7.4 Practice Assessment


7.4 Practice Assessment

This section provides examples of “emerging,” “strengthening,” and “advanced” practices for the calculation of value and related measures. In the table an emerging practice is one that supports the guidance with minimal complexity, an advanced practice illustrates a “state of the art” example in which an agency has addressed some aspect of the asset value calculation in a comprehensive manner, and a strengthening practice lies between these two levels.

This section provides examples of “emerging,” “strengthening,” and “advanced” practices for the calculation of value and related measures. In the table an emerging practice is one that supports the guidance with minimal complexity, an advanced practice illustrates a “state of the art” example in which an agency has addressed some aspect of the asset value calculation in a comprehensive manner, and a strengthening practice lies between these two levels.

Practice Area
Maturity Level
Description

Current Value Calculation
Emerging

Asset value is calculated for major assets at an aggregate level as required to support financial reporting and TAMP requirements.


Strengthening

Asset value is calculated for major assets. Either the calculations are performed at an asset/component level or supplemental analysis is performed to confirm use of the approach for aggregating asset value calculations.


Advanced

Asset value is calculated for major assets. Either the calculations are performed at an asset/component level or supplemental analysis is performed to confirm use of the approach for aggregating asset value calculations. Sensitivity analyses are periodically conducted to show the effect of changes in key analysis parameters.


Balance Sheet Preparation
Emerging

The agency prepares a balance sheet as part of its financial reporting, but does not attempt to reconcile asset value in the financial report with TAM estimates.


Strengthening

Differences in approaches between financial reporting TAM asset valuation are documented as a one-time exercise performed when preparing the TAM asset valuation.


Advanced

Consistent approaches are used where possible to prepare the balance sheet in the agency’s financial report and value assets for TAM. Differences in approaches are resolved where possible, and regularly reviewed and documented in financial and TAM reports where they remain.


Asset Value-Related Measures
Emerging

Cost to maintain current value, ASR and asset ACR are or can be calculated using annual depreciation and expenditures.


Strengthening

Cost to maintain current value, ASR and asset ACR are or can be calculated using annual depreciation and expenditures. In addition, supplemental analysis is performed using the agency’s management systems to establish the cost to maintain current value.


Advanced

Cost to maintain current value, ASR, ACR and AFR are calculated and used to support investment decisions. Supplemental analysis is performed using the agency’s management systems to establish the cost to maintain current value and the cost to achieve the desired state of good repair.