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Institutional Architectures to Improve Systems Operations and Management (2012)

Chapter: Chapter 6 - Research Findings: Institutional Architecture Characteristics That Support Effective Programs

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Suggested Citation:"Chapter 6 - Research Findings: Institutional Architecture Characteristics That Support Effective Programs." National Academies of Sciences, Engineering, and Medicine. 2012. Institutional Architectures to Improve Systems Operations and Management. Washington, DC: The National Academies Press. doi: 10.17226/14512.
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Suggested Citation:"Chapter 6 - Research Findings: Institutional Architecture Characteristics That Support Effective Programs." National Academies of Sciences, Engineering, and Medicine. 2012. Institutional Architectures to Improve Systems Operations and Management. Washington, DC: The National Academies Press. doi: 10.17226/14512.
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Suggested Citation:"Chapter 6 - Research Findings: Institutional Architecture Characteristics That Support Effective Programs." National Academies of Sciences, Engineering, and Medicine. 2012. Institutional Architectures to Improve Systems Operations and Management. Washington, DC: The National Academies Press. doi: 10.17226/14512.
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Suggested Citation:"Chapter 6 - Research Findings: Institutional Architecture Characteristics That Support Effective Programs." National Academies of Sciences, Engineering, and Medicine. 2012. Institutional Architectures to Improve Systems Operations and Management. Washington, DC: The National Academies Press. doi: 10.17226/14512.
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Suggested Citation:"Chapter 6 - Research Findings: Institutional Architecture Characteristics That Support Effective Programs." National Academies of Sciences, Engineering, and Medicine. 2012. Institutional Architectures to Improve Systems Operations and Management. Washington, DC: The National Academies Press. doi: 10.17226/14512.
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Suggested Citation:"Chapter 6 - Research Findings: Institutional Architecture Characteristics That Support Effective Programs." National Academies of Sciences, Engineering, and Medicine. 2012. Institutional Architectures to Improve Systems Operations and Management. Washington, DC: The National Academies Press. doi: 10.17226/14512.
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Suggested Citation:"Chapter 6 - Research Findings: Institutional Architecture Characteristics That Support Effective Programs." National Academies of Sciences, Engineering, and Medicine. 2012. Institutional Architectures to Improve Systems Operations and Management. Washington, DC: The National Academies Press. doi: 10.17226/14512.
×
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Suggested Citation:"Chapter 6 - Research Findings: Institutional Architecture Characteristics That Support Effective Programs." National Academies of Sciences, Engineering, and Medicine. 2012. Institutional Architectures to Improve Systems Operations and Management. Washington, DC: The National Academies Press. doi: 10.17226/14512.
×
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Suggested Citation:"Chapter 6 - Research Findings: Institutional Architecture Characteristics That Support Effective Programs." National Academies of Sciences, Engineering, and Medicine. 2012. Institutional Architectures to Improve Systems Operations and Management. Washington, DC: The National Academies Press. doi: 10.17226/14512.
×
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Suggested Citation:"Chapter 6 - Research Findings: Institutional Architecture Characteristics That Support Effective Programs." National Academies of Sciences, Engineering, and Medicine. 2012. Institutional Architectures to Improve Systems Operations and Management. Washington, DC: The National Academies Press. doi: 10.17226/14512.
×
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Suggested Citation:"Chapter 6 - Research Findings: Institutional Architecture Characteristics That Support Effective Programs." National Academies of Sciences, Engineering, and Medicine. 2012. Institutional Architectures to Improve Systems Operations and Management. Washington, DC: The National Academies Press. doi: 10.17226/14512.
