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Asset Sustainability Index: A Proposed Measure for Long-Term Performance

Table Of Contents

List of Figures

Figure 1: Ratios from Maintenance, Pavements and Bridges combine into the Asset Sustainability Index.

Figure 2: This illustration depicts how the use of the ASI in a time series represents an important decline in needed infrastructure investment.

Figure 3: Inputs to the Asset Sustainability Index.

Figure 4: Pavement Sustainability Ratio and valuation over time.

Figure 5: The "Sustainability Gap" or investment gap.

Figure 6: Pavement deterioration curves.

Figure 7: Guardrail sustainability ratio calculation.

Figure 8: Long-term investment perspective.

Figure 9: Combining ratios into an index.

Figure 10: Kentucky's Charles Roebling suspension bridge is an example of a unique asset.

Figure 11: Class I capital investment growth.

Figure 12: The Balanced Scorecard.

Figure 13: Sunshine Coast short-term, medium-term and long-term metrics.

Figure 14: Gold Coast Asset Consumption forecasts.

Figure 15: Asset values in Bundaberg.

Figure 16: An idealized example of asset consumption.

Figure 17: Conditions on Ohio's "priority system".

Figure 18: Ohio pavement conditions over 30 years.

Figure 19: Ohio pavement sustainability ratio and gap.

Figure 20. Construction inflation influenced investment needs.

Figure 21: Utah pavement conditions over time.

Figure 22: Utah pavement budget versus condition.

Figure 23: Backlog of pavement treatments.

Figure 24: Utah Interstate pavement condition trends.

Figure 25: NHS conditions and trends.

Figure 26: Non-NHS condition and trends.

Figure 27: Budget need for optimal conditions.

Figure 28: Utah pavement sustainability ratio.

Figure 29: MnDOT "good" ride quality.

Figure 30: MnDOT "poor" ride quality index.

Figure 31: MnDOT remaining service life.

Figure 32: MnDOT declining program projections.

Figure 33: MnDOT's declining pavement investment levels.

Figure 34: Ohio bridge conditions over time.

Figure 35: General appraisal conditions by district.

Figure 36: Statewide bridge condition changes.

Figure 37: Ohio deck condition changes.

Figure 38: Shifting budgets to address deficiencies.

Figure 39: Improving conditions over time.

Figure 40: Shifting bridge allocations over time.

Figure 41: District 1 bridge funding shifts.

Figure 42: Heat map of bridge conditions showing shifting conditions over time.

Figure 43: Statewide "heat map" of bridge conditions and associated sustainability ratio.

Figure 44: Improvement in MnDOT sufficiency ratings.

Figure 45: Age profile of MnDOT bridges.

Figure 46: Bridge conditions and targets over time.

Figure 47: MnDOT long-term investment trends.

Figure 48: North Carolina network-wide bridge health conditions.

Figure 49: Forecasted decline in bridge health at current expenditure levels.

Figure 50: Targets, Performance, Expenditure and Budgeted Amounts.

Figure 51: Shoulder Work - Score, Target and Expenditure.

Figure 52: Pavement striping condition, expenditures.

Figure 53: Pavement marking targets, expenditures.

Figure 54: Sign, post conditions expenditures.

Figure 55: Guardrail performance, expenditure.

Figure 56: Touch screen menu of deficiencies.

Figure 57: Map of maintenance deficiencies in one county quadrant.

Figure 58: A county work plan shows condition, level of effort.

Figure 59: A county work plan's anticipated level of effort by category of deficiency.

Figure 60: Ohio guardrail expenditures and conditions.

Figure 61: General system guardrail conditions, budgets.

Figure 62: Guardrail Work-Score, Target and Expenditure.

Figure 63: Shoulder drop off condition, budgets.

Figure 64: Drop off conditions, expenditures on Priority System.

Figure 65: Forecasted pavement conditions at current budget levels.

Figure 66: LOS forecast.

Figure 67: NC ASI for maintenance categories, expenditures.

Figure 68: ASI over time.

Figure 69: Theoretical Pavement Sustainability Ratio and corresponding asset valuation.

List of Tables

Table 1: Pavement Sustainability Ratio.

Table 2: Asset value and annual investment needs.

Table 3: Norfolk Southern RR assets and capital expenditures.

Table 4: NSC track mileage.

Table 5: NSC maintenance targets.

Table 6: NSC rolling stock metrics.

Table 7: BNSF financial metrics.

Table 8: BNSF capital investments.

Table 9: Queensland asset investment indicators.

Table 10: Sunshine Coast asset investment metrics.

Table 11: Bundaberg metrics.

Table 12: Ohio pavement expenditures and outcomes.

Table 13: Ohio pavement expenditures and outcomes.

