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Beyond the Short Term: Transportation Asset Management for Long-Term Sustainability, Accountability and Performance

Overview of Asset Management

Chapter 1 uses a photograph to represent the idea that asset management can provide a framework for transportation agencies to manage their resources, both their physical resources and also their human and informational resources.

To devise the best organizational structure and the best leadership strategies for Transportation Asset Management, it is important to first understand all the functions which comprise this discipline. This section summarizes the basic functions of Transportation Asset Management as described in the Asset Management Guide and other documents. Much of the description relates to Pavement Management as an illustrative example of Asset Management. However, the general principals could apply to any asset, not just pavements.

As the Asset Management Guide notes, transportation asset management is a strategic approach to managing physical transportation infrastructure. It became a focus in the 1990s after the earlier development of Pavement Management, Bridge Management, Maintenance Management, Fleet Management and even Facilities Management systems. Each of these processes applies a systems approach to managing not only individual assets but also the entire class of assets for the lowest, long-term, life-cycle cost.

The term Asset Management can be ambiguous to both the uninitiated as well as those who are familiar with these earlier management systems. To the uninitiated, Asset Management can be vague because it is named after two generic words, Assets and Management. It is described in general ways which could refer to many systematic processes. To the non-transportation specialist, the descriptions of good Asset Management sound like the description of just Good Management. Both rely on effectively executing a logical strategy to achieve the highest returns for an organization. To the experienced transportation practitioner, it can be difficult to differentiate Asset Management from the earlier systems such as Pavement Management, Maintenance Management and Bridge Management. A comparison of the definitions in Table 1 illustrates the similarities.

Further complicating the dialogue is the increasing focus upon Performance Management. In this report, Performance Management is defined as an on-going process which translates strategic goals into relevant and detailed measures and targets which are then tracked to ensure uniform achievement of institutional goals.

Performance management relies heavily on the use of performance measures to assess whether the organization is achieving its goals. It also has an institutional learning process built in because it requires continuous analysis of results and root-cause evaluation of why results were not achieved. From that analysis, adjustments can made to improve performance.

Performance Management for federal agencies is required in the 1993 Government Performance and Results Act, although the Act's requirements did not extend to states. Performance management was strongly recommended for the federal transportation program in the 2007 National Surface Transportation Policy and Revenue Study Commission Report and it has been an increasing focus of AASHTO. So in addition to the original pavement and bridge management systems and Asset Management, the transportation community is now also coming to grips with Performance Management.

In many ways description rather than definition helps to clarify Asset Management. Transportation Asset Management applies a rational and comprehensive approach to managing pavements, bridges and other assets.

As the Asset Management Guide says,

"At its core, asset management deals with an agency's decisions in resource allocation and utilization in managing its system of transportation infrastructure. Asset management is a way of looking at an agency's way of doing business to see if there are better ways to reach decisions in infrastructure management for instance, by basing decision methods and criteria on current policy guidance, considering a range of alternatives, focusing on outcomes of decisions, and applying more objective information to decisions."

Asset Management has been defined as,

".... a strategic and systematic process of operating, maintaining, upgrading, and expanding physical assets effectively throughout their lifecycle. It focuses on business and engineering practices for resource allocation and utilization, with the objective of better decision making based upon quality information and well defined objectives".

The antithesis of Asset Management is neglect of assets until they deteriorate and require reactive maintenance treatments to restore at least minimal functionality without regard to long-term need or performance. Instead, Asset Management is about applying policies, forecasts, tradeoffs and economic optimization to comprehensively manage an inventory of assets. Asset Management is distinguished by being:

Policy-driven Resource allocation decisions are based on a well-defined set of policy goals and objectives.

Performance-based Policy objectives are translated into system performance measures that are used for both day-to-day and strategic management.

Analysis of Options and Tradeoffs Decisions on how to allocate funds within and across different types of investments (e.g., preventive maintenance versus rehabilitation, pavements versus bridges) are based on an analysis of how different allocations will affect achievement of relevant policy objectives.

Decisions Based on Quality Information The merits of different options with respect to an agency's policy goals are evaluated using credible and current data.

Monitoring Provides Clear Accountability and Feedback Performance results are monitored and evaluated for both efficiency and effectiveness.

