In transportation, the notion of equity in the broad sense has been applied to encompass a diverse range of populations. In certain instances, it signifies environmental justice, often relating to low-income and minority populations. It is crucial to discern the distinctions between equality, equity, and justice. These concepts are interrelated terms that pertain to distinct notions within the realm of fairness and social equilibrium.

• Equality: centers around the idea of treating everyone the same, regardless of their circumstances or needs.
• Equity: recognizes that different individuals or groups have different needs, and it involves distributing resources and opportunities to ensure fairness.
• Justice: encompasses a broader notion of fairness and addresses deeper structural issues. It involves rectifying historical injustices and ensuring that systems, laws, and policies are designed to treat all individuals and groups fairly and equitably.

Identifying a Home for Asset Management

There are many choices to consider when identifying a "home" for asset management. Asset management committees can be used to achieve coordination across units, regardless of where the TAM home is located, in order to enhance the asset management culture across the organization. Some agencies choose to focus TAM activities within a single business unit and use committees and other management structures to achieve the needed coordination. Others appoint a TAM lead individual to play a coordination role with staff support and resources drawn from multiple units across the agency.

As agencies gain experience with TAM, the organizational model may evolve. At early stages of maturity, an agency may not have any organizational unit or function that is performing TAM activities. In developmental stages of TAM, an agency may create a TAM unit to signal its importance, formalize processes and integrate TAM business practices across the organization. Eventually, as TAM practice is well-established, there may no longer be a need for a TAM unit, because TAM becomes the way the agency does business. Many international agencies with mature TAM practices do not have a TAM unit.

Creating a TAM Unit

An agency can conduct an assessment of where TAM-related functions currently are by making a list of TAM roles and where they exist in the agency. This will determine if there are gaps in needed roles. It will then be necessary to decide whether TAM roles should be added to existing business units, or if it is best to have a TAM unit that performs the roles and responsibilities.

If an agency decides to create a TAM unit, the roles and responsibilities that the unit performs can initially be based on the gap assessment. A beneficial aspect of a TAM unit is that it can focus on specific activities, such as the development and implementation of a federally-compliant TAMP.

Executive Office

Placing a TAM leader or TAM unit in the executive office signals the importance of TAM to the agency and provides a close connection to agency leadership. However, the executive office typically has less direct access to technical staff support than planning or engineering units. Connections to individuals with delivery-oriented responsibilities are also less direct than they would be in an engineering or maintenance office. If the TAM unit is not in the executive office, it’s important that there is an executive involved with the TAM program to both understand how TAM is benefiting the agency and to communicate the importance of TAM to the rest of the agency.

Planning Office

Locating a TAM leader or TAM unit within a planning office establishes a tight connection to long-range planning and, in some agencies, project programming. This fosters a long-term view of asset investments and an integrated approach to meet preservation, safety, mobility and other objectives. However, in many agencies, the planning function is not closely connected to project selection, and may have less engineering expertise. In these agencies, planning has less influence over asset preservation investment decisions.

Engineering Office

Creating a TAM leadership position or TAM unit within an engineering office puts it in proximity to capital design and construction (program delivery) activities. This will tend to give TAM more influence at the agency, as well as access to technical staff resources. Typically, the engineering office takes care of models for asset condition (i.e. pavement and bridge management units), and optimizing asset treatment decision making. However, because of the project delivery focus, there is less connection to long-term planning, systemwide performance, or routine maintenance.

Maintenance and Operations Office

Designating a TAM leader or TAM unit within a maintenance and operations office provides a strong connection to what is happening “on the ground” with respect to asset performance. It also provides an opportunity to emphasize proactive preser¬vation activities to cost-effectively extend the useful life of assets. However, maintenance is rarely involved in long-term planning or capital programming, so the TAM unit may have less influence on overall funding.

The practice examples below illustrate states that have TAM units in the four different agency locations. There is no one right way to locate the lead TAM unit. Figure 3.1, Locating TAM within the Agency, shows where the lead TAM unit is located in 2019 across the US states. The most commonly used location is the planning function.

TAM involves many integrative functions that require collaboration across business units. This map shows the results of an informal survey of the location of the TAM lead within each state department of transportation.

