Title: Fundamentals of Asset Management Nat Coley, Economic Analysis Program FHWA Office Of Asset Management
1Fundamentals of Asset Management
Nat
Coley, Economic Analysis
Program FHWA Office Of Asset
Management
2Topics
- Definition and Understanding Asset Management
- Importance of asset management and what it can do
for us - Explain the role we play in implementing asset
management - Methods and Tools
- Apply the principles of asset management
- Define steps that agencies can take toimprove
asset management - Identify available tools that can assist in
applying asset management - Identify performance measures that are useful in
an asset management context
3Transportation Asset Management
Asset management is a systematic process of
maintaining, upgrading, and operating physical
assets cost-effectively. It combines engineering
principles with sound business practices and
economic theory, and it provides tools to
facilitate a more organized, logical approach to
decision-making. Thus, asset management provides
a framework for handling both short- and
long-range planning.
4Why Transportation Asset Management?
Transportation Asset Management
- As government providers and operators of
transportation systems, we face an increasingly
complex challenge of improving safety, mobility
and the aesthetics of our highway system in an
environment of constrained resources.
Implementing an asset management approach is
essential to ensure that we invest the public
funding entrusted to us wisely, and that we
minimize long-term costs in achieving our desired
service level objectives. - Â
- Neil J. Pedersen, Administrator, Maryland State
Highway Administration - and Vice-Chair, AASHTO Subcommittee on Asset
Management
5Why is it Important?
- Increasing congestion between 1993 and 2002
- 24 increase in passenger car VMT
- 32 increase in single-unit trucks VMT
- 39 increase in combination trucks VMT
- Only a 2 increase in lane miles
- In the next 20 years
- VMT will increase by 50
- Freight tonnage will nearly double
- All of this is occurring on an aging network
and in a fiscally constrained environment
6What Can we do about our situation?
- Aging Infrastructure Networks
- Need to make what we have work better for us and
last - longer
- Growing Congestion
- What can we do to reduce the
- inconvenience of congested roadways?
- Growing Traffic Volume
- What can we do to curb the increasing levels of
traffic? - Increasing Legislative Oversight
- Need to respond to pressure to be more
transparent and - accountable
7Asset Management Principles
8Focus of Asset Management
9Transportation Asset Management
RESOURCES
Capital Improvement
Preservation
Operations
Safety
Other
10A Resource Allocation and Utilization Process
Funding Levels
Policy Goals and Objectives
Customer Input
Analysis of Options and Tradeoffs
Resource Allocation Decisions Financial Staff
Equipment Other
Program and Service Delivery
System Condition and Service Levels
11Benefits of Asset Management
- Extend resources
- Make our assets last longer
- Make your dollars do more for you
- Get more money
- Make the case for funding and have the executives
- and legislature understand the needs
- Have your partners support you and communicate
the - case
- Communication, accountability, and credibility
- Improved communication and collaboration within
- agency, across agencies, and with customers
- Improved credibility and accountability for
decisions
12Asset Management Can Support Financial Performance
- Governmental Accounting Standards Board (GASB)-
Statement 34 - provides a comprehensive framework for financial
reporting with the objective of making annual
reports easier to understand and more useful to
the people who rely on the financial information
contained therein.
13Asset Management Can Support Financial Performance
- Governmental Accounting Standards Board (GASB)-
Statement 34 - the government manages the eligible
infrastructure assets using an asset management
system that has the characteristics set below - Provides an up-to-date inventory of eligible
infrastructure assets - Performs condition assessments of the eligible
infrastructure assets and summarizes the results
using a measurable scale and - Estimates each year the annual amount to
maintain and preserve the eligible infrastructure
assets at the condition level established and
disclosed by the - government.
14Asset Management Can Support Financial Performance
- Governmental Accounting Standards Board (GASB)-
Statement 34 - the government documents that the eligible
infrastructure assets are being preserved
approximately at (or above) a condition level
established and disclosed by the government.
Determining what constitutes adequate documentary
evidence to meet the second requirement involves
professional judgment because of variations among
government asset management systems and condition
assessment methods.
