Estimating Life Expectancies of Highway Assets, Volume 1: Guidebook (2012)

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1 The deterioration of highway infrastructure begins as soon as it is put into service. Effective management of highway system assets requires a good understanding of the causes and rates of deterioration and the ultimate life expectancy of each asset. Asset life expectancy is generally defined as the length of time until the asset must be retired, replaced, or removed from service. Determining when an asset reaches the end of its life entails consideration of the repair and maintenance actions that might be taken to further extend its life. Different types of assets, such as pavements, bridges, signs, and signals, will have very different life expectancies. Asset life expectancy also depends on the materials used; the demands actually placed on the asset in use; the environmental conditions; and the maintenance, preservation, and rehabilitation activities performed. Effective management of highway system assets requires that agency decisionmakers design and execute programs that maintain or extend the life of the various types of assets in the system at low cost. Designers use estimates of asset life expectancy in their lifecycle cost analysis to make design decisions, but those estimates depend on assumptions about maintenance practices, material quality, service conditions, and characteristics of the asset’s use. If actual service conditions and maintenance activities subsequently differ from the designer’s assumptions, the asset’s life is likely to be different from initial estimates. The ability to forecast life expectancy is one part of a larger set of tools that agencies need in order to advance the maturity of their asset management business processes. Forecasting tools equip an agency to be proactive and to actively intervene in the asset lifecycle to optimize future cost and performance. This is in contrast to a less mature process where decisions are based on reacting to conditions and problems which have already taken place. Proactive decision-making requires that an agency have credible models for future deterioration, future maintenance requirements, and future replacement of assets. Along with quality analysis methods, agencies require functional data, clear communication methods, and a confident implementation process in order to earn the buy-in of stakeholders for this more far-sighted mode of decision-making. In addition, successful implementation requires flexibility in the establishment of performance standards, accountability for those standards, and innovation in delivery capabilities, all of which provide the agency with more options for satisfying the diverse needs of stakeholders. This guide gives decisionmakers, practitioners, and stakeholders an actionable cookbook and authoritative reference on the uses of life expectancy analysis, its benefits and limitations, and its data sources and products. This guide describes current methods for various types of infra- structure, from pavements and bridges to signs and signals. To help practitioners get started, the guide is presented in a “how to” format with realistic examples and a number of sample C h a p t e r 1 Introduction: How to Use This Guide

2 estimating Life expectancies of highway assets spreadsheet models. More broadly, the guide is framed with a vision of asset management imple- mentation, consistent with AASHTO guidance, which will help senior managers to understand why they should implement the guide, what they should expect, and how to begin. 1.1 Who Should Use This Guide Preservation of infrastructure assets is a matter of concern to all facility owners, public and private. This guide, with its focus on transportation assets, is especially intended for public owners of transportation facilities at all levels of government. The methods in the guide are applicable to inventories of all sizes, for centralized or decentralized organizations, and address all the indi- vidual asset management phases: planning, programming, project development, maintenance and operation, and disposal. Asset management is fundamentally a cooperative effort among all levels of an organization and its external stakeholders. One of the primary purposes of asset management is to help these diverse actors to cooperate and work effectively to improve the level of service delivered to customers. This guide therefore has specific sections for the different levels of involvement. Specifically • Senior managers and outside stakeholders will acquire a top-down vision of what life expectancy really means for decision-making and how life expectancy fits in the process of selecting and budgeting for projects and in the management of routine maintenance (Chapters 1 and 2). • Oversight bodies and managers will gain tools for converting the vague and informal concept of asset life into something that can actually be measured and used for planning, performance tracking, and accountability (Chapters 2 and 3). • Asset managers will gain insight to using life expectancy as a performance measure for routine decision-making processes (Chapter 3). • Practitioners will learn how to compute life expectancy and related measures, how to obtain the necessary data, how to reconcile such data with other measures of asset performance, and how to present such material to decisionmakers (Chapters 3, 4, and 5). • Engineers and maintenance planners in the traditional disciplinary and modal roles in transportation agencies will learn how the concepts of life expectancy that they often use can be quantified in a way that is more objective and more compatible with other disciplines and roles in the agency (Chapters 4 and 5). • System designers will learn how to incorporate life expectancy performance measures into management system software and tools (Chapters 5 and 6). • Researchers will find opportunities to continue improving the state of the practice in asset life studies (Chapter 6). • Senior managers will see how to ensure the long-term perpetuation of mature asset management practices using life expectancy tools (Chapter 7). Figure 1-1, which presents the participants and groups that have roles in asset management, is reproduced from the AASHTO Transportation Asset Management Guide, Volume 2: Focus on Imple- mentation (Gordon et al. 2010). All of the players in asset management have a potential interest in asset life expectancy as one of the tools they may want to have at their disposal. This guide frequently refers to the AASHTO Transportation Asset Management Guide as the organizing framework for implementation of the tools described here. It is important that the values of life expectancy are calculated in a manner that is objective, quantitative, and relevant to agency responsibilities and objectives, and as precise and accurate as possible with available data. Like most other asset management inputs, the true value of life expectancy is more than just the success of calculating it. The value lies in the ability to use it to

