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The useful life (UL) of an asset is the estimated length of time during which the asset is likely to be able to deliver a satisfactory level of service.
International Infrastructure Management Manual
The International Infrastructure Management Manual states that "useful life" may be expressed as either:
- The period over which a depreciable asset is expected to be used, or
- The number of production or similar units (i.e. intervals, cycles) that is expected to be obtained from the asset.
CPA Australia valuation and depreciation guide
The CPA Australia valuation and depreciation guide suggests that there is an asset management/engineering definition of useful life and an accounting one.
- Engineering Definition - The period from original commissioning to the time of decommissioning, including a number of expected major renewals.
- Accounting Definition - The period in which the asset is expected to be available for use or the number of production or similar units expected to be obtained by the entity.
General Notes
The useful life of an asset is not necessarily equivalent to its physical life or economic life, a number of other factors may result in an assets useful life being reduced, including:
- Obsolescence
- Changes in community expectations
- Increased demands on capacity
- New legal requirements
Reviewing Asset Useful Lives
Whenever an asset class is revalued the appropriateness of the useful lives applied to the assets within that class should be considered.
Factors that could be considered when reviewing asset useful lives, include:
- The useful lives adopted by other organisations;
- The average condition of assets nearing the end of their expected useful lives;
- The typical design life (with era of construction practices/assumed workmanship/ quality)
- The percentage of assets requiring renewal before reaching the end of their estimated useful lives.
Typical Useful Lives
The useful life of most assets will depend on a wide range of environmental factors, but it is usually necessary to adopt a standard useful life for a range of asset types for asset management and accounting purposes. It would make life much easier if the state or federal governments published a list of default asset useful lives for Councils to use in the absence of better information, but with the notable exception of South Dakota in the United States, a quick internet search seems to suggest that this isn't a high priority for state governments around the world.
The table below is LGAMs attempt to compile a list of realistic asset useful lives.
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Related Pages
- Asset Management Training Manual
- Building Useful Lives
- Council Asset Useful Life Tables
- Economic Life
- Infrastructure Asset Useful Lives Report
- Lifecycle Cost Analysis
- Moorabool Shire Council Asset Service Life Spreadsheet
- Remaining Useful Life
- Residual Value
- Water Main Useful Lives
Contributors
The following site members have contributed to this page:
External Links & References
- Infrastructure Asset Useful Lives - 2009 (LGA.SA)
- Infrastructure Asset Useful Lives - 2014 (LGA.SA)
- Boroondara City Council Asset Management Plan for Roads
- South Dakota Municipal Asset Useful Life Table
- Road Safety Engineering Risk Assessment Part 4: Treatment Life for Road Safety Measures (Austroads)
- Lifecycle Cost Guidelines for Sport and Recreation Facilities (Western Australian Department of Sport Recreation)
- Tweed Shire Council Drainage Assets Management Plan
- Asset Lives - Felix Schrodinger's Blog
- Levels of Service & Asset Lives - Felix Schrodinger's Blog
- The Gold Book (SA Department of Education and Child Development)
- Standard Life Comparison Roads and Stormwater
- Google Search
- CPA Australia valuation and depreciation guide
- Fanny Mae Estimated Useful Life Tables
- IPWEA Practice Note 12 - Useful Life of Infrastructure