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Suggested Citation:"Chapter 1 - Introduction." National Academies of Sciences, Engineering, and Medicine. 2018. Return on Investment in Transportation Asset Management Systems and Practices. Washington, DC: The National Academies Press. doi: 10.17226/25017.
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Suggested Citation:"Chapter 1 - Introduction." National Academies of Sciences, Engineering, and Medicine. 2018. Return on Investment in Transportation Asset Management Systems and Practices. Washington, DC: The National Academies Press. doi: 10.17226/25017.
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Page 2

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1 Transportation asset management (TAM) is intended to help agencies make the best use of resources available for maintaining, rehabilitating, and replacing existing physical assets such as pavements, bridges, traffic and safety devices, and facilities. TAM can help agencies make better use of limited resources to maximize asset life, manage risk, and provide safe and efficient travel for passengers and goods. TAM has been a focus area of the U.S. transportation community for more than two decades, and received increased attention with the passage of the transportation legislation Moving Ahead for Progress in the 21st Century (MAP-21) in 2012. In this law the term asset management is defined as: . . . a strategic and systematic process of operating, maintaining, and improving physical assets, with a focus on both engineering and economic analysis based upon quality information, to identify a structured sequence of maintenance, preservation, repair, rehabilitation, and replacement actions that will achieve and sustain a desired state of good repair over the life cycle of the assets at minimum practicable cost. MAP-21 requires states to develop asset management plans that describe existing conditions and detail target levels of performance, investment strategies, and financial plans for their roads and bridges on the National Highway System (NHS). Frequently, new information systems, such as pavement and bridge management systems, are required to support TAM. Also, implement- ing such systems often requires making changes to existing business processes, particularly those related to asset data collection and analysis. Consequently, many transportation agencies face chal- lenges in determining the right level of investment in TAM systems given their needs and resources. Objective approaches are needed to characterize the benefits of TAM investments. This report details the research performed through NCHRP Project 20-100 to help illustrate the benefits of TAM system and process improvements and develop the means to measure and monetize accurate estimates of return on investment (ROI) of TAM. Research Scope The objectives of NCHRP Project 20-100 were to: • Assess the experience of selected agencies that have adopted TAM systems, in terms of the investments made and returns realized. • Develop guidance for estimating the ROI for adopting or expanding TAM systems in an agency. The project was undertaken to produce two valuable outcomes for state departments of trans- portation (DOTs) evaluating potential investments in TAM. First, the research provides a set of illustrative examples of the ROI achieved by selected agencies implementing improved systems and processes. This alone may help agencies evaluate their own investments to the extent that they face similar decisions under similar circumstances as the selected agencies. C H A P T E R 1 Introduction

2 Return on Investment in Transportation Asset Management Systems and Practices Second, the research provides guidance that agencies can use to calculate the ROI of a specific investment in TAM. An ROI analysis provides a standard quantitative approach for making a business case through comparing the benefits of a proposed investment with its costs, measuring both over a standard time horizon. A variety of effects are measured to develop accurate esti- mates of ROI. These estimates include direct and indirect agency cost savings, asset/user benefits, and benefits to the general public. The guidance is intended to help transportation agencies identify scenarios in which a given system or process investment may yield a favorable ROI and thus merit investment. To help agencies apply the ROI guidance, the report is supplemented by a spreadsheet calculation tool and a set of worked examples that illustrate the application of the guidance and calculation tool. Research Approach The research detailed in this report was performed in two phases over a 2-year period. During the first phase of the research, the research team reviewed the available literature describing approaches to calculating ROI for TAM implementation, developed an ROI framework, and performed a set of case studies to determine the realized benefits from implementing TAM systems. During the second phase of the research, the research team developed the ROI calculation guid- ance and the supporting ROI Calculator (ROI Tool). Draft versions of the guidance and ROI Tool were presented at a project workshop in Minneapolis, Minnesota in July 2016, and then refined based on the workshop results. The guidance and ROI Tool were further refined through a pilot test performed in conjunction with a New England state agency. The test was performed to pre- dict the ROI for a proposed new system for inventorying and assessing condition of the agency’s drainage-related assets. This pilot test, which is documented in Appendix F, was used to develop illustrative values for one of the worked examples of the ROI calculation tool in Chapter 5. Report Organization The remainder of this research report is organized into the following chapters and appendices: • Chapter 2 outlines the methodological framework for estimating ROI for a TAM system or process investment. • Chapter 3 summarizes the case studies performed to establish the realized benefits of TAM system improvements at three U.S. state DOTs. • Chapter 4 details step-by-step guidance for determining the ROI for a proposed TAM system or process investment. • Chapter 5 documents the spreadsheet calculation tool that accompanies this report, and describes a set of worked examples. • Chapter 6 presents the conclusions of the research and recommends areas for further research. • Appendix A details the literature review performed for the research. • Appendix B provides an annotated bibliography of the materials that were included in the literature review. • Appendix C lists references consulted in developing the ROI framework and guidance. • Appendix D details the parameters used in the Western State case study for predicting user costs as a function of pavement roughness using models extracted from the FHWA Highway Economic Requirements System–State Version (HERS-ST). • Appendix E describes the Southern State case study. • Appendix F describes the pilot testing of the ROI guidance. • Appendix G provides supplemental guidance on the use of simulation results in an ROI analysis.

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TRB's National Cooperative Highway Research Program (NCHRP) Research Report 866: Return on Investment in Transportation Asset Management Systems and Practices explores how transportation agencies manage their transportation assets, and provides guidance for evaluating the return on investment for adopting or expanding transportation asset management systems in an agency.

As the term is most generally used, transportation asset management (TAM) entails the activities a transportation agency undertakes to develop and maintain the system of facilities and equipment—physical assets such as pavements, bridges, signs, signals, and the like—for which it is responsible. Based on the research team’s work and the experiences of these agencies and others, the researchers describe a methodology that an agency may use to assess their own experience and to plan their investments in TAM system development or acquisition.

A spreadsheet accompanies the research report helps agencies evaluate the return-on-investment of TAM systems.The tool allows users to summarize data from various simulation tools. The calculator also includes factors and procedures from the Highway Economic Requirements System State Version (HERS-ST) to estimate user benefits for pavement projects. It does not estimate user benefits for bridge projects.

This software is offered as is, without warranty or promise of support of any kind either expressed or implied. Under no circumstance will the National Academy of Sciences, Engineering, and Medicine or the Transportation Research Board (collectively "TRB") be liable for any loss or damage caused by the installation or operation of this product. TRB makes no representation or warranty of any kind, expressed or implied, in fact or in law, including without limitation, the warranty of merchantability or the warranty of fitness for a particular purpose, and shall not in any case be liable for any consequential or special damages.

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