Figure 3.1 Locating TAM within the Agency: An Informal Nationwide Survey

Nationwide Survey

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Aligning the TAM Organizational Model with Agency Priorities

The choice of a TAM organization model should align with and support agency policies and priorities. Agencies that have priorities focused on activities that are located in the planning unit (such as economic development, increasing funding, or sustainability) may choose to house TAM in planning. A greater focus on safety and rebuilding infrastructure may lead to locating TAM in engineering. Agencies that prioritize preservation and operations may choose maintenance and operations for the TAM location. Table 3.1 Organizational Models describes how the home for TAM would work in different parts of the agency.

Table 3.1 TAM Organizational Models

Considerations in making the choice on the home for TAM.

Centralized vs. Decentralized Models

A second important choice in creating a TAM organizational model is deciding on the degree to which asset management responsibilities are centralized versus dispersed across the agency.

Model 1. Single TAM Unit

In this model, a central office TAM unit plays a strong role in making decisions and driving TAM actions. Influence is concentrated at a single point, which has advantages, but results in less distributed ownership across the agency.

Model 2. Strong but Distributed Central Office Role

In this model, the central office plays a strong function in investment decisions, but there is no single designated TAM unit. Roles and responsibilities are distributed across multiple central office units and are supported by a central office TAM function that is tied to the investment planning role and may not have a title with TAM in it.

Model 3. Central Office Coordination with Strong Field Office Role

In this model, the central office plays a coordinating role but investment decisions are primarily made by field offices. This approach fosters strong ownership and decision-making that is close to the customer. Establishment of clear guidance and standards at the central office helps to avoid inconsistencies across offices, ensures that a statewide view of asset information can be created, and takes advantage of opportunities to gain efficiencies through the standardization of tools and processes. Field units may take on varying levels of ownership for TAM with respect to data collection, condition and performance monitoring, and work prioritization. The advantage of this model is the stronger link between TAM policies, goals, and objectives and work that is implemented. The disadvantage is the lack of consistent application of TAM across the agency and the greater likelihood that non-TAM priorities are implemented.

Core TAM Roles

Understanding what roles and responsibilities are most important for the TAM program is key to getting an agency ready and aligned to achieve TAM-related goals. It is crucial to fill each TAM-related role with qualified people who possess the right competencies.

Three key roles provide the foundation for implementing TAM in an agency: a TAM champion, a TAM lead, and a lead for each priority asset class.

TAM Champion

Having a TAM program champion leads to greater success in meeting TAM goals and objectives. The TAM champion advocates for TAM advancement and communicates its importance throughout the agency. TAM champions can come from various groups, but they are typically senior managers or executives. The TAM champion should be able to create a vision for how TAM will deliver a stronger agency in the future, communicate how TAM can benefit stakeholders, and gain acceptance from agency staff and stakeholders.

TAM Lead

The TAM lead is the person who is the head of the TAM unit or, if there is no TAM unit, is the lead for coordinating various TAM program activities. People in this role are responsible for making sure agency staff and external partners are working together to advance TAM. The TAM lead should be a person who understands and can manage dependencies across activities and who can develop and maintain good working relationships. The TAM lead should be a constructive problem solver who can monitor the entire program, spot concerns, and listen to and consider alternative points of view when necessary.

An agency’s top management support is an key component of TAM success. One important role of the TAM lead is to keep executive management informed about and engaged in the TAM program. This requires regular and effective communication with executives about plans and achievements. Building executive support for and confidence in TAM activities helps to ensure continued resources and support for TAM activities. When the rest of the agency sees executives supporting the TAM program, they are more likely to assist with TAM needs.

Asset Stewards

Asset stewards (sometimes called “Asset Owners,” “Asset Managers” or simply “Asset Leads”) have lead responsibilities for managing a particular class of asset. This role can be assigned at the agency-wide level as well as at the field office level. An asset steward should be someone who understands the asset well, has the ability to communicate the asset’s needs and the consequences of underinvestment and is able to work with other asset stewards to develop agency-wide investment strategies.

TAM-Related Functions: Planning, Programming, and Delivery

TAM is inherently an integrative function, so designation of individuals performing key roles within agency planning, programming and work delivery functions can clarify the key points of responsibility and foster cross-functional coordination.

