Chapter 12: Programming/Resource Allocation What is works programming? Works programming refers to the preparation of annual and multi-annual works programs in which road assets requiring treatment are identified, selected, and prioritized and resources are allocated from available funds (Robinson et al. 1998). Programming implies the application of asset management principles to make decisions at the network or subnetwork level for budget allocation in the short to medium term. Assuming that appropriate levels of service have been set, this process includes identifying asset requirements, developing a total needs program, and prioritizing/optimizing programs for the existent budget constraints (Austroads 2009). The preparation of works programs has at its core a resource allocation process, which ideally distributes the available funding among projects that have been identified as the best alternatives for investing funds. Best practice includes the application of benefit-cost analysis for each candidate project within a lifecycle framework. Modern analysis tools are based on such a framework and provide mathematical optimization routines to determine the best investment choices subject to limited budgets (FHWA 2004). While the economic factor is important, it is not the only criterion used for selecting projects. Other aspects that may also be considered are network connectivity, neighborhood cohesion, preservation of corridor standards, and economic necessity (AASHTO 2002). At high levels of maturity in asset management, works programming also considers risk and thus applies a risk-based approach when carrying out tasks like identifying candidate projects or prioritizing works programs by road asset (UKRLG and HMEP 2013). In addition, mature works programming features resource allocation across asset classes, which is often implemented using risk criteria as well. In developing works programs, it is important to make sure that treatment options, intervention criteria, and system priorities comply with established strategic directions (Austroads 2009). Why should works programs be prepared? The main goals of the works programming process include the following (Austroads 2002 and UKRLG and HMEP 2013): Develop an effective and efficient works programs aligned with the adopted asset management approach and deliver the service Identify a list of candidate projects to close the existing performance gaps Define and broadly estimate the costs of candidate projects 88
Prioritize and optimize the projects comprising the works program to comply with existent resource constraints Monitor works to ensure their consistency with the chosen approach to asset management Program effectiveness is measured in terms of the program s contribution to achieving asset management policy and strategic goals, attaining performance targets defined by the transportation agency and meeting the expectations of stakeholders. The efficiency of programs is determined as a function of the benefits generated (user cost savings, improved road safety, congestion reduction, and so on) per investment unit. Works programs and the associated performance measures and targets, when made publicly available, also provide means for increasing the accountability and transparency of the transportation agency operations. Ultimately, the goal of works programming in asset management is to deploy, maintain, and operate assets in a manner that maximizes the accomplishment of the organization s mission (FHWA Transportation Asset Management Expert Task Group 2013). Maturity levels The level of maturity for works programming can be assessed based on a number of features, such as the length of the programming period, application of analysis tools, or resource distribution across asset classes. In this way, for each maturity level a particular feature may or may not be present, as shown in Table 12.1. Maturity levels can then be characterized by the set of features they support. Table 12.1 Maturity levels for works programming Feature Basic Proficient Advanced Annual program Application of analysis tools Stakeholder needs taken into account Alignment with strategic objectives Multi-annual program Consideration of risk Program optimization across assets The following sections present a brief discussion of maturity levels with regard to the programming process. 89
Basic A basic approach to programming normally allows for the production of annual works programs only. At this maturity level, organizational barriers still exist that limit the use of strategic objectives and other elements of planning to support longer programming periods. Another restricting factor for the development of multi-annual programs is a high level of uncertainty with respect to future revenue. Though management systems and/or analysis tools are present at the basic maturity level, agencies at this stage tend to privilege the implementation of such systems over the improvement of the business process they should support, thus reducing the potential impact that the use of these tools may have on the overall performance of the organization. Nevertheless, at this level return on investment might be used as a basis for decision making when this capability is built into the analysis tools employed. Also, at the basic level performance models within management systems are frequently not developed or calibrated to an appropriate degree to ensure that local conditions are properly simulated. In this respect, it should be emphasized that all performance models used in asset management systems (road deterioration, traffic assignment, vehicle operating costs, etc.) should be carefully adjusted to local conditions. Using default models, as is done in a number of countries due to economic or technical issues, should be discouraged if not prohibited because all medium- and long-term results from studies such as benefit-cost analysis or risk analysis are strongly dependent on the relevance of the models. Most management systems in operation at the basic level support works programming only for pavements and, to a lesser extent, for bridges. Budget allocation for assets other than pavements or bridges are often carried out based on historical expenses. Finally, because management of stakeholders expectations is usually also at an early stage, pressure may arise to favor projects addressing the needs