Resource Allocation Logic Framework to Meet Highway Asset Preservation (2012)

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8C h a p t e r 2 The research team began the work by augmenting our understanding of the current state- of-the-practice in resource allocation. We focused on the policies and principles that typically govern the practices in use as well as the data, methods, and constraints that affect preservation resource allocation decisions. The research team (a) reviewed relevant information available in current literature—research articles, journals, NCHRP reports and so on and (b) interviewed cognizant managers at nine state DOTs to understand the logic process and decisionmaking tools used to allocate preservation funds. The research team’s review of relevant reports, journals, and articles found that useful lit- erature on preservation resource allocation is limited. In general, there is a lack of information on how state DOTs actually conduct or practice preservation resource allocation. For instance, limited information is available on the following: • Processes adopted to develop preservation budget at the state and district levels • Factors that affect the resources available for preservation • Logic process that state DOTs adopt to allocate preservation resources across different high- way assets and districts/regions • The role of performance measures and targets in the preservation resource allocation process • Data, analytical tools, and methods used to support preservation resource allocation decisions The team interviewed managers involved in the resource allocation process at the following state DOTs: • Florida • Maryland • Michigan • Minnesota • Nevada • Oregon • Wyoming • Utah • Washington The interviews were typically an hour long and involved three or four state DOT partici- pants. The team sent relevant materials and an interview guide in advance to the point of contact at each state DOT to ensure selection of the appropriate participants and allow them to prepare for the discussion. Appendix B provides the interview guide. Typical participants in the interviews included representatives from maintenance management, pavement man- agement, bridge management, capital programs, asset management, traffic and safety, and planning. Literature Review

Literature review 9 2.1 Business Case 2.1.1 Defining Highway Preservation The team established a working definition of preservation—actions to restore and maintain assets in good condition and to extend useful service life. The following definition of preservation maintenance is from NCHRP Report 551(1): Definition of System Preservation (Source: NCHRP Report 551 (1)) System preservation encompasses work to extend the life of existing facilities (and associated hardware and equipment) and to repair damage that impedes mobility or safety. The purpose of system preservation is to retain the existing value of an asset and its ability to perform as designed. System preservation counters the wear and tear of physical infrastructure that occurs over time due to traffic loading, climate, crashes, and aging. It is accomplished through both capital projects and maintenance actions. The Federal Highway Administration (FHWA) (2) and Bridge Preservation Expert Task Group (BPETG) (3) have developed definitions for pavement and bridge preservation. Per BPETG, “For a treatment to be considered pavement preservation, one must consider its intended purpose. As shown in table 1, the distinctive characteristics of pavement preservation activities are that they restore the function of the existing system and extend its service life, not increase its capacity or strength.” According to an FHWA memorandum (2) to local and state transportation agencies, pavement preservation includes three components: • Minor Rehabilitation. This includes structural enhancements that extend the service life of highway systems or improve its load-carrying capacity. • Preventive Maintenance. This includes cost-effective treatment of the existing roadway to retard future deterioration and maintain or improve the functional condition of the system without significantly increasing the structural capacity. • Some Routine Maintenance Activities. This includes planned work performed on a rou- tine basis to maintain and preserve the condition of the highway system or to respond to specific conditions and events that restore the highway system to an adequate level of service (LOS). Depending on the timing of the application, nature of the distress, and type of activity, certain routine maintenance activities are classified as preservation and eligible for federal funding. Any corrective maintenance that is not part of planned maintenance is normally not considered part of preservation under these definitions and guidelines. The same memorandum explains and provides examples for these three components. Minor rehabilitation refers to nonstructural enhancements necessary because of age and envi- ronmental exposure. Examples of preventive maintenance activities include asphalt crack sealing; chip sealing; slurry or micro-surfacing; thin and ultra-thin, hot-mix asphalt overlay; concrete joint sealing; diamond grinding; dowel-bar retrofit; and isolated, partial, or full- depth concrete repairs to restore functionality of the slab (e.g., edge spalls or corner breaks). Examples of pavement-related routine maintenance activities include cleaning of roadside