Project Prioritization

Within each program, key action include:

• Adopting and modifying policies and guidelines for how and when prioritization is done
• Developing prioritization methodologies
• Coordinating the execution of the process
• Gathering and compiling data
• Implementing, managing and updating information systems to support the process
• Performing analysis for individual projects
• Analyzing, reporting and communicating prioritization results
• Making final decisions about which projects will be advanced for funding

Maintenance and Operations

When work is being conducted in the field the following are important considerations for TAM program support:

• Understand TAM goals and objectives and how field actions impact end results.
• Understand the choices that were made during the programming process on asset treatments.
• Capture data on work accomplished to keep asset information accurate.
• Train field staff on the TAM program

Data Collection

Several steps are required to plan and execute data collection efforts – and then to process and store the data that are collected. Some agencies have established roles to provide standardization and coordination across data collection efforts. For each effort, key roles include:

• Analysis to provide a sound business case for data collection
• Research to identify the best method and approach to collecting the data
• Procurement – when contractors are used to collect data
• Data specification and design – that considers integration with existing agency data
• Hardware and software specification and acquisition for data storage and processing
• Guidance and oversight to ensure consistent and valid data
• Data quality assurance
• Data loading and validation

Development of a Long Range Plan

The long-range plan sets the framework for impactful asset investment decisions for the rest of the transportation development process. TAM implementation has a greater impact if TAM roles and responsibilities are clear in this step. It is also important to determine who will take the lead for the following:

• Long range plan policies and priorities related to TAM
• Consideration of tradeoffs across investment types (all program areas and across asset classes)
• Consideration of TAM investment distribution within asset classes (rebuild, rehab, preservation)
• Financial planning (funding outlook across investment types)

Program-Level Budgeting

Allocation of resources across program categories is a critical decision that both enables and constrains what can be accomplished. Where programs are defined based on funding sources or where allocations are based on formulas, there is little or no flexibility. However, where there is flexibility, it is important to establish TAM roles for technical analysis of investment versus performance tradeoffs, as well as for orchestration and facilitation of tradeoff decision making based on the results of this analysis.

Development of the TAMP

TAMP development is a multi-step process that involves agency stakeholders. Clearly articulating process, roles, and lead responsibility for the document yields the best product and makes it easier to implement the TAMP. Table 3.2 illustrates how to provide the link between roles and the key components of a federally-compliant TAMP development process.

Table 3.2 illustrates a way to provide the link between some typical TAM roles and the key components of a federally-compliant TAMP development process.

Table 3.2 - Links to the TAMP Development Process

Supporting Roles

The following additional roles are important to support TAM in an agency:

• Asset Data Stewards: ensure all data related to a specific asset class is accurate and aligned with other pieces of data; this is not the same as asset steward/owner.
• Asset Management Software System Owners: manage/own specific software systems, bridge/ pavement management system; the owner is the software owner.
• Asset Management Software System Architects: look at the connectivity of information across systems and across outputs.
• Analysts (data, economics, financial): take data, then apply statistical, economic or financial analysis to provide guidance using that information.
• Maintenance and Operations Managers: are out in a district or field office managing the day-to-day asset activities.
• IT and Data Specialists: usually reside in the Data/IT unit; ensure that overall information and tools support for asset management work.

The following disciplines are key components of a TAM program:

• Engineers: apply understanding of specific asset types, how the condition and role of assets influence treatment choices, and model how investments influence future performance.
• Planners: in the planning or other units; consider long-term planning/policy-making for assets as it relates to programming and the connectivity of information throughout the cycle of activities.
• Economists: look at economic tradeoffs of various scenarios on actions taken for a specific asset.

Table 3.3 - Agency roles list and location

Building a Strong TAM Team

Matching TAM Roles to Skills

When TAM is first initiated, roles can be filled with available staff in a manner that takes advantage of available talents and personalities:

• TAM Lead: people-oriented and enthusiastic; able to manage conflict across business units.
• Resource Allocation Leads: analytical and proficient with complex software.
• Data Collection & Management: detail-oriented and accurate.
• Field Maintenance Management: task-oriented monitors.
• Prioritization Leads: comfortable with uncertainty (gray areas), and willing to make decisions.

Making the Case for TAM Positions

Building a case for TAM positions requires defining how the gaps in staffing will hold the agency back from achieving its objectives. If possible, describe the anticipated return on investment from the added staff. It can also be helpful to evaluate TAM efforts at peer agencies, to find out if they have a TAM unit, how many people are in it, and what roles and responsibilities they have. Find examples of agencies that successfully made the case for new staff positions and borrow from their approach.