Introduction: how to Use this Guide 3 gain agreement across the agency and with stakeholders on the agency’s objectives, the rationale for resource allocation decisions, the process of satisfying objectives and in determining whether they have been satisfied, and the fairness of the agency’s accountability measures. 1.2 Setting Goals and Objectives Calculation of life expectancy can be a fairly esoteric pursuit unless the agency has a clear idea of how it wants to use the information. Before trying to implement the analytical methods, it is helpful to list the goals and objectives of those initiating the effort and the agency’s objectives in embracing it. Possible asset management goals include • Justifying funding for preventive maintenance. • Planning and justifying the timing and scope of rehabilitation and replacement. • Planning sufficient staffing and equipment to meet maintenance needs. • Setting desired inventory levels for parts and materials. • Evaluating the cost-effectiveness of new materials or methods. • Reducing the overall frequency of highway rehabilitation and maintenance work zones. • Improving the consistency of accounting reports. • Optimizing the terms of bond issues. • Improving management guidance and accountability. • Building credibility with oversight bodies and elected officials. Many of these objectives address an agency’s need to minimize the cost of providing the desired level of service to customers. Some also respond to non-economic needs such as improving the safety of the public and maintenance crews, enhancing management professionalism, and reducing risk. Although goal statements are often broad, they provide a foundation for ensuring that the right measures are computed and that the applications of life expectancy analysis are relevant to an agency’s needs and capabilities. 1.3 Listing Desired Applications This guide is meant to be a practical tool that agencies can use immediately to enhance asset management processes. A recurring theme is the contributing role that life expectancy analysis can have when used as a part of a larger transportation asset management plan. Assumptions about Figure 1-1. Organizational roles in asset management (Gordon et al. 2010).