10 resource allocation Logic Framework for highway asset preservation ditches and structures, maintenance of pavement markings and crack filling, pothole patching, and isolated overlays. The state DOT interviews revealed that many states consider some routine preventive main- tenance, corrective maintenance, and minor rehabilitation work activities to be part of the preservation program, because they are important to extending useful life. Most of the state DOTs interviewed actually allocate preservation resources based (at least in part) on factors driven by asset condition and actual or expected service levels. Many states also determine resource allocation for typical “routine maintenance” (e.g., locally performed pothole repair, crack sealing) based on historical factors (e.g., last year’s budget and district staffing levels for this work). Ideally, determination of preservation needs should consider measures and estimates of the expected useful life of an asset along with condition and traffic load factors. Only a few of our interviewees indicated this orientation, and we recognize that there is a difference of opinion on the precision and certainty of measures associated with useful life estimates. The boundary between preservation and maintenance is obscure, and states use leeway in interpreting the guidelines on this. However, the interpretive issue is not a critical problem in developing the framework for preservation resource allocation. 2.1.2 Resource Allocation Processes In addition to the interview findings, the research team relied heavily on two NCHRP products: NCHRP Project 20-68 scan tour report (4) and NCHRP Web-Only Document 154 (5). These discussions provide an overview of the following: • State DOTs’ organization context and stakeholders in budget development and resource allocation • Preservation resource allocation process, addressing the broader context within which pres- ervation allocation decisions are typically made, development of budget, allocation of funds across various programs, and allocation of resources within the preservation program 2.1.2.1 Organizational Context State DOTs are typically hierarchical organizations, with a cabinet-level officer as the high- est ranking transportation official. This officer is usually under oversight by a transportation commission or legislative committee. There is no standard organizational structure; however, the central office under direction by the top official typically executes policymaking, planning, programming, budgeting, and administrative functions. In some states, district administrators and officials are directly accountable to the top official for both preserving and maintaining the highway assets and have a strong role in top-level deci- sionmaking on program priorities and geographic distribution of resources for preservation of most asset groups. This is a decentralized model as defined below. Our interviews revealed that a more centralized model is common, where much of the pres- ervation resource allocation decisionmaking appears to take place centrally. We also observed hybrid versions, particularly regarding bridge preservation programs (usually centrally man- aged) or statewide safety or mobility programs: • In a centralized model, the central office leads the development of the budget, definition of needs, identification of improvements or projects, and direction of preservation resources. The regional or district offices typically support the budget development process by providing

Literature review 11 inputs requested by the central office and refine the projects identified by the central office. The states that have strong legislative oversight tend to have a centralized model. • In a decentralized model, the regional or district offices have more autonomy in the devel- opment of the budgets, definition of needs, and decisions on significant improvement or preservation projects. In this model, the central office may provide support in the budget development process and usually provides guidance on project selection by the district offices. • The hybrid model is a blend of both centralized and decentralized models, with specific varia- tions based on program. For example, the initial allocation to all programs is made centrally, with virtually all bridge projects prioritized, selected, and administered centrally; pavement preservation projects are budgeted and recommended centrally, but specific pavement proj- ects are selected and managed in the districts. Resources for other programs, such as traffic, safety, and roadside asset preservation, also tend to exhibit variations on this hybrid model. Overall, the interviews showed that this model is the more common context for typical resource allocation approaches. 2.1.2.2 Process Context for Resource Allocation Figure 2-1 summarizes the overall resource allocation logic flow that we observed, notwith- standing the specific organizational models or state DOT entities studied. This is context for the preservation resource allocation processes that are the primary focus of this research. The state DOT’s policy, performance goals, and priorities drive the overall allocation pro- cess. The overall highway budget can include tax revenues, user fee collections, federal funding, credits, and funding from other sources. The DOT organizes funds with certain mandates, con- straints, rules, or policies on their specific use. The DOT prioritizes budgets for each program (including the preservation program) and designates funding based on high-level strategies, policies, and performance objectives for the highway program. This prioritization involves DOT executive leadership and may involve state legislative committees or oversight commissions as well as other stakeholder interests outside of the DOT. Methodology, rationale, and analytic support for this decisionmaking vary significantly in practice, ranging from negotiation and adjustment of historical “shares” for various programs to data-driven decision models based on program performance and need. The following sections discuss findings in performance targeting, prioritization among pro- grams, and allocation within preservation programs. Establishment of Performance Goals and Targets Overall Highway Budget Developmen “The Pot” t Allocation within Preservation Program Revision to Performance Goals and Targets Budget Prioritization between Programs Figure 2-1. Logic process adopted by state DOTs to allocate highway resources.

