1.2 Scope and Organization

This guidebook consists of nine chapters, a glossary and additional technical appendices. The first two chapters, including this one, introduce the content and key concepts. Chapters 3 to 8 provide step-by-step guidance for calculating asset value. Chapter 9 provides a set of worked examples of the calculations.

The contents of the remaining chapters are as follows:

**Chapter 2 – Asset Value Overview**introduces the concept of asset valuation. It defines asset value from the cost, market, and economic perspectives, identifies applications of asset value for supporting TAM, and presents the simplified steps for calculating asset value. The chapter concludes with a summary of U.S. and international accounting standards and their underlying assumptions.**Chapter 3 – Asset Valuation Scope**outlines the different factors one should consider when establishing their asset valuation calculation approach. This includes selecting which assets and systems to include in the calculation, reviewing available data, and determining the level of detail at which the calculation will be performed, and specifically whether to break complex assets into components.**Chapter 4 – Initial Asset Value**describes how to calculate the initial value of an asset when it is first constructed or obtained. The chapter describes four basic approaches to performing the calculation reflecting different perspectives on asset value: historic cost, replacement cost, market value, and economic value.**Chapter 5 – Treatment Effects**identifies and defines which treatment effects should be included in the asset value calculation. It discusses treatment costs, treatment effects, and the concept of residual value.**Chapter 6 – Depreciation**describes how to calculate the loss in value of an asset over time. The chapter describes three basic approaches to calculating depreciation. Each approach focuses on a different basis for depreciation: asset age, condition, or the pattern of benefit consumption for the asset.**Chapter 7 – Measure Calculation**brings together all of the steps from Chapters 3 to 6 to calculate the overall asset value. Also, it describes how to calculate additional supporting measures, such as the cost to maintain value, asset sustainability ratio, net present value, asset renewal funding ratio, and asset consumption ratio.**Chapter 8 – Using Asset Value to Support TAM Decisions**addresses the interpretation, communication, and application of asset value. It explains how to test different treatment scenarios using asset value, and it clarifies when and how asset value can support prioritization. The chapter also explains when and how to use sensitivity analysis to understand the asset value results.**Chapter 9 – Case Studies**presents a set of case studies undertaken to demonstrate the process outlined in this guide. The case studies illustrate scenarios for calculating and applying asset value from a range of different agencies and asset types.