National Academies Press: OpenBook

A Guide to Incorporating Maintenance Costs into a Transportation Asset Management Plan (2023)

Chapter: Chapter 5 - Incorporating Maintenance into Risk Management

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Suggested Citation:"Chapter 5 - Incorporating Maintenance into Risk Management." National Academies of Sciences, Engineering, and Medicine. 2023. A Guide to Incorporating Maintenance Costs into a Transportation Asset Management Plan. Washington, DC: The National Academies Press. doi: 10.17226/27291.
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Page 42
Page 43
Suggested Citation:"Chapter 5 - Incorporating Maintenance into Risk Management." National Academies of Sciences, Engineering, and Medicine. 2023. A Guide to Incorporating Maintenance Costs into a Transportation Asset Management Plan. Washington, DC: The National Academies Press. doi: 10.17226/27291.
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Page 43
Page 44
Suggested Citation:"Chapter 5 - Incorporating Maintenance into Risk Management." National Academies of Sciences, Engineering, and Medicine. 2023. A Guide to Incorporating Maintenance Costs into a Transportation Asset Management Plan. Washington, DC: The National Academies Press. doi: 10.17226/27291.
×
Page 44
Page 45
Suggested Citation:"Chapter 5 - Incorporating Maintenance into Risk Management." National Academies of Sciences, Engineering, and Medicine. 2023. A Guide to Incorporating Maintenance Costs into a Transportation Asset Management Plan. Washington, DC: The National Academies Press. doi: 10.17226/27291.
×
Page 45
Page 46
Suggested Citation:"Chapter 5 - Incorporating Maintenance into Risk Management." National Academies of Sciences, Engineering, and Medicine. 2023. A Guide to Incorporating Maintenance Costs into a Transportation Asset Management Plan. Washington, DC: The National Academies Press. doi: 10.17226/27291.
×
Page 46
Page 47
Suggested Citation:"Chapter 5 - Incorporating Maintenance into Risk Management." National Academies of Sciences, Engineering, and Medicine. 2023. A Guide to Incorporating Maintenance Costs into a Transportation Asset Management Plan. Washington, DC: The National Academies Press. doi: 10.17226/27291.
×
Page 47

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42 Incorporating Maintenance into Risk Management Background Federal regulations define risk management as “the processes and framework for managing potential risks including identifying, analyzing, evaluating, and addressing the risks to assets and system performance” (23 CFR 515.5). Risks can occur at all levels in an agency. This is reflected in the definition of risk management in the AASHTO Guide for Enterprise Risk Management, which states, “the formal and systematic effort to control uncertainty and variability [to an] organization’s strategic objectives by managing risks at all levels of the organization” (Proctor et al. 2016, 1). The levels of risk management can be summarized as including the enterprise, program, project, or activity. An enterprise-wide risk could be a reduction in tax revenues. An activity risk could be a breakdown in data collection. Either could impede objectives, although they are managed at different levels. Figure 5-1 shows four levels at which risks are managed. The AASHTO Guide for Enterprise Risk Management details the Five Ts for risk mitigation (Proctor et al. 2016a): • Tolerating the Risk: Maintaining the business process without taking additional steps. A decision to tolerate risk can be caused by low-risk consequences, low potential benefits, or a lack of effective control or treatment. • Treating the Risk: The most common response to risk assessment. Nearly all activities in a department can be construed as an effort to treat risk, such as paving roads to reduce risks to safe travel. It is advised that agencies not try to treat all risks at once. Instead, costs and benefits should be considered so projects with a higher social or cultural importance are prioritized. • Transferring the Risk: Shifting risk to another party. The most common risk transfer is purchasing insurance, such as requiring contractors to have insurance for vehicles. Perfor- mance contracts can be another example, such as if a contractor is required to build a facility and maintain it for a certain period. Risk transfer is possible through agreements; however, it does not equate to risk avoidance. • Terminating the Risk: Stopping a practice or eliminating the source of the risk. In this situation, most agencies replace a high-risk product with a lower-risk one, such as replacing timber bridges with more durable concrete ones. However, it is inherent to most agencies that they undertake high-risk functions, so risk management strategies should be considered. • Taking Advantage of the Opportunity Inherent in the Risk: Some risks present oppor- tunities for improved performance and should be considered to maximize the return to its C H A P T E R 5 Maintenance resources are commonly relied upon to mitigate risks to the highway infrastructure. Field crews are called upon to respond to emergencies big and small. Maintenance crews also have to respond when assets deteriorate prematurely or capital budgets are unexpectedly reduced. This chapter provides guidelines for incorporating the uncertainties surrounding maintenance into risk management.

