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GASB#34 Asset Management

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

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GASB#34 Asset Management

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  1. GASB#34 Asset Management TEAM Transportation Fair Presentation by: Charles J. Nemmers, P.E. October 8, 2004 St. Louis, Missouri

  2. Today’s Presentation: • Define: • ”What is GASB#34 ? Why Should I Care?” • Why is it important • “Why Worst First Is Worst” • Implement: • “Asset Management”

  3. GASB #34 What is it? Why should I care?

  4. GASB • Government Accounting Standards Board • NOT a government agency • Sets standards for States and Local entities • Basis of audit opinions

  5. #34 • “Basic Financial Statements and Management’s Discussion and Analysis for State and Local Governments” • June 1999 • Changed reporting from Optional to Required

  6. 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, ...

  7. 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.

  8. GASB #34 gives 2 options • 1) Depreciate • 2) Modified Approach

  9. Modified vs. Depreciation Modified Depreciation Expense:Maintenance & Maintenance Preservation Capitalize: Additions and Preservation costs Improvements Additions & Improvements

  10. GASB #34 recognizes that factors vary among jurisdictions and among infrastructure assets

  11. In a Nutshell Governments generally don’t depreciate their assets and the private sector does, but now the rules have changed !!

  12. Why “Worst First” is “Worst” Comments on how to build an effective public works infrastructure program

  13. 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

  14. But “Worst First”: • Costs more - 6X more • Drags the whole system down • Is difficult to recover from • Is a difficult concept to counter

  15. Maintenance: • Routine • Reactive • Preservation / Preventive

  16. Build: • Replace / Reconstruct (improve structural condition) • Expand / New Facilities (add new capacity)

  17. Original Pavement Prevention Trigger Pavement Condition OptimalTiming Rehabilitation Trigger Time/Traffic

  18. Current Condition 40% 19% 17% 10% 8% 6% I (0-2) II (3-7) III (8-12) IV (13-17) V (18-22) VI (23-27) (years) Pavement Remaining Life Categories From Michigan DOT -- Galehouse

  19. Remaining Service Life Distribution State RSL average 8.32

  20. Remaining Service Life Distribution County Average RSL 6.9

  21. Ideal Condition 20% 18% 18% 17% 16% 11% I (0-2) II (3-7) III (8-12) IV (13-17) V (18-22) VI (23-27) (years) Pavement Remaining Life Categories

  22. Remaining Service Life Distribution State

  23. Remaining Service Life Distribution-Tooele County

  24. Remaining Service Life Distribution-Tooele County

  25. Reconstruction Strategy(25 Year Fixes)

  26. Combined Reconstruct and Rehab Strategies(15, 20 & 25 Years Design Life)

  27. Combined Reconstruct, Rehab, andPreventive Maintenance Strategies

  28. 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

  29. “Asset Management”to meeting GASB #34 using the Modified Approach

  30. 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

  31. Asset Management • Inventory assets • Condition assessment • Value Assets • Performance prediction • Alternative / Decision analysis • Monitor and feedback

  32. Condition Survey

  33. Condition Assessment .

  34. RSL of 0

  35. RSL of 8

  36. RSL of 20

  37. Pavement Performance Curve Lowest Annual Resurfacing Cost (Rehabilitation Treatments) Preventative Treatments *Terminal Serviceability

  38. Network Performance Objectives(Recommendations) StateNetwork Average RSL Percent Requiring Reconstruction Interstate +15 Years 3% or less Arterials/Major Collectors (NHS and High Volume Roads) +12 Years 5% or less Major Collectors (Low Volume) and Minor Collectors + 10 Years 5% or less Local Roads and Streets 10 Year(min.) No more than 5%

  39. Needs AssessmentCounty and City Networks

  40. Routine (reactive) Maintenance

  41. Preventative Maintenance

  42. Rehabilitation

  43. Reconstruction

  44. Predicted 10 Year RSL Average- Heber City

  45. Thank You Charlie Nemmers

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