15Examples of Application
- Policy Development
- Tradeoff Analysis
- Economic Analysis and Life Cycle Cost Analysis
16Policy Development Proactive Role in Policy
Formulation
- Asset Management provides an opportunity to
connect POLICY to ACTION - Agencies need to engage policy makers during
their decision-making process - Have an impact on external bodies that shape
policies - Frame and inform policy options
- Communicate implications of funding decisions
- Reinforce accountability
- Same principles can be applied to long-range
planning
17Proactive Role in Policy FormulationExample
MassHighway
- Governor initiated a Fix It First program
focused on reducing structurally deficient (SD)
bridges. Initially, resources would be allocated
to fix current SD bridges
18Proactive Role in Policy FormulationExample
MassHighway (continued)
- Further analysis indicated that the number of SD
bridges would increase over time with focus only
on fixing current SD bridges
19Proactive Role in Policy Formulation
Funding Levels
Policy Goals and Objectives
Customer Input
Analysis of Options and Tradeoffs
Resource Allocation Decisions Financial Staff
Equipment Other
Program and Service Delivery
System Condition and Service Levels
20Proactive Role in Policy FormulationExample
MassHighway (continued)
- New policy balances preservation and replacement
needs. New budget includes increased bridge
funding to address current SD bridges and manage
deterioration
21Tradeoff AnalysisWhat is a Program Tradeoff?
22Tradeoff Analysis Example
23Economic Analysis and Asset Management
- Mechanism for evaluating and comparing
long-term costs and benefits of alternatives - Economic analysis results
- Help structure project-level tradeoffs
- Quantify Qualify costs and benefits to the
agency and to customers - Support repeatable and transparent project
justification and prioritization - Management systems can help with economic
analysis
Adam Smith
24Economic Fundamentals
- Life-Cycle Comparisons
- Inflation
- Time Value of Resources
25Life-Cycle Comparisons
Typical Life-Cycle Profile
26Economic Analysis Tools
- FHWA Office of Asset Management offers multiple
tools to assist organizations with economic
analysis - HERS-ST uses engineering standards to identify
highway deficiencies, applies economic criteria
to select the most cost-effective mix of
improvements for system-wide implementation - STEAM facilitates detailed corridor and
system-wide economic analysis for large
transportation projects - BCA.NET web-based benefit-cost analysis tool
to support the highway project decision-making - Life Cycle Cost Analysis Process RealCost
Software performs a project alternative analysis
27Benefit and Cost Elements
28Performance Measures Basics
- Performance measurement is
- A way to link strategy to action
- A process of gathering information to make
well-informed decisions - A way of monitoring progress toward a result or
goal (accountability is another dimension of
this aspect) - Goal of performance measurement is to align
metrics to focused strategies that are
achievable - Having measures that state that one has to be
good at everything is not helpful - Good measures strengthen link between
strategies, actions, and results - Useful as a filter for how to respond to new
initiative
29Performance Measures are Critical
Funding Levels
Policy Goals and Objectives
Customer Input
Analysis of Options and Tradeoffs
Resource Allocation Decisions Financial Staff
Equipment Other
Program and Service Delivery
System Condition and Service Levels
30VDOT Dashboard Performance Measures Example
- 2002 Program delivery was not good late and
over budget - Commissioner - Change the culture
- Develop and adhere to strict definition of
on-time, on-budget - Measuring on-time, on-budget required data on
outputs - Work accomplishments
- Project schedule
- Cost of work to date
- Contract award amount
31Performance Results
- Maintenance
- 110 improvement in on-time delivery
- 51 improvement in on-budget delivery
- From FY 2001 to FYTD 2007
- Construction
- 345 improvement in on-time delivery
- 74 improvement in on-budget delivery
32Establish Performance TargetsExample Analyze
Resource Allocation Scenarios
33Establish Performance TargetsExample Analyze
Resource Allocation Scenarios
34Role of Preservation
- Preservation of existing assets is fundamental in
any asset management approach - Doing the right thing at the right time to the
right asset - Benefits
- Make existing capital investments last longer
- Stretching available funding further
- Reducing the frequency of costly, time consuming,
traffic disrupting rehab, and reconstruction
projects - North Carolina DOT (described in the FHWA
Comprehensive Asset Management Case Study)
added preservation as an explicit budget
line item to their budget
35ExamplePavement Preservation
36Applying Asset Management to Operations
- Operations broadens asset management beyond a
preservation focus - Can an ITS project achieve the same objective as
a proposed capital project? - Should we trade a decline in pavement
condition for improved capacity on an
existing highway?