of specific groups or projects with special political significance at the expense of other projects with better potential to achieve the goals of the transportation agency. Proficient A distinctive feature of proficient organizations with respect to works programming is their ability to support development of multi-year work programs. These organizations have typically succeeded in reaching a proficient level in other aspects of asset management, including data management, lifecycle planning, and performance management. The above is evidenced by the existence of more reliable information and tools at the disposal of road managers. These allow managers to expand the programming time horizon, which is also leveraged by an increased commitment from senior executives to use business cases effectively in securing funds for road investment over longer periods. Pavement and bridge management systems are well established as corporate tools, and their application is aligned with the business processes the agency has implemented for allocating resources. Other systems for managing slopes and/or embankments, accidents, and signs may 90
have already been deployed. Evaluation and prioritization of treatment options are based on benefit-cost analysis, particularly in the case of pavements. At the proficient level, risk is used as an additional criterion to identify and prioritize candidate projects for assets such as bridges, earthworks, and drainage or for projects related to road safety. Risk may also be taken into account to manage sources of uncertainty affecting program delivery, including costs, funding levels, and adverse environmental events. Risk management is an additional factor enabling the agency to prepare multi-year works programs. This level also features mechanisms for managing stakeholder expectations so that the needs of particular groups are properly balanced with the strategic objectives of the transportation agency. At the same time, new means for capturing customer perception, such as road user surveys, are put into practice. Advanced Organizations at this stage of maturity have successfully incorporated asset management into their corporate culture and are immersed in a continuous improvement process. In this context, they investigate further actions to enhance the efficacy and efficiency of their business practices. One of these actions is the implementation of a cross-asset schema for budget allocation, which broadens the scope of project selection and prioritization to ensure that projects that best contribute to the organization s mission are adequately funded, regardless of the asset class or operational feature each project is related to. A prerequisite for an organization to implement cross-asset resource allocation procedures is the existence of a suitable organizational structure for allowing the steady flow of information that might be required. Cross-asset methods are still at an early stage of development worldwide. In this regard, riskbased approaches have also proven useful for organizations already engaged in adopting such methods. Advanced works programming is closely linked to asset management financial planning. On the one hand, financial planning takes as input information regarding historical funding levels and the amount of funds expected to be available in the foreseeable future (FHWA 2013). On the other hand, it defines how these funds will be allocated in the short to medium term. The works programming process The overall process of developing works programs and allocating resources to individual projects can be depicted as a sequence of stages, as shown in Figure 12.1. 91
Identify candidate projects and prepare the initial subprogram for each asset class Prioritize works subprograms for each asset class Prepare and optimize the multi-year works program Prepare and optimize the annual program Based on UKRLG and HMEP 2013 Figure 12.1 Works programming process These stages are described in the following sections. Identification of candidate projects and preparation of the initial programs by asset class The identification of candidate projects implies the analysis of a given asset (e.g., a pavement section or a bridge) to determine what actions, if any, should be taken to maintain or improve its performance (Cambridge Systematics et al. 2002). This analysis relies on information sources like the following: condition surveys, safety inspections, knowledge of local staff, stakeholder needs, accident claims, and requirements to meet corporate objectives. Data from condition surveys and safety inspections should ideally be available from the asset management system, in some cases through advanced platforms such as GIS (UKRLG and HMEP 2013) A comprehensive approach to project identification may include the following steps (Austroads 2002): Define levels of service, i.e., describe the quality of services associated with the assets considered. Levels of service are usually defined in terms of performance measures and targets, as discussed in Chapter 5. Develop a level of service hierarchy specifying the associated asset class (e.g., dualcarriageway motorways for trunk roads, medium standard single carriageway for secondary roads, and so on). Target levels of service to transportation asset classes to express condition or performance requirements in terms of capital investment needs. Identify performance gaps by comparing the current asset configuration and condition with the required configuration and condition as defined by performance targets. Incorporate the informed view of the community involved through formal community consultation. In order to define the projects required to close the gaps identified from the above steps, several treatment alternatives may be evaluated for each asset. Transportation management systems such as pavement, bridge, accident, and other management systems have been developed over the years to streamline the analysis of alternative works. At this stage, evaluation may include assessing the economic benefits of each option, particularly in the case of pavement assets. The final lists of candidate projects obtained by identifying the optimal intervention option for the various assets may be referred to as the total needs program (Austroads 2009). Figure 12.2 contains a simplified representation of the programing stage concerning project identification and the preparation of initial programs. 92