12 resource allocation Logic Framework for highway asset preservation 2.1.2.2.1 Establishment of Performance Goals and Targets. Setting performance goals is usually a tiered process and occurs at the strategic, tactical, and operational levels, as shown in Figure 2-2. At the top tier, the state legislature, state transportation commission or advisory commit- tee, governor, and executive leadership usually define the strategic policy framework and the blueprint to make investment decisions. These goals and targets are usually broad and are not frequently updated. For example, Washington State law establishes the following policy goals for its transportation program: Broad policy goals that establish the DOT priorities and provide framework for resource allocation decisions Strategic Asset-specific goals and performance targets that support the strategic goals based on current conditions, expected service levels, and anticipated funding levels Tactical Asset-specific goals and metrics to monitor the performance against the production targets Operational Figure 2-2. Performance goals and targets by level. Washington State law (RCW 47.04.280) establishes the policy goals for the transportation program Preservation. To maintain, preserve, and extend the life and utility of prior investments in transportation systems and services. Safety. To provide for and improve the safety and security of transportation customers and the system. Mobility. To improve the predictable movement of goods and people throughout the state. Environment. To enhance Washington’s quality of life through transportation investments that promote energy conservation, enhance healthy communities, and protect the environment. Stewardship. To continuously improve the quality, effectiveness, and efficiency of the transportation system. At a tactical level, the goals and targets are typically more asset specific (although still high level) and support the strategic goals and policies. These goals and targets are updated more often (i.e., annually or once every 2 years) depending on budget cycles. The target values for the performance metrics are determined based on the current asset condition and projected asset condition and may be constrained by resource availability for the cycle. Pavement condition

Literature review 13 Finally, at an operational level, central or district offices (depending on the program and management model) assess needs and typically use inventory-specific and condition metrics for pavement and bridges. In some cases, this has been extended to other asset groups. These goals and targets are also sometimes updated annually or once every 2 years, depending on the DOT budget cycle. 2.1.2.2.2 Budget Prioritization among Programs. There are varying degrees of state leg- islature involvement in program budget prioritization decisions. In states with legislature play- ing an active role in these decisions, mandates or statutes might define how the funds should be distributed across different programs and even to districts (e.g., using a formula basis). It is not uncommon for state legislatures or transportation commissions to define and mandate specific policy goals and priorities and set performance standards for various programs within the highway program. Budget prioritization typically follows the program structure established in each state’s high- way program. For example, Washington State’s highway program has two main components: the Preservation Program and the Improvement Program. Other states break out more pro- grams at the top level (e.g., preservation, safety, mobility, expansion, maintenance). Either way, most highway management resources flow through these programs after funding is divided among them. Figure 2-3 presents an example highway program structure. Performance Targets Established in the Florida State Legislature • Ensure that 80 percent of the pavement on the state highway system meets department standards. • Ensure that 90 percent of the department-maintained bridges meet department standards. • Ensure that the department achieves 100 percent of acceptable maintenance standard on the state highway system. indices and bridge condition indices are a few examples of asset-specific performance metrics at the tactical level. For example, the Florida state legislature defines the following performance targets for the state highway system: Key Stakeholders Shaping Goals, Policies, or Mandates - State Legislature - Transportation Commission - DOT Executive Leadership State DOT Highway Budget ($) Maintenance Mobility DOT Goals and Policies Drive Program- Level Resource Allocation Decisions Preservation Expansion Safety Figure 2-3. Program budget prioritization—typical.

