Let’s say you’re the department head of a transportation agency, and you were offered a 10 percent increase in your funding, do you know how you would spend it? Do you have a decision process that identifies agency priorities so you can continue to advance your strategic objectives? Or would you rush around asking employees for project suggestions and fund those projects that are ready to go — whether or not they make long-term sense? If your organization’s response more closely resembles the latter approach, your agency could benefit from learning more about an asset management approach.

What is transportation asset management?
The American Association of State Highway and Transportation Officials (AASHTO) defines transportation asset management (TAM) as “…a strategic and systematic process of operating, maintaining, upgrading, and expanding physical assets effectively through their lifecycle. It focuses on business and engineering practices for resource allocation and utilization, with the objective of better decision making based upon quality information and well-defined objectives.”

Asset management is based on five principles according to the Transportation Asset Management Guide:

• It is policy driven. The decisions made reflect the agency’s policies, goals, and strategic objectives so the system conditions can reach targeted levels of service.
• It is performance based. Performance information on the network is used to establish targeted levels of service, to allocate funding, and to monitor progress.
• It considers alternate investment options. These decisions are based on the consideration of trade-offs between different funding strategies.
• It is data driven. Decisions are based on quality data and analysis tools that allow investment trade-offs to be evaluated.
• It is transparent. The decision process relies on criteria that are well understood and defensible.

The importance of TAM
Asset management principles are becoming increasingly important as agencies are forced to manage their assets with fewer resources, higher expectations for customer service, and increasing demand for more transparency in the decision process. Nationally, there is an increased emphasis on asset management principles through the links being established between funding and performance management in the American Recovery and Restoration Act, and the language being proposed in the new highway bill. In the not-too-distant future, many policy experts expect there will be national performance targets established for the interstate highway system that will help ensure more consistent conditions for motorists. And, as budgets get tighter, it is more important than ever that agencies can defend their funding requests and can demonstrate that funds are being used effectively.

The growing importance of asset management is also reflected in its increasing prominence within national transportation organizations. For instance, the Federal Highway Administration’s (FHWA) Office of Asset Management has sponsored international and domestic scan tours, supported training course development through the National Highway Institute (NHI), and organized peer exchanges among state highway agencies and regional workshops. AASHTO Standing Committee on Planning includes a Subcommittee on Asset Management that provides support to member states to help improve agency practices. AASHTO has also sponsored several initiatives in this area, including development and publication of an asset management Data Collection Guide. The Transportation Research Board includes a Committee on TAM and has funded research in this area through its National Cooperative Highway Research Program.

Making asset management work
At its most basic level, agencies that are adhering to asset management principles should be able to answer the following questions about their assets:

• What is the current state of my assets? Asset managers should have a clear understanding of what assets they manage, where they are located, and what condition they are in.

• What is expected in terms of level of service? Asset managers should have a good understanding of the traveling public’s expectations for service levels, any existing regulatory requirements, the agency’s performance targets, and the funding levels required to meet these expectations.

• Which assets are most important to meeting performance expectations? Asset managers should consider the risk associated with each investment option to minimize high-probability or high-consequence failures.

• What are my best operations and maintenance and capital improvement investment strategies? Within each asset class, there are many available investment options. Using tools such as pavement management systems or bridge management systems, the most cost-effective choices for investing in a particular asset can be made.

• What is my best long-term funding strategy? The asset manager is responsible for determining the best strategy for optimizing funding. Once the investment decision is made, asset management plans should be developed for each of the major asset classes.

These five fundamental questions are based on a training class on asset management developed jointly by the FHWA and the U.S. Environmental Protection Agency and information published in the International Infrastructure Management Manual (2006 edition) distributed through the Association of Local Government Engineering, New Zealand. Implementation of asset management should follow the continuous process outlined in Figure 1. This involves planning to determine which assets will be included, doing the work to analyze the available data, checking the reasonableness of the results, and acting on the conclusions that can be drawn.

Figure 1: asset management implementation steps Graphic by Applied Pavement Technology, Inc. based on information from the City of Calgary’s Corporate Asset Management Program.

In addition to New Zealand, there are a number of agencies internationally that are following asset management principles, such as groups in Australia, Canada, and England.

Closer to home, there are several examples of agencies that have made significant efforts in this area, including state highway agencies (e.g., Ohio and Utah Departments of Transportation), local agencies (e.g., City of Portland, Ore.; Hillsborough County, Fla.), and Metropolitan Planning Organizations (e.g., Grand Valley Metropolitan Council, Grand Rapids, Mich.; Southeast Michigan Council of Governments, Detroit).

Key observations of successful practices in these agencies include the following:

• Upper level support is mandatory. In most organizations, there was a champion who was able to drive the organizational changes needed.
• Preservation of existing assets was a top priority. Most agencies recognized the cost-effectiveness associated with preserving assets that were already in good condition to defer the need for more expensive repairs.
• Investment decisions are linked to performance measures. Within these agencies, performance measurement is an important method of monitoring system performance and prioritizing investment needs. Through the use of management system tools (such as a pavement management system), agencies can determine the amount of funding needed to achieve certain performance targets so realistic goals can be assessed.
• Agencies are very customer-oriented. The agencies that are using asset management principles have incorporated public perceptions, or customer demands, into their decision process.
• Quality data is critical. The evaluation of trade-offs relies on the availability of, quality data on the various assets being managed.

The future of asset management
In the United States, recent initiatives in this area focus on providing guidance for implementing principles through the development of guidelines and NHI training courses. Further, the recommendations from the international scan team led to an initiative to investigate the feasibility of developing a National Asset Management Steering Committee to create and support a community of asset management practitioners. This recommendation is being considered by FHWA and other national transportation organizations.

At least two primary areas of research are needed to support future asset management efforts. One concerns the incorporation of risk into the analysis of investment options. Results of the domestic scan indicate that risk analysis techniques are not widely considered in the United States, although they are an important part of the analysis in other parts of the world. A second research need is improved tools for allocating investments across assets. Globally, transportation agencies recognize the difficulty associated with comparing the trade-offs associated with investments in different asset classes such as pavements, bridges, and drainage structures. However, development of these types of tools will greatly enhance our ability to better understand the long-term consequences associated with the investment decisions we make today. Although both of these topics have been incorporated into current research efforts to some degree, additional work is needed.

Through a concerted effort, adoption of asset management principles can result in a more transparent decision process that leads to more coordinated and cost-effective efforts that better reflect the priorities of the agency and its stakeholders.

Kathryn A. Zimmerman, P.E., is president of Applied Pavement Technology, Inc. (APTech), and can be contacted at kzimmerman@appliedpavement.com.