ASSET MANAGEMENT: THE ONGOING CRISIS

Emad Elbeltagi1
eelbelta@mans.edu.eg

Mohamed Tantawy2
eng.tantawy@gmail.com

ABSTRACT
Civil infrastructure is the foundation for economic growth, a large percentage of its assets
are rapidly deteriorated due to age, harsh environment, and insufficient capacity.
Governments, municipalities and organizations, therefore, have come under increasing
pressure to develop new strategies to manage public assets in a way that ensures their
long-term sustainability. Managing infrastructure assets, however, is a complex and
challenging task due to various reasons, including: the costly asset condition assessment
process, particularly for old assets that lack historical information; the lack of accurate
models of asset deterioration and cost implications of deferred maintenance decisions.
The paper reveals research and development efforts in the field of infrastructure
management. It highlights on the area of buildings as it is an important infrastructure
sector. It illustrates the main challenges faced to implement infrastructure management
systems. Then it introduces a generic framework for Infrastructure Management System
(IMS) along with the benefits of using such systems and areas of future research are
outlined.
Key words: Framework, Asset, crisis, asset management, infrastructure.
INFRASTRUCTURE ASSETS
Infrastructure assets can be classified as current and non-current assets. Current assets are
these with useful life less than one year and can be divided to financial (money) and
physical assets which are something touchable like raw materials. Non-current assets are
these with useful life more than one year. It can either be physical or intangible (nonphysical). Examples for physical assets are buildings, bridges,etc. and intangible like
computer software. Some assets can be classified as physical and intangible asset like
building belongs to software company, it contains the building itself and computers
(physical) and software (intangible). Figure 1 shows the classification for different asset
types [2].
Assets

Current

Financial

Non-Current

Physical

Intangible

Figure 1: Asset Types

1
Associate Professor of Construction Management, Structural Engineering Department, Faculty of
Engineering, Mansoura University, Mansoura 35516, Egypt.
2
Assistant Lecturer, Civil Department, Higher Institute of Engineering, El-Shrouk Academy ,Cairo, Egypt.

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Infrastructure assets could be described under physical non-current assets. It could be

categorized to seven categories according to its service: transportation, water and waste
water, water management, energy production and distribution, buildings, recreation
facilities and communication. Each category can be also classified to many types. For
example, buildings can be classified to schools, hospitals,etc., transportation can be
classified to aviation, roads, rail,...etc.
Expenditure on Infrastructure Assets
This section provides an overview of the statistics and expenditures on infrastructure in
some countries such as Egypt, Canada and the United States, classified by infrastructure
type. The purpose is to provide information on investment values and to compare the
rates of yearly investment made in response to infrastructure needs. Table 1, presents the
total construction spending in Canada and United States for both residential and
infrastructure construction, as depicted from various references made by Statistics Canada
and United States Census Bureau [7,15].
Table 1: Infrastructure Expenditures in Canada & United States ($ Billions)
No.
1
2
3
4
5
6
7
8
9
10
11
12
13

Year
Residential Buildings
Non-Residential Buildings
Transportation Engineering
Waterworks Engineering
Sewage Engineering
Electric Engineering
Communication Engineering
Oil and Gas Engineering
Other Engineering
Total Buildings (sum 1 & 2)
Engineering (sum 3 to 9)
Infrastructure (sum 2 to 11)
Total Construction (sum 1 to 9)

1990
186.7
160.4
34.7
4.9
10.3
10.6
9.8
5.2
19.6
347
95.1
256
442

U.S.A.
1993 1997
214.5 270.5
139.8 227.8
41.0
50.3
6.0
6.3
10.4
10.5
14.3
12.1
9.6
11.6
7.4
5.4
23.4
23.8
354
498
112
120
252
348
466
618