14 resource allocation Logic Framework for highway asset preservation Many of the interviewed states prioritize safety and preservation needs over other programs. They fund emergency programs, including snow removal and high-priority rehabilitation activi- ties, separately or off the top, followed by other prioritized programs. The following are some examples of program-level prioritization: • In Florida, the Florida DOT Executive Board, which is composed of a department secretary, assistant secretaries, deputy secretaries, and program heads, is involved in resource allocation. In Florida, the state legislature requires funding the preservation and maintenance of the existing highway system first. The state legislature also has a formula for distributing discre- tionary capital funds, as needed. • In Minnesota, Chapter 152 legislative direction provides guidance for prioritizing programs. Until 2004, the Minnesota DOT regarded preservation as a top priority and fully funded the preservation program over safety, mobility, and local community needs. Since then, because of divergence between the projected costs and anticipated revenues, the state has realized that this is not sustainable and has sought to implement a more balanced budget program. • The Utah Transportation Commission is the governing body responsible for making the state’s investment policies and setting strategic goals. The first priority is system preservation, followed by system performance improvement, and then capacity enhancement. • In Wyoming, program priority and resource allocation decisions are primarily based on the input provided by the district offices and the DOT executive staff. The state legislature is not actively involved in resource allocation decisions. 2.1.2.3 Resource Allocation within the Preservation Program Our interviews and recent work with state DOTs found wide variations in approaches and the rationale for resource allocation decisions within preservation programs. All of the observed approaches have the following common objectives: • Allocation of preservation resources to two primary asset groups (bridges, pavements) • Allocation of preservation resources to other asset groups, including drainage, signs, guard- rail, lighting, sound barriers, grouped in various ways • Allocation of resources to specific districts, locations, roadway classifications, or projects Our interviews and recent work also found wide variations in the execution of resource alloca- tion approaches: • Basis for resource allocation decisions—whether history driven, inventory driven, or needs driven • Tools for decisionmaking—whether useful measures, models, and analytic models are avail- able to facilitate and support allocation decisions • Process for reaching resource allocation decisions—whether the logic process is top-down, bottom-up, or a combination of both, depending on asset grouping • Accountability and control of resource allocation—centralized or decentralized We found from the available literature and our interviews that most state DOTs reported using a data-driven, performance-based approach to resource allocation. In those cases, the per- formance measures and targets play three key roles in assessing the results of year-to-year invest- ments. Resource allocation decision practices within preservation programs also range from history-based to much more sophisticated models, and most approaches incorporate bridge and pavement inventory and condition data as a foundation for decisionmaking. Confidence was generally high in available inventory and specific condition-rating informa- tion for bridge and pavement assets. All states interviewed reported having a Bridge Manage- ment System (BMS) and a Pavement Management System (PMS) that track and monitor the

Literature review 15 condition of the bridges and pavements, respectively. State DOTs widely adopt the ability to forecast asset conditions based on varying investment levels for bridges and pavements. Confidence was not as evident for the availability of inventory and condition data for other system assets; only a few DOTs had specific programs or methods in place to assess needs/condition for their other asset categories. Allocation for these tended to be based on a combination of histori- cal budgets and periodic sample condition surveys to determine whether adjustments to allocations were needed. We found a preponderance of top-down centralized approaches to allocation of preserva- tion resources. Generally, control of allocations and project selection was centralized for bridge preservation. For pavements, allocation tended to be centralized, but districts had greater influ- ence on specific project selection and execution. Allocations for other asset types were generally less specific as to the particular asset types to be invested in, and control of project selection and execution was at the district level. Another dimension to resource allocation is the use of various analytical methods and tools to assess and compare the cost and benefits of alternative treatments and to identify the best treat- ment for the individual assets. A common principle used by the states is identification of pres- ervation investments that can maximize the useful life of the asset. Fairly sophisticated analysis tools and models are necessary for resource allocation tools to effectively target extension of useful asset life. These tools would need to integrate reliable condition data with cost–benefit algorithms to address both estimated remaining asset life and projected deterioration. One of the DOTs interviewed indicated it already uses lowest life-cycle cost and benefit–cost approaches to identify improvements and to select preservation projects. 2.2 Data Collected and Maintained for Resource Allocation To support resource allocation decisions, most state DOTs collect and maintain asset inven- tory and condition/performance data. The research team collected numerous samples and state- specific examples of this information, which were used to develop case information. This section provides an overview and characterization of inventory and condition/performance data in use. 2.2.1 Asset Data State DOTs spend significant effort to collect and maintain asset inventory data. Most DOTs interviewed have good bridge and pavement information. As shown in the Table 2-1, accord- ing to interviews conducted with nine state DOT agencies, information needed for data-driven resource allocation is typically much more limited for other asset types. The data overview indicates the challenge practitioners face in implementing data-driven resource allocation logic that reflects needs. Outside the bridge/pavement area, condition and performance data is usually limited to estimation based on sample inspection programs. This can be acceptable for the purpose intended but is nevertheless costly to manage and perform. The need for consistent inspection protocols and sufficient frequency of inspection rounds to support the business cycles drives the cost of this kind of effort. In a technical sense, inventory and condition/performance data is useful for managing the quality of service (e.g., safety, function) that an asset provides but is not sufficient alone to address useful life, which is intended to be a principal objective of preservation programs. To assess useful life as part of preservation resource allocation logic, reasonable estimates need to be

