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Risk Assessment Techniques for Transportation Asset Management: Conduct of Research (2023)

Chapter: Section 11 - Conclusions and Benefits

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Suggested Citation:"Section 11 - Conclusions and Benefits." National Academies of Sciences, Engineering, and Medicine. 2023. Risk Assessment Techniques for Transportation Asset Management: Conduct of Research. Washington, DC: The National Academies Press. doi: 10.17226/27130.
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Suggested Citation:"Section 11 - Conclusions and Benefits." National Academies of Sciences, Engineering, and Medicine. 2023. Risk Assessment Techniques for Transportation Asset Management: Conduct of Research. Washington, DC: The National Academies Press. doi: 10.17226/27130.
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Suggested Citation:"Section 11 - Conclusions and Benefits." National Academies of Sciences, Engineering, and Medicine. 2023. Risk Assessment Techniques for Transportation Asset Management: Conduct of Research. Washington, DC: The National Academies Press. doi: 10.17226/27130.
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Suggested Citation:"Section 11 - Conclusions and Benefits." National Academies of Sciences, Engineering, and Medicine. 2023. Risk Assessment Techniques for Transportation Asset Management: Conduct of Research. Washington, DC: The National Academies Press. doi: 10.17226/27130.
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Suggested Citation:"Section 11 - Conclusions and Benefits." National Academies of Sciences, Engineering, and Medicine. 2023. Risk Assessment Techniques for Transportation Asset Management: Conduct of Research. Washington, DC: The National Academies Press. doi: 10.17226/27130.
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Suggested Citation:"Section 11 - Conclusions and Benefits." National Academies of Sciences, Engineering, and Medicine. 2023. Risk Assessment Techniques for Transportation Asset Management: Conduct of Research. Washington, DC: The National Academies Press. doi: 10.17226/27130.
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134 The tools and techniques developed in this project build on earlier NCHRP projects such as NCHRP 08-93, “Managing Risk Across the Enterprise: A Guide for State Departments of Trans- portation.” That research emphasized qualitative risk management, or the assessment of risks based largely on expert judgment. NCHRP 08-36/Task 126, “Development of a Risk Register Spreadsheet Tool,” provided an Excel-based common risk register for state DOTs. NCHRP 20-24(105), “Launching U.S. Transportation Enterprise Risk Management Programs,” developed a workshop and a “how-to” guide for agency executives interested in launching risk management programs. The tools and techniques developed in NCHRP 08-118 also demonstrate and elaborate on the recommendations in the NCHRP 20-07/Task 378 Final Report that demonstrated develop- ment of bridge utility indices. The studies in this report demonstrate additional techniques to advance the state of the prac- tice in managing risks to assets by • Illustrating the use of deterministic and probabilistic forecasting techniques to incorporate and communicate risk into forecasts • Illustrating techniques for the quantification of threat probability, vulnerability, and consequence • Performing benefit–cost trade-off optimization in existing asset management systems to priori- tize mitigation of at-risk assets or locations while managing the assets’ condition • Creating network risk indices, or utilities, to track and predict both individual asset risk and overall system risk over time under various scenarios • Integrating risk into more asset management processes, such as those described in asset man- agement plans • Linking climate change and resilience assessments to risk management practice so that climate risks can be considered along with other risks to asset performance Summary benefits from each of the studies are described in the following section. 11.1 Studies 1 and 2: Deterministic and Probabilistic Forecasts Studies 1 and 2 demonstrate how off-the-shelf risk tools can help quantify the uncertainty and variability around the forecasts of funds available for bridge and pavement investments. State transportation agencies are required to prepare financial plans for their 10-year TAMPs, which include forecasts of investments needed, the corresponding bridge and pavement conditions, and the revenues the agency expects to receive during the forecast period. Although agencies and legislatures may have control over factors that can influence revenues, such as taxes, allocations, and stimuli, they have no control over numerous other factors, such as inflation; construction S E C T I O N 1 1 Conclusions and Benefits