Table 14: Increased investment and achievement of asset goals.

Table 15: Ohio bridge expenditures, funding gap.

Table 16: Ohio bridge sustainability ratio components.

Table 17: Changes in Ohio bridge funding, sustainability ratio.

Table 18: Bridge condition statistics.

Table 19. Bridge Sustainability Ratio..

Table 20: Recurring bridge needs and activities.

Table 21: Bridge maintenance program categories.

Table 22: NC bridge conditions, targets.

Table 23: Recommended expenditure levels.

Table 24: Maintenance grades.

Table 25: Shoulder Work - Target, Score, Dollars Spent or Budgeted.

Table 26: Striping scores, conditions, expenditures.

Table 27: Pavement markings scores, expenditures.

Table 28: Sign post scores, expenditures.

Table 29: Guardrail condition, expenditures.

Table 30: Guardrail expenditures and conditions.

Table 31: Shoulder drop off conditions, expenditures.

Table 32: NC maintenance conditions and targets.

Table 33: NC Interstate maintenance condition, budget and need.

Table 34: Forecasted need by category for performance-based activities.

Table 35: Calculation of a Sustainability Index.

Table 36: NCDOT bridge maintenance need by category.

Table 37: Sustainability ratios over time by asset class or activity.

Table 38: Kansas DOT GASB data.

Table 39: Kansas highway asset values.

Table 40: 10 year bridge investment need.

Table 41: Example of pavement need estimate.

Table 42: Bridge depreciation costs.

Table 43: Useful service life.

Table 44: Example of how sustainability indices can illustrate program needs.

Notice

This document is disseminated under the sponsorship of the U.S. Department of Transportation in the interest of information exchange. The U.S. Government assumes no liability for use of the information contained in this document. This report does not constitute a standard, specification, or regulation.

Quality Assurance Statement

The Federal Highway Administration provides high-quality information to serve Government, industry, and the public in a manner that promotes public understanding. Standards and policies are used to ensure and maximize the quality, objectivity, utility, and integrity of the information. FHWA periodically reviews quality issues and adjusts its programs and processes to ensure continuous quality improvement.

Technical Report Documentation Page

1. Report No.

FHWA-HEP-12-046

2. Government Accession No.

3. Recipient’s Catalog No.

4. Title and Subtitle

Asset Sustainability Index: A Proposed Measure for
Long-Term Performance

5. Report Date

July 2012

6. Performing Organization Code

7. Author(s)

Gordon D. Proctor, Shobna Varma, Steve Varnedoe

8. Performing Organization Report No.

9. Performing Organization Name and Address

Gordon Proctor &StarIsis Corp. Associates,Inc.3737 Woodstone Drive
7825 Wiltshire Drive Lewis Center, Ohio 43035
Dublin, Ohio 43016
National Center for
Pavement Preservation
2857 Jolly Road
Okemos, MI 48864

10. Work Unit No. (TRAIS)

11. Contract or Grant No.

DTFH61-10-C-00036

12. Sponsoring Agency Name and Address

FHWA Surface Transportation Environment Planning Cooperative Research Program and the Office of Asset Management, Pavements and Construction

13. Type of report and period covered

2011

14. Sponsoring Agency Code

15. Supplementary Notes

16. Abstract

This report examines the concept of asset sustainability metrics. Such metrics address the
long-term performance of highway assets based upon expected expenditure levels. It examines how such metrics are used in Australia, Britain and the private sector. It also reviews asset management data from selected states to illustrate that long-term sustainability metrics could be produced using available US asset management data.

17. Key Words

Asset Sustainability, Asset Management, Long-term Performance,
Sustainable Infrastructure
Performance Management

18. Distribution Statement

No restrictions. This document is available to the public from the: FHWA Surface Transportation Environment and Planning Cooperative Research Program and the Office of Asset Management, Pavements and Construction www.fhwa.dot.gov/hep/step, www.fhwa.dot.gov/asset/

19. Security Classif.(of this report)

Unclassified

20. Security Classif. (of this page)
Unclassified

21. No. of Pages

116

22. Price

Free

Foreword

The FHWA, through the Office of Planning, Environment, and Realty solicited for research and development projects that could lead to transformational changes and revolutionary advances for transportation planning in the United States. This report, Asset Sustainability Index: A Proposed Measure for Long-Term Performance, is a product of that research.

This report examines the use of forward-looking metrics in Australia, Great Britain and in the private sector that measure the sustainability of infrastructure conditions. These metrics encourage a long-term, asset-management-based approach to managing infrastructure, not just to meet condition targets today, but to sustain those targets into the future.

