A Life Cycle Model for Asset Investment Decision Making

Physical infrastructure assets, such as roads, tend to represent major financial investments, be designed to last for many years, be heavily used, carry considerable load, and be exposed to the natural environment. Expenditure on constructing and maintaining such assets is considerable. For example, in Australia, it is estimated that about $A7 billion dollars are spent annually on roads. Allocation of the capital portion of such expenditure tends to be on perceived value for money, tempered with social considerations. The maintenance, or recurrent portion (which can be a quite high proportion of the whole) typically tends to be based on previous performance and "as seen" performance of the roads. While such a process is useful at a day-to-day operational level, a more strategic approach, in which the behaviour of the infrastructure in question and its likely future performance were better understood, would be better for making funding decisions and for focusing expenditure where it is most needed. As the various phases of the infrastructure life cycle interact, any strategic infrastructure management approach should consider the whole life cycle of the infrastructure rather than a particular segment of the life cycle in isolation from the rest of that life cycle. This paper considers the application of such a life cycle methodology to the infrastructure development, management and investment decision-making process.