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42 This chapter focuses on the development of an institutional maturity model. A key finding from consideration of the prac- tices of the mature versus transitioning states was the appar- ent direct relationship between some business processes—as described in the previous chapter—and their dependency on institutional support. Process Implications for Institutional Architecture Each of the key process dimensions discussed in Chapter 5 is dependent on the following key features of institutional architecture: scoping implications, technical process impli- cations, systems and technology implications, and perfor- mance measurement. Scoping Implications The selection and implementation of various application strategies—the program scoping—is the mechanism through which the SO&M-related services are actually delivered in the field in real time. Impact on level of service will depend on the applications selected, where they are deployed, and how well they are implemented. The promise of SO&M and its cost- effectiveness in maintaining and improving mobility is directly proportional to the nature of the implementation, such as the service needs addressed, extent of SO&M applications, aggres- siveness of the applications (compared to best practice). The more fully developed, long-standing programs are in trans- portation agencies where the limits on capacity enhancement have been acknowledged in policy; where senior leaders have consistently supported a standardized, expanding, and sus- tainable SO&M program; and where capable staff is evident, resources rationally relate to key needs, and partner relation- ships are somewhat formal. Technical Process Implications The nature of SO&M strategy applications (low-cost and dis- tributed) and their key features (critical information, com- munication and control systems and related technology, the necessity of situational awareness, and performance feedback) require custom-tailored processes in parallel with existing con- ventions for capital programs. Process development requires upper-management recognition of the need to formalize SO&M at a statewide level with the full set of standardized activities in parallel with those of other core programs, such as planning, programming, project development, and mainte- nance. It also requires the identification of the organizational units responsible, an accountability mechanism, supporting resources, and appropriate professional capacities. Systems and Technology Implications Without a formal managed SO&M program and experienced systems engineering staff (at both DOT central office and dis- trict levels), achieving standardization, rational systems plat- form, and technology improvement and upgrading is not possible. In addition, since some strategy applications involve external players in their concepts of operations, there is a need for external system coordination. However, this is not likely without a level of formal partnering. Performance Measurement Performance measurement is the basis for a transportation agency’s accountability for any mission related to mobility and safety—including increases in reliability. Policy remains merely assertion, and accountability meaningless, without the ability to determine the impacts of investments and actions. Thus, performance measurement plays a fundamental role in the culture and business model of an operations-committed C H A P T E R 6 Research Findings: Institutional Architecture Characteristics That Support Effective Programs

transportation agency. Performance measurement and report- ing also structures organizational reporting and accountabil- ity among units and individual managers in the organization. In addition, performance measurement is fundamental to resource allocation in association with performance standards and targets. It is (or should be) fundamental to the political process associated with the justification of funding for new and/or ongoing programs. Increasingly, state legislatures are beginning to demand this type of information during their budgeting processes. Finally, effective partnerships can be forged only in the context of an agreement on measures and related remediation and improvements. The Key Categories of Institutional Characteristics In the following discussion, the findings were analyzed in terms of the four categories of institutional characteristics for the range of variation across the DOTs and for their impli- cations regarding institutional differences between mature and transitioning states that appeared to be relevant to the more effective business processes. These findings—combined with evidence from organizational theory—suggest that there are four key categories of institutional characteristics that capture important relationships between business processes and institutions: • Culture/leadership related to the level of understanding and potential leverage of SO&M, as reflected in values, mission, leadership, and related legal arrangements and strategy applications, and as demonstrated by leadership. • Organization and staffing related to how structure aligns responsibilities and accountabilities vertically and horizon- tally, consistent with capabilities and incentives at the staff level. • Resource allocation for operations and capital, and the degree of transparency and sustainability in relationship to pro- gram improvement. • Partnerships in terms of degree of alignment and stability in objectives, procedures, roles, and relationships. The findings for each characteristic are presented below, including definition of the characteristic, indicators found in data or survey, and the related range of variation. While at a high level the identified characteristics of institutional archi- tecture correlate well with conventional wisdom, the specific features of each characteristic and the distinct relationships between levels of business process capability and specific insti- tutional architectures have been illuminated. Whereas most of the