadworks” until physical works are complete. The exception being when land is resumed immediately prior to the commencement of physical works and the works extend for more than one year. RTA NSW has recorded land under work in progress as land under roads since 30 June 1996 (cf page 48 in RTA NSW Annual Report.Valuation of Road Infrastructure Assets in Australia and New Zealand Question 12 Land and work in progress How does your organisation recognise land under work in progress .as part of “work in progress”. All land is included in “land under roads”. Storage. or as “land under roads”? DMR Qld DIER Tas MR WA Neither. Personal use licence only. As land under roads. Land under work in progress is recognised as part of “work in progress”. there is uniformity in this aspect of the road infrastructure valuation process. Land is expensed when construction commences. therefore land purchased for roadworks is not part of “work in progress”. — 98 — . distribution or use on network prohibited. In the majority of cases. The land is reported as part of “work in progress” on these occasions. 1996). Land under roads is capitalised upon acquisition as a separate asset category.

Improvements under consideration include: • • • optimisation of depreciation (see Q 7). 5 and 6 of this Report may indicate inconsistencies with road agencies in other States. DMR Qld DMR Qld is continually moving to improve the valuation methodology and processes. DIER Tas Licensed to Prof Stephen Emery on 12 Apr 2006. Yes. VicRoads TNZ VicRoads is considering refining aspects of the valuation model.Valuation of Road Infrastructure Assets in Australia and New Zealand Question 13 Changes being considered to valuation methodology Is your organisation considering any changes to improve valuation methods and processes? If so. Improvements under consideration include: • • bridge capitalisation based on condition rather than age. Information contained in Figures 4. such as land under roads and the use of cost indices. TSA is also considering internal processes for capitalisation and periodic revaluations. and pavement capitalisation based on a new condition based method. But we are mindful of the costs of continual improvement for an outcome which is predominantly geared to external financial reporting requirements. Personal use licence only. A pilot of 1 of 14 Districts was undertaken in 1997/98 and further work is planned in 1998/99. Benefits of this shift for TSA would be to establish a clearer link between asset accounting and asset management. TSA intends to explore this. T SA TSA is continuously moving to improve our valuation processes. improvements to the estimation of remaining life. distribution or use on network prohibited. The road replacement cost method. MR WA RTA NSW MR WA is moving to improve the valuation model by including additional condition information such as rutting in the deterioration model. and incorporation of valuation in asset management. TSA is currently evaluating moving towards a condition based depreciation model rather than a straight line model. now in place is to be reviewed annually. Yes. Storage. DCC No — 99 — . please briefly describe. A working party is currently reviewing the bridge valuation process. An example of one of the improvements currently being explored is the use of forward planning forecasts to estimate remaining useful lives of individual road sections based on obsolescence.

To assist in making decisions on maintaining or replacing bridges. Intend to consider incorporating valuation information into internal indicators. Comment: Should we proceed to compile such a compendium of current practice. None at this stage. Can provide descriptions of valuation methods. DMR Qld DIER Tas MR WA RTA NSW TSA VicRoads Licensed to Prof Stephen Emery on 12 Apr 2006. but no action at this stage in this direction. Would be more than happy to participate.Valuation of Road Infrastructure Assets in Australia and New Zealand Question 14 Additional uses of valuation information Is your organisation considering any additional uses of valuation information? If so. TNZ DCC Question 15 Descriptions of valuation methods Would your organisation be in a position to provide descriptions of valuation methods for incorporation in a possible compendium of road agency valuation methodologies? It is envisaged that existing material would be used. for example as a percentage of asset value. Yes. Yes . without a requirement that new material be prepared. The methodologies used by VicRoads have been looked upon by other Departments and Local Government Authorities. Asset management planning. Trends in road expenditure. or is it adequate for individuals to make contact with other MAs as required? — 100 — . No. distribution or use on network prohibited. The uses for valuation information are growing all the time. as done elsewhere. Storage. Yes. Yes. Yes. Yes. if required. Personal use licence only. please briefly describe. Yes.the procedures are documented. Could be used more broadly such as in whole of government budget negotiations. can be used for determining the efficiency of the program. DMR Qld DIER Tas MR WA RTA NSW TSA VicRoads TNZ DCC Yes.