4 estimating Life expectancies of highway assets asset lifespan are built into various design and maintenance tools and procedures. Predictions of asset life extension form a part of the justification for various maintenance, repair, and rehabilitation projects, programs, budgets, and policies. Figure 1-2 shows the role of life expectancy analysis superimposed over a model of asset management business processes. The diagram illustrates how life expectancy estimation is built on the products of the research and data collection processes of an agency; and in turn, life expectancy analysis contributes directly to preservation policy formation, project development, and preservation needs assessment, largely through use as a performance measure for quantifying the effects of agency decisions. Less directly, the expectations of an agency’s designated asset life- spans affect the design of certain information systems and their analyses, as well as the assumptions that are made in financial decisions such as debt terms, depreciation, amortization, and cash flow. Further, through its use in preservation policy and planning, asset life expectancy indirectly affects the processes of budgeting, network planning, corridor development, design, and maintenance planning. Agencies increasingly seek to adopt design and construction methods that minimize future maintenance requirements or that facilitate coordination of preservation activities across asset categories in a corridor or region. Such decisions can reduce traffic disruptions, improve economies of scale, and reduce the indirect costs (mobilization and traffic control, for example) of activities. Given that life expectancy analysis touches so many routine business processes, this guide will provide various example applications, such as • Estimating life expectancy when little or no maintenance is performed. • Estimating life expectancy when preservation work is performed according to an established policy, such as the policy established by a facility designer, current agency policy, or proposed future agency policy. • Estimating the life-extension effects of preventive maintenance activities on constructed facilities such as pavements and bridges. • Comparing two or more alternative maintenance, repair, and rehabilitation alternatives on a facility, under differing assumptions and discount rates. • Determining the optimal replacement interval for expendable assets and components. • Determining the optimal preventive maintenance interval for constructed facilities. • Determining the optimal annual expenditure level on periodic maintenance activities. • Optimizing life extension to select the best scope and timing of preservation work on constructed facilities. • Comparing design alternatives based on their relative lifecycle costs; for example, comparing a conventional material with a more expensive low-maintenance material. • Determining the price point where a low-maintenance material becomes cost-effective. • Proactively grouping future preservation work on multiple assets into projects based on the anticipated convergence of their end-of-life conditions. • Selecting design alternatives for the various assets on a corridor, such that preservation and replacement interventions likely can be synchronized and long-term traffic disruptions can be minimized. • Multi-objective prioritization of programmed projects, using life extension as one of the criteria. • Allocating funding among investment categories using asset life extension in a multi-objective framework. • Determining the effect on asset life and long-term costs for variations in near-term funding levels. • Selecting treatment application policies based on rate of return, using life extension and lifecycle cost forecasts in the computation. • Computing life expectancy as a by-product of a decision simulation, such as what is done in a pavement or bridge management system. • Establishing research priorities for improved lifespans of certain types of assets. • Establishing a rate of depreciation for GASB 34 financial analysis.

Introduction: how to Use this Guide 5 Chapters 4 and 5 of this guide will provide approaches and examples for most of these applications, which can be used by agencies to visualize how to put the techniques to work and which may be considered prototypes for applications and systems that the agency may want to develop as it gains more sophistication in asset management. 1.4 Delimiting the Scope of the Effort It is tempting to think that an analytical tool, once developed, can be applied to any type of asset in any part of an agency’s network. Practical realities, however, preclude this from happening. Agencies often find it convenient to start with the portions of their asset inven- tory where there is already a strong practice in the collection and use of data; for example, bridges or pavements in the state highway system. Many agencies have established excellent databases, mature quality assurance functions, and a quantitative management culture for certain asset types. Once the application scope is expanded to cover a wider range of asset types, implementation may become more difficult because data may be absent or incomplete. If certain data have not been in routine use for important agency functions, their quality may never have been tested or may be doubtful. Sufficient personnel may not be available to gather or process the necessary data. In such cases, a history of performance measurement or performance accountability may be absent; and certain parts of the transportation system or asset inventory may not have suf- ficient weight, in cost or performance, to justify a detailed analysis. One frequently repeated piece of good advice in asset management applications is to “start small, build incrementally” (Figure 1-3). Often, life expectancy analysis, or the related topic of lifecycle cost analysis, is the first and only truly quantitative asset management tool that an agency has tried to put in place for asset management. If this is the case, obstacles related to iner- tia, culture, and custom may arise. An implementation effort that faces the barriers of requiring considerable time and resources may never be able to succeed. To help in applying new analytical tools within a selected scope in an agency, AASHTO’s transportation asset management guides describe various strategies and tactics to help overcome resistance. In terms of the scoping of an implementation effort, a key strategy is to plan to show early useful results, for only a portion of the asset inventory. Such early results should be based on data the agency already has, or can obtain easily, whose quality is at least minimally acceptable. The analysis may be simpler than what is eventually desired, a “back of the envelope” exercise, Figure 1-2. How life expectancy analysis affects business processes.