Conclusions and Benefits 135   costs; economic conditions like recessions; prices of essential inputs like steel, cement, and fuel; and as recently evidenced, pandemics. While preparing forecasts, agencies need to account for the associated uncertainties. The study results can inform decisions on the amount of funds projected to be available based on the assumptions detailed in each forecast, along with the associated magnitude of projected uncertainties. The revenue projections can serve as input to decisions on asset targets that can be reasonably achieved. The results can also be helpful to a DOT that cannot meet the targets for Interstate pavements and NHS bridges required by the federal regulations, or other state- mandated asset targets. The studies will also enable a DOT to communicate with its stakeholders any projected funding gaps and the resulting impact on its ability to achieve such state and federal requirements or other state priorities. In addition to informing investment decisions, such forecasts can inform any necessary trade- off decisions. For example, the forecasts can show whether a DOT can expect funding gaps that prevent meeting the needs of all targets. In such instances, DOT decision makers can prioritize the asset needs and change the amounts allocated to different assets. The financial projections also can be used as inputs to other long-range plans. 11.2 Studies 3, 4, 5, and 6: Asset-Level Risk Indexes Studies 3, 4, 5, and 6 produce similar outputs. The results of these studies address asset-level information relating to risk and condition. This section discusses the high-level uses and ben- efits of the asset-level risk studies. For a description of a direct use of the study results, refer to Sections 9 and 10. (Note that the methodologies for Studies 4, 5, and 6 include the same 8 steps while Study 3 follows a comparable set of 13 steps.) • Study 3: Asset-Level Risk Index—Bridge Risk Utility Index • Study 4: Asset-Level Risk Index—Pavement Section Flooding • Study 5: Asset-Level Risk Index—Non-NBIS Culverts • Study 6: Asset-Level Risk Index—Landslide Hazard Management The results of these studies can be beneficial for decision making at multiple levels within an agency. A DOT can use the methodologies for building and analyzing risk indices to manage risk. These considerations and potential uses can be incorporated into risk-based asset management planning for any DOT. Following are potential uses and benefits of the results of these asset-level studies: • Determining Impacts of Funding Changes: Decision makers can recommend or request that various forecasted budgets be assessed for impacts on the resulting condition forecasts and risk forecasts for the asset network. For instance, a decision maker can request the analysis of a decreased funding level to determine the impacts on conditions and risk. This would simulate the effect of moving funding away from an asset program and could assist with fund- ing allocation decisions. When requesting additional funds, asset managers or risk managers would be able to justify additional budget requests if the analysis results show risks reaching unacceptable levels. • Developing Risk Mitigation Policy: Following analysis, decision makers can use the resulting trends in risk (whether improving or declining) to make policy decisions on how risk miti- gation should be prioritized. Decisions can be made on how to weight the risk index within the analysis or how to fund risk mitigation efforts. Figures 9-16, 9-19, 10-1, and 10-2 provide examples of the forecasted risk index for each of the four asset-level risk studies that could be used in decision making.

136 Risk Assessment Techniques for Transportation Asset Management: Conduct of Research • Planning for Emergencies: The methodology detailed in the studies and resulting informa- tion can be used for emergency planning and response, as well as overall network mobility. For example, information concerning high-risk assets or locations can be used in determining detour routes. • Making Trade-Off Investment Decisions: The analysis results can be used to inform investment decisions, including trade-off decisions based on risk. Additional risk indices and forecasts can be produced for multiple threats or assets. Given the outcomes from these additional analyses, trade-off investment decisions can be made depending on risk forecasts for different threats and assets. For example, an agency that experiences both flooding and landslides could implement the methodologies from both Study 4 and Study 6. The results of both studies could help the agency determine which risk is greater to their pavement network and make decisions accordingly. • Addressing Risk in Planning and Reporting: The methodology and detailed steps of risk modeling and forecasting illustrated in Studies 3, 4, 5, and 6 show that risk can be fully inte- grated into asset management systems. Optimization analyses completed in asset management systems inherently include life cycle cost analyses of assets to determine the best projects under the constraints set for each scenario. The resulting life cycle planning data and forecasts can be used for project planning and reported in TAMPs, state transportation improvement programs, and long-range transportation plans. For 23 CFR 667 reporting, decision makers in the central office and in the field can assess risk levels at the individual location level, including benefit– cost ratios of mitigation for use as appropriate in Part 667 analyses. An agency can also include the forecasted risks in 23 CFR 667 evaluations for specific, repeatedly damaged locations. • Addressing New Requirements for TAMP: As of October 2021, with the passing of the Infra- structure Investment and Jobs Act (also known as the Bipartisan Infrastructure Law), states are required to “consider extreme weather and resilience as part of the life cycle cost and risk management analyses within a State TAMP.”60 The implementation of the methodologies pre- sented for Studies 3 through 6 would help states meet the new requirement. Each approach addresses extreme weather in life cycle analyses and provides information that can be used to create a more resilient infrastructure network. • Setting Targets: FHWA requires that states set 2- and 4-year targets for the conditions of their pavement and bridge networks when updating their TAMP every 4 years. In this process for pavement and bridge conditions, time-based targets can be set specifically for risk based on the risk forecasts for a selected funding level. An agency can then use these targets to monitor their progress on managing and mitigating risk over time. • Determining Vulnerability Assessment Data Collection Needs: The study results can be used by planning departments and anyone conducting future vulnerability assessments to guide the definition of specific assessment data that need to be captured. • Planning for Specific Assets: With any of the methodologies for determining asset-level risk, an agency could model, track, and forecast risks for specific assets in a management system. This can be especially useful for managing high-risk or highly important assets. These assets may be important because of the traffic they carry or the significance (historical, political, etc.) they hold for the community. Therefore, it may be beneficial to individually schedule projects that have a positive impact on the condition of, risks to, and/or resilience of these assets. These studies can assist with determining the impact of projects on risk. 11.3 Studies 7 and 8: Program-Level Risk Analyses Studies 7 and 8 produce similar outputs. The results of these studies include program-level information relating to risk and condition. This section discusses the high-level uses and benefits of the program-level risk studies. More details are included in the individual studies presented in Sections 9 and 10. • Study 7: Program-Level Risk—Pavement Network Analysis • Study 8: Program-Level Risk—Bridge Network Analysis