16 resource allocation Logic Framework for highway asset preservation added for factors driving asset deterioration (e.g., traffic loads, accidental damage rates). Stan- dards for useful life assumptions are also needed for particular assets as well as knowledge of the present status of the asset in its useful life cycle. As can be expected, there is a growing body of knowledge in this area for bridge and pavement but little useful research for other assets. Never- theless, reasonable assumptions and principles can be applied to other assets to aid resource allocation logic, as long as the application is consistent and until sufficient results accumulate to adjust them. 2.2.1.1 Bridges and Pavements Most state DOTs have detailed bridge and pavement data that usually spans several years. Bridge and pavement data are typically collected through coordination between the central and regional or district offices and maintained centrally at the state level. The data directly feeds the BMS and PMS. Most state DOTs have developed guidance manuals on how and what data should be col- lected and maintained to monitor the bridge and pavement performance. Data collection occurs on an annual or less frequent basis. The data-collection process is typically a survey of sample data but, in some cases, is more comprehensive. For example, some states collect the pavement condition data on all state and interstate highways annually, while collecting arterial and local road data less frequently. Sensor-mounted vehicles typically collect pave- ment condition data, although some DOTs continue to use visual inspection. Typical data elements captured address rutting, cracking, International Roughness Index (IRI), coverage and faulting, ride quality, and structure or pavement quality. Bridge inspection and rating are performed using broadly accepted standard inspection protocols and rate various elements of the bridge structure. Table 2-1. Asset data overview. Asset Group Example Types Data Collected/Estimated/Maintained Inventory Condition/Performance Useful Life Bridges Pavements Drainage Culverts Drains Pipe Safety Signals Lighting Signs Marking Guardrail Roadside Shoulders Barriers Walks Landscape Others Toll Plazas Weigh Station Rest Areas = All maintain useful data = Most maintain useful data = Some maintain useful data = Few maintain useful data = Rarely maintain this data

Literature review 17 2.2.1.2 Other Highway Assets Data-collection and maintenance methods for assets other than bridges and pavements are not rigorous, and the existing data’s usefulness suffers. For example, states usually have at least inventory and (sometimes) condition status data on traffic signals maintained in central or local database systems. For other assets, inventory and condition data are not available except as approximations or may only be obtained from field books and records filed at the regional or district maintenance offices for other purposes. Visual inspection is the most common method of collecting data for most non-bridge/pavement (NBP) assets, and much of this inspection is either ad hoc or performed on a sample basis. 2.2.2 Asset Data Management Systems The Intermodal Surface Transportation Equity Act (ISTEA) mandated that states implement management systems for highway pavement, bridges, highway safety, traffic congestion, public transportation facilities and equipment, and intermodal transportation facilities and systems. In response, most state DOTs have developed data management systems to support asset manage- ment practices and to comply with any federal or state mandates. However, these data manage- ment systems are typically not designed or implemented to support resource allocation processes as a functional objective. Although most states typically follow federal guidelines for data collec- tion, the standards are scarce on how certain types of data are to be collected, stored, or reported. Most agencies have data-collection programs in place and possess significant amounts of data. However, with the development of asset management strategies, some states have implemented approaches to integrate various asset-specific data elements to help optimize asset management decisions. Our research does not focus on asset management, which involves planning decisions to balance and optimize acquisition, maintenance, preservation, rehabilitation, or replacement of assets. Rather, we address resource allocation logic frameworks for preservation—a subset or outgrowth of asset management. Table 2-2 summarizes information on the most common asset data systems in use by state agencies. 2.2.3 Performance Measures The central office usually handles the formulation of policy goals and definition of perfor- mance measures to ensure consistency in data collection and measurement. Many state DOTs now use performance measures to monitor the performance of their investments, and some have linked the resource allocation decisions to current and targeted performance levels. Performance measures are typically used to help determine the investment needs necessary to meet state DOTs’ statewide goals pertaining to preservation, safety, and mobility. In general, the performance measures that state DOTs use to evaluate the performance of bridges and pave- ments are similar, consistent among states, and well defined when compared to the performance measures used for other asset types. In most states, only limited information is available on performance for asset categories other than bridges and pavements. Most states either have or are in the process of establishing programs to collect performance measures for asset types, at least for the mandated programs. Table 2-3 lists some commonly used performance measures. NCHRP Report 551 recommends measures that are suitable to support resource allocation logic for broader program prioritization (see Table 2-4). Appendix A provides excerpts from the report. Most states have adopted a performance-based resource allocation process model, where practical, and they also use system-level performance measures to help assess and report key results of preservation activities.