1990
41.0
29.0
8.4
1.1
1.8
6.1
2.6
8.3
3.4
70
31.7
60.7
102

Canada
1993
38.4
22.9
8.9
1.3
1.8
7.6
1.9
8.1
2.9
61
33
55
94

1997
37.4
18.4
5.8
1.7
1.4
2.4
2.1
17.2
2.9
56
34
52
89

The data collected revealed that the yearly average expenditure on infrastructure in
Canada is about $53 billion, distributed as non-residential buildings (40%), oil and gas
(21%), transportation (14%), electric (10%), communication (4%), sewage (3%), water
(2%), marine (1%), and 5 percent for other projects. It is apparent that majority of
Canadian infrastructure expenditures are still mainly directed to new construction, despite
of the need for large investments as facilities age [7].
In the United States, infrastructure expenditures amount to 56% on average of yearly
construction expenditures (range from 52% to 60%). Spending on infrastructure has been
steadily increasing from about $255 billion in 1990 to $410 billion in 1999 [15]. The rate
of growth in spending on infrastructure has also increased from 0.59 percent in 1991 to
12.73 percent in 1998. The yearly average expenditure on infrastructure in the United
States is about $303 billion, distributed as non-residential buildings (63%), transportation
(14%), electric (4%), communication (4%), sewage (3%), water (2%), oil and gas (2%),
and 8 percent for other projects .
It is noted that in Canada non-residential buildings followed by oil and gas then
transportation are the areas on which most infrastructure expenditures are directed. In the
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United States, non-residential buildings and the transportation are at the top. It is clear,
therefore, that the above surface infrastructure has been given more attention than
underground infrastructure such as water/sewage.
According to Egypt statistics of 2005, there are 178 institute, 353 collage, 64677
mosques, 2089 churches, railway 9400Km, roads 45657 km, and underground 61km,
drinking water network 22850 km and waste water network 17800 km. Also, No. of
schools (public sector) in Egypt is 38922 in 2004/2005 compares by 18668 in 1980/1981
which means 108.5% increase. And in private sector no of schools is 4621 in year
2004/2005 compared by 1080 in 1980/1981 increased by 327.8% [4].
The above discussion shows the huge investments on infrastructure assets on both
advanced and developing countries. Thus highlights the importance and the value of the
infrastructure assets. It also mandates immediate action to maintain and improve the
current assets for sustainable development.
ASSET CRISIS
In recent years, assets or in other words infrastructure facilities, have been in the center of
attention worldwide. While the infrastructure is the foundation for economic growth, a
large percentage of existing facilities are rapidly deteriorating due to age, outdated
technologies, and insufficient capacity for population growth. In the USA, for example,
over 25% of water and sewer pipelines are in immediate need of repair or replacement
[11].
With the huge shortage in expenditures, maintaining the operation of infrastructure
facilities becomes a challenge that requires various efforts related to facility condition
assessment, resource planning and rehabilitation techniques. This requires the search for
innovative and new developments that can achieve substantial benefits in terms of cost
savings and least interruption to the public.
The importance of directing research and development activities towards the
infrastructure has been recognized by various researchers and organizations. In 1998, The
American Society of Civil Engineers (ASCE) identified the need for more than one
trillion dollars to keep the different assets in good performance condition. To respond to
this need, The Transportation Equity Act for the 21st century, a six-year program,
allocated US $100 billion for highways, transit, rail, and other infrastructure projects.
Several organizations published assets status like ASCE for United States assets. Table 2
shows the report card for year 2005 [1]. This card shows the status evaluation grade for
each asset type. Grades are A, B, C, D and F which A is the best situation for the asset
and F is Fail. It published the need for each asset. About schools, for example, the report
stated that "The Federal government has not assessed the condition of America's schools
since 1999, when it estimated that $127 billion was needed to bring facilities to good
condition. Other sources have since reported a need as high as $268 billion. Despite
public support of bond initiatives to provide funding for school facilities, without a clear
understanding of the need, it is uncertain whether schools can meet increasing enrollment
demands and the smaller class sizes mandated by the No Child Left Behind Act". ASCE
estimates that the United States would have to invest $1.6 trillion in its infrastructure over
five years to bring it into good condition. As shown in Table 2, all assets have lower
grads C and D. Thus reflect the need of these assets for immediate action.
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Table 2:Report Card 2005 [1]

