Return on Investment in Transportation Asset Management Systems and Practices (2018) / Chapter Skim
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Pages 41-65
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41 This chapter provides guidance for assessing the ROI of TAM systems and practices. The guidance is intended to assist state and local agencies interested in evaluating planned or prior TAM investments.
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42 Return on Investment in Transportation Asset Management Systems and Practices agency practices. The guidance often refers to TAM systems for brevity, but the phrase should be interpreted as referring to both systems and practices.
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ROI Calculation Guidance 43 value of money (see the discussion of Step 7 in this chapter) , and the discounted costs and benefits are compared.
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44 Return on Investment in Transportation Asset Management Systems and Practices • Only direct effects are considered. TAM investments can have direct impacts on agencies and asset users (e.g., reductions in staff time and maintenance expenditures, avoided increases in vehicle operating costs and travel time, and reductions in emissions and noise)
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ROI Calculation Guidance 45 and tracking the benefits of the next. In other words, carefully tracked changes to the agency's costs and activities based on an initial TAM effort can inform expectations for later improvements.
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46 Return on Investment in Transportation Asset Management Systems and Practices Step 2: Identify Likely Impacts Step 2 results in a preliminary identification of the impacts expected from the investment. This step also sets the stage by identifying the areas of focus needed to assess the availability of data in Step 3.
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ROI Calculation Guidance 47 less direct benefits may not be immediately apparent; it can be helpful to revisit how the TAM may improve agency effectiveness multiple times, and gather input from staff in other offices. Some ROI analyses will need to include a further analysis of user benefits and broader community benefits generated by improvements in the transportation assets.
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48 Return on Investment in Transportation Asset Management Systems and Practices the overall transportation system. In addition, the TAM system may allow the agency to monitor roadway conditions and report needed data with fewer staff, allowing for staff attrition and lower overall staff costs over several years.
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ROI Calculation Guidance 49 investment and may be viewed by a wider audience, the analysis may be helped by including estimates of user benefits. In this case, if the in-house information is limited, it may be necessary to perform additional, outside research to identify proxies to supplement the in-house data.
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50 Return on Investment in Transportation Asset Management Systems and Practices Capital costs, which include the costs for purchasing and implementing a TAM system, often are the easiest costs to collect. In addition to the costs of purchasing any software, information should be collected on any planned upgrades, licensing fees, ongoing technical assistance, and any other costs the product's provider would charge.
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ROI Calculation Guidance 51 • Frequency of use for legacy system; • Maintenance and rehabilitation practices; • Worker safety statistics; • Measures of staff work productivity (e.g., number of FTE positions per mile of assets managed, monitored, or reviewed) ; • Assets covered (e.g., type, number, size)
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52 Return on Investment in Transportation Asset Management Systems and Practices Transportation System Use and Performance To estimate user benefits and benefits to the broader community, information also will be needed on transportation system performance and usage, such as the following: • Traffic volumes affected by the ROI investment. Data may come from the TAM system, internal agency sources, or an outside source.
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ROI Calculation Guidance 53 examined. Other characteristics, such as historical information on detour lengths and any changes on average detours, also can be used to help estimate additional impacts on users.
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54 Return on Investment in Transportation Asset Management Systems and Practices The base case should be a realistic scenario, reflecting what the agency will actually do if it does not make the TAM investment being analyzed. For example, continued use of the legacy system and existing methods should be assumed only if this scenario is realistic; otherwise, some other system purchase costs should be assumed.
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ROI Calculation Guidance 55 Step 4, Task 4: Choose the Analytical Method for Quantifying Impacts The next task focuses on choosing the best method for quantifying the impacts of the TAM investment (i.e., how the situation differs due to the introduction of the TAM investment)
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56 Return on Investment in Transportation Asset Management Systems and Practices • Benefit transfer. Benefit transfer approaches use empirical value estimates from a previous study in the organization or from other studies with similar contexts.
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ROI Calculation Guidance 57 If the goal is to: • Justify TAM investment already made and in place, a retrospective analysis will be needed. • Make the case for a new investment, a prospective analysis will be conducted.
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58 Return on Investment in Transportation Asset Management Systems and Practices • Economic variables, which include: – Inflation rates reflecting the trend toward higher prices over time. If future costs and benefits are expressed in nominal dollars, these can be converted to real dollars using price indexes, which are available for many products and services.
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ROI Calculation Guidance 59 Step 5: Collect Necessary Data During Step 5, the analyst collects all the data that have been identified for the analysis. Usually this will entail compiling existing data from multiple sources rather than undertaking collection of original data from the field.
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60 Return on Investment in Transportation Asset Management Systems and Practices The type of analysis will vary depending on the method used, but they all share the goal of estimating impacts (and putting dollar values to those impacts) that are due to the new or improved TAM system.
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ROI Calculation Guidance 61 Estimating User and Broader Area / Community Impacts Once agency impacts and changes in asset conditions have been estimated, user and broader community benefits can be estimated if they are expected to contribute to the overall benefits of the TAM investment. The estimation of user benefits will require the use of algorithms built into in-house TAM systems, existing software products (such as HERS-ST)
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62 Return on Investment in Transportation Asset Management Systems and Practices 6. Calculate the ROI metrics.
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ROI Calculation Guidance 63 Step 7, Task 2: Describe Qualitative Benefits An attempt should also be made to account for benefits that cannot be measured in monetary terms. Examples of such qualitative benefits include: • More efficient decision-making, • Increased service to the public, • Improved accountability and public trust, • Reduced failure risks for critical assets, • Longer life expectancy of assets, • Increased economic development along improved transportation assets, • Reduced congestion, lower noise levels, and fewer emissions from more efficient travel, and • Improved data quality.
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64 Return on Investment in Transportation Asset Management Systems and Practices the pilot presented in Appendix F Completing a preliminary review helps facilitate correction of small errors and recognition of unintended biases, which leads to greater confidence in the findings of the final analysis.
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ROI Calculation Guidance 65 • "What-if" analysis. This type of analysis is closely related to scenario analysis.
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