18 resource allocation Logic Framework for highway asset preservation Although many agencies maintain and use high-level performance measures, there is little consensus on accepted principles for setting realistic performance targets (5). Setting targets too high can lead to over-investment and, at the same time, failure to meet expectations. Setting tar- gets too low can lead to under-investment and reduced performance—not a good return on any investment. The basic need is to establish better data and experience on the actual relationships between investment levels and performance. The most likely approach to this is to (1) apply a Data Category Database System Roadway Data Highway Performance Management System (HPMS). Includes data in highway inventory, condition, performance, and operations. It also describes functional characteristics, performance, and operations. PMS Database. Most state agencies collect pavement data to support PMS, but there is no standard format for how the information is collected and stored. Different state agencies collect different pavement data, and examples of pavement data include pavement type, lane width, shoulder width, number of lanes, layer thickness, pavement layer material, drainage, subgrade type, cracking, IRI, and rutting data. Structure Data National Bridge Inventory (NBI). NBI is a federally mandated database of bridge inventory and conditions, and this data is submitted to FHWA. The NBI data set contains condition/rating data by bridge component: deck, superstructure, substructure, channel/channel protection, and culvert. It also contains data on a bridge’s functionality, such as under clearances and load-posting information. Pontis BMS. The Pontis database contains additional data on the distribution of conditions by condition state for each structural element of the superstructure, including elements such as girders, stringers, and floor beams. Safety Feature and Facility Data Most state DOTs collect and maintain asset inventory data of their safety features and facilities. The data is stored in a variety of ways, ranging from filed books to database applications. There are no standards for collecting asset data for safety features and facilities, and data availability varies from one agency to another. LOS is commonly used to support performance-based budgeting or resource allocation. Commonly used safety data includes Fatality Analysis Reporting System (FARS), Highway Safety Information System (HSIS), State Crash Data Systems, and State Highway Safety Improvement Plans (HSIP). Mobility Data State DOTs typically use HPMS as a source of mobility data. The FHWA Highway Economic Requirements System (HERS-ST) uses HPMS data to generate mobility measures. Most state DOTs maintain databases for tracking highway inventory and traffic data in addition to what they report to FHWA through the HPMS Program. However, there are no standards for how and what additional data are collected and stored. Table 2-2. Asset data systems common to state DOTs (4) (6). Asset Types Example Performance Measures Safety Accident occurrence and fatality rates Pavement Ride quality, roughness index, crack, potholes, depressions, pavement markers, usage Bridges Bridge condition rating, structural appearance, roughness index, safety Mobility Congestion delays, peak volumes Signals Operating status, inspected condition Signs Reflectivity, age Rest Areas Inspected condition, complaint levels Table 2-3. Common performance measures for asset types (based on state DOT interviews).

Literature review 19 consistent methodology for performance-based resource allocation and (2) continually assess accumulated results over time to calibrate key assumptions on the effects of investments on asset performance and useful life expectations. At this juncture, it is appropriate to distinguish between a framework for allocation of pres- ervation resources and the broader framework and principles commonly understood for asset management. The research team views asset management as encompassing a much wider and longer term decisionmaking and priority-setting spectrum involving a balance among capacity building, infrastructure improvement, preservation, maintenance, and operations management. For this process, the research team is focusing specifically on a logic framework for allocation (between asset groups or activities) of resources designated for asset preservation. This is seen as a shorter cycle transactional process that will likely leverage some performance/condition data and deterioration data1 important to asset management but is focused on optimal allocation of available funds designated for preservation. Figure 2-4 presents additional examples of key performance measures for preservation and other program objectives. NCHRP Report 632 (6) recommended these for use in the context of interstate highway asset management. 2.3 Analytical or Optimization Techniques Several state DOTs have taken a data-driven approach to resource allocation in which esti- mated needs (based on asset data, policy goals, and performance targets) are used to guide resource allocation decisions. State DOTs have adapted existing analysis tools and developed new approaches to do this. This chapter describes commonly used analysis tools and optimiza- tion techniques used to allocate resources. 2.3.1 Analysis Tools To conduct investment analysis that predicts the anticipated change in asset condition for dif- ferent investment levels, state DOTs employ a variety of analysis tools and techniques. Although the tools used vary from one state to another, most state DOTs use some type of BMS to manage Performance Category Example Performance Measures Preservation Pavement condition index, bridge health index, remaining life, debt index Mobility and Accessibility Congested travel, travel time index, average travel time, average travel cost, etc. Safety Accident rates, fatality rates, number of crashes Environment Air quality, groundwater quality, protected species, noise Operations and Maintenance Traffic signal failure rate, incident clearance time, signal and pavement marking retro-reflectivity, customer satisfaction rating Social Impacts Customer perception of congestion severity, quality of life Economic Development Transportation costs, volume of freight movement Security Performance during emergencies, such as flood or fire Delivery Efficiency and effectiveness in use of resources and impacts on customers that need to be considered in evaluation of alternative delivery strategies, etc. Table 2-4. Sample performance measures for program prioritization. 1Including PMS and BMS inventory, condition, deterioration, and cost data.