The general principles of asset management are similar, whether the assets involved are pavements, bridges, roadside features, or even facilities. By using pavement management as an example, the following steps illustrate the type of methodical, systematic and cyclical steps inherent within Asset Management.

Figure 2: The asset management process includes a continuous and systematic setting of goals and evaluating of results.
Figure 2 is a chart that shows how the asset management process includes a continuous and systematic setting of goals and evaluating of results. It shows the goals/targets and policies for pavements provide input to what information should be collected to develop the inventory of assets (pavements). The information about the condition of the inventory in turn provides input to economic-tradeoff analysis that leads to the development of the short and long-range plans leading to the selection and implementation of projects. The performances of these projects are monitored and the performance information is used to make changes to the overall program and also to make changes to the original goals and policies.

First, a target level of service or performance goal for pavements is set. This target or goal usually is based on customer requirements, such as the degree of smoothness customers desire balanced against the available budget.

Second, the inventory of pavements is developed, if one does not already exist, and current conditions are assessed against the desired targets.

Third, an economic-tradeoff analysis is conducted at the program level to determine what is the estimated optimum amount to invest in pavements to achieve the highest economic return. Investing too little will lead to degradation of pavement conditions which will be more expensive in the long term to repair. Investing too much draws essential resources from bridges, safety, maintenance, capacity and other important needs. This tradeoff can be conducted through a state-of-the-art optimization software program or it can be a much simpler straight-line forecast based off of the pavement inventory and past expenditure levels. Either way, it begins with a logical economic evaluation of the amount that should be budgeted for pavements.

Fourth, once the optimum amount of pavement spending is estimated, a rational analysis is conducted to allocate funds among preventive maintenance, reactive maintenance, rehabilitation and pavement replacement categories. Preferably, each category's spending levels would be predicated upon a highest Return on Investment analysis. If such a formal analysis is not possible, engineering judgment and past experience can be relied upon.

Fifth, once pavement sections are selected for treatment, the actual treatment would be based upon a rational analysis of the individual pavement to provide it the lowest-cost treatment at the right time. The pavement's place on the Pavement Deterioration Curve would be located and the appropriate preventive, reactive, rehabilitative or replacement treatment would be selected.

Sixth, once the pavement was brought to good condition, a planned and rational multi-year preventive maintenance schedule would be identified, and then executed.

Seventh, the pavement's performance would be assessed annually and adjustments made in its treatment schedule to provide the highest Remaining Service Life.

Eighth, if the pavement fails to perform as expected, a root cause analysis would be conducted so the agency can learn from the poor performance and can take corrective action so it is not repeated.

Ninth, the attributes of that pavement's performance and treatment costs would be fed into a Pavement Management System to continually assess if pavement goals were met and if adjustments need to be made to achieve overall pavement goals, expenditures or strategies.

In a fully developed Transportation Asset Management environment, similar rational and comprehensive approaches would be taken for the bridges, maintenance items, the department's fleet, its equipment, and even its human resources. Figure 2 above illustrates the basic steps within Transportation Asset Management. Similar steps would be taken for any individual class of assets, as well.

In short, Asset Management is a comprehensive, rational, systems approach to managing pavements, bridges and other transportation assets.

Haas and Hudson speak in similar terms when describing pavement management. [1]

"Good pavement management is not business as usual. It requires an organized and systematic approach to the way we think and in the way we do day-to-day business. Pavement management, in its broadest sense, includes all activities involved in the planning and programming, design, construction, maintenance, and rehabilitation of a pavement portion of a public works program. A pavement management system (PMS) is a set of tools or methods that assist decision makers in finding optimum strategies for providing and maintaining pavements in a serviceable condition over a given period of time. The function of PMS is to improve the efficiency of decision making, expand the scope, provide feedback on the consequences of decisions, facilitate the coordination of activities within the agency, and ensure the consistency of decisions made at different management levels within the organization."