The report also examines the asset management data and systems used in four U.S. States to determine if they could produce long-term sustainability metrics. The report demonstrates that U.S. agencies that have mature asset management systems can produce long-term metrics that provide insight into the future condition of transportation assets. Thus, sustainability metrics such as those used in Australia can be produced in the U.S. using available asset management systems.

The report is intended to provide the transportation community with additional perspectives on performance management as it considers how to integrate accountability, performance, and sustainability into U.S. transportation programs. Most performance measurement systems focus upon current performance. However, the long-term performance of infrastructure is based upon longterm strategies, such as preventive maintenance, which may not significantly increase performance immediately. Adding to the suite of performance metrics some that examine long-term performance can help decision makers understand how today’s actions can influence transportation performance in the next decade. The forward-looking perspective embraces sustainability and allows the current generation of decision makers to understand how their actions will affect a future generation of transportation users.

Executive Summary

This report examines the concept of a suite of proposed performance measures centered around an Asset Sustainability Index (ASI). The metrics are proposed to be inherently forward looking and to address a fundamental question surrounding infrastructure management. That is, will current actions result in a financially sustainable highway system? Or, will current actions come at the expense of future stakeholders who will inherit a deteriorated and depreciated highway network?

The metrics are examined primarily for State transportation agency officials but they could be useful to all who manage transportation networks be they at the national, State, regional or local level. Increasingly, these officials are expected to demonstrate they are operating responsibly and transparently. In addition, they face concerns over sustainability. The proposed suite of financial sustainability metrics allow them to add to their performance reporting a set of measures that are forward-looking, leading measures that help predict the future consequences of today’s investment decisions.

Performance measures help to allocate resources, make difficult tradeoffs and to demonstrate accountability. Their use among State transportation agencies is relatively new, having gained prominence in the past decade. Performance measurement in the private sector and in the international transportation sector is more mature, and its lessons hold implications for U.S. transportation officials. A review of the private-sector evolution of performance measures illustrates that over time managers came to increasingly rely upon leading measures, as opposed to backwardlooking or lagging measures. Leading measures illustrate the likely consequences of today’s actions on future conditions. Lagging measures are inherently backward looking and provide only inferences into future results.

Mature performance-measurement frameworks such as the Triple Bottom Line or the Balanced Scorecard often emphasize forward-looking or leading indicators. They use leading indicators to forecast whether today’s actions are likely to achieve the desired results for future stakeholders, or are today’s actions coming at the expense of those future stakeholders?

The financial sustainability metrics in this report build off of similar metrics in Great Britain, Australia and the private sector that measure whether current investment levels will sustain future condition targets. As noted in a Queensland, Australia, sustainability act, "A local government is financially sustainable if the local government is able to maintain its financial capital and infrastructure capital over the long term." The Asset Sustainability Index and its related measures look forward to assess whether the infrastructure investment allows sustainable conditions into the future, preferably for a time horizon of at least 10 years.

Federal, State and local transportation officials repeatedly stress their concern over the condition of their transportation assets and whether they can sustain them at an acceptable condition into the future. Their concerns over future infrastructure sustainability mirror other national areas of concern. The deficits growing in the Federal budget, Social Security and Medicare create serious national debates about the sustainability of these important programs. However, continuing underinvestment in infrastructure also is creating an "infrastructure deficit". If investment is inadequate, current users are consuming infrastructure that they are not replenishing for future generations. Today’s users are, in effect, consuming the infrastructure of their children. This report examines asset sustainability metrics that can illustrate if current users are leaving a legacy for future users, or creating a deficit for them.

This Asset Sustainability Index as proposed in this report is a ratio of the amount budgeted for highway infrastructure preservation divided by the amount needed to adequately sustain infrastructure at a targeted condition over the long term.

Amount Budgeted
Amount Needed
 =   Asset Sustainability Index

This report examines the proposed index as a composite of three ratios, a Pavement Sustainability Ratio, a Bridge Sustainability Ratio and a Maintenance Sustainability Ratio. When combined, they form an Asset Sustainability Index which is a composite of all three. Aggregated, the Asset Sustainability Index provides at-a-glance summation of critical investment trends. Disaggregated, it allows "drilling down" into system-level or asset-level sustainability.

Figure 1: Ratios from Maintenance, Pavements and Bridges combine into the Asset Sustainability Index.

Figure 1 is a composite graphic of photographs of pavement repair activities, bridge repair activities and roadside maintenance activities. It illustrates that components of pavements, bridges and roadside maintenance all are compiled into the asset sustainability index. It is a composite index that is composed of three categories of ratios, one each for pavement needs, bridge needs and for roadside maintenance item needs.