20 resource allocation Logic Framework for highway asset preservation bridges and PMS to manage pavements. Most states also typically use either the added function- ality of the data management systems or stand-alone tools that interface with the management systems. Apart from bridges and pavements, most states do not use any sophisticated tools and methods to conduct analysis. Examples of tools adapted for investment analysis include FHWA’s HERS-ST (Indiana DOT), Multi-Objective Optimization System, AssetManager NT (Caltrans), Road Quality Forecasting System (Michigan DOT), and Bridge Condition Forecasting System (Michigan DOT). To con- duct project-level analysis like benefit–cost analysis or life-cycle cost analysis, states typically use stand-alone tools. These systems use data from other management systems or require project- specific inputs to perform the analysis. In addition, some states have Geographic Information System (GIS)-based tools, databases, and stand-alone Excel spreadsheet systems to collect and maintain data and conduct analysis. Some states also use special programs such as the Maintenance Rating Program (MRP) to manage data and evaluate funds needed for maintenance activities. The Maintenance Division or Office typically manages these programs, which are used to set the desired levels of service for each asset type. MRP typically provides guidance for conducting a visual and mechanical evalu- ation of routine highway maintenance conditions. The purpose of this evaluation is to provide information that should be used to schedule and prioritize routine maintenance activities and provide uniform maintenance conditions that meet established departmental objectives. The analysis tools that state DOTs use vary depending on the level of maturity of the state’s asset management program and the volume and quality of data collected and maintained to sup- port the analysis (see Table 2-5). NCHRP Report 551 presents a summary of common analytical tools available to state DOTs to manage highway assets. Source: Reproduced from NCHRP Report 632. Figure 2-4. Recommended core performance measures for interstate highway asset management.

Literature review 21 2.3.2 Optimization Techniques The literature review and state DOT interviews revealed the optimization techniques adopted by state DOTs to allocate resources. The following summarizes the key findings: • Some state DOTs perform tradeoff analysis to determine the impact of varying levels of invest- ment on asset condition and performance for major asset categories, such as pavements and bridges. Based on their practices, states have identified the optimal set of treatments for assets that are in different stages of their life cycle and condition. The states use lowest life-cycle cost, return on investment (ROI) analyses, or benefit–cost optimization while evaluating alterna- tive treatments and choosing a cost-effective treatment. Source: Reproduced from NCHRP Report 632. Table 2-5. Summary of analysis tools in use by state DOTs.

22 resource allocation Logic Framework for highway asset preservation • It is less common for states to conduct tradeoff analysis between programs or assets to optimize the resource allocation. In fact, one state DOT interviewed mentioned that the allocation of resources across programs and assets depends heavily on priorities and points of view. • An impediment to the implementation of the techniques to optimize across assets and pro- grams is the availability of quality data, agreed upon performance measures, and target per- formance values to measure progress across various programs on a consistent basis. States like Utah have taken huge strides to develop cross-asset management systems and use opti- mization techniques but also acknowledge that realizing the full potential of these systems requires development of metrics that are agreed upon by various stakeholders across various programs. Most state DOTs recognize the importance of having an analytical approach to make invest- ment decisions—especially given that the resources available are constantly dwindling in com- parison with needs. No known state DOT, however, has adopted a fully integrated cross-asset management approach to allocate resources to meet highway preservation needs. 2.4 Outputs and Reporting State DOTs recognize the importance of communicating the benefits or the outcomes of investment choices. State DOTs typically generate the reports to demonstrate the per- formance of the highway systems to the public. They also use these reports to monitor the system performance and justify the use of funds for preservation activities. To demonstrate the benefit of preservation and maintenance activities, some states publish an annual trans- portation performance report. These performance reports are typically made public through state DOT websites. Some state DOTs use performance measure-based scorecards to communicate to the public the improvements that have been made to the transportation system as a result of the invest- ments made in preservation. Other states are still trying to find practical ways to illustrate the benefits of investing in preservation and maintenance activities by focusing on the amount of money saved because of preservation activities and the improved safety of the system through investment in preservation. The information presented in these typical performance reports published by some state DOTs includes the following: • Statewide goals and objectives • Performance measures that are used to monitor the goals • Description and the process of collecting performance measures • Current and future condition and performance of bridges • Current and future condition and performance of pavements • Safety measures • Mobility measures • Environmental measures • Customer satisfaction We have not found an example of a report that effectively enumerates the results or benefits (“money in the bank”) of investments to extend infrastructure life—one of the principle objec- tives of preservation programs. This is because solutions researched and offered have not pro- duced a framework and credible computational model to link multi-asset investments and work done to results in terms of system condition, performance, or life.