Conclusions and Benefits 137   When implemented, the results of these studies can be beneficial for decision making at the agency leadership level. A DOT can use the methodologies presented for building and analyzing risk indices to manage risk. These considerations and potential uses can be incorporated into risk-based asset management planning for any DOT. Potential uses for and benefits of the results of these program-level studies include the following: • Assessing High-Level Impacts: An agency would benefit from the ability to forecast and pre- pare for potential risks to overall network condition from threats to network-level variables. The same strategy of identifying best-case, expected, and worst-case scenarios can be used across various other risk factors that may be uncertain at the program level. The methodologies for Studies 7 and 8 can be used for other network-level risks and asset types. Network-level risks can include material or contractor availability (e.g., a shortage of contractors may eliminate a treatment type as an option), changing deterioration rates (e.g., deterioration of pavements accelerated by frequent flooding), and inconsistent data collection quality (e.g., changing data collection vendors or methodologies may influence condition ratings). An agency may have to adjust funding levels, inflation rates, deterioration rates, or more specific configurations within an asset management system to approximate the risks to other network-level variables. • Developing Agency-Level Risk Management Processes: An agency can use these method- ologies and their outcomes in the development of agency risk management processes. An agency can develop processes that include reviewing the resulting high-level forecasts of how network conditions may react to threats to agency- or program-level variables. For instance, a process could be implemented whereby the asset groups (e.g., pavement or bridge man- agement group) could obtain budgets, expected inflation, and potential variation from the finance group and produce the “envelope” of best-case, expected, and worst-case forecasts. Then the asset groups could develop their recommendations and requests using the forecasts and provide these to the appropriate decision makers to determine funding allocations. • Addressing Risk in Planning and Reporting: The agency can continue to use the methodol- ogy to include program-level uncertainty in future asset management planning and funding decisions. These program risks can be included in the agency’s TAMPs and long-range trans- portation plans. Defining agency- and program-level risks is typically a practice recorded within these plans, and this strategy would support the definition of impacts of these high- level risks. • Making Cross-Asset Trade-Off Decisions: Decision makers can compare the results pro- duced by the Study 7 and 8 strategies with high-level forecasts for other programs to make cross-asset trade-off decisions. For instance, one network’s conditions could be forecasted to decrease significantly at the expected funding level. If another network’s conditions are forecasted to increase at their expected funding level but maintain the current condition for a lower funding level, funds could be reallocated to the network with the decreasing condition. Figures 9-21 and 10-3 are example results from these studies that could be used for cross-asset trade-off decision making. • Addressing Risk in Planning and Reporting: The results from Studies 7 and 8 can be useful to anyone using forecasted budgets and the resulting average network conditions, including those compiling risk-based TAMPs. The methodology and detailed steps of risk modeling and forecasting illustrated for these studies show that risk can be fully integrated into asset man- agement systems. The resulting risk-based life cycle planning data and forecasts can be used for project planning and reported in TAMPs, state transportation improvement programs, and long-range transportation plans. • Undertaking Additional Analysis of Program-Level Risk: Additional investigation of any specific scenarios caused by major events such as temporary drops (or influxes) in revenue or major weather events after which considerable unplanned projects are implemented (e.g., to replace or expand culverts) can be completed using this methodology. The results of such scenarios run on different funding levels using the study methodology can inform the plan- ning and programming of projects.