A Forward-Looking Approach

Part of building a strong TAM team is seeking skills that will help to advance practices rather than sustain the status-quo. Advancements in technology are changing the way data are collected, processed and analyzed; and how work is planned and carried out. As automation increases, certain routine tasks become obsolete, while it becomes necessary to acquire new skills to take advantage of improvements. For example, with tools that produce more robust analysis, agencies will need less people who crunch the numbers but more people to interpret and communicate the results.

Typically, when an agency starts its TAM journey, data accuracy is an issue. When data is not accurate, people may lack the confidence necessary to use the data for making decisions. As data quality and availability improve, the TAM program develops a need for stronger data analytic skills.

As processes become more complex, new skills are needed to monitor and carry out checks and balances. TAM aims to cut across traditional silos, which gets complicated as more units and stakeholders get involved. Therefore, TAM units benefit from people who are comfortable dealing with complex processes. This is a capability that can be acquired through hiring or training.

All transportation infrastructure assets have a life cycle, which includes several stages from initial construction to removal or replacement (see figure 4.1). Life cycle management is an investment approach that considers maintenance, renewal, replacement, or repair options through an asset’s service life with the intent to maximize the benefit provided by the asset at the minimum practicable cost. It employs data on asset condition, treatment options, costs, deterioration rates, replacement cycles, and other factors to evaluate trade-offs between possible investment strategies and treatment timings. Effective life cycle management requires knowledge of the agency’s strategic priorities and an understanding of the performance criteria driving investment decisions, so the right management strategy can be identified and implemented for each asset class. Aligning asset management measures with agency priorities ensures the investments made to extend asset service life provide the maximum impact to the agency’s long-term goals.

Figure 4.1 illustrates a variety of interventions that occur over an asset life cycle. The larger circles represented in the figure are service life altering, and represent a capital investment in infrastructure. Capital investments provide significant life extension, and may alter or enhance the operational nature of the asset, e.g. expand capacity, without fully replacing the asset. Maintenance (reactive, interval based and routine) activities are required throughout the life cycle to ensure the asset achieves its service life.Preservation treatments restore condition or performance to achieve service life, and may extend service life as well, but do not significantly alter the operational nature of the asset. Some agencies may capitalize investment in these preservation activities; however, regardless of the timing and character of the selected interventions, all of them are part of the life cycle management process. More (lower cost) maintenance interventions can offset the number and cost of the larger (and more costly) interventions. Balancing the right intervention, at the right time, can greatly reduce the overall investment needed for infrastructure to be reliably available for providing service.

Life cycle management can be used at both network level and at project level. At network-level, life cycle management considers the needs of an entire asset class, as well as the available funding, to determine the most appropriate life-cycle strategies. For example, analysis can establish the optimal proportions of overall investment that should be allocated to different types of interventions over the network, to minimize investment to achieve performance targets or an average condition level. At a project level, life cycle management is commonly used to develop asset-specific strategies. Project level life cycle plans provide input into the network level life cycle plans. Large bridges or other distinct network components are often planned and managed in this manner.

Life Cycle Cost Analysis (LCCA) is an engineering-economics approach that can be used to quantify the differential costs of alternative design approaches. Network level life cycle management, while a more wholistic process that manages every stage of an asset’s life, may employ LCCA or other forms of analysis to inform management decision-making. Figure 4.2 highlights some of the major differences between life cycle management and life cycle cost analysis. At the network level, LCCA can be used to understand how to best manage the network as it ages. At a project level, it is used to understand what are the most effective actions to be taken on the assets within the project scope at the time of project delivery. Both network level and project level analyses contain many aspects of engineering economic analysis, such as consideration of user benefits, user costs, and the time-value of money to identify alternatives that represent the lowest practicable life cycle cost over the analysis period to achieve the desired objectives.

Decision Making Context

Life cycle management is driven by the need for owners to provide consistent service to those that use the transportation system with the resources available. Infrastructure decision making can take place at several levels within an organization, and in each case, considers different but often interrelated factors. These are illustrated in table 4.1.

Table 4.1 - TAM Decision-Making Contexts
Key Questions and Connections to Other Chapters

Virtually all transportation infrastructure assets are designed to have long service lives, lasting years or even decades. This means life cycle management must include long-term predictions that come with inherent uncertainty. Further complicating matters, the condition or performance of some assets may be difficult, expensive, or impossible to discern. This is most common with geotechnical assets or hidden elements on complex structures. Addressing this uncertainty requires integration with the agency’s risk management practices, and consultation with technical experts, such as hydraulics and geotechnical engineers. Risk management practices are discussed in more detail in Chapter 5. This section highlights how uncertainty should be considered when selecting a management strategy to maximize service life and address risk.