Literature review 23 2.5 Summary of Findings The literature review and state DOT interviews provide an understanding of the current state of the practice in resource allocation and provide background resources that were used in the framework development as well as open channels for information sharing on this research. This section summarizes the main findings and presents the information in the standard Strengths, Weaknesses, Opportunities, Threats/Risks (SWOT) format: • Strengths. This includes attributes or components of existing processes or models that are helpful or effective in achieving the resource allocation objective. • Weaknesses. This includes attributes or components that hinder the processes or models from achieving the resource allocation objective. • Opportunities. This includes conditions or additional information helpful in achieving the objective. • Threats or Risks. This includes conditions or constraints that could present barriers to the objective. 2.5.1 Strengths • Most state DOTs appear to have “preservation” as one of their top priorities in line for resources. • Most state DOTs use a performance-based resource allocation process for a substantial subset of assets. To support this process, most state DOTs collect detailed asset and per- formance data. • The current state-of-the-practice in resource allocation for bridges and pavements is mature in most states. Most state DOTs use asset management support systems, such as BMS or PMS, to help make investment decisions. • A wealth of data is available on the performance and conditions of bridges and pavements, and some state DOTs use analysis tools to prioritize projects for these assets and forecast future conditions. • Some state DOTs perform tradeoff analysis to determine what performance levels can be achieved for different levels of investments. • States heavily use historical data to help guide the resource allocation process. This provides some consistency and limits major swings in how the assets are treated on a yearly basis. • In some states, districts exercise extensive flexibility in the allocation and use of preservation funding. • Most states realize the importance of having GIS and other tools to manage their asset data. States that do not have these tools are working toward developing them. • Several states have programs in place to monitor the performance of the investments made in preservation. 2.5.2 Weaknesses • Integration of multiple databases systems, such as PMS, BMS, and other asset inventories and databases, is not commonly practiced in the industry. • Available data, analysis tools, and optimization techniques for assets other than bridges and pavements are generally rudimentary. • Although the data-collection techniques and procedures are well established and standardized for bridges and pavements, most DOTs have limited standards for collecting and managing inventory and condition data for other asset types. • Techniques for estimating preservation results (or extension of useful asset life) have been researched but are not widely accepted or used as part of the budgeting or resource allocation processes for preservation investment.

24 resource allocation Logic Framework for highway asset preservation 2.5.3 Opportunities • Encourage state DOTs to collect data and performance measure standards for asset types, such as signals, signs, and guardrails, to better manage preservation needs for these assets. • Encourage development and use of integrated data systems to manage asset and performance data for assets other than bridges and pavements. • Consider better risk analysis as a part of the supporting rationale for investment prioritization for some asset types (e.g., bridges, traffic signals). • Improve resource allocation optimization and tools. • Make the Resource Allocation Logic Framework understandable and accessible to a wide DOT audience, including executive management, policymakers, legislators, program manag- ers, and district managers. • Develop a framework that is generic in application but provides principles and insight to state DOTs in adapting it to their respective business and operating structures. 2.5.4 Threats or Risks • Optimization programs that apply operation research principles are likely to be considered black-box models. • Analytical approaches and optimization techniques tend to produce scientific rather than practical solutions in the public sector, unless they have flexibility to incorporate mandates, decision thresholds, policy decisions, and other adjustments. • Levels of estimating precision—though appropriate for support of high-level allocation decisions—may be unacceptable for those seeking to use the framework for unintended pur- poses that it cannot support.