Abstract
Asset management is a strategic tool for maintaining the value of an asset at a level that is satisfactory for users, asset owners, and taxpayers. This paper introduces the concept of service value. The concept is applied following the recommendations of the Organisation for Economic Co-operation and Development (OECD): service value equals the value of economic benefits generated by an asset. It is shown how alternative value accounting methods result in different asset values. The present value method, as recommended by accounting practitioners and in line with the concept of service value, is more appropriate for asset management purposes than the perpetual inventory method (PIM), despite the fact that the latter is more widely used. The impact of correct asset and service value accounting extends well beyond project and investment program management levels to the national accounting system of fixed capital. Incorrect asset management accounting may lead to serious under- or overestimation of investments and repair debt.
| Original language | English |
|---|---|
| Article number | 04019025 |
| Number of pages | 12 |
| Journal | Journal of Infrastructure Systems |
| Volume | 25 |
| Issue number | 3 |
| DOIs | |
| Publication status | E-pub ahead of print - 2 Jul 2019 |
| MoE publication type | A1 Journal article-refereed |
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Keywords
- Accounting
- Asset
- Benefit
- Infrastructure
- Service value
Cite this
}
Service Value and Componentized Accounting of Infrastructure Assets. / Leviäkangas, Pekka; Pargar, Farzad; Sirvio, Konsta; Khabbaz Beheshti, Behrouz; Love, Peter E.D.
In: Journal of Infrastructure Systems, Vol. 25, No. 3, 04019025, 02.07.2019.Research output: Contribution to journal › Article › Scientific › peer-review
TY - JOUR
T1 - Service Value and Componentized Accounting of Infrastructure Assets
AU - Leviäkangas, Pekka
AU - Pargar, Farzad
AU - Sirvio, Konsta
AU - Khabbaz Beheshti, Behrouz
AU - Love, Peter E.D.
PY - 2019/7/2
Y1 - 2019/7/2
N2 - Asset management is a strategic tool for maintaining the value of an asset at a level that is satisfactory for users, asset owners, and taxpayers. This paper introduces the concept of service value. The concept is applied following the recommendations of the Organisation for Economic Co-operation and Development (OECD): service value equals the value of economic benefits generated by an asset. It is shown how alternative value accounting methods result in different asset values. The present value method, as recommended by accounting practitioners and in line with the concept of service value, is more appropriate for asset management purposes than the perpetual inventory method (PIM), despite the fact that the latter is more widely used. The impact of correct asset and service value accounting extends well beyond project and investment program management levels to the national accounting system of fixed capital. Incorrect asset management accounting may lead to serious under- or overestimation of investments and repair debt.
AB - Asset management is a strategic tool for maintaining the value of an asset at a level that is satisfactory for users, asset owners, and taxpayers. This paper introduces the concept of service value. The concept is applied following the recommendations of the Organisation for Economic Co-operation and Development (OECD): service value equals the value of economic benefits generated by an asset. It is shown how alternative value accounting methods result in different asset values. The present value method, as recommended by accounting practitioners and in line with the concept of service value, is more appropriate for asset management purposes than the perpetual inventory method (PIM), despite the fact that the latter is more widely used. The impact of correct asset and service value accounting extends well beyond project and investment program management levels to the national accounting system of fixed capital. Incorrect asset management accounting may lead to serious under- or overestimation of investments and repair debt.
KW - Accounting
KW - Asset
KW - Benefit
KW - Infrastructure
KW - Service value
UR - http://www.scopus.com/inward/record.url?scp=85068368122&partnerID=8YFLogxK
U2 - 10.1061/(ASCE)IS.1943-555X.0000497
DO - 10.1061/(ASCE)IS.1943-555X.0000497
M3 - Article
VL - 25
JO - Journal of Infrastructure Systems
JF - Journal of Infrastructure Systems
SN - 1076-0342
IS - 3
M1 - 04019025
ER -