Treatment options Asset condition Local knowledge Stakeholder needs Identify candidate projects and prepare the initial subprogram for each asset class Asset operation Customer complaints Corporate objectives Initial subprograms for pavements, bridges, slopes, etc. Figure 12.2 Selecting candidate projects for the initial subprograms Works prioritization by asset class Prioritization is basically a method of arranging proposals on new lists that indicate which projects are to be funded first (Austroads 2009). Each new list corresponds to a prioritized subprogram per asset class. The prioritization process is built upon a set of criteria involving aspects such as physical condition, safety, risk, and economic feasibility. The initial works program usually includes assets whose performance has fallen below specified standards in terms of condition or safety measures. It may also comprise assets subject to high levels of risk, such as those located in areas of extreme weather conditions as well as those attracting the interest of stakeholders for other reasons (e.g., political or socioeconomic). Because available budgets will in most cases be insufficient to address all needs, safety-critical assets or having the highest level of risk (Figure 12.3) will normally be put at the top of the list. Figure 12.3 Example of a high-risk asset, which should be given a higher priority 93
Candidate projects should also be prioritized depending on their lifecycle return on investment to ensure that value for money is achieved, particularly in the case of assets such as pavements, structures, or lighting (UKRLG and HMEP 2013). Again, road management systems usually help in performing this task. Modern prioritization procedures call for applying a multi-criteria approach in which factors such as sustainability, stakeholder requirements, and social benefits are combined with serviceability, safety, and value for money. This approach requires assigning appropriate weights to each factor depending on the institutional vision. It should be noted that agencies at the proficient maturity level might not be in a position to apply the multi-criteria approach described above, while agencies at the basic level usually only use serviceability and economic return as criteria for prioritizing. Inputs and outputs of the prioritization stage are illustrated in Figure 12.4. Initial subprograms Prioritizing criteria: risk, value for money, serviceability, etc. Stakeholder interests Prioritize works subprograms for each asset class Strategic objectives Prioritized subprograms for pavements, bridges, etc. Figure 12.4 Preparing prioritized subprograms Preparation and optimization of the multi-year works program Multi-year programs comprise projects for the various asset classes to be executed within periods from three to five years (UKRLG and HMEP 2013). When information is available, indicative programs can be developed for longer periods, e.g., 10 or more years. The preparation of multiyear programs is an essential phase of the programming process where project-level needs are reconciled with network-level resource constraints and performance goals. The multi-year program supports financial planning by demonstrating what projects needs to be done and where and when they are to be undertaken. This planning must be reviewed annually and updated using the latest information available. A multi-year program should indicate the amounts of funding corresponding to routine, preventive, and periodic maintenance, as well as resources intended for rehabilitation and construction (Austroads 2009). It should also contain details of the specific works considered for budget allocation. These features may be challenged by senior decision makers, so multi-year programs need to be robust and based on reliable information. 94
The list of projects to be included in the multi-year program is compiled by selecting projects from the prioritized program and adding up the costs estimated for each project until the forecasted budget is exhausted. At the advanced maturity level, the asset management plan and the investment strategy serve as a basis for determining which projects should be selected. For projects around the budget ceiling or those requiring significant investment, additional data may be required to verify any assumptions made. The actual benefits from obtaining these data should be carefully assessed when the costs and risks involved are significant (UKRLG and HMEP 2013). Project selection from prioritized programs often involves an optimization process. In this context, optimization refers to selecting investment options from various alternatives with the aim of achieving the highest benefits from constrained resource levels (Austroads 2009). One of the ranking criteria used for optimizing the available budget is the incremental benefit-cost ratio, which seeks to maximize the economic benefits for each additional unit of expenditure (Morosiuk et al. 2006). Various management systems provide optimization modules for conducting impact analyses of different funding scenarios (Austroads 2009). Scenarios that might be considered include current constrained funds, incremented funds, reduced funds, and changes in the level of service offered. Results can then be presented to senior management to either support a particular funding scenario or examine various scenario options. In performing program optimization, considerations such as the following may also be addressed (UKRLG and HMEP 2013): Minimizing occupation of the network, which refers to reducing disruption to users by coordinating different works programs and integrating transport projects on related parts of the network Deliver efficiencies by combining activities, e.g., combining projects identified as being close to each other in the works program but scheduled for different years Optimization of works programs has been traditionally carried out separately for the various asset classes, with a different budget ceiling established for each class. Using this approach, the resulting multi-annual program is actually made up of as many subprograms as the number of asset classes included in the programming process. Organizations at the advanced maturity level of asset management consider the implementation of methods for optimizing resource allocation across asset classes, using optimization processes based on a multi-criteria approach similar to that described for the prioritization stage. Figure 12.5 shows the main information flows occurring at this stage of the programming process. 95