Valuation of Road Infrastructure Assets in Australia and New Zealand Question 16 Is there any other comment you would like to add? DMR Qld DMR Qld is very supportive of the current work being undertaken by Austroads in this area and is keen to be involved with a view to moving towards a uniform approach for recording and valuing road infrastructure in Australia. DCC We would support a valuation method for land under roads and within road reserves (we do not distinguish between them) whereby land is valued at the Valuer-General’s average rateable value per hectare for the urban and nonurban sectors in each local government area. There is a need to ensure that asset management practice and resource allocation practice are consistent with valuation methods. distribution or use on network prohibited. Valuation of land under roads: MR WA is in general agreement with the treatment proposed in Appendix 4 and currently uses average values. DIER Tas MR WA RTA NSW Licensed to Prof Stephen Emery on 12 Apr 2006. in a meaningful format and can be used as quality intelligence in asset management. — 101 — . Average rateable value per hectare is supplied by the Valuer-General and is based on adjacent land use type. Guidelines are needed to give a consistent approach between agencies. The current benefits of our asset valuation process are still to be realised. No. if only consistent with accounting. Optimising the network needs to be considered as it is the method of valuation along with a more earnings based approach that are used for evaluating the rates of return for infrastructure monopolies. Storage. TSA VicRoads TNZ No. Otherwise. Personal use licence only. the information will not be very relevant. TSA’s asset depreciation and valuation methods need to be challenged with further research and development required to transform current practices such that valuations produced are reliable. The change should occur when the technology is available to gather and process the data at a reasonable cost. Figure 6 in the June 1998 draft report tends to suggest that TSA’s road and bridge assets are over 50% run-down which appears high compared to other States. We interpret this to mean an average over the whole Council area for urban and non-urban land values applied to the area of roads in each classification. The method of depreciation needs to be reviewed and agreed upon. it is our view that the objective should be to move to using the current market value of the land immediately adjacent to the road reserve to value land under roads and within the road reserve.

Valuation of Road Infrastructure Assets in Australia and New Zealand (September 1999) — 102 — . distribution or use on network prohibited. Storage.Valuation of Road Infrastructure Assets in Australia and New Zealand APPENDIX 12 Extract from VicRoads Annual Report to 30 June 1998 on depreciation Licensed to Prof Stephen Emery on 12 Apr 2006. Personal use licence only.

distribution or use on network prohibited. Valuation of Road Infrastructure Assets in Australia and New Zealand — 103 — . Storage.Licensed to Prof Stephen Emery on 12 Apr 2006. Personal use licence only.

Valuation of Road Infrastructure Assets in Australia and New Zealand — 104 — .Licensed to Prof Stephen Emery on 12 Apr 2006. Storage. distribution or use on network prohibited. Personal use licence only.

Licensed to Prof Stephen Emery on 12 Apr 2006. Personal use licence only. Storage, distribution or use on network prohibited.

Valuation of Road Infrastructure Assets in Australia and New Zealand

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Licensed to Prof Stephen Emery on 12 Apr 2006. Personal use licence only. Storage, distribution or use on network prohibited.

Valuation of Road Infrastructure Assets in Australia and New Zealand

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INFORMATION RETRIEVAL

Austroads (1999), Valuation of Road Infrastructure Assets in Australia and New Zealand: Sydney, A4, 117pp, AP-144/00.

KEYWORDS:
Accounting, bridge management, capitalisation, depreciation, financial statements, infrastructure, inventory, investment, pavement evaluation, road management, valuation

SUMMARY
Licensed to Prof Stephen Emery on 12 Apr 2006. Personal use licence only. Storage, distribution or use on network prohibited.