Condition-Based Management

A condition-based management approach is the life cycle management approach that is the most commonly associated with asset management at U.S. transportation agencies. In condition-based management the condition of an asset is measured, and used to forecast and identify the onset of failure. Maintenance and preservation activities are identified to address the failure and restore or extend service life. While the objective of asset management is to support the reliable performance of the asset, the performance measures most commonly used for physical assets are condition-based. Agencies that are very advanced in their asset management practices may be able to apply the condition-based management approach to other aspects of asset performance.

Condition-based management relies on the collection and analysis of asset condition and defect data. This data is then used to understand the current state of individual assets and when aggregated is used to predict the future condition state of similar asset types. When linked with intervention data and condition threshold information, the future impact of potential actions can be assessed, all with the view of optimizing an asset’s service life cost-effectively. Accordingly, a condition-based management approach combines condition monitoring with performance predictions and knowledge of preventive or restorative actions, to establish a cost-effective life cycle plan. The condition-based management approach can be applied to simple and complex assets, groups of single assets or a whole network. In a network perspective, components could be individual assets such as pavement segments and bridges and at a project level, components could be elements of individual assets.

Interval-Based Management (Age Based)

Interval-based Management is most commonly applied to operations assets (striping, signs, guardrail), where just an inventory is maintained. Condition assessments may not be financially feasible or practical. Additionally, these assets are often related to compliance, meaning their condition state either meets a specific standard, or does not. With interval-based management, asset performance data or manufacturer’s suggested life estimates are used to establish a time interval representative of the service life beyond which the cost of asset failure outweighs the cost of replacement. The service life being the average life that all assets or components of a type are expected to last. Cyclically applied interventions can also be classed as interval-based management strategies, as there is fixed period between a set of predefined actions that have to be taken. An interval-based approach is most commonly applied to manufactured assets with highly uniform performance levels. It is less applicable to assets constructed on site or long-lived complex assets where there is a greater level of uncertainty surrounding the expected life of the asset. Examples of the types of assets that are often maintained on an interval-based approach are signals, ITS equipment, and other mechanical and electrical related items.

Reactive Management

Reactive management unlike condition or interval maintenance does not use forecasting to understand the likely timing of an intervention. Accordingly, reactive management excludes all or most actions to address asset condition or performance, until the asset reaches an unacceptable condition state. The condition state may be influenced by accumulated deterioration or a specific event, like a crash or intense storm. Reactive-management is commonly applied to low-value or less critical assets, redundant assets, or assets for which failure represents an acceptable risk. To create a reactive-based management strategy, minimum acceptable condition thresholds, must be defined. Reactive management strategies often require an agency to have a mechanism to deliver required work within a specified time frame, to avoid unacceptable levels of risk. This may include properly staffed and equipped in-house maintenance forces or “stand-by” contracts, so work can be dispatched and delivered quickly. Examples of assets managed using a reactive-based approach include fences, brush, lighting, raised pavement markers, impact attenuators, and rockfall.

To the extent an organization is focused on preserving its existing transportation assets, ideally it will make investments consistent with the life cycle management approach for its assets as described in Chapter 4. However, organizations often lack the funding, staff, or other resources needed to achieve all of their goals and objectives, and must make hard decisions about how to divide resources while considering competing needs. If resources for existing assets are systematically constrained such that the life cycle management approach is simply not achievable, the resource allocation process may need to revise life cycle strategies or the overall life cycle management approach.

The approaches used for resource allocation vary. For instance, in considering how to allocate capital funding over multiple years, an organization may need to either prioritize projects or establish an overall budget for certain types of investment, depending on the specific context. In day-to-day allocation of operations and maintenance resources, the challenge is more tactical, as a manager assesses what staff, materials and equipment are immediately available, considers both internal forces and contract capacity, and puts these to the best possible use considering current conditions and challenges.

The output of the resource allocation process could be a specific assignment of resources or a plan for what capital projects to fund. In addition, the results of the resource allocation process may impact other plans and decisions related to TAM. To the extent the process involves allocating money, a financial plan may serve both as an input to the process (by specifying what funds are available) and an output of the process that details how funds will be spent. TAM financial planning is discussed further in Section 5.3.