Sector
Aviation
Bridges
Dams
Drinking water
Energy

Grade
D+
C
D
DD

Sector
Grade Sector
Hazardous waste
D
Roads
Navigable waterways
DSolid waste
Public parks & recreation
CTransit
Rail
Cwastewater
Schools
D
America's Infrastructure GPA = D
Total Investment need = $1.6 Trillion (estimated 5 year need)

Grade
D
C+
D+
D-

Similar to the USA, much of the environmental, social and transportation infrastructure in
Canada requires huge investments that amount to approximately $13 billion annually for
10 years. Also, the investment shortfalls for water facilities (mains, storage tanks and
treatment plants) and wastewater facilities (sewers, combined sewer and separations and
treatment plants) amount to $16.5 billion and $36.8 billion, respectively [7].
The National Research Council of Canada (1999) estimates an investment shortfall in
municipal and regional roads of almost $9 billion, while the Canadian Urban Transit
Association (1999) places the shortfall in public transit investment at more than $8
billion. Despite of the large need, the Infrastructure Canada Program [7] allocated only
2.65 billion Canadian dollars in the year 2000 for infrastructure. A report by
Infrastructure Canada (2004) provided a detailed review of previous studies, including a
survey among 589 Canadian municipalities that reported the deficit in infrastructure
repairs as $44 billion.
The infrastructure crisis is even more severe in developing countries such as Egypt, which
is one of the most populous countries in North Africa. Egypt's infrastructure is
underdeveloped. Most roads are in poor condition or under construction. Egypt's aging
railway system is old and requires urgent upgrade. Cairo's metro system, opened in 1987,
is also one of the most heavily used systems in the world. Schools, for example, need 500
million Egyptian pounds to be in a good condition while there is only 100 million funded
[4].
A GENERIC INFRASTRUCTURE MANAGEMENT SYSTEM
As per the current crisis of infrastructure assets, a robust way is needed to allocate the
limited available funds in order to raise the overall condition of the assets. Thus impose
the need for the development of Infrastructure Management Systems (IMS).
The infrastructure management process is combined of three main areas:
i) Data collection and inspection
ii) Performance modeling and forecasting
iii) Decision making and repair activities
These three areas are mutually related. Condition data are collected through inspections
of infrastructure facilities. These data used in performance model to predict the future
status of facilities. Then, different repair seniors are obtained. According to system
constrains, like budget and time, best senior is determined [5].
Figure 2 shows a simple and generic framework for asset management systems which
mainly works on one database in addition to: 1) condition assessment module;

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2) deterioration module; 3) repair module; 4) after-repair module; and 5) decision-making

module.

Condition
Assessment Module

Deterioration Module

Replacement
Major repair
Minor repair

Condition

Time

Decision Making
Module

Repair Module

Database and user

Interface

$ ???

After-Repair Module
Condition

Life Cycle Cost

Analysis (LCCA),

Time

Optimum
Decisions
Figure 2: Framework for Asset Management System
Database, is mainly to know assets owner again actions have exactly and their current
status. It collects all data in the same place and prevents mistakes and duplication in the
data. New database and software technologies is used to make these data reachable in
easy way.
Condition assessment module, is developed to specify the status of each component of
the asset. This can be done in several ways. It could be by visual inspection or by simple
tools or using hi-technologies. Using each of these depends on what we are inspecting
and what we need to know as well as what tools we have. This module is dependent on
the analysis of the data collected by inspectors for the asset in inspection process. For
example, the condition of pavements can be characterized by criteria such as the amount
of cracking, rut depth, and surface roughness. Conditions can be measured by inspection
technologies such as video imaging, radar and infrared technologies. The condition of
pavements, for example, is often defined in terms of Pavement Condition Index (PCI),
which ranges from 0 to 100 where 100 mean the best possible condition [2].
Deterioration module, shows how is each component of the asset will deteriorate
according to time and used to forecast its future status. There are many methods to obtain
the best simulation for the asset. These different methods adapted to have the predicted
state of the asset component. Some of these methods are simple and some are more
complicated. Simple methods which assume that the component deteriorate in linear
relation with time. Some methods are more accurate such as Morkov-Chin which depends
on the historical data of the component.
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Repair module, this module is dependent on condition assessment module as it takes the
data from the deterioration module to suggest repair scenarios and identify the cost of
repair for each scenario. Some IMSs name this module as cost module.
After repair module, is to identify the status of each component of the asset after repair
as the status will not be as good as new after repair. Also, the deterioration behavior of
repaired components will be different than new components.
Decision-Making module, is to select the best scenario to get the best status of assets
with the minimum cost. This can be done using Life Cycle Cost Analysis (LCCA),
Benefit Cost Ratio (BCR) etc.
Table 3 illustrates some of the current developed asset management system packages.
Table 3: Computer Packages for Asset Managment Systems[3,5,9,14]
Name

