A system dynamics approach to evaluating the effects of maintenance budget fluctuations on asset condition

Road maintenance funding is usually assessed by total expenditures, but the stability and timing of expenditures may also affect outcomes. This paper examines how annual variability in road maintenance funding influences contractor capacity, productivity, maintenance effectiveness, value for money (cumulative effective maintenance work per unit of cumulative maintenance investment), and asset condition. The study combines three components: a contextual analysis of infrastructure governance and road maintenance expenditure stability, a system dynamics model of the funding variability mechanism, and an empirical plausibility check through a New Zealand case study. The system dynamics model compares stable funding with annual cut-and-catch-up cycles, in which a 10%, 20%, or 30% funding reduction in one year is followed by an equal funding increase in the next year, while holding cumulative expenditure constant over 240 months. Results show that stable funding produces the highest value for money and asset condition. At month 240, asset condition was 9.2%, 24.1%, and 38.2% lower under ±10%, ±20%, and ±30% annual variability, respectively, relative to stable funding. Value for money reduced by 31.1%, 49.5%, and 59.0%. The findings suggest maintenance funding stability should be considered alongside adequacy, because catch-up expenditure may not fully recover the value lost during underfunded periods.