Once an initial set of resource allocation decisions has been made, an organization may need to reconsider the best delivery option for planned work. Issues related to work planning and delivery are discussed further in Section 5.4.

All organizations practice resource allocation in some manner, whether formally or informally. By using a structured and repeatable approach for resource allocation, an organization improves its own resilience and ensures that it will continue to succeed even as new challenges arise and personnel changes over time. This chapter outlines an idealized approach to resource allocation an organization can use to help assess how it allocates resources, and how best to improve its process.

It also describes various processes closely related to resource allocation, such as risk management, financial planning and work planning and delivery.

MPOs are required to prepare financial plans as part of LRTP and TIP development. DOTs also have to prepare financial plans for their NHS TAMPs. The federal requirements help guide practice in many agencies. However, there are often additional state-level requirements for financial planning and reporting that may impact the preparation of financial plans.

The financial plan prepared for an MPO LRTP requires system-level estimation of costs and revenue sources with reasonably expected availability to adequately operate and maintain the federal-aid highways included in the plan. LRTPs have a planning horizon of 20 years or more, but beyond the first 10 years of the plan the costs may be specified using aggregate cost ranges. MPOs, transit operators and states are required to work together to develop the financial plan. Requirements for LRTP financial plans are listed in 23 CFR 450.324 (f)(11).

The financial plan for a MPO TIP serves a similar purpose as for an LRTP: to show that funding is reasonably expected to be available for projects within the plan. Funds must be estimated by year for over a period of at least four years. A TIP financial plan does not need to include funding for other activities outside of the projects included, but should include some form of system-level estimation of costs of operating and maintaining federal-aid highways, as well as confirmation that sufficient funds are available for implementing, operating and maintaining the system. As in the case of LRTP financial plans, MPOs, transit operators and states are required to work together to develop the plan. Requirements for TIP financial plans are listed in 23 CFR 450.326 (j).

For SLRTP and STIPs, the elements of a financial plan are similar to those for LRTPs and TIPs, respectively. However, the financial plan for these documents is an optional element. SLRTP requirements are described in 23 CFR 450.216 and STIP requirements are described in 23 CFR 450.218.

Separate requirements specify the contents of a financial plan prepared for a State’s NHS TAMP. 23 CFR 515 specifies that a TAMP financial plan is a “long-term plan spanning 10 years or longer, presenting a State DOT’s estimates of projected available financial resources and predicted expenditures in major asset categories...”

Regulations further stipulate that the process for preparing a financial plan must include:

• Estimating the cost of expected future work to implement the investment strategies in the TAMP by fiscal year and work type
• Estimating funding levels that are expected to be reasonably available by fiscal year
• Identifying anticipated funding sources
• Estimating the value of the agency’s NHS pavement and bridge assets
• Estimating the needed investment on an annual basis to maintain asset value

In addition to preparing financial plans in the documents described above, state DOTs and other organizations typically prepare annual financial statements. The U.S. Governmental Accounting Standards Board (GASB) establishes standards for state and local governments to use in following Generally Accepted Accounting Principles (GAAP). These standards describe how governments should perform their accounting and prepare financial statements. A financial statement prepared based on GAAP describes an organization’s financial position for a given reporting period, such as a fiscal year, and typically does not include detailed projections of future funding and work. A financial statement prepared to comply with GASB standards and a financial plan prepared to support an LRTP, TIP or TAMP are meant to serve different purposes, but the same underlying concepts inform the development of all these products.

Financial statements and Federally-compliant NHS TAMPs both include calculations of asset value. Reporting asset value in a TAM financial plan helps communicate what assets an organization manages in a common unit applicable to all assets: dollars. Estimates of asset value in a TAM financial plan are typically based on asset replacement cost. The value of an asset may be depreciated on remaining asset life or current asset condition. Where a depreciated asset value is calculated the cost to maintain asset value is equal to annual depreciation. This can provide a useful benchmark for the minimum spending required to maintain an inventory of assets.

The asset value reported in a financial statement is prepared in compliance with GASB requirements, and is often prepared differently than that in a TAMP. For financial statements agencies typically apply straight-line deprecation to historic capital costs to estimate the current book value of their assets. The historic cost of constructing an asset is different from the cost to replace an asset in today’s dollars, and the annual depreciation calculated using this approach is different from the cost of actually maintaining asset condition. GASB requirements allow for addressing this issue using a “modified approach” for calculating asset value. This alternative approach involves calculating a cost to maintain assets using an organization’s management systems in lieu of calculating straight-line depreciation. Where this approach is used it provides a calculation of asset value that can be used in both a TAM financial plan and an organization’s GASB-compliant financial statement.

