Transcript GASB #34 - TEAM StL | Transportation Engineering

GASB#34
Asset Management
TEAM Transportation Fair
Presentation by:
Charles J. Nemmers, P.E.
October 8, 2004
St. Louis, Missouri
Today’s Presentation:

Define:


”What is GASB#34 ?
Why Should I Care?”
Why is it important
 “Why

Worst First Is Worst”
Implement:
 “Asset
Management”
GASB #34
What is it?
Why should I care?
GASB
 Government
Accounting Standards
Board
 NOT a government agency
 Sets
standards for States and Local
entities
 Basis of audit opinions
#34
 “Basic
Financial Statements and
Management’s Discussion and
Analysis for State and Local
Governments”
 June
1999
 Changed
Required
reporting from Optional to
GASB #34 Objective:


To make government accounting more like
private sector accounting
Defined Infrastructure Assets
–
–
–
–
–
roads
bridges
water and sewer systems
drainage systems
dams, tunnels, ...
Asset Valuation: GASB #34
Requirements:
state and local agencies to include the
value of physical assets in their financial
statements
 value based on depreciated historical cost,
or historical cost without depreciation if
the agency can demonstrate that they:

– inventory their assets
– assess every 3 years
– spend funds sufficient to maintain at an
established condition.
GASB #34
gives 2 options
 1)
Depreciate
 2)
Modified Approach
Modified vs.
Depreciation
Expense:
Capitalize:
Modified
Maintenance &
Preservation
Additions and
Improvements
Depreciation
Maintenance
Preservation costs
Additions &
Improvements
GASB #34 recognizes
that
factors vary among jurisdictions
and among infrastructure assets
In a
Nutshell
Governments generally don’t
depreciate their assets and the
private sector does, but now the
rules have changed !!
Why “Worst First” is
“Worst”
Comments on how to build
an effective public works
infrastructure program
Worst First occurs because:

Easy to sell - lots of roads are in
poor shape
Funding / budgets tilt toward new
construction
No Ribbon Cutting

Deferred maintenance


But “Worst First”:
 Costs
more - 6X more
 Drags
the whole system down
 Is
difficult to recover from
 Is
a difficult concept to counter
Maintenance:
 Routine
 Reactive
 Preservation
/ Preventive
Build:
 Replace
/ Reconstruct
(improve structural condition)
 Expand
/ New Facilities
(add new capacity)
Pavement Condition
Original Pavement
Prevention
Trigger
Optimal Timing
Rehabilitation
Trigger
Time/Traffic
Current Condition
Percent of Network Pavement
50
40%
40
30
20
19%
17%
10%
10
8%
6%
0
I
II
III
IV
V
VI
(0-2)
(3-7)
(8-12)
(13-17)
(18-22)
(23-27)
(years)
Pavement Remaining Life Categories
From Michigan DOT -- Galehouse
Remaining Service Life
Distribution State
Percent Surface Area
State Highway Network (RSL)
45.00
40.00
35.00
30.00
25.00
20.00
15.00
10.00
5.00
0.00
42%
20%
5%
0
RSL average 8.32
7%
1%
1-3
4-6
7-9
7%
8%
10%
10-12 13-15 16-18 19-20
Remaining Service Life Category
Remaining Service Life
Distribution County
Tooele County Remaining Service Life Distribution
Percent Area
60.00
50.2
50.00
40.00
25.5
30.00
20.00
10.00
5.8
9.8
4.0
3.1
1.3
0.3
13-15
16-18
19-21
0.00
0
1-3
Average RSL 6.9
4-6
7-9
10-12
RSL Category
Ideal Condition
Percent of Network Pavement
50
40
30
18%
20
20%
18%
16%
17%
11%
10
0
I
II
III
IV
V
VI
(0-2)
(3-7)
(8-12)
(13-17)
(18-22)
(23-27)
(years)
Pavement Remaining Life Categories
Remaining Service Life
Distribution State
Percentage of Network
Remaining Service Life for State Network in 2011
(Multi-Phase Preservation Program)
40.00%
35.00%
30.00%
25.00%
20.00%
15.00%
10.00%
5.00%
0.00%
37.0%
24.6%
15.9%
8.2%
2.6%
1.4%
1.8%
1.4%
1.0%
0
1-3
4-6
7-9
10-12
6.0%
13-15 16-18 19-21 22-24 25-30
RSL Categories
Remaining Service Life
Distribution-Tooele County
Distribution in the Year 2010 Using a Two Phase
Funding Program
% Street Network
40.00%
30.00%
20.00%
10.00%
0.00%
0 yrs
1-3 yrs
4-6 yrs
7-9 yrs
10-12 yrs
Years
13-15 yrs
16-18 yrs
19-21 yrs
Remaining Service Life
Distribution-Tooele County
Distribution in the Year 2010 Using a Two Phase
Funding Program
% Street Network
40.00%
30.00%
20.00%
10.00%
0.00%
0 yrs
1-3 yrs
4-6 yrs
7-9 yrs
10-12 yrs
Years
13-15 yrs
16-18 yrs
19-21 yrs
Reconstruction Strategy
(25 Year Fixes)
100
Percent of Lane Miles
90
80
70
60
50
40
30
20
10
0
1997
2003
2009
poor
2015
2021
fair
2027
2033
good
2039
Combined Reconstruct and Rehab Strategies
(15, 20 & 25 Years Design Life)
100
Percent of Lane Miles
90
80
70
60
50
40
30
20
10
0
1997
2003
2009
poor
2015
2021
fair
2027
2033
good
2039
Combined Reconstruct, Rehab, and
Preventive Maintenance Strategies
100
Percent of Lane Miles
90
80
70
60
50
40
30
20
10
0
1997
2003
2009
poor
2015
2021
fair
2027
2033
good
2039
Keys to Success
(from MiDOT/GaDOT):

