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Asset Management: A Tool for Managing Highway Assets

Asset Management: A Tool for Managing Highway Assets. Midwest Transportation Consortium TransportationSeminar January 14, 2000. Sue McNeil Professor Carnegie Mellon University Visiting Professor University of Minnesota. Outline. Overview and status Performance and asset value Tools

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Asset Management: A Tool for Managing Highway Assets

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  1. Asset Management: A Tool for Managing Highway Assets Midwest Transportation Consortium TransportationSeminar January 14, 2000 Sue McNeil Professor Carnegie Mellon University Visiting Professor University of Minnesota

  2. Outline • Overview and status • Performance and asset value • Tools • Where to next?

  3. Asset Management: A Tool for Managing Highway Assets Overview

  4. Overview and Status • Asset management definitions/goals/attributes • Asset management components • History • Status of asset management in the United States • So why do State DOTs need asset management?

  5. Overview and Status Asset Management Definitions • . . . is a systematic process of maintaining, upgrading, and operating physical assets cost-effectively • . . . Combines the use of sound engineering principles, accepted business practices, and economic theory to improve the decision-making process

  6. Goals • To provide ready access to quantitative and qualitative data • To facilitate decisionmaking based on data • To utilize principles drawn from economics, accounting, risk management, and customer service models • To ensure efficient resource allocation and asset optimization

  7. Attributes • Standardized • Understandable • Customer-focused • Mission-driven • Accessible • Flexible • Integrated • Informative

  8. Attributes Required to Realize Benefits • Common performance measures and criteria • User-friendly environment • Customer focus • Accessibility within agency • Flexibility • Link to technical, management, and budgetary processes • Exchange of information

  9. Quantifiable Objectives • Enhance knowledge of inventory and asset value • Develop links that tie resource allocations to savings from replacement • Establish standardized processes and protocols • Consider life-cycle costing

  10. Objectives That Are Difficult To Quantify • Recognize data as a corporate asset • Create sense of ownership in assets by corporate managers and operators • Improve credibility in decision-making • Encourage processes where managers think globally, but act locally • Improve teamwork, communication, and training

  11. Benefits of AMS • Improve program quality • Improve information and access to information • Facilitate economic assessment of various tradeoffs • Improve documentation of decisions • Improve information on return on investment and value of investments • Reduce short-and long-term costs

  12. Asset Management Concept

  13. Approaches to Asset Management • Silo or stovepipe • Outreach • Massive integration • Modular

  14. Components of an AMS • Asset inventory • Location/Asset Referencing System • A centralized database • Analysis tools • Reporting tools

  15. Components(FHWA) Goals and Policies Asset Inventory Condition Assessment and Performance Modeling Budget/Allocations Alternatives Evaluation and Program Optimization Short and Long- Range Plans Program Implementation Performance Monitoring

  16. Data collection and monitoring Condition related Cost related Causes: Usage Environment Age Effects: Damage User impacts Agency costs Impacts modeling Deterioration prediction User impacts prediction Strategy identification/ cost prediction Strategy selection Objective specification or re-evaluation Pre-planned decision rules Heuristics Optimization Strategy implementation The Infrastructure Management Process

  17. Asset Inventory Analysis Modules Central Database Location/ Asset Referencing Systems Report Modules Graphics - Summaries - Map Links Framework for AMS

  18. Asset Inventory System • Identification of assets included • Inventory of basic characteristics • Assessment of asset conditions • Estimate of asset age

  19. Location/Asset Referencing System • Geographic location • Reference system • Identifiers for equipment

  20. BMS Revenues Project BMS Maintenance Accounting Pavement Safety Data Congestion Budgeting Permits Contracts Equipment Materials District and Local Offices Central Database • Contains inventory information • Facilitates exchange of information

  21. Analysis Modules • Forecast of Future Conditions • Impact Analysis of Various Scenarios

  22. Reporting Modules • Presentation of Inventory Information • Presentation of Analysis Results • Formats: • Graphics • Tables • Maps

  23. Asset Management versus Managing Assets • History • Survey - Status of Asset Management in the United States.

  24. History • 1970’s - pavement management • 1980’s - bridge management • 1990’s - asset management

  25. Recognition of common characteristics Projects/ components are parts of networks Long time horizons Presence of trade-offs Indivisibility Variability in space and time Subject to design standards Subject to deterioration Subject to uncertainty Exhibit many modes of failure Hierarchical decision process Background

  26. 1991 - ISTEA 1994- Road Asset Management Guideline - Austroads 1995 - Report on Current Practice - Australia 1996 - AASHTO/FHWA Workshop - Public Private Perspectives 1997 - AASHTO/FHWA Workshop - The Future AASHTO Task Force formed History