Although the index and ratios are considered to be simple in concept, the Asset Sustainability Index can be an informative metric useful for long-range plans, short-term State Transportation Improvement Programs or for public budgeting decisions particularly when tracked over time. They boil down complex, long-term infrastructure condition and investment analysis into a suite of easy-to-illustrate metrics. The insight they provide increases with the length of the analysis period.

As this report points out, missing among U.S. transportation practice is a common framework for determining the needed investment to sustain infrastructure at an acceptable condition. The ASI is "Need" divided by "Budget" but there is not a common process for identifying the needed investment for a highway network. To create an analogy, there is no Highway Capacity Manual for infrastructure condition. The Highway Capacity Manual creates a national standard for measuring and setting acceptable levels of highway capacity performance. It defines levels of service as A through F and creates volume-to-capacity ratios for various types of highways. These metrics are universally understood among highway practitioners in the United States and in many nations abroad. The HCM even includes a forecasting component with standards set to ensure adequate levels of service into the future, generally 20 years.

No analogous process exists for universally measuring and forecasting the condition of a highway network and the needed investment to sustain it. The product of such an analysis could be considered to produce a Transportation Asset Management Plan that indicates what comprehensive series of investments are necessary to sustain asset conditions for a forecasted period, say 10 or 20 years. If such a plan were based on Transportation Asset Management principles, it would be policy driven and include a comprehensive mix of treatments to ensure the lowest lifecycle costs for the various highway assets. Throughout this report, case studies illustrate that sustainability metrics can be generated in the United States. However, in each case study, no actual Transportation Asset Management plan exists. Instead, the analysis "teases out" from the mature asset management practices of the examined States how their asset management practices produce credible estimates of "need" that resemble what a mature Transportation Asset Management Plan would include.

This report also borrows from the private sector. The ASI and its components are analogous to the capital-investment metrics financial analysts use to evaluate the long-term health of capitalintensive companies such as manufacturers, railroads or electric utilities. If capital-intensive industries fail to adequately invest in their own capital assets, they are considered by analysts to be poor long-term investments. In effect, current owners are consuming the physical assets that future shareholders need.

Building from international examples, the ASI emulates recent practices in Great Britain and Australia in which State and local governments are required to report on the long-term financial sustainability of their infrastructure. State and local governments are required to demonstrate they are not under-investing in infrastructure and creating future unfunded maintenance and repair needs, such as illustrated in Figure 2 (see page 4). Figure 2 illustrates that levels budgeted for sustaining highway infrastructure conditions were near needed levels in this example in the early 2000s but began to decline relative to need. As assets aged, their condition deteriorated at a more rapid rate, needed investments rose and the relatively modest budget increases consistently fell behind the needed investment. The Asset Sustainability Index fell over 20 years from a high of .97 to .53. In other words, in this forecast by 2019 if these trends continue only 53 percent of the investment needed to sustain highway infrastructure conditions will be budgeted. In Figure 2, the mid-point of the 20-year trend is highlighted to illustrate for policy makers the past trends and likely future consequences of the current forecasts.

Figure 2: This illustration depicts how the use of the ASI in a time series represents an important decline in needed infrastructure investment.

Figure 2 illustrates how an Asset Sustainability Index could be used over a time series of 20 years to illustrate long-term trends in the adequacy of highway infrastructure funding.The chart shows two series of bars, one for budgeted investment in highways and one for the amount needed to sustain highways at an acceptable condition.The graphic illustrate that by tracking both the need and the amount actually budgeted over time, it is apparent in the graphic whether investment is adequate.In this theoretical example depicted in Figure 2, it depicts that need is outstripping investment and the gap between need and investment is growing.The chart also contains a trendline on a secondary axis illustrating that the Asset Sustainability Index declines from a high of point 97 in the year 2000 to a low of point 53 by 2019.

Generating the Asset Sustainability Index relies on two credible forecasts. One is for the amount of needed investment, preferably developed from a credible Transportation Asset Management (TAM) analysis. The second element is a longterm fiscal forecast. Although complex, these two analyses are produced by capital-intensive private-sector corporations and are being developed by State and local governments in Australia and on an ad hoc basis by the U.S. agencies examined in this report.

This report describes the ASI and examines whether it can be produced using typically available U.S. highway data.

The report also explores a complementary set of metrics, those related to "Asset Valuation". Asset valuation is defined as the calculated monetary value of an asset or class of assets. By tracking over the long-term whether a transportation agency’s assets are increasing or declining in value, the effect of investment also can be displayed. If asset values decline, society is losing its highway equity and not replenishing that equity for future users. In Australia, Great Britain and in the private sector Asset Valuation serves as a complementary metric to those such as the Asset Sustainability Index. They seek to determine whether current actions increase or decrease "public equity".

The report is organized in the following manner:

Updated: 03/26/2013
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