Incorporating Maintenance into Risk Management 43   SOURCE: Adapted from Proctor et al. 2016, 7. Figure 5-1. Risk management levels. Example: MDOT SHA’s Enterprise Risk Management Approach MDOT SHA’s 2019 TAMP documents a wide variety of risks but does not quantitatively consider maintenance risks. Instead, since a large percentage of MDOT SHA’s maintenance work is reactionary, MDOT SHA qualitatively considers maintenance risks in the asset treatment prioritization process. For instance, MDOT SHA used the risk of the slow and sometimes insufficient capital funding allocation process as justification to allocate more contract authority to the district maintenance offices for highway lighting maintenance. Also, MDOT SHA used the sight-distance reduction caused by overgrown grass on some medians as a way to respond to a decrease in its mowing budget during the COVID-19 pandemic. To offset these budget reductions, MDOT SHA decided to mow only on routes that had unsafe reductions in sight distance. This solution provided the necessary cost savings while delivering this necessary operations and routine maintenance activity. Although MDOT SHA has some qualitative processes in place, the Asset Management Office plans on implementing more robust risk management practices to enhance its practice. Figure 5-2 illustrates one of the practices currently under implementation: incorporating triple-bottom-line (social, environmental, and financial) risk considerations into the decision-making process. Figure 5-2 illustrates that, based on the resulting risk score from asset condition and criticality, the risk-based outcome may encourage the use of proactive maintenance. MDOT SHA has yet to have enterprise-wide quantified risk management processes. These are currently in the works for each asset class at both the network- and project-level. Instead, MDOT SHA is working to identify the best long-term and immediate fixes for each vulnerable asset. Using this, along with criticality, MDOT SHA hopes to prioritize maintenance and capital work to address vulnerabilities.

44 A Guide to Incorporating Maintenance Costs into a Transportation Asset Management Plan stakeholders. e key is to take well-reasoned risks in which the rewards are likely to outweigh the negative consequences, such as trying new materials and construction techniques to lower costs or improve quality. Mitigation Risk Events Transportation agencies must prepare for and respond to a wide range of risk events. ese are documented in the TAMP risk register and oen include events such as • Extreme weather or natural disasters, • Economic disruption, and • Changes in regulations or requirements. What dierentiates a risk event is that it has specic time boundaries when it begins and ends. Response is oen needed immediately, and recovery actions last for signicant periods of time. Maintenance costs primarily go toward either managing a condition or managing risk. For example, operations activities such as incident response, emergency response, and winter maintenance are primarily aimed at managing asset risk and have little bearing on asset condition. Emergency response, including unplanned repairs and replacement of failed or damaged asset components, is also directed toward managing risk. An example would be pavement or bridge component repairs damaged from ooding that has resulted in unsafe driving conditions and possible detours. Resilience, Climate Change, and Extreme Weather Federal statute 23 USC 119(e)(4)(D) and regulations 23 CFR 515.7(c)(6) and 515.9 (d)(6) require state DOTs to incorporate resilience into their TAMPs to address risks associated SOURCE: MDOT SHA 2021. Figure 5-2. MDOT SHA’s triple-bottom-line, risk-based decision-making approach.