Description

Builder

Is developed by the United States Army Corps of Engineers at its Engineering

Research and Development Center Construction Engineering Research Laboratory.
The system is used for buildings management.

ReCAPP

Renewal Capital Asset Planning Process was initially developed to support data
gathering and reporting for audit clients. And it is helpful for buildings management.

Ponits

In 1992, the first version of Pontis (Latin for bridge) was completed under the auspices
of the FHWA. This package used for bridge management.

Bridgit

Bridgit is a bridge management system developed jointly in 1985 by National

Cooperative Highway Research Program and National Engineering technology
Corporation.

OBMS

In 1998, the Ontario Ministry of Transportation developed new system for bridge
management: Ontario Bridge Management System.

Roofer

The Roofer is designed to help facility managers at military installations optimize

maintenance and repair spending for roofs.

Railer

The United States Army Construction Engineering Research Laboratory designed

RAILER, a railroad track engineered management system, to help engineers,
technicians, and planners evaluate track and plan effective, economical maintenance
and rehabilitation.

Implementation Benefits and challenges

By implementing IMS, complete and updated database for asset type concerned is
achieved. It can predict the status of each asset component as well as overall asset status.
Also, it can schedule the preventive maintenance for the asset component. It helps
selecting the best senior of repair according to available fund and time constrains by
implementing component priority. Also, IMS gives the decision-makers accurate data as
the IMS using one computerized database. They can also have a measure for the
effectiveness of expenditure spent, therefore, secure and economic operation of assets
could be achieved.
Despite the importance of developing and using IMS, there are a lot of challenges that
may hinder the design and implementation of these systems. Some of the main challenges
are illustrated:

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Lack in historical information; the shortage of historical data and the big amount
of data required for having efficient deterioration model to predict accurate future
asset performance.
Methods used for condition assessment depends mainly on visualization which is
not accurate enough in application as it depend on personal judgment; and
Mentality resistance to respond to the newest technologies and asset management
systems, which need at least to forget the concept of "built and forget".

TOWARDS THE FUTURE

Looking forward to the future and as people looks for reliable, efficient and durable
services with low cost in asset operation and maintenance. Through a wide analysis of
current research and development efforts related to infrastructure and the opinions of
various researchers, the four main areas that need immediate focus are identified:
innovative infrastructure financing; increased research funds to introduce innovative
technology and materials; highly skilled resources and Engineering education; and
construction resource management. Therefore, funding, political will, and commitment
must be complemented with education, training, and innovation to provide a healthy
infrastructure. These are elaborated in the following subsections.
Innovative Financing
To cover the shortage in infrastructure expenditures, innovative financing arrangements
are required to increase investment in civil infrastructure systems. Among the strongly
suggested options is to encourage private sector to invest in infrastructure projects
through tax incentives [10].
Innovative Developments
To overcome the rapid deterioration of materials used in infrastructure projects, the need
for more durable and less cost materials becomes essential. The use of innovative
materials will increase the age of infrastructure facilities and accordingly decrease the
expenditures. Some suggestions include:
- Establishing a council for comprehensive research on high performance
construction materials;
- Expediting the commercialization of new technologies;
- Encouraging private sector to invest in innovative research and development by
creating tax incentives;
- Creating new nondestructive evaluation techniques, smart materials, and enhance
geographic information system;
- Promoting the use of performance standards to ensure high performance
construction and systems; and
- Encouraging the re-use of construction materials. Also, new materials need to be
environmentally sound and recyclable.
Professional and Engineering Education
Municipal and federal authorities are increasingly recognizing the importance of accurate
life cycle assessment of infrastructure projects and the availability of skilled professionals
to facilitate proper budgeting of maintenance operations within the limited provincial and
federal funds. Therefore, engineers should be taught the skills to:

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Determining how materials and structures break down and wear out (deteriorate),
So that to design, build, and maintain structures that are more durable, safe, and
environmentally sound;
Using assessment technologies to determine how durable, safe our structures and
facilities;
Use renewal engineering to enhance and extend the life of civil infrastructure
systems that would, otherwise, continue to deteriorate; and
Integrating life-cycle cost analysis into the engineering curriculum.