6 estimating Life expectancies of highway assets for example. The early product should be attractive and persuasive and should address an immediate need, even if only a part of the need. As a result, the initial application of analysis tools, such as life expectancy estimation techniques, often may be limited to the state highway system or even to only one district that is willing to experiment or innovate. Application may be limited to assets where the agency already has data, such as the bridge inventory or the Federal Highway Performance Moni- toring System (HPMS) dataset, or may rely on data from manufacturers or other agencies (Figure 1-4). In any event, the scoping strategy will often have multiple levels, envisioning expansion over time. It is important that stakeholders understand the current scope and the desired future scope, as well as the barriers, costs, and benefits that will occur as the tools are expanded. 1.5 Assessing Gaps and Readiness A new methodology such as life expectancy analysis arrives in an agency that likely already has its ongoing processes of asset management underway. Many of the goals and objectives suggested in the preceding sections are aspects of using the new tools to improve current asset management processes. But life expectancy methods can range from very simple to very Figure 1-3. Start small, build incrementally. Figure 1-4. NOAA can be an excellent source of climate data (http://www.esrl.noaa.gov/psd/products/ images/search.gif).

Introduction: how to Use this Guide 7 sophisticated. So it is important to ask at the beginning of the effort: In what ways do we need to improve next? How much improvement can we sustainably accomplish in one step? How much change can we absorb? Volumes 1 and 2 of the AASHTO Transportation Asset Management Guide (Cambridge et al. 2002, Gordon et al. 2010) describe the processes of self-assessment and gap analysis that pro- vide strategic and tactical guidance to help answer these questions. The process is based on the concept of a “maturity scale,” which provides location and orientation in a model of agency advancement. The maturity scale is not a value judgment: it does not separate “good” organizations from “bad” ones. Every agency is on a journey toward improved asset management, and the maturity scale provides the “you are here” marker on a map of that journey (Gordon et al. 2010). Table 1-1 summarizes the maturity scale, levels, and descriptions. Advancement on the scale involves the following: 1. Increasing the level of cooperation vertically and horizontally among the units of the organization, 2. Increasing the shared understanding of agency objectives and constraints across the agency and with its customers and stakeholders, 3. Increasing the use of quantitative measures of performance, 4. Being more proactive in using agency decisions and actions to improve future performance, 5. Using performance measurement for accountability, 6. Gaining more effective support from decision support tools, and 7. Increasing the drive among all employees to improve the agency’s performance. The self-assessment can be conducted using a survey of agency personnel, either formal or informal. It might not be necessary to conduct a survey specifically related to life expectancy analysis if the agency is already using this process for asset management in general. The stages of maturity tend to move together across the full breadth of asset management. For example, it would be unusual to be successful in implementing sophisticated optimization of bridge preservation over its lifecycle at the same time as lacking a basic complete pavement database. Similarly, the standardization of life expectancy definitions across asset types may be difficult if management has not already made efforts to increase communications and teamwork across organizational silos. In both cases, the difficulty lies in the fact that to make a new analysis technique successful, it is necessary to increase the demand for the information as well as the supply. Maturity Level Generalized Description Initial No effective support from strategy, processes, or tools. There can be lack of motivation to improve. Awakening Recognition of a need and basic data collection. There is often reliance on heroic effort of individuals. Structured Shared understanding, motivation, and coordination. Development of processes and tools. Proficient Expectations and accountability drawn from asset management strategy, processes, and tools. Best Practice Asset management strategies, processes, and tools are routinely evaluated and improved. Table 1-1. Transportation asset management maturity scale (Gordon et al. 2010).

