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1-1-1 CHAPTER 1 Introduction This section provides an introduction to PBRA, which is NCHRP 8-70 research, which led to NCHRP Report 666: described in greater detail in Volume I of NCHRP Report 666. Target-Setting Methods and Data Management to Support Following that is a brief summary of the five case studies Performance-Based Resource Allocation by Transportation discussed in more detail throughout the primer. Agencies, described a comprehensive framework and methods The remainder of this document describes a process for to set specific performance targets to guide agency policies, transportation agencies to systematically assess and address plans, and programs. It also detailed factors that influence risks. It also provides several examples, organized by the target-setting and the success of performance-based resource steps of the process, that illustrate how state departments of allocation (PBRA) systems, explaining how agencies may transportation (DOTs) are using risk management to support successfully design, implement, and use such systems. Finally, funding decisions. it addressed the data and information needs, data acquisition and management systems, and institutional relationships required to support successful PBRA systems. 1.1 Introduction to Research in NCHRP 8-70 highlighted the significant un- Performance-Based certainties agencies face from frequent changes of important Resource Allocation variables outside their control, such as cost inflation, changing political leadership and their priorities, and revenues available Despite uneven implementation among state departments for agency programs. These uncertainties pose risks that asset- of transportation (DOTs), performance management has been allocation decisions will be rendered inappropriate when evolving steadily into an effective business process that links external variables change. Some organizations in both the organizational goals and objectives to resources and results. private and public sectors utilize risk analysis to assess whether Performance measures, and their attendant targets, are the certain resource-allocation choices and consequent system and lynchpin in this process. They are the link connecting goals agency performance are more susceptible to these uncertainties. to specific investments. The methods by which the measures Such risk analysis has been found to be helpful, but is not cur- and targets are established, including underlying data support rently in common use among transportation agencies. systems, play a critical role in the overall success of a public Based on this work, the NCHRP 8-70 Project Panel identi- agency or private company. fied the need for further research on how risk analysis may best Performance-based resource allocation takes place within be used by transportation agencies to support PBRA. This an overall Performance Management Framework, depicted primer addresses that need and serves as an introduction to in Figure 1.1.1, which is comprised of the following six basic the topic. elements: The guidance provided in this report is consistent with, but different than, the risk management approaches being Establish Goals and Objectives. Performance-based explored as part of NCHRP 20-24(74). That research effort is resource allocation decisions are anchored in a set of policy addressing risks related to internal operations and program goals and objectives that identify an organization’s desired and project delivery. In contrast, this document focuses on direction and reflect the environment within which its business the application of risk management techniques to support is conducted. For example, many state DOTs have well-defined funding decisions, such as by helping to prioritize which proj- goals for the transportation system, including infrastructure ects should be delivered. condition, level of service and safety, as well as goals reflecting

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1-1-3 organizational functions that produce these requirements are called data management systems. There are two key dimensions to creating and sustaining these systems. The two areas are equally important and must be synchronized within an organ- ization to ensure the generation and use of accurate, timely, and appropriate data. The first area centers on the technical challenges associated with data systems, including devel- opment and maintenance of hardware and software, and the specifications for data collection, analysis, archiving, and reporting. The second area focuses on the institutional issues associated with data stewardship and data governance. 1.2 Selected Case Studies Georgia DOT Pavement and Bridge Preservation Risk Assessment The Georgia Department of Transportation (GDOT) is developing an approach for incorporating risk considerations Source: TranSystems. into the prioritization of pavement and bridge preservation Figure 1.1.2. Primary highway routes in Texas. projects. The intent of this effort is to move away from a “worst-first” resource allocation approach to a “most-at-risk” approach. The new approach considers both the current con- TxDOT adopted the following definition of freight trans- dition of an asset and the risk associated with its failure. GDOT portation resiliency: “the ability for the system to absorb the is implementing this new process with the overall goal of better consequences of disruptions, to reduce the impacts of dis- informing transportation investment decisions. The GDOT ruptions, and to maintain freight mobility.”1 Office of Organizational Performance Management (OPM) The SFR Plan is primarily focused on the key highway routes initiated the risk management work as part of its responsibility for freight traveling through Texas (Figure 1.1.2) and the for administrating the agency’s transportation asset manage- potential mode shift to highways or the shift from one highway ment program. to another following a moderate-to-major disruption on/at the state’s highways, rail system, ports, or airports. By identi- Minnesota DOT Bridge Programming fying prioritized infrastructure enhancements on the portion of Risk Assessment the network that is vital for freight movements, TxDOT intends that the SFR Plan will help build a stronger case for increased The Minnesota Department of Transportation (Mn/DOT) transportation funding. Bridge Office has undertaken a process that applies risk man- agement philosophy to programming of bridge rehabilitation Washington State DOT Bridge Retrofit and replacement projects. The primary goal of this process is Risk Assessment to develop a communication tool that would help managers more easily explain the factors that Mn/DOT considers in Washington’s Department of Emergency Management, programming bridge rehabilitation and replacement projects, National Guard, Department of Transportation (WSDOT), considering the risk of an interruption to service. This process and others in the state helped determine a network of lifeline was developed at the request of the Mn/DOT Commissioner routes across the state, critical in the event of major natural early in 2008, and is part of a larger effort to integrate risk or manmade disasters. These include routes to military bases, assessment and management into the agency. airports, and all interstate routes. As part of a separate effort, researchers have found that particular silts in Washington Texas DOT Statewide Freight Resiliency Plan 1 Ta, C., A. V. Goodchild, and K. Pitera. “Structuring a Definition of The Texas Department of Transportation (TxDOT) has Resilience for the Freight Transportation System.” In Transportation developed a Statewide Freight Resiliency (SFR) Plan that iden- Research Record: Journal of the Transportation Research Board, No. 2097, tifies key freight infrastructure corridors and strategies to Transportation Research Board of the National Academies, Washington, ensure a resilient freight transportation network in Texas. D.C., 2009, pp. 19–25.

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1-1-4 could liquefy in the event of a major earthquake, and many California’s bridges up to seismic safety standards, which was of the state’s bridges are not designed to withstand this. In refined following the 1989 Loma Prieta earthquake. However, response, several divisions at WSDOT, including planners, since it was not possible or necessary to retrofit all structures bridge engineers, and materials engineers, have begun work- to eliminate all damage, Caltrans used the following process ing together to identify ways to evaluate bridge projects by so that the most critical structures were retrofitted first: weighing the risks of failure and impacts against other poten- tial projects. 1. Identify all structures potentially needing retrofitting to ensure that they were safe from collapse during earth- quakes; California DOT Seismic Safety 2. Identify complex or vital transportation lifeline structures; Retrofit Program 3. Prioritize all structures requiring retrofitting, based on an algorithm that considers a weighted combination of There are more than 12,000 bridges in the California hazards, impacts, and vulnerability of bridges; and State Highway System, plus an additional 11,500 city and 4. Group structures into logical projects, focusing on highest county bridges. The California Department of Transportation priority structures and considering geographic proximity. (Caltrans) established a prioritization process in 1988 to bring