Promote Preventive Maintenance Philosophy

Fix pavements BEFORE they are broken-select
good pavements for treatment

Budget & fund Preventive maintenance

Shorten the time between assessment and
maintenance

Build them excellent the first time
“Asset Management”
to meeting GASB #34 using the
Modified Approach
Asset Management
What is it?
 Improved way of doing business
 Draws from economics & engineering
 Focuses on benefit of investment
 Shows How, When & Why resources
were committed
 Planning tool
Asset Management
 Inventory
assets
 Condition assessment
 Value Assets
 Performance prediction
 Alternative / Decision analysis
 Monitor and feedback
Condition Survey
DistressType
Fatigue
Cracking
Longitudinal
Cracking
Transverse
Cracking
Low
Severity
Medium
Severity
High
Severity
Longitudinal crack in
Moderately to
Interconnected crack
wheel path with no or
severely spalled
pattern in wheel path,
only a few connecting
pattern of
slightly spalled, no
cracks, no spalling or
interconnected
pumping.
pumping.
cracks in wheel path,
Unsealed or poorly
Unsealed cracks with
Unsealed or poorly
sealed cracks with
mean width less than
sealed cracks with
width greater than
1/4" or well sealed
width 1/4" to 3/4".
3/4" and secondary
cracks.
random cracking.
Unsealed or poorly
Unsealed cracks with
Unsealed or poorly
sealed cracks with
mean width less than
sealed cracks with
width greater than
1/4" or well sealed
width 1/4" to 3/4".
3/4" and secondary
cracks.
random cracking.
Low
Extent
Medium
Extent
High
Extent
0-10%
10-30%
>30%
<100 ft.
100-300 ft.
>300 ft.
>100 ft.
100-25 ft.
< 25 ft.
Bleeding
Asphalt cement
beginning to flush to
surface.
70% of aggregate
texture lost in wheel
paths.
Excess asphalt
cement in wheel
path, little or no
aggregate texture.
<500 ft.
Patching &
Utility Cuts
Smooth Patch.
Uneven patch that
traps surface water.
Patch deteriorated,
uneven, traps surface
water.
0-10%
Oxidation &
Raveling
Asphalt oxidized &
some loss of fine
aggregate.
Edge Drop-off
Edge drop-off of less
than 1".
Loss of fine
Surface very rough
aggregate and some
and substantial loss
loss of coarse
of aggregate in wheel
aggregate, road
paths.
surface pitted.
Edge drop-off of
between 1" to 3".
Edge drop-off of
greater than 3".
<500 ft.
0-10%
500-1500 ft. >1500 ft.
10-30%
>30%
500-1500 ft. >1500 ft.
10-30%
>30%
Condition Assessment
Flexible Pavement
Low Volume Asphalt Fatigue Cracking
.
Extent (Percent of Wheel Path)
0
RSL (20)
Low
Severity
Longitudinal crack in wheel path with no