37Management Systems
- All state DOTs have some form of pavement and
bridge management systems - Selected agencies have other management systems
and analytic tools tunnels, safety hardware,
traffic signals, culverts, etc. - Management system uses
- Manage an inventory of assets
- Monitor condition and performance
- Perform engineering and economic analysis
- Determine budget needs and expenditures
- Determine what is working well and where work is
needed - Major challenge tying management systems to the
decision-making process
38Pavement Management Systems
- Invest in strong bases and preventive maintenance
to maximize pavement life at lowest life cycle
cost, and rehabilitate pavements well before they
become noticeably rough. - Many Pavement Management Systems exist in the
market
39Bridge Management Systems
- A tool for managing a bridge portfolio for
optimal results - Quantification of the benefits of addressing
bridge needs and the increased cost of deferring
needed work - Determine the most cost-effective way to maintain
the bridge inventory
40Other Management Systems
- Maintenance Management Systems
- Combines asset inventories, work planning, and
work orders - Many products exist in the market
- Culvert Management Systems
- Alabama, Maryland, Minnesota, and Shelby County
case study - Many adapt their BMS for use with culverts
- Adapt maintenance management systems
- Home-grown systems exist
- Other states have custom developed systems
(NJDOT) - Operations Asset Management
- Tools operations asset management systems are
beginning to be published and made available - Traffic Operations Asset Management System
(NCHRP) - Identification of operations assets (FHWA
document) - Signals, lighting, safety hardware, signs, others
(NCHRP)
41Data and Data Management
- Many agencies view themselves as data rich, but
information poor - Existing tools are largely under-utilized in most
DOTs for asset management decision-making,
especially predictive models
When you cannot measure, when you cannot express
in numbers, your knowledge is of a meager and
unsatisfactory kind you have scarcely, in your
thoughts, advanced to the stage of a science.
Lord Kelvin
As a general rule, the most successful man in
life is the man who has the best information.
Benjamin Disraeli
Data is a lot like humans It is born. Matures.
Gets married to other data, divorced. Gets old.
One thing that it doesn't do is die. It has to be
killed. Arthur Miller
A computer cannot turn bad data into good data.
John R Pierce
42Forces Driving Data Business Planning in
Transportation
Fragmentation, lack of integration
Data quality issues
Data Rich, Information Poor Syndrome
Shrinking resources, growing needs
Need for greater accountability
Data Business Plans
Technology Advances
Increase understanding of data value
Better payoff from IT investments
Support for data programs
Maximize use of existing data
43Data Plans Delivering Value
Established need, sound measurement methods,
precise definition, fit with other data
Design
Efficient and sustainable methods using current
technologies
Collect
Validate
Process to ensure accuracy
Document
Provide metadata for users and integrators
Store
Protect data security and integrity, enable access
Integrate
Link to other data sets
Provide access to meet user needs downloads,
reports, maps
Access
Use to support decisions, meet reporting
requirements, etc.
Use
44Moving Forward with Asset Management
- There is no one right way
- Most important ingredient is an organizational
support structure - Identify a champion
- Clearly define responsibilities
- The scale of the effort can be big or small
agency-wide, division centric, or unit focused
involved hundreds of people or a small group - The Self Assessment in Chapter 3 of the Asset
Management Guide can help identify greatest
opportunities for improvement
45Developing a Plan
No single correct approach to getting started
46FHWA Office of Asset Management
- Mission
- provide leadership and expertise in the
systematic management of highway infrastructure
assets. - serves as an advocate for asset management,
system preservation, pavement management and
analysis, bridge management and inspection, and
construction and maintenance activities, as well
as technology development, outreach, and
partnering initiatives.
47FHWA Office of Asset Management
- Three Teams
- Construction and System Preservation responsible
for construction and maintenance program policy,
technical support, and national outreach.
Specific areasof responsibility include
accelerated construction,transportation
systempreservation, and continuous quality
improvement initiatives such as system
preservation.
48FHWA Office of Asset Management
- The System Management and Monitoring Team
responsible for developing promoting systematic
approaches to the management of highway assets.
This work includes refiningand advancing the use
of pavementand bridge management systems and
developing systems where theypresently do not
exist, such as for tunnels and roadway hardware.
Theteam is made up of a Pavement Management
Group and a Bridge Management Group.
49FHWA Office of Asset Management
- Evaluation and Economic Investment Team
- development and promotion of an array of
procedures for inclusion in an engineering
economic analysis toolbox, identification and
dissemination of alternatives for developing data
systems to support asset management, and
providing assistance with implementation of
relevantstandards issued by the Governmental
Accounting Standards Board (GASB).
50Thank You
- Nathaniel Coley
- FHWA Office Of Asset Management
- Washington, DC
- NColey_at_dot.gov
- 202-366-2171