examples are drawn from state DOT experience, many of the same features apply to larger local government trans- portation entities. Culture and Leadership Definition Culture is a broad term that includes how an agency reflects (and embodies) the professional orientation toward SO&M and the overall public policy context that defines the trans- portation agency’s mission and public expectations. The per- spective on culture is descriptive rather than analytical, as the observations come from various sources, including the sur- vey, interviews, and existing literature. Indicators and Range Culture has a series of components that establish the con- text for professional, policy, organizational norms, and user/ stakeholder expectations and that together substantially enable (or inhibit) program modifications. There are nine key aspects of culture that are relevant. Vision evidencing a clear commitment to SO&M as a cus- tomer service-focused core mission of the transportation agency. An implicit and shared vision of the future of transportation infrastructure services is an essential component. Formaliz- ing this vision and interpreting the transportation agency’s role in the form of its mission is important where culture is changing or needs to change, as it establishes the baseline for SO&M strategy applications and their relevance. SO&M is increasingly, if indirectly, included in the mission of most of the mature transportation agencies (and many of the transi- tioning agencies) in language that refers to level of service or congestion. Whereas few explicitly call out operating the system as part of the mission, visible program components, especially TMCs and safety service patrols, have sometimes been branded with catchy names intended to market their public purpose. A formal strategic planning process, includ- ing an adjustment in the formal statement of goals and objec- tives to relate to systems operations and management, can be an important signal of a change in culture. Politics and public policy. Public policy is projected in both formal programmatic terms—as embodied in law and regulations—and the more informal political process through legislative and stakeholder influence on resource allocation. The expectations include visible (politics, media) expressions of public satisfaction or dissatisfaction regarding agency per- formance in dealing with congestion (especially NRC). The expectations establish the context for SO&M actions, includ- ing both focus and boundaries. They include both informal and formal expressions. The informal expressions are the pre- sumptions regarding proper role of the public agency in pro- viding facilities and services and their general quality level. The formal expressions comprise the authorizing environment for the agency’s activities, including conventions regarding 43

customary responsibilities and activities, state resource alloca- tion, and legal scope as per state government mandates, com- mittee jurisdictions, and other federal and state program mandates. Level of public expectations. In general, the level of expecta- tions regarding SO&M are low, based on experience and on lack of official commitment. There are occasions (major traf- fic disruptions, special events) when there is a focus on SO&M, usually in terms of inadequate response or the need to prepare for an expected problem. However, the external environment that influences transportation policy (elected officials, key legislative committees, organized stakeholder associations, media) rarely shows continuing interest in or support for aggressive SO&M at the program level—especially in terms of investment or staffing—even in the more mature states. Even in the limited instances where senior management has publicly declared a commitment to operations, there has been limited external interest or support. In part, this shows that many external decision makers and interests have considerable stakes in maintaining the conventional programs, which they often view as already underfunded, with SO&M seen as a diversion. The states with dominant or substantial small urban and rural environments, where recurring congestion is modest, are espe- cially slow in recognizing that NRC is the major source of dis- ruption and delay. Agency and professional background, values, and level of tech- nical knowledge regarding SO&M conventions. This includes professional, technical, and institutional values; background of management and staff; assumptions about what is the norm regarding the job of transportation professionals and the related lifestyle in offices and the field; the relevance of special technical knowledge; and the bureaucratic and civil service culture of public agencies. The dominance of civil engineering and civil service cultures in both mission and capability is a principal feature of the legacy context in most transportation agencies—with a professional orientation to medium-tech, organized capital project implementation on a nine-to-five basis, and with substantial span of control over the project environment. Newer (younger) professionals are introducing a systems-oriented, technology-comfortable element into this environment, and gradually introducing a technology-oriented and partner-dependent performance regime. Technical understanding of the potential of SO&M compared to other service improvement programs and investments. Insti- tutionalization of operations necessarily depends on the level of technical appreciation by staff and management of the potential for leveraging improved operations. It must also be based on an understanding of the basic concepts of SO&M, as well as of the more detailed specialty knowledge regarding individual applications. Few senior transportation agency managers have an SO&M background or seem to project a clear understanding of its potential. In some of the mature states identified in this project, technical understanding of the potential of operations has spread beyond operations staff, resulting from a combination of conditions