Prioritized subprograms Estimated budget for the programming period Prepare and optimize the multi-year works program Optimizing criteria for each asset Criteria for cross-asset optimization (advanced level only) Multi-year program Figure 12.5 Preparing multi-year works program As mentioned above, organizations at the basic level only support development of annual works programs. In this case, the preparation and optimization of the multi-annual program is omitted or, more precisely, the tasks described above are performed using an analysis period of one year, and cross-asset optimization is not addressed. Project selection for the annual program The multi-annual program should be reviewed annually to update the list of projects with the highest priority that can be delivered from the available budget and produce an annual works program or annual plan (UKRLG and HMEP 2013). In generating the annual program, consideration must be given to projects deferred in the last year, the backlog of needs, and the updated availability of resources (Austroads 2009). Projects in the annual works program should already have undergone a detailed design process and be ready for delivery. This enables contractors to plan the works properly and minimize any potential risks. In project design, the collection of additional detailed data on the involved assets should be considered to ensure that the proposed intervention produces the expected outcomes. Also, a more detailed cost estimate for each project should be made allowing a suitable contingency for risk (UKRLG and HMEP 2013). Case study: Works programming for the Mexican federal toll-free network One of the major components of Mexican roads is the federal toll-free network, which comprises 40,752 km of paved roads (Figure 12.6) and 7,483 bridges. 96
Figure 12.6 Mexican federal toll-free network This part of the network is managed by the General Directorate of Road Maintenance (DGCC) of the Mexican Secretariat of Communications and Transport (SCT). As part of the planning process implemented by the federal government for developing and preserving the federal roads, the DGCC prepares, on the one hand, a six-year plan for each period of the federal administration and, on the other hand, an annual road maintenance program. Both the six-year plan and the annual program are composed of a series of asset-specific subprograms, including pavement maintenance, bridge reconstruction, and black spot treatment. The programming process for pavement maintenance is supported by a pavement management system, which makes use of HDM-4 for analyzing investment options. Based on information about pavement condition, traffic forecasts, and other data items, this process determines the set of pavement works yielding the greatest return on investment for the available resources. Other funding scenarios simulating budget cuts or the allocation of additional resources are also analyzed. With regard to bridges, inspection data are used as input to the DGCC bridge management system in order to identify bridges requiring treatment, define the necessary bridge works, and prioritize the resulting works list using criteria such as current bridge condition, traffic volume, 97
and the impact of failure on network connectivity. Resources are allocated to projects based on the priorities defined. Finally, concerning black spots, a priority list is also prepared based on accident information provided by other areas of the SCT. The DGCC has not yet implemented procedures for allocating resources among asset classes. However, in the final stage of the annual program preparation, a thorough review is performed to identify bridges and other structures involving high levels of risk and, eventually, redistribute parts of the available budget. References American Association of State Highway and Transportation Officials (AASHTO). 2002. Transportation Asset Management Guide. American Association of State Highway and Transportation Officials. Washington, DC. Austroads. 2015. Asset Management Publications & Resources. Last accessed July 29, 2015. http://www.austroads.com.au/road-operations/asset-management/resources. Austroads. 2009. Guide to Asset Management Part 4: Program Development and Implementation. Austroads Inc. Sydney, Australia.. 2002. "Integrated Asset Management Guidelines for Road Networks." Austroads Publications Online. Accessed April 9, 2015. https://www.onlinepublications.austroads.com.au/items/ap-r202-02. Cambridge Systematics, Inc., Applied Research Associates, Inc., Arora and Associates, KLS Engineering, PB Consult, Inc., and Louis Lambert. 2009. NCHRP Report 632: An Asset- Management Framework for the Interstate Highway System. Transportation Research Board of the National Academies. Washington, DC. Last accessed July 24, 2015 at http://onlinepubs.trb.org/onlinepubs/nchrp/nchrp_rpt_632.pdf. Federal Highway Administration (FHWA). 2015. Asset Management. Last accessed July 29, 2015. http://www.fhwa.dot.gov/asset/.. 2012. Executive Brief: Advancing a Transportation Asset Management Approach. Federal Highway Administration Office of Asset Management. Washington, DC. Last accessed July 29, 2015. http://www.fhwa.dot.gov/asset/pubs/if12034.pdf. Cambridge Systematics, Inc., Parsons Brinckerhoff Quade and Douglas, Inc., Roy Jorgensen Associates, Inc., and Paul D. Thompson. 2002. Phase I Report Task 2 of 3: Asset Management Framework. NCHRP Web Document 41. National Cooperative Highway Research Program, Washington, DC. Last accessed July 30, 2015. http://onlinepubs.trb.org/onlinepubs/nchrp/nchrp_w41_task2.pdf. Federal Highway Administration (FHWA) Transportation Asset Management Expert Task Group. 2013. AASHTO Asset Management Guide A Focus on Implementation. Executive Summary. American Association of State Highway and Transportation Officials. Washington, DC. Last accessed July 29, 2015. http://www.fhwa.dot.gov/asset/pubs/hif13047.pdf.. 2004. FHWA Asset Management Position Paper. Federal Highway Administration. Last accessed July 30, 2015. http://www.fhwa.dot.gov/infrastructure/asstmgmt/ampp.cfm. 98
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