or only a few connecting cracks, no
spalling or pumping
Med
Interconnected crack pattern in wheel
path, slightly spalled, no pumping
Low
Med
High
0-10%
10-30%
>30%
1
2
3
RSL (10) RSL (8) RSL (6)
4
5
6
High
RSL (8) RSL (6) RSL (4)
7
8
9
Moderately to severely spalled pattern
of interconnected cracks in wheel path,
pumping may be noticeable
RSL (6) RSL (2) RSL (0)
Reference: SHRP Distress Manual pages 8-9
RSL of 0
RSL of 8
RSL of 20
Pavement Performance Curve
PCI
100
RSL
Pavement Performance Curve
Preventative
Treatments
20
80
Lowest Annual
Resurfacing Cost
(Rehabilitation
Treatments)
10
60
0
40
20
*Terminal
Serviceability
0
20 18 16 14 12 10 8
6
4
2
Remaining Service Life
0
Network Performance
Objectives
(Recommendations)
State Network
Average RSL
Percent Requiring
Reconstruction
Interstate
+15 Years
3% or less
Arterials/Major Collectors
(NHS and High Volume Roads)
Major Collectors (Low Volume)
and Minor Collectors
+12 Years
5% or less
+ 10 Years
5% or less
Local Roads and Streets
10 Year(min.)
No more than 5%
Needs Assessment
County and City Networks
Agency
Tooele County
Heber City
Centerline Surface Estimated
Miles
Area (yd2) Funding Needs
244
30
3,605,282 2.1 million/year
641,713 220,000/year
Routine (reactive) Maintenance
Routine Maintenance
Type of repair
Crack Seal
Digout and Cold Patch
Digout and Hot Patch
High Perf. Cold Patch
Fog Coat
Cost per Unit Area Added Service Life
When used RSL 13-18
$0.05
2
$0.30
0
$0.30
0
$0.30
0
$0.30
2
Preventative Maintenance
Preventive Maintenance
Type of Repair
Sand Seal
Scrub Seal
Single Chip Seal
Double Chip Seal
Slurry Seal
Microsurfacing
Cost per Unit Area Added Service Life
When used RSL 10-12
$0.54
2
$0.90
5
$0.90
5
$1.35
7
$0.90
5
$1.44
7
Rehabilitation
Rehabilitation
Type of Repair
HMA (leveling) & Overlay (<2 in.)
Thin Hot Mix Overlay (<2 in)
Hot Surface Recycling
Rotomill & Overlay (<2 in)
Plant Mix Seal
Cost per Unit Area Added Service Life
When used RSL 7-9
$4.14
8
$3.60
7
$4.95
8
$4.95
8
$2.70
7
Reconstruction
Reconstruction
Type of Repair
Thick Overlay (3 in.)
Base repair and pavement Replacement
Base Replacement and Pavement Replacement
Cold Recycling &Overlay (3 in.)
Rotomill & Thick Overlay (3 in.)
Cost per Unit Area Added Service Life
When used RSL 0
$5.00
12
$7.50
14
$10.00
20
$9.90
14
$6.00
12
Predicted 10 Year RSL
Average- Heber City
Average Remaining Service Life
Two Phase Strategy
13.1
13.20
13.00
12.7
12.80
12.5
RSL
12.60
12.40
12.20
12.1
12.00
11.80
11.60
2003
2006
2008
Year
2010
Thank You
Charlie Nemmers