  27. History • 1998 • New York State - Concept Plan • AASHTO Task Force Strategic Plan • TAC - Primer on Highway Asset Management • APWA - Asset Management for the Public Works Manager • 1999 • FHWA - Office of Asset Management formed • OECD Asset Management Systems Working group • FHWA/AASHTO Workshop (December)

  28. Status of Asset Management in the United States • Survey Questions • Inventory of Assets • Investment Decisions • Workshop Agenda • Responses

  29. Survey QuestionsInventory of Assets • Asset management responsibilities and contacts • Inventories and condition by type of asset • Management systems and performance by type of asset • Asset valuation

  30. Survey QuestionsInvestment Decisions • Integration with management systems • Decision-making tools for investment • How tools are used • Use of tools across modes • Analysis to make allocations to capital versus maintenance • Quantitative evaluation of capital, operational or maintenance expenditures needs to improve performance • Comparison of effectiveness of investments • Relationship of budget expenditures to system performance • Mechanisms to provide feedback

  31. Survey QuestionsWorkshop Agenda • Areas responding state would be willing to discuss experiences • Areas responding state would find of interest.

  32. Survey Responses Received responses from states inyellow

  33. Survey Responses (CONTINUED) • Number of Responses -- 33 • Points of Contact for Asset Management • none -- 12, one -- 13, more than one -- 8 • States with Inventories -- 33 • average per state -- 9 • inventories with conditions -- 66% • States with Management Systems -- 32 • average per state -- 7 • inventories with performance indicators -- 70%

  34. Survey Responses (CONTINUED) • States Attempting Asset Valuation -- 13 • replacement cost -- 10 • historic expenditures -- 6 • equivalent value -- 5 • other -- 2 Other includes HPMS Financial Analysis package and investment/fair market basis.

  35. Survey Responses (CONTINUED) • States Using Decision Making Tools -- 32 • cost-benefit analysis -- 29 • life-cycle costing -- 28 • trade-off analysis -- 9 • quantitative investment analysis -- 4 • other -- 9 Other includes citizen and political input, value engineering, grade crossing hazard ratings, first cost, threshold levels, and highway needs analysis.

  36. Survey Responses (CONTINUED) • Apply tools across modes -- 7 • Analysis to allocate capital vs. maintenance -- 10 • CBA of major maintenance expenditures -- 11 • CBA for operational improvements -- 11 • Evaluate how expenditure improves system -- 17 • Relate budget expenditures to system performance -- 22 • Automatic updating of systems based on expenditures -- 13

  37. Survey Responses -Conclusion • Many states have elements of asset management • for specific types of assets • for specific activities • Examples include • Performance based programming • Integrated maintenance management • Integrated management systems • Preservation and improvement tradeoffs

  38. Why do State DOT’s need asset management? • Aging infrastructure • Preservation, and good business practices provide a foundation • Customer focus means a shift in emphasis from outputs to performance • Demand for better accountability • Magnitude of the investment • Asset management is a vehicle for delivering

  39. Premises • One size does not fit all • Champions are needed • Dependent on a corporate database • Builds on content, concepts and substance of other management systems • Recognize that organizations have frequent leadership changes, and need to develop a means for continuity in asset management

  40. Asset Management: A Tool for Managing Highway Assets Performance and Asset Valuation

  41. Performance • What is it? • Why is it important? • What have we learned?

  42. Performance What is it? Operational indicators: e.g miles of road accidents, roughness Mission: smooth, safe, economic and efficient road systems • Link between the user and the physical asset Stakeholders: service providers private and commercial road users, policy makers & regulators [Modified from Paterson and Humplick]

  43. Performance Why is it important? • Fundamental concept • Provides link to decision making • Critical to identifying the true value of assets • Foundation for performance based planning

  44. Performance What have we learned? • For example, Minnesota • Three areas: • System performance • Public values/issues • Organizational Performance

  45. System Performance Time/ Directness Safety Condition of infrastructure Access/ Basic service levels Public values/issues Environment Socioeconomics Organizational Performance Performance/ Productivity Progress towards targeted focus areas Performance Minnesota -

  46. Critical elements Focus leadership Demonstrated benefit Customer involvement System managers key Experience Time consuming Expensive No single answer Not an answer to funding issues Performance Lessons learned

  47. Performance What are the issues? • Good data • Consistent and continued application • Customer input • Benchmarking • Not the answer

  48. Asset Valuation • Driving forces • Mechanisms • Government Accounting Standards Board (GASB) 34 • Mechanics

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