Nearly 50 years ago, a renowned Yale economist named Charles E. Lindblom wrote a famous public sector management article in which he argued that most public agency decisions are not based on rational and comprehensive analysis, such as that described by Haas or the Asset Management Guide. Lindblom argued that instead, decisions generally are based on narrow, incremental changes to past practice, or muddling through. [2] He wrote in 1959 that the complexities of conducting a rational, comprehensive analysis of many alternatives was generally so difficult and expensive that public agencies could not afford it. Instead, they tended to make minor, incremental changes to past practice as a means of muddling through their policy-making process.

The advent of powerful scenario-producing information systems such as travel-demand models, pavement management systems, HERS-ST, Pontis, and many maintenance management systems now allow transportation policy makers to run numerous forecasting scenarios. They can routinely evaluate different investment levels and different investment mixes between programs to seek the optimum program budgets and strategies. The rational and comprehensive decision-making process that evaded Lindblom's peers now is available to transportation executives for many of their most-important infrastructure decisions.

In the absence of sound Asset Management, the following conditions are likely to be found, much in the manner described by Lindblom:

  • Investment levels for various programs are based upon outdated formulas, geographic splits, political compromises or simple past practice;
  • Bridges, pavements and maintenance assets are not treated systemically with an optimum mix of timely preventive and reactive treatments;
  • The department lacks a clearly defined set of goals for where it wants its system conditions to be and it lacks strategies for how it will get there;
  • Planning, design, construction, maintenance and information technology lack adequate coordination and take a silo approach to their role in managing assets;
  • In other words, an agency muddles through its infrastructure-management process.

Asset Management therefore relates to improving existing agency functions such as long-range planning, short-range programming, scheduling of maintenance and the delivering of projects. These functions clearly are not new. What is new in an Asset Management approach is that they are conducted in a tightly coordinated fashion to ensure they result in the highest-system conditions for the lowest cost over the life of the department's infrastructure planning horizon.

Asset Management should not be viewed as yet another new program, requiring another new bureaucracy. Rather, Asset Management is a way of doing business. It brings a particular perspective to how an agency conducts its existing procedures, reaches decisions, and applies its information technology capabilities. It suggests principles and techniques to apply in policymaking, planning, project selection, program tradeoffs, program delivery, data gathering, and management system application.

There is no one correct table of organization and no one correct set of performance measures that will guarantee a successful Asset Management program. However, there are a variety of common functions which need to occur in an Asset Management structure. Leaders seeking to instill Asset Management in their organizations will have to decide how best to coordinate these functions.

Asset Management Is a Strategic Approach

Asset Management requires a strategic approach to managing a department's infrastructure. A strategic perspective takes a long view of infrastructure performance and cost, and considers options in a comprehensive, proactive, and informed way. It is driven by policy goals and objectives and relies on systematic assessments of asset performance and cost in making decisions on future actions.

An agency which practices sound Asset Management has well-defined policies that can be related to clear objectives and measures of performance. Management emphasizes customer service and accountability for system performance and cost effectiveness. Decisions on allocating resources are policy driven and performance-based, consider a range of alternatives, have clear criteria for decision making, and investigate the most cost-effective solutions through analyses of tradeoffs.

Asset Management Breaks Down 'Silos'

Asset management encompasses a number of business processes related to infrastructure management in DOTs, including those related to planning, program development, design, construction, maintenance, information technology and knowledge management. The functions of planning, design, construction, maintenance and information technology work through common, coordinated processes to ensure that each contributes to asset management, without encumbering the other. The sub-optimization that can occur within silos is prevented through effective communication and coordination strategies. The business processes are managed to elicit effective contributions from all levels of the organization, and to foster communications on Asset Management needs and accomplishments both within and outside the agency. The organizational roles of each unit are clear, but also clear is the shared requirement that each unit coordinates with and complements the other. For instance, if maintenance has responsibility for crack sealing of pavements, it understands that role and executes it in a timely and appropriate manner in the pavement's lifecycle. Design provides plans on time to provide treatments when needed. Information technology understands the information needs of the other functions and provides the data they require. In short, the units function in a coordinated fashion to execute the thousands of individual steps required. Management authors sometimes refer to this as Horizontal Alignment, which often does not occur in large organizations without specific effort from the senior leadership.

