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Conditions and Performance Report. Appendix D.

Conditions and Performance Report
Appendix D—Asset Management and
Investment Strategies: An Update

Conditions and Performance Chapter Listing

Conditions and Performance Home Page


Current Practice

Assessment of Current Practices

Improving the Process

Strategies for Implementation



Assessment of Current Practices
(How Is It Working?)


During the decades of the 1960s, 1970s, and even into the 1980s, transportation preservation projects were selected and developed without the benefit of today's vast technology expansion and the information resources made possible by the technical revolution in computers, automated data collection, testing equipment, design procedures, analytical tools, and so forth. Investment decisions were project driven, and asset preservation and upgrading were frequently by-products of facility expansion and new construction. Over the past two decades, progress in the planning and programming arena of system preservation, upgrading, and operation has been considerable, with asset management becoming a more important element in the State's overarching policies and transportation plans.

Today, most State transportation plans include more explicit policies and goals relative to asset management. However, the link between the transportation plan and actual programming and resource allocation decisions may be tenuous if state-of-the-art engineering, economic and business practices are not in place. The policies and objectives regarding Asset Management and investment are intended to guide project selection and development. In the past, transportation investment and maintenance decisions within and among asset classes tended to reflect tradition, intuition, personal experience, resource availability, and political considerations, with systematic application of objective analytical techniques applied to a lesser degree because of lack of availability. Further, success was often measured in terms of controlling backlogs, not in optimizing system performance, maximizing return-on-investment, or minimizing user impacts. Currently more States are developing performance measures and targets to guide the overall decision-making process.

Achieving the situation where programs and projects reflect predetermined goals and policies is difficult for a number of reasons. First, available analytical tools are subject to technical constraints related to data inputs, assumptions and theoretical understanding. Second, practical realities related to institutional considerations, social objectives, and political goals may circumvent the process. And, third the planning, programming, and project development process in many States must deal with antiquated data systems, disparate management systems (such as for pavements and bridges), and limited communication channels, especially along horizontal lines.

Technical Considerations

Although management systems, such as pavement and bridge systems, have been under development for many years and these systems have inherent investment analysis capabilities, few States use economic efficiency criteria to assess the relative merits of overarching alternative investment strategies within all asset classes, e.g., one highway facility versus another based on relative costs and benefits.

Most States limit application of their management systems to monitoring conditions and then plan and program their projects on a "worst first" basis. Existing management systems typically function at the operations level and focus on one particular asset. The current approach to asset management in general and resource allocation and investment analysis, in particular, is tactical rather than strategic.

Another technical issue facing State DOTs is the requirement for appropriately trained analysts with the ability to translate the results of complex analytical processes into relevant conclusions that can be readily understood by the lay person. Furthermore, it is important for the analysts to have a full understanding of the important concepts and techniques. States face some difficulty in finding and retaining staff with these capabilities due to the personnel situation described earlier.

Practical Realities

Beyond the technical hurdles, State practitioners are faced with a host of practical realities that confound objective, analytically based decisions. Institutional considerations, social objectives and political goals have the potential to dominate the resource allocation and project selection process.

Examples of institutional considerations include the legislative earmarking of Federal and State funds. In addition, State budgets generally cover time horizons of 1 to 2 years. Therefore, committing available funds over the long-term is difficult. The short budget cycle, combined with uncertain future funding levels, creates pressure to select the alternative with the lowest initial cost, regardless of total life-cycle cost and return-on-investment. In other words, the cost-effective solution may not be the most politically practical solution.

A further complication arises from the competition between political objectives and the technical decision-making process. For example, elected and appointed officials may find a strictly long-term perspective demanded by the analytical approach to be untenable. In addition, the public often measures the success of such officials by their ability to advance specific projects and services. As such, decisionmakers may prefer a process that will accommodate individual efforts, as opposed to a technical approach that does not specifically reflect such efforts. Long-term cost-effective solutions therefore may not be the most attractive because of competing policy objectives.


In many of the State DOTs, communication across asset classes (horizontal) and from the day-to-day manager to the highest executive (vertical) has historically been limited. This situation inhibits a systems approach to managing assets. States that have established management systems have done so by focusing on individual asset classes. The result has been so called "stovepipe" operations with limited horizontal coordination. For instance, bridge management systems were developed by bridge engineers and pavement management systems were produced by pavement engineers. Typically, there is little, if any, data exchange between systems. Furthermore, there is little consistency with respect to investment decision procedures. As a result, these systems are not able to evaluate trade-offs between various classes of assets, for example, highways versus bridges.

Complicating coordination across asset classes is the typical State DOT's organizational structure. Many State DOTs experienced most of their growth and development during the Interstate Highway construction years. As a result, most of these organizations have budgets, staffs, and other internal resources that support the requirements of a highway construction program and are not necessarily geared to highway preservation and modal system efficiencies.

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Page last modified on November 7, 2014
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