including recon- ciliation to capacity constraints and CEOs with previous operations exposure, strong middle management or technical champions, and a major disruptive event. The transitioning states typically have one or two of these conditions. A business model, focused on systems management. The tradi- tional state DOT business model and the larger local govern- ments is revealed in both stated assumptions (about its role, the role of its partners, its intentions, and its commitment to deliv- ering improved levels of service) and unstated presumptions. The traditional transportation agency model evolved during a long period of successful development of new capacity. The business model was designed to construct and maintain safe and adequate upper-level highway facilities at a level to meet the peak-period demands of future growth. Part of this model has been unstated presumptions, including the transportation agency’s relative independence of service providers, lack of need to communicate with users, and a presumption that impacts of external events was substantially outside the agency’s influence—with congestion considered to be the outcome of uncontrollable factors (behavioral, weather, business patterns) that are not the responsibility of the transportation agencies. It is also not considered the responsibility of the public safety community whose actions may add to congestion in the pursuit of their different mission. Impact of new technology-related developments. The prevail- ing business model for state DOTs (and many local transporta- tion and public works entities) remains focused on providing and physically maintaining basic roadway capacity and viewing congestion as a symptom of capacity shortfalls that, in the long-term, may be overcome. However, there are a few instances where this traditional business model is beginning to transition to something closer to mobility management responsibility. The impact of vehicle tracking and communi- cations with systems users, the federal interest in performance, examples of aggressive management from abroad, in combina- tion with constraints on capacity additions, have led to some initiatives that support modest changes in the traditional busi- ness model. Visible leadership. Leadership in SO&M implies change management and visibility and identification of individual se- nior managers (central office and districts) with an SO&M mis- sion, both internally and externally. The lack of familiarity with SO&M and the lack of external support contribute to inhibit such visibility. In addition, top management in most state DOTs and most local government entities have been reluctant to commit to a formal SO&M program, as they are concerned with over-promising and raising expectations that cannot be met in areas where visible success is dependent on factors out- side of the agency’s control. Furthermore, many state DOT 44

CEOs come from outside transportation and most serve short terms that challenge the momentum of altering the current program. This concern is reinforced by an authorizing environ- ment, which, while forceful in regarding on-time, on-budget performance for construction, has no parallel expectations from operations other than to minimize exposure in the press. Federal influence versus state and local priorities. The well- established federal-aid transportation program is a major influ- ence on the culture of state and local transportation agencies (and directly on the program priorities and process as well). Federal aid accounts for nearly 40% of state capital expen- ditures and the grant conditions, regulations, and technical leadership of FHWA and FTA substantially shape state DOT, MPO, and local government priorities. SO&M has not long been part of the federal aid program (and many operations costs were not eligible for federal aid until recently). The fed- eral ITS and Operations program was only formalized in 1997 as part of TEA-21 with the establishment of an FHWA office, ITS deployment funds (since discontinued), and clarification of program intent and broad funding eligibility and a modest requirement for MPOs to consider SO&M. The legacy FHWA capital programs and related funding still dominate the federal-state and MPO relationships. Relationship to Program and Business Process Capabilities The development of a formal SO&M program requires a strategic framework to structure and asserts the priorities of the needed business process development. The imperative for making these efforts and the political and policy permission to do so depends on an understanding, on the part of policy and management leadership, of the potential of SO&M. It also depends on a willingness to make changes in the current status quo—requiring effort, resources, and disruption. Organization and Staffing Definition Organization refers to the structure of and relationships among the functional units and individual managers and technical staff. Staffing refers to the availability of needed technical and managerial capabilities. Indicators and Ranges Organization is only roughly reflected in the formal organiza- tion charts, because DOTs have important noncharted rela- tionships that may be dominant. Nevertheless, the following characteristics are widely observed at the state level. In addi- tion, whereas local government transportation agencies do not share the same organizational structure as state DOTs, many of these same issues are present. Authority of top management. Position in management hier- archy, relative to top management of other mission-related programs (maintenance and project development), has a sig- nificant impact on the ability of an SO&M program to secure resources and align authority. SO&M is rarely represented by an undivided portfolio even at the second level within most state DOT central offices and districts. There is a more varied mix in local governments when the traffic engineering unit may be separate from public works. This subsidiary status has an impact on the entire range of program, resource