What Is an Asset Disposal Plan?

An asset disposal plan documents the activities and costs associated with the disposal of infrastructure assets. An asset disposal plan is typically part of a comprehensive asset management plan that is used by local governments and municipalities to manage their portfolio of infrastructure assets such as roads and bridges, water distribution networks, wastewater systems, and other utilities.

How an Asset Disposal Plan Works

An asset disposal plan is an essential component of a sound asset management plan because the disposal of assets accounts for a significant part of the full life-cycle costs of an asset. Asset disposal includes any activity associated with the disposal of a decommissioned asset such as its sale, demolition, or relocation. The International Infrastructure Management Manual recommends that an asset disposal plan should include forecasts of the timing for future asset disposals and cash flow forecasts identifying income and expenditures associated with asset disposal.

Well-managed asset disposal reduces asset management costs, provide superior services to the community, and ensure a lower tax burden for taxpayers.

Essential Components of an Asset Disposal Plan

An asset disposal plan should show a timeline whereby replacement assets are operational and ready to absorb the workload of the decommissioned asset. That way, users are not inconvenienced, and operations can continue without interruption.

Disposal costs are expenses that are directly related to asset disposal. The costs can be significant because of the difficulty associated with the disposal of infrastructure assets. Income and expenses associated with asset disposal are dependent on whether the assets are sold, demolished, or relocated. 

Key Takeaways

  • An asset disposal plan forms part of an asset management plan.
  • Local governments and municipalities must plan asset disposal so that infrastructure assets and services continue to perform without interruption.
  • Infrastructure assets include roads and bridges, water distribution networks, wastewater systems, and other utilities.
  • A well-managed asset management plan will reduce the costs of asset replacement and benefit taxpayers.

Special Treatment of Assets

Asset disposal plans often include guidelines for special handling that may be necessary. For example, some assets may include equipment that can be recycled. In this case, the instructions for the equipment's processing should be included in the asset disposal plan. If the asset has been exposed to materials that could introduce or spread contaminants, such as decommissioned wastewater machinery, the assets may need to be sealed or otherwise transferred to a treatment facility.

Assets are disposed of in a number of ways. For example, they can be demolished, recycled, relocated, or sold. Selling an asset would generate the highest income and may be the preferred option. The sale price would depend on the physical state of the asset, which depends, in turn, on the level of service it has provided to the community, its maintenance, and the number of years left in its useful life.

Fast Fact

While recycling can benefit the environment, some critics say that the costs outweigh the benefits and exceed community resources. According to Smartasset, some towns and cities claim that they cannot afford to operate recycling programs

A solid asset disposal plan can reduce asset management costs, provide superior services to the community, and ensure a lower tax burden for taxpayers.