Use of Markov Chain for Deterioration Modeling and Risk Management of Infrastructure Assets

Current annual expenditure for management and renewal of Infrastructure assets around the world is 500 billion US dollars. With an aging stock of infrastructure, innovative methods for management of risk of failure and optimizing of maintenance expenditure becomes extremely important. Whilst different infrastructure assets may have different attributes, governing issues are similar in nature. Prediction of deterioration of some infrastructure is complex since they can constitute of a number of discrete elements with a vast range of influencing factors. A major issue currently faced by local government agencies in Australia is the inability to predict maintenance and replacement expenditure with a reasonable accuracy, which creates situations where emergency repairs would use the funds kept for routine maintenance, which then creates a vicious circle of deterioration.