Resource Management
The main characteristics of infrastructure projects are their large size and repetitive
nature. Infrastructure projects, as such, require a lot of resources to maintain. Thus,
determining and allocating the necessary resources so that cost and time are minimized
become a major challenge that requires:
- Sufficiently skilled people to ensure the work is carried out and managed in a
cost-effective, safe, and efficient manner [13];
- Innovative scheduling with focus on resource management to ensure crew work
continuity, least work disruption, and to maintain less cost.
CONCLUSION
The importance of IMS implementation arises from the fact that owners required assets to
be in a good operation state with low operational cost. On the other hand, the users will
be satisfied. To avoid rapid deterioration of assets, materials used in construction must be
durable and with low cost. Therefore, comprehensive efforts by designers must be done in
choosing asset construction materials. Regarding asset maintenance and rehabilitation, it
must be done in the suitable time to avoid deterioration and expensive maintenance cost.
Better integrated information about assets status is needed to make general plan for assets
maintenance and rehabilitation. Thus, implementing an IMS for asset type would lead to
avoiding assets services interruption and high expenditure.
REFERENCES
1. American Society of Civil Engineers, Infrastructure Report Card 2005,
http://www.asce.org/reportcard/005/index.cfm.
2. Barrett, P.J. (1996) Practice Guide: Asset Management Handbook, Audit report
No.27, 1995-1996.
3. BUILDER (2002). BUILDER User Guide. United States Army, Engineering
Research and Development Centre - Construction Engineering Research Laboratory
(ERDC-CERL), Champaign, IL, USA.
4. Egyptian Ministry of Education, Increasing schools Capacity
http://knowledge.moe.gov.eg/Arabic/about/ achievement/field_increase/

in

2005

5. Elbehairy, H. (2007), Bridge Management System with Integrated Life Cycle Cost
Optimization. Ph.D. thesis, Waterloo University, Ontario, Canada.
6. Elhakeem, A. (2005), An Asset Management Framework for Educational Buildings
with Life-Cycle Cost Analysis. Ph.D. thesis, Waterloo University, Ontario, Canada.
7. Federation of Canadian Municipalities, (May 2001), Early warning: will Canadian
cities compete?, FCM, Ottawa, Ontario, Canada.
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8. Flintsch, G. W. and Chen, C. (2004). Soft Computing Applications in Infrastructure

Management. Journal of Infrastructure Systems, 10(4), pp.157166.
9. General Authority for Educational Buildings (GAEB), (2006), Maintenance Guide,
Fourth Edition, Cairo, Egypt.
10. Grant, A. (1995), Civil infrastructure systems: The big picture, Journal of
Infrastructure Systems, 1(2), pp.78-81.
11. Hastak, M. & Gokhale, S. (2000), System for evaluating underground pipeline
renewal options, Journal of Infrastructure Systems, 6(3), pp.105-113.
12. Hegazy, T., Elbeltagi, E., and Elbehairy, H. (2004). Bridge Deck Management
System with Integrated Life Cycle Cost Optimization., Journal of the Transportation
Research Board, No. 1866, TRB, National Research Council, Washington, D.C., pp.
44-50.
13. Hudson, W.R., Hass, R., and Uddin, W., (1997), Infrastructure Management.
McGraw-Hill, New York, USA.
14. United States Army Construction Engineering Research Laboratory (CERL),
http://www.cecer.army.mil.
15. United States Census Bureau, Statistical abstract of the Unites States (1999),
construction and housing, http://www.census.gov/compendia/statab/

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