Incorporating Maintenance into Risk Management 45   with extreme weather. This includes events such as heat waves, floods, and storm surges that can affect the condition and performance of the NHS. Six state DOTs—Arizona, Kentucky, Maryland, Massachusetts, New Jersey, and Texas—have integrated resilience considerations into their asset management processes. Two state reports are included in the references in this document—ADOT 2020 and KYTC 2019. Reports from all six states are available at www.fhwa.dot.gov/asset/pilot. FHWA defines resilience as “the ability to anticipate, prepare for, and adapt to changing conditions and withstand, respond to, and recover rapidly from disruptions.” Agencies differ in their approaches to preparing for, responding to, and recovering from extreme events. Resilience considerations involve a wide array of policies and actions that impact the entire asset life cycle. Maintenance plays a key role in asset resilience, before, during, and after extreme weather events. Maintenance activities performed before events ensure assets are functioning as designed. Maintenance forces are among first responders acting during events to assess conditions, address emergency needs, and facilitate safe highway operations. Following events, maintenance crews and contractors support recovery efforts. State DOTs are required by 23 CFR Part 667 to identify and conduct statewide evaluations to determine whether there are reasonable alternatives to NHS roads, highways, and bridges that have required repair and reconstruction activities on two or more occasions due to emergency events. Additionally, 23 CFR 515.9(6) requires state DOTs to address risk management of NHS pavements and bridges in their TAMPs, pursuant to 23 CFR Part 667. Maintenance plays an important role in planning for and responding to such emergency events. Maintenance divisions and offices within several state DOTs have been engaged in identifying assets addressed by Part 667. Moreover, state DOTs are moving toward adopting well-categorized databases containing construction and maintenance details on assets experiencing recurring events to meet the requirements of Part 667. Going forward, maintenance personnel will play a pivotal role in tracking and reporting data from emergency repair projects after the occurrence of qualifying events. This data will help develop unit costs, forecast future maintenance needs and budgets, and update the agency’s MMS. Example: Tennessee DOT’s Approach to Integrating Maintenance and Safety Needs to Mitigate Program Risk Tennessee DOT (TDOT) developed a strategic approach that integrates maintenance and safety needs with preservation and rehabilitation. The approach assures that TDOT's activity timings maximize an asset's life cycle while minimizing agency costs, resources, and labor. The integrated strategic approach hinges on improved communications between maintenance, safety, and operations staff to better coordinate asset treatment and safety activities. TDOT accomplished the enhanced communication by standardizing approaches and practices statewide, forming a pavement management section at the central office and appointing a pavement manager in each region. TDOT's strategic approach to enhance coordination efforts across maintenance, safety, and operations staff illustrates the benefits to treatment and safety activity coordination along with providing guidance for agencies to learn how to advance their practices. Also, reports for qualifying maintenance activities could be submitted to FHWA for reim- bursement. Additionally, organizational strengthening activities contribute to making the employees and organizations more resilient and mitigating risks that may be identified in an agency’s risk register.

46 A Guide to Incorporating Maintenance Costs into a Transportation Asset Management Plan Mitigating the Risk of Long-Term Change or Trends Numerous change-related risks can impact how an agency incorporates maintenance costs into its risk management process. While the foundation for asset maintenance and preservation is to extend the life of the asset by proactively applying the right treatment in the right place at the right time, an agency’s ability to apply those treatments can vary with time. Below is a summary of several trends that agencies are forced to address: • Updated regulations or engineering standards: Agencies need to address asset regulations and engineering-standard revisions for specific assets. For example, recently constructed ADA-compliant curb ramps must now be maintained and, possibly, at a higher cost than previous curb ramps. • Evolving maintenance expectations: While performance targets for assets are typically set at the beginning of a budget cycle, some may evolve during the year. Increases in customer com- plaints related to rest areas or mowing might lead to legislators demanding an improved LOS for those assets. To address these changing priorities, maintenance must utilize resources that may have been scheduled for other work, which can lead to lower performance on other assets. • Funding fluctuation: Decreased department revenue and the resulting lower routine main- tenance budgets hamper an agency’s ability to address asset performance. As a result, lower- priority assets tend to stay in a low-performing category since available funds are allocated to higher priorities. • Aging infrastructure: As assets age, the cost to maintain them increases. Keeping budgets steady does not address this cost increase, which results in lower-performing assets. • Staffing: As the current workforce retires, many agencies are faced with losing institutional knowledge. This can affect maintenance costs as work is performed less-efficiently. • New infrastructure: As many agencies deliver expanded transportation networks, the necessary funds to maintain those newly constructed assets are not always included in future budgets. While newer assets do not often require extensive preservation or maintenance, many routine activities are performed immediately after maintenance takes ownership of the asset. • Environmental changes: Long-term or gradual environmental change can significantly impact the maintenance needs of highway networks. Changes in temperature, precipitation levels, and invasive plant species can introduce new required maintenance activities or change the needed level of existing activities. The impacts of these risks should be considered in the risk analysis process to evaluate their impact on maintenance costs and establish mitigation strategies for risks that exceed the agency’s risk tolerance. Preparing Maintenance for the Future DOTs must consider several factors when preparing maintenance programs for the future. As agencies place an increased focus on managing assets from risk and performance-based approaches, it will be important for maintenance managers to evolve to support and enhance these processes. For example, agencies should work to prioritize maintenance activities to address high-risk assets. Examples of ways to support this approach include establishing higher LOS targets for high-risk assets, prioritizing roadways with higher average annual daily traffic, or focusing on maintenance of safety-specific assets. Tracking costs associated with high-risk assets is necessary to accomplish this. This data can answer key questions, such as: 1. Do high-risk assets cost more to maintain? 2. Is there an overall improvement in LOS of high-risk assets that links to a lower likelihood of asset failure?