Asset Management Relies on Good Information and Analytic Capabilities

Quality information accurate, complete, timely is important at all stages of Asset Management. Information technology is a practical necessity in supporting Asset Management. A sound Asset Management program relies on information regarding past asset performance, remaining service life, the expected performance of treatments and a forecast of future trends. The needed trend forecasts must address not only expected infrastructure performance but also future resource availability. Information is needed in standard reports for system-wide performance. Also innumerable ad hoc reports are required for front-line managers seeking to optimize their short-term performance of individual assets.

Figure 3: The ability to illustrate future trends and the results of current practices allows Asset Management practitioners to demonstrate the consequences of current decisions.
Figure 3 is a chart that shows pavement goals and pavement conditions from 2002 projected to the year 2016. It takes the historic trends and shows the projected conditions of the pavements in 2016. The figure shows that the ability to illustrate future trends and the results of current practices allows Asset Management practitioners to demonstrate the consequences of current decisions.

Asset Management Practices Are Flexible

Successful Asset Management practices vary considerably across the nation because of the significant differences between how states are organized and governed. Asset Management performance measures, data systems and analytical tools also vary widely because of the disparate development of information systems over the decades. No two states have the same legal structure, span of responsibility or legacy information systems. Each state and locality which undertakes Asset Management does so in a fashion unique unto itself.

Asset Management Works at Multiple Levels

Asset Management provides benefits at three levels, a policy level, an administrative level and a technical level.

First, at the public-policy level it provides the organization with a clear framework it can use to explain its investment decisions and to illustrate the investment tradeoffs that it faces, as in Figure 3 above. If legislators ask for scenario planning to illustrate the impacts of increased or decreased investment, the agency can respond in a systematic fashion. The agency can explain its infrastructure-management philosophy and document that it is rational, comprehensive and economical, based on the lowest-overall life-cycle cost.

Second, at the administrative level, Asset Management provides the agency a means by which to organize its disparate and widely distributed resources in a coordinated fashion to achieve one of its key missions the optimization of roads, bridges and other transportation assets. The typical department of transportation will have essential staff distributed across dozens of counties and regions and hundreds of construction projects. Asset Management policies and practices provide a unifying structure and philosophy to coordinate these widely distributed people and the resources they control.

Third, at the technical level, Asset Management systems provide the information that engineers, planners, information technology specialists and managers need to conduct their jobs. Asset inventories provide information on the extent and condition of assets. Degradation rates can be used to predict assets' future remaining service life. Information about the performance of past materials and construction techniques can be used to assess the adequacy of construction standards and materials. The planned preventive and reactive maintenance needs provide structure to the efforts of maintenance forces. In summary, Asset Management provides a knowledge management framework which contributes to continued organizational learning.

People, Processes, Plans and Products

Two of the agencies examined in this report, the Oregon and the Utah DOTs, use very similar language in describing the major focus areas necessary to instill asset management successfully. They describe people, processes, plans and products as being essential. The fact that four fundamental aspects of an organization need to be engaged reflects the complexity and comprehensiveness of Asset Management. Changing people, changing processes, changing plans and changing products can involve a transformative evolution which extends to most major business areas of a large transportation organization.

Such transformation has been experienced by leading Asset Management practitioners, and by those organizations which have embraced other advanced frameworks such as ISO, Baldrige or Six Sigma. This report will later describe those other systems and illustrate how they compare to Asset Management. But first, the report will describe what leadership strategies and organizational structures have been used successfully to ingrain these frameworks into the people, processes, plans and products of transportation agencies.

The Case Studies

Beginning with the next chapter, case studies follow each section. These case studies elaborate upon and illustrate the themes from each topical section. Particularly they focus upon the common issues that agencies confront and how they address them when they attempt major organizational change to improve asset conditions.

All of the case study agencies stressed that they do not consider themselves to have achieved a perfect process. All stressed that while they are pleased with their progress, they are on a long journey and their asset management practices continue to evolve. Each agency has taken a different approach based upon its statutes, geography, history and organizational structure. No case study is presented as representing the definitive approach. Rather, they illustrate the rich and innovative approaches which have been adopted. In their diversity, they illustrate that Asset Management principles can be applied successfully in many different settings, with different organizational structures and with differing legal frameworks. From New Zealand to North Carolina, agencies have achieved success with asset management practices in their own ways.

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Updated: 06/18/2012