Typically, U.S. transportation agencies perform some or most of their maintenance work internally, and contract out a large portion – if not all – of their capital projects. The line between the types work performed as maintenance and capital projects varies by organization and is often blurred. Agencies can often use maintenance forces in a flexible manner to perform a wide variety of activities, including preservation activities on pavements, bridges and other assets. However, in the near term, an organization’s maintenance resources – staff and equipment, in particular – are fixed. Consequently, the asset owner is challenged to optimize use of these resources to meet immediate needs, such as winter maintenance and incident response, while performing additional work to improve asset conditions wherever possible.

The ability to contract out maintenance work, such as through Indefinite Delivery/Indefinite Quantity (IDIQ) contracts, provides an agency with flexibility in meeting near-term needs. Other approaches for contracting out maintenance work include use of portfolio or program management contracts in which certain operations and maintenance responsibilities for some group of assets is delegated to a contractor over a specified period of time. Section 4.3.3 provides additional details on considerations involved in outsourcing asset maintenance.

Regarding contracting approaches for capital projects, in the U.S., most transportation agencies rely on Design-Bid-Build (DBB) model for delivering their capital programs. With this approach, the project owner designs a project (or contracts for a private sector firm to prepare a design) and solicits bids for project construction following completion of the design. This provides the project owner with control over the process, but can be time consuming and can result in cases where bids for project construction exceed the expected cost developed during design. In recent years, many transportation agencies in the U.S. and abroad have explored improved approaches to work planning and delivery to accelerate completion of needed work, leverage alternative financing approaches and transfer program and project risk.

All of these approaches are intended to reduce the time from initial conception of a project to its completion, and in many cases transfer risks associated with project completion from the public sector to the private sector. As these examples help illustrate, major trends in this area include:

• Group work together by geographic location or type of work to develop fewer, larger, and more easily contracted projects
• Use Design-Build (DB), Design-Build-Finance-Operate-Maintain (DBFOM) and other contracting strategies, wherein a single contract is awarded to design and complete a project, as opposed to separate contracts for design and construction
• Encourage development of Alternative Technical Concepts (ATCs), wherein a contractor proposes an alternative approach to meeting a contract requirement in the bidding phase
• Select contractors earlier in program/project development through use of Construction Manager-General Contractor (CM-GC) arrangements, where a contractor is selected as Construction Manager while design is still underway
• Use IDIQ contracts and other flexible contracts to provide a more efficient mechanism for performing smaller projects
• Incorporate performance-based specifications, time-based incentives and other specifications in contracts to improve project outcomes
• Outsource operations and maintenance of an asset using program or portfolio management contracts.

Both in the U.S. and abroad there are many examples of public agencies making extensive use of alternative contracting strategies, such as Public-Private Partnerships (P3s) and performance-based contracts to speed project delivery and transfer risk.

While alternate strategies for work planning and delivery hold great promise, all of the approaches described here have advantages and disadvantages and carry their own risks. Use of alternative approaches can save taxpayers money and provide improvements more quickly than a traditional model. Success stories typically result from improving the efficiency of the process and incentivizing the use of better technology and methods, but there are also many cautionary examples in which these strategies have failed to achieve cost savings, time savings or risk transfers as desired. Asset owners should consult the separate body of research in this area (referenced at the end of this section) when exploring the use of alternative approaches and carefully weigh the expected return, advantages and disadvantages of whatever delivery approaches they consider.

Performance Management Framework

As discussed in Chapter 2, transportation agencies have embraced the use of performance data to drive investment decisions. A performance-based management approach enables agencies to select and deliver the most effective set of projects for achieving strategic objectives, while also improving internal and external transparency and accountability.

A typical performance management framework includes:

• A clear idea of the agency’s strategic objectives.
• The use of performance measures to assess performance.
• Methods to evaluate and monitor performance results.
• The evaluation of factors with capacity to improve long-term performance.
• The allocation of funding to achieve agency objectives.
• Ongoing processes to monitor and report progress.

A fundamental component of the framework is the use of performance measures to evaluate system performance and the importance of establishing business processes to evaluate, monitor, and use the data to influence agency decisions. These are achieved by aligning decisions at all levels of the organization with the agency’s strategic objectives and ensuring that the right performance measures are being used to drive decisions. This alignment helps to ensure that resource allocation decisions and the day-to-day activities of agency personnel support the agency’s priorities and the interests of external stakeholders.