Incorporating Maintenance into Risk Management 47   Example: Florida DOT’s Mitigation of Facilities Damaged by Multiple Emergency Events Florida DOT (FDOT) relies on state funds for maintenance revenue sources in the TAMP, and maintenance work is completely funded with state revenue sources, regardless of work type. More extensive resurfacing projects and bridge repair/replacement work are funded with a combination of state and federal funds. FDOT does not distinguish between maintenance and operations activities or expenses in the TAMP. However, traffic operations activities, such as service patrols and cameras that are monitored from traffic management centers, help maintain the flow of traffic throughout the state. These traffic operations activities are intended to address mobility and are not tied to the maintenance and upkeep of the physical asset. All maintenance costs (both in-house and contracted) are included in FDOT’s estimate of future investments in the maintenance work type included in the TAMP investment strategies. These estimates are developed by district maintenance offices and are difficult to correlate with actual spending as part of the annual consistency review. FDOT does not attempt to account for emergencies in the maintenance budgets, but it does provide a modest amount of contingency funding to address minor routine emergencies such as sink holes. However, the contingency funding is not sufficient to address maintenance needs that may result from more substantial events such as a major hurricane. Example: ALDOT’s Efforts to Streamline Reimbursement Requests To streamline its work related to data reporting and reimbursement requests associated with emergency work, ALDOT’s Maintenance Bureau has developed internal checklists and applications using ArcGIS that are used widely by their maintenance workforce. ALDOT’s process is to complete emergency work immediately and move that labor and cost information to the appropriate emergency project whenever it is set up. ALDOT sets up special maintenance projects with emergency codes. The agency uses event codes and site IDs to document emergency-related work. District and area staff play an active, engaged role in tracking work this way. Staff have developed FEMA and FHWA checklists to ensure that all necessary data is associated with each submittal before it is officially submitted to the appropriate agency. Additionally, staff have developed a debris management mobile application inside ArcGIS that is available to in-house crews and contractors. The application includes staging sites, landfill sites, and any other debris-related information. Some areas developed another tool that allows users to locate debris; for example, users can mark the location on a map where a tree has fallen over a powerline. This allows staff to see the overview of the damage. Balancing the need for resources regarding emergency work is very decentralized. Headquarters responds to the needs of the areas and districts for items such as emergency letters and any other assistance. Example: NYSDOT Revisioning Bridge Maintenance NYSDOT has developed improved maintenance treatment strategies to cost-effectively maintain bridges that have exceeded their design life while preventing the bridges from being unsafe. NYSDOT's vertical- down bridge inspection approach helps NYSDOT identify and address the root cause of a bridge's deterioration in a cost-effective manner. This approach focuses on repairs that are performed to address deterioration caused by water and salt intrusion through cracks in the deck or leaky joints. NYSDOT's vertical-down bridge inspection approach is an example of the cost-effective benefits of coordinating maintenance strategies with inspection data and LCP. NYSDOT's growth in bridge repair needs, coupled with exponentially higher costs of delivering that work via contracts instead of being accomplished in-house by state forces, led NYSDOT to decide to enhance the bridge maintenance program to deliver as much work as possible in-house. Consequently, NYSDOT has invested maintenance funding in training and is equipping staff forces so they can focus their efforts on the tasks where they are the most cost competitive with maintenance contracts.

Next: Chapter 6 - Incorporating Maintenance into Financial Plans »
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Since 2018, State departments of transportation (DOTs) have been required to develop risk-based transportation asset management plans (TAMPs) and to update processes for developing these plans every four years. To date, several DOTs have described challenges in showing clear connections between maintenance investments and asset condition.

NCHRP Research Report 1076: A Guide to Incorporating Maintenance Costs into a Transportation Asset Management Plan, from TRB's National Cooperative Highway Research Program, leads practitioners through a six-part framework designed to tackle the biggest challenges agencies face in projecting future maintenance costs in TAMP activities. Supplemental to the report is a pocket guide.

Supplemental to the report are NCHRP Web-Only Document 372: Incorporating Maintenance Costs into a Transportation Asset Management Plan, an Executive Summary, an Implementation Memorandum, an Overview Presentation, and a Publication Announcement.

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