5.5.1 Asset Value Checklist

Define the Analysis Scope

In many TAM applications the preferred approach for initial value uses the cost perspective and the current replacement cost. However, in some applications other methods are valuable, including the economic perspective, market perspective and historic cost.

Establish Initial Value

In many TAM applications the preferred approach for initial value uses the cost perspective and the current replacement cost. However, in some applications other methods are valuable, including the economic perspective, market perspective and historic cost.

Determine Treatment Effects

The inclusion or exclusion of treatment effects depends on the factors which influence the asset’s expected useful life. Often, treatments may be excluded from analysis, but it is worth documenting the anticipated maintenance plan and understanding which treatments impact the expected useful life.

Calculate Depreciation

The best method for depreciating an asset varies based on the intended application of the calculation, the asset type, the value perspective, and the resources and data available. The three proposed methods for calculating depreciation are straight-line depreciation, condition-based depreciation, and non-linear benefit consumption.

Calculate Value and Supporting Measures

To support the final asset value and its application in the agency, several additional measures may be necessary. These measures include: cost to maintain value, asset sustainability ratio (ASR), asset consumption ratio (ACR), asset funding ratio (AFR), the net present value (NPV), and others.

Communicate and Apply the Results

Lastly, the asset value should be interpreted, communicated and applied to appropriate TAM decision-making. The agency may want to conduct sensitivity analyses to describe the accuracy of the calculated value and identify any assumptions or variables which significantly impact the final asset value.