This report examines current practices by State road agencies in Australia and by Transit New Zealand in valuation of road infrastructure assets. Areas of consistency and inconsistency are identified. The report focuses on the potential for infrastructure valuation to assist road agencies in formulating asset management strategies which will meet the needs of road users while minimising the long term costs of providing and maintaining the road networks. Valuation information is described from an asset management perspective, complementing the traditional accounting perspective on capitalisation. The potential benefits to a road agency from both the valuation process and the resulting information are articulated. Further study is necessary of the relative potential for condition based and age based depreciation of road pavement assets to be an effective input to road asset management decisions. A number of other directions for future action are identified for consideration as part of the intended Austroads review of valuation methods for road infrastructure elements.

Roads in the Community — A Summary Roads in the Community — Part 1: Are they doing their job? Roads in the Community — Part 2: Towards better practice Electronic Toll Collection Standards Study Strategy for Traffic Management Research and Development Strategy for Improving Asset Management Practice Austroads 1997 Bridge Conference Proceedings — Bridging the Millennia Principles for Strategic Planning Assessing Fitness to Drive Cities for Tomorrow — Better Practice Guide & Resource Document Cities for Tomorrow — CD Guide to Stabilisation in Roadworks Australia Cycling 1999-2004 — The National Strategy e-transport — The National Strategy for Intelligent Transport Systems Guide to the Selection of Road Surfacings These and other Austroads publications may be obtained from: ARRB Transport Research Ltd 500 Burwood Highway VERMONT SOUTH VIC 3131 Australia Telephone: Fax: Email: Website: +61 3 9881 1547 +61 3 9887 8144 donm@arrb.14/99 AP-11.au www.6/93 Roundabouts AP-11. A Guide to the Hydraulic Design of Bridges.1/88 Traffic Flow AP-11. Some of its more recent publications are: AP-1/89 Rural Road Design AP-2/90 Design of Sprayed Seals AP-8/87 Visual Assessment of Pavement Condition Guide to Traffic Engineering Practice AP-11. or their agent in all States and Territories.2/88 Roadway Capacity AP-11.AUSTROADS PUBLICATIONS Austroads publishes a large number of guides and reports. Standards New Zealand.4/88 Road Crashes AP-11.8/88 Traffic Control Devices AP-12/91 AP-13/91 AP-14/91 AP-15/96 AP-17/92 AP-18/96 AP-22/95 AP-23/94 AP-26/94 AP-29/98 AP-30/94 AP-34/95 AP-36/95 AP-38/95 AP-40/95 AP-41/96 AP-42/96 AP-43/98 AP-44/97 AP-45/96 AP-46/97 AP-47/97 AP-48/97 AP-49/97 AP-50/97 AP-51/98 AP-52/97 AP-53/97 AP-54/97 AP-55/98 AP-56/98 AP-57 & 58/98 AP-59/98 AP-60/98 AP-61/99 AP-62/99 AP-63/00 Arterial Road Traffic Management Local Area Traffic Management Parking Roadway Lighting Pedestrians Bicycles Motorcycle Safety Licensed to Prof Stephen Emery on 12 Apr 2006. . Storage.au or from road authorities.arrb.3/88 Traffic Studies AP-11. Road Maintenance Practice Bridge Management Practice Guide to Bridge Construction Practice Australian Bridge Design Code Pavement Design RoadFacts 96 Strategy for Pavement Research and Development Waterway Design.10/88 AP-11.15/99 AP-11.7/88 Traffic Signals AP-11. distribution or use on network prohibited.org. Culverts & Floodways Strategy for Structures Research and Development Austroads Strategic Plan 1998–2001 Road Safety Audit Design Vehicles and Turning Path Templates Adaptions and Innovations in Road & Pavement Engineering Guide to Field Surveillance of Quality Assurance Contracts Strategy for Ecological Sustainable Development Bitumen Sealing Safety Guide Benefit Cost Analysis Manual National Performance Indicators Asphalt Recycling Guide Strategy for Productivity Improvements for the Road Transport Industry Strategy for Concrete Research and Development Strategy for Road User Cost Australia at the Crossroads.5/88 Intersections at Grade AP-11.13/95 AP-11.org.12/88 AP-11. Standards Australia & Bicycle New South Wales. Personal use licence only.9/88 AP-11.11/88 AP-11.