Direct computation of life cycle cost consequences of as-constructed - as opposed to as-designed - quality measures, is presented as a basis for developing the pro-forma financial statements necessary for managing highway pavements as assets. The current and next-generation mechanistic-empirical pavement design and analysis models, combined with the development of easily deployable non-destructive testing technologies, increase the feasibility of estimating the combined effects of variations in the in-situ material properties that influence pavement quality and performance. These models can be deployed to develop the inputs to financial statements. In the process, one can not only develop a framework for monitoring financial health over any given performance period, but also estimate the difference between the life cycle costs associated with the as-designed and as-built pavement, which can, in turn, provide a basis for determining contractor penalties or bonuses, suggested here as being an important component of pavement asset management. Copyright ASCE 2006.