A pavement management system was developed for the State of Arizona to produce optimal maintenance policies for each mile of the 7,400-mile network of highways. The heart of the system is a mathematical model which captures the dynamic and probabilistic aspects of pavement maintenance. The model integrates management policy decisions, budgetary policies, environmental factors, and engineering decisions. During the first year of implementation, fiscal year 1980–81, the system saved 14 million dollars (almost 1/3 of Arizona's preservation budget). The forecast savings over the next four years is 101 million dollars.