The existence of a regular, ongoing processes to monitor and report results is critical to identifying and implementing improvements to system performance or to further the effectiveness of the performance management process. The continual monitoring and update of a performance management framework is reflected in Figure 6.1, which illustrates inputs to performance targets and how ongoing monitoring and adjustments are fed back into the framework to adjust future targets. The surveys conducted regularly to support a pavement, bridge or maintenance management system are examples of the types of performance monitoring activities fundamental to an effective performance management organization.

Agencies with a performance management framework in place have benefited from:

• Maintaining a clear and unified focus for making agency decisions based on agency priorities, public input and available resources.
• Using available funding more effectively to preserve or improve system performance while lowering life cycle costs.
• Allocating available resources based on analysis of past performance and expected conditions to address areas most in need of attention.
• Having the data to confidently defend funding requests or explain the impact of reduced budgets.
• Building a transparent and accountable organization by communicating the basis for making resource decisions.
• Meeting legislative requirements.

Performance Measures

Performance measures are used within a performance management framework to allocate resources and provide feedback on the effectiveness of the activities in achieving overall objectives. Performance measures are indicators used for evaluating strategies and tracking progress. A performance measure can be an indication of asset condition, such as a pavement condition rating, or an indication of an operational characteristic, such as the annual number of fatalities on a facility.

The most effective performance measures drive decisions that are important to the success of the program. For example, maintenance departments may use performance measures that track actual expenditures to planned expenditures to ensure that available funding is directed towards the highest-priority items, as shown in the North Carolina DOT practice example.

It is also important that the measures drive the desired performance within an organization. For instance, a performance requirement that measures whether pavement or bridge designs are submitted on time might cause incomplete or incorrect submittals to meet a deadline, leading to an increase in construction modifications. A more effective measure might focus on a minimal number of design modifications during the construction phase of a project.

Effective performance measures should also primarily be outcome-based rather than output-based, meaning that they focus on the result or impact of an activity rather than the inputs that went into the activity. Outcome-based measures are generally preferred because they indicate the effect on the traveling public resulting from the actions taken, so they usually relate to user priorities such as the length of time for a road to be cleared after a snow event or the absence of litter and graffiti. They are developed based on a description of what an agency wants to achieve as a result of the actions undertaken. Outcome-based measures are commonly used for managing ancillary assets such as drainage assets and signs. For instance, the performance of drainage assets might be reported in terms of the percent of pipes/culverts greater than 50 percent filled or otherwise deficient and the performance of signs might be reported in terms of the percent of signs viewable at night.

Output-based measures, on the other hand, track the resources used to achieve the outcome, such as the number of hours of labor used or the number of light-bulbs changed in a month. While the data is important information for managing resources, it does not necessarily drive outcomes that would matter to the public. For instance, travelers on a highway are much more interested in knowing when the road will be cleared of snow than how much overtime went into the operation.

When possible, agencies should use performance measures that are leading measures rather than lagging measures to influence future decisions. A leading measure uses changes in performance to provide insights into potential changes that might influence a future decision one way or another. For example, knowledge that a ramp meter has exceeded the manufacturer’s suggested service life might drive a decision to replace that meter. Similarly, increases in equipment downtime might indicate risks due to an aging fleet are growing or that planned operational activities will not be performed as planned. A lagging measure, on the other hand, looks back on the results of past investment strategies after the decisions have been made. Because a lagging measure is recorded after the fact, there is a delay (lag) in the agency’s ability to adjust its practices and improve performance. Bridge and pavement condition measures are examples of lagging measures because the reported conditions reflect the impact of decisions made several years in the past. Lagging measures are commonly used to evaluate a program’s effectiveness or to verify that actual investments achieved projected results.

In transportation, an agency might have a lagging measure for tracking complaints responded to within a 48-hour window. The measure provides an indication of the public’s satisfaction with the road network and is easy to monitor and report. However, if an agency really wants to effect change, it might develop leading measures to track the percent of complaints not worked on within a two-hour window or the percent of complaints that can’t be resolved by the initial point of contact and must be passed to someone else. Focusing on these types of measures could drive agency decisions to ensure complaints are being worked on quickly and are being assigned to the right people. General characteristics of effective performance measures are presented in Table 6.1.