The Victorian Auditor-General’s Office (VAGO) report Maintaining State Roads, tabled on 9 September 2026, provides a timely case study in the consequences of asset deterioration, constrained maintenance programs and the need for integrated, whole-of-life asset management.
The audit examined whether Victoria’s Department of Transport and Planning is managing road pavement maintenance to achieve its objectives and deliver value for money.
Its findings extend well beyond potholes and road repairs. They highlight issues familiar to asset managers across every asset-intensive sector: understanding asset condition, defining required levels of service, balancing reactive and preventative maintenance, managing ageing infrastructure, making risk-based investment decisions, maintaining reliable asset information and ensuring that maintenance expenditure delivers the intended outcomes.
A network under increasing pressure
Victoria has more than 23,000 kilometres of state roads, which carry most of the state’s traffic and freight. Around 82 per cent of this network is in regional Victoria. Increased traffic and freight, ageing assets, rising maintenance costs and major weather events are placing further pressure on the network.
VAGO found that the overall condition of the network is deteriorating. Based on the Department’s remaining useful life measure, around 48 per cent of state roads were rated as being in poor or very poor condition in 2024, compared with approximately 39 per cent in 2021. The audit also found a substantial and growing maintenance backlog, with maintenance needs accumulating faster than they are being addressed.
Another particularly significant indicator is the asset renewal ratio. VAGO calculated an average road pavement renewal ratio of just 0.16 between 2022–23 and 2024–25. A ratio below one indicates that renewal expenditure is not keeping pace with depreciation. VAGO also reported accumulated road asset impairment of more than $1.34 billion by 2024–25.
These are important asset management signals. They demonstrate why infrastructure performance cannot be understood solely through annual expenditure or the number of maintenance activities completed.
Moving from reactive to preventative maintenance
One of the most important themes in the report is the balance between reactive and preventative intervention.
The Department advised government that available funding had increasingly resulted in maintenance being focused on reactive and safety-critical repairs rather than preventative works that sustain asset condition over the longer term. VAGO also observed that delaying maintenance can lead to further deterioration and more expensive interventions later, while proactive maintenance can slow deterioration and reduce whole-of-life costs.
This principle applies far beyond roads.
Good asset management is not simply about fixing an asset once it fails. It requires organisations to understand deterioration, risk, performance and remaining useful life so that the right intervention can be undertaken at the right point in the asset lifecycle.
A short-term maintenance decision may appear less expensive today but create a significantly greater lifecycle cost tomorrow.
Better information supports better decisions
VAGO also identified fragmented and sometimes poor-quality asset information as a barrier to effective decision-making.
Road maintenance information is held across multiple systems that are not fully integrated. The audit found that the Department could not easily obtain an integrated view of available information or demonstrate that all relevant data was being used to optimise maintenance expenditure.
Of particular interest to asset management professionals is the finding that operational defect information and routine maintenance data were not systematically incorporated into planned maintenance decisions. Without connecting condition data, defects, intervention history, cost and future maintenance requirements, it becomes difficult to understand whole-of-life cost or identify when repeated reactive intervention should be replaced by a longer-term solution.
Asset information therefore needs to be treated as an organisational asset in its own right.
Collecting large quantities of data is not enough. Information needs to be governed, integrated, reliable and capable of supporting decisions.
What does good performance look like?
Another significant finding concerns performance measurement.
VAGO found that the Department had mostly achieved its publicly reported maintenance performance targets, while the overall condition of the network continued to deteriorate. It concluded that the existing measures did not provide meaningful public insight into road condition or the effectiveness of maintenance.
This raises an important question for every asset-owning organisation:
Are we measuring activity, or are we measuring whether our assets are delivering the outcomes and levels of service we require?
Measures such as the number of defects repaired, kilometres resurfaced or dollars spent are useful operational measures, but they do not by themselves demonstrate whether asset condition, risk, service or value is improving.
Effective asset management starts with clearly understood organisational objectives and levels of service. Performance measures should then demonstrate whether assets are contributing to those objectives.
Decision-making must be transparent and repeatable
The report also identifies opportunities to improve maintenance prioritisation.
The Department combines modelling, visual inspections, engineering expertise and professional judgement when developing its maintenance program. VAGO recognised the value of professional judgement but found that the rationale for departing from modelled priorities was not always clearly documented.
Asset management does not remove professional judgement. Instead, it provides a structured framework within which judgement can be exercised.
Good decisions should be capable of being explained: what options were considered, what risks and benefits were assessed, what assumptions were made, what level of service was sought and why one intervention was selected over another.
That becomes particularly important when resources are constrained and competing priorities cannot all be addressed.
Maintenance quality and assurance also matter
VAGO’s findings are also a reminder that allocating funds and awarding maintenance contracts are only part of the asset management system.
Asset owners require effective assurance that maintenance activities have achieved the specified outcome.
The audit found gaps in contractor oversight, inspection coverage, follow-up and verification. VAGO consequently recommended strengthening processes to obtain greater assurance that maintenance activities meet required standards.
Effective assurance closes the loop between planning, delivery and asset performance.
Six recommendations – but broader lessons for asset managers
VAGO made six recommendations covering:
- improved public reporting on road condition;
- reporting of maintenance backlogs;
- clearer maintenance prioritisation criteria and documentation;
- better coordination between routine and planned maintenance;
- improved information about drainage assets and its integration into maintenance planning; and
- stronger assurance that maintenance work meets required standards.
The Department accepted all recommendations, either fully or in principle.
For the asset management profession, however, the significance of this report extends beyond one department or one asset class.
It illustrates the importance of several fundamental principles of effective asset management: understanding asset condition and risk; establishing meaningful levels of service; making transparent, evidence-based investment decisions; integrating asset and maintenance information; coordinating lifecycle interventions; balancing cost, risk and performance; and maintaining a long-term view even when immediate operational pressures are significant.
The challenge facing many infrastructure owners is not simply finding enough money to maintain every asset in an ideal condition. Resources will always be constrained.
The challenge is to understand what level of service is required, what risks are acceptable, what interventions deliver the greatest value across the lifecycle, and what the consequences are of deferring those interventions.
That is precisely where effective asset management can make a difference.
The Asset Management Council will continue to support government, industry and asset management practitioners in developing the capability, knowledge and evidence-based approaches required to enable value from effective asset management.