Economic, Environmental and Social Impacts of Changes in Maintenance Spend on the Scottish Trunk Road Network

10 Impact on depreciation

10.1 Depreciation of vehicles

The impact on vehicle depreciation has been considered based on the assumption that a network in worse condition will result in more wear and tear on vehicles and therefore higher rates of vehicle depreciation.

Generally in studies of the effects of changing pavement condition, the cost of vehicle depreciation is subsumed within the overall vehicle operation costs as it is usually considered a relatively small contribution to the overall level of those costs. The ISOHDM study on road user effects (Bennett & Greenwood, 2004) included the development of models specifically for depreciation based on various international studies, supplementing these with realistic assumptions where the appropriate research data did not exist. The models showed that up to roughness levels of 5 IRI (equivalent to 5.5 mm2 3m LPV) there is no significant change in vehicle depreciation for any vehicle type.

Based on the projected pavement conditions used in this study, for the proposed budget levels, it was concluded that any changes in vehicle depreciation due to changes in investment levels on the network would be negligible.

10.2 Depreciation of the road network

If renewal investment in the asset is less than the annual depreciation of the asset, then under current assumptions in asset valuation methodologies, the overall asset value will depreciate over time. Whilst there might be debate over the exact figure to be used for the asset value and its variation over time as conditions vary, it is clear from the analyses in this study that the asset value will decline with any of the three budget scenarios (as the total amount of the network requiring renewal according to current standards is shown to increase over time).

In addition to the Transport Scotland Pavement Network Model, WDM Ltd provides estimates of the asset value for the trunk road pavement network for Transport Scotland. Using this method, WDM assessed the change in asset value for the predicted levels of pavement condition. Table 10.1 shows the undiscounted depreciation of the pavements in the trunk road network based on the predicted network condition for each Scenario. The analysis by WDM Ltd produced the depreciation for the Base Case and Scenarios 2 and 3.

The depreciation values have been reported with the other impacts from reductions in maintenance funding to give an indication of the likely effects of the predicted changes in network condition. With the uncertainty in how the asset value feeds into the maintenance decision making process, the asset value has not been included in the reported overall impact in Section 13.

The overall asset value of the road network is made up from the value of all assets on the network. Table 10.1 includes only the depreciation of the road pavements.

Table 10.1 Depreciation of the trunk road network

Cumulative discounted1 costs

(£m 20022 Prices)

Scenario 1

(Base Case)

Scenario 2

Scenario 3

Based on 20% and 40% budget reductions

Reduction in pavement asset value




Difference compared to Base Case

Base Case