138 Risk Assessment Techniques for Transportation Asset Management: Conduct of Research 11.4 Study 9: Crosswalk Between Climate Change Vulnerability and Risk Terminologies Agencies can use the study guidance to incorporate climate risk information more seamlessly into their risk registers. The risk registers cover a broad array of assets, and DOTs could incor- porate climate hazards in their next TAMPs. For agencies that have conducted a climate change vulnerability assessment, this study pro- vides guidance on how to translate those results into a more useful format to incorporate findings into asset management systems. For agencies that do not already have a climate change vulner- ability assessment, this guidance can be used to develop an appropriate methodology for a future assessment that can then feed into the TAMP. 11.5 Study 10: Decision Tree for Selecting Climate Risk Management Strategies This study provides guidance for any DOT interested in implementing a decision tree to make trade-offs regarding climate impacts under conditions of uncertainty. Although the decision tree presented is designed for pavement and higher temperatures, DOTs could apply a similar decision tree to other asset and hazard combinations. Asset managers and project planners can follow the decision tree to determine an appropriate course of action for managing climate risk to a project. 11.6 Study 11: Institutionalizing Risk Management into Asset Management Plans Study 11 illustrates how to incorporate risk management into every section of a TAMP to help ingrain it into agency practices. To illustrate this, the study focused on Minnesota bridges 10 times the size of the average MnDOT NBI structure. These large structures present dispropor- tional risk to both condition and performance targets. These bridges cost more to maintain. If they deteriorate, their large size disproportionately affects statewide bridge conditions. This methodology can be used by any DOT to address bridges, pavements, and other assets that create disproportionate impacts on asset conditions and budgets. The information included will enhance the TAMP and bring focus on the assets that create the greatest long-term per- formance risk. This approach provides an agency the opportunity to include details about its short- and/or long-term plans to address these assets. It also creates a process whereby agency personnel working on the TAMP will collaborate with other SMEs to identify, plan, and imple- ment processes, investment strategies, and funding to address these at-risk assets. The study provided examples of how the large structures could influence each TAMP section. For example, • Agency objectives could include references to sustaining particularly important structures to avoid cost and network-wide condition risks. • Specific targets for the large structures could supplement statewide condition targets. • The description of assets could single out these structures and note their disproportionate impact on conditions and budgets. • The impact of large structures on condition and performance gaps could be described, such as their – Role in lowering or raising statewide bridge conditions – Effect on freight mobility, if any are load limited

Conclusions and Benefits 139   • How large structures are managed with life cycle strategies could be disproportionately impor- tant to network-wide conditions. • The risk analysis could demonstrate the threats or opportunities presented by the large struc- tures as the agency strives to meet its objectives and targets. • The funding amounts and investment strategies related to the large structures could be cited in the TAMP financial plan and investment strategies. • The overall result is to expand the focus on risk beyond the TAMP’s risk chapter. Instead, the TAMP could illustrate how risks are acknowledged and managed at each stage of managing assets. 11.7 Study 12: Probabilistic Decision Tree for Risk Assessment The benefit of this study is twofold. First, it demonstrates the use of a probabilistic decision tree that can be applied to many risk-based asset management decisions. Second, it demonstrates how a probabilistic decision tree can be applied to a specific problem—in this case, beginning a chip seal program. Because asset management involves balancing risks and making trade-offs, the decision tree can help an agency analyze and make informed risk-based decisions for any program, such as adopting chip seals for the first time. The study analysis could help a state DOT by illustrating the savings and losses that could result from trying a new program. The decision tree example in this study illustrates the risks surrounding a new pavement treatment, but it can be applied to any program or action when alternatives are identified and probabilities of success or failure are estimated along with associ- ated costs. It provides a graphical representation of the options faced and the potential costs and benefits of each.

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The assessment of climatic and extreme weather risks is increasingly becoming important to the operation of transportation agencies. There are easy-to-use tools and techniques that can be implemented by agencies.

NCHRP Research Report 1066: Risk Assessment Techniques for Transportation Asset Management: Conduct of Research, from TRB's National Cooperative Highway Research Program, discusses how to assess risks and summarizes 12 studies that demonstrate how to enhance the measurement of risks, quantify risks, and better link risk management processes with the appropriate tools.

Supplemental to the report are a presentation and NCHRP Web-Only Document 366: Risk Assessment Techniques for Transportation Asset Management: Appendices.

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