Condition-Based Depreciation — The Engineering Perspective

Condition-based depreciation (CBD) is a method of accounting for the combined maintenance and renewal effort required to ensure infrastructure asset networks retain their service potential. CBD methods entail the calculation of an annuity based on detailed asset management plans, which forecast works programs over the foreseeable lifecycle of the network and link them to service need projections. CBD has not gained wide acceptance by the accounting profession, because of concerns about the methos underlying assumptions and potential problems with its application. These concerns are analysed from the perspective of the engineering profession (which is frequently the custodian of such assets), and the feasibility of the method demonstrated in a number of case studies.