8 estimating Life expectancies of highway assets Table 1-2 lists the kinds of questions that a maturity scale survey would address. These include both technical and non-technical subject matter, the use of information as well as the ability to produce and manage it. 1.6 How to Use This Guide There are various ways of computing life expectancy, depending on the planned use of the information, assumptions about how end-of-life is defined, and the types of policies to which the method must be sensitive. A great many of these methods have engineering or economic validity, but successful implementation often depends on acceptance by people who are not engineers or economists and has to be compatible with agency history and accountability. If this guide is to facilitate successful implementation, then it must aid in understanding the context in which the information is needed so as to ensure that the right kind of life expectancy calculation is performed for a given set of applications in a given agency with its current policy concerns and current state of maturity. This sensitivity to decision context is a great concern throughout asset management and is a recurring theme in the AASHTO Transportation Asset Management Guide. Figure 1-5, reproduced from Volume 2 of the AASHTO Guide, shows the approach taken in order to ensure that the selection and adoption of analytical tools is properly fitted to the agency context, to ensure that the investment in better tools pays off with sustained implementation. Typically the tools of life expectancy estimation fall within Step 11, Lifecycle management, in the diagram. This guide is designed to fit into the AASHTO Transportation Asset Management framework so as to maximize the likelihood of implementation success. As a result, this guide is organized in a top-down fashion: defining first the purpose and implementation plan for the techniques, then defining stakeholder needs for the information, and finally using this insight to select the right tools for the job and designing them so they work correctly and as expected. Figure 1-6 shows the recommended process of planning, selection, and implementation of life expectancy tools and describes the structure of this guide. Thus each chapter in the guide Part A. Policy Guidance How does policy guidance benefit from improved asset management practice? Policy guidance benefitting from good asset management practice Strong framework for performance-based resource allocation Proactive role in policy formulation Part B. Planning and Programming Do resource allocation decisions reflect good practice in asset management? Consideration of alternatives in planning and programming Performance-based planning and a clear linkage among policy, planning and programming Performance-based programming processes Part C. Program Delivery Do program delivery processes reflect industry good practices? Consideration of alternative project delivery mechanisms Effective program management Cost tracking and estimating Part D. Information and Analysis Do information resources effectively support asset management policies and decisions? Effective and efficient data collection Information integration and access Use of decision support tools System monitoring and feedback Table 1-2. Relevant topics for self-assessment (Cambridge et al. 2002).

Introduction: how to Use this Guide 9 Figure 1-5. Road map for asset management implementation (Gordon et al. 2010). Figure 1-6. Structure of implementation and of this Guide.

10 estimating Life expectancies of highway assets corresponds to an implementation step, consisting of several tasks. Each step also corresponds to a step in the development of the life expectancy computations. Chapters 1 through 3 focus on understanding how the life expectancy estimation methods will be used and learning how to use this planning information to select the right tools and the right level of detail. Senior managers and stakeholders can use the material in these chapters to decide what life expectancy information to ask for, what the agency has to do in order to get the information on a reliable and cost-effective basis, and how to use the information to improve decision-making. The high-level, relatively non-technical information in Chapters 1 through 3 is then followed by a progressively more technical presentation in Chapters 4 through 6, where life expectancy methods are described in detail and reinforced with examples. If Steps 2 and 3 of the process determine what is to be computed, then Step 4 is where the basic computation of asset life expec- tancy actually takes place. This step is where the end-of-life is determined quantitatively for each asset, deterioration and future performance are forecast, and a determination is made as to how many years it will take for each asset to meet its end-of-life criterion. Once the foundation tools are in place to compute life expectancy, then Step 5 puts the informa- tion to work to assist in answering practical asset management questions. As already emphasized, an agency may have a great many questions and decision-making tasks where the new information can be put to use. Although Chapters 4 and 5 are fairly detailed, the reader does not have to read all of it. The self-assessment and gap analysis in Step 1 and the requirements analysis and planning in Steps 2 and 3 will help the agency to select the specific methods that it should implement. So for each given agency at a given point in time, only selected portions of Chapters 4 and 5 will be relevant. Finally, as agencies become more mature in their asset management capabilities, Steps 6 and 7 become more relevant. In these steps, the agency ensures that its implementation of life expectancy tools is sustainable, evaluates these tools more critically, and seeks ways to improve them. The topics in Chapter 6 cover what are considered to be “best practices” in asset management for continuously evaluating and improving the models. Chapter 7 involves taking the necessary organizational steps to make sure the applications will become a permanent part of the agency’s business processes, to ensure sustained asset performance, and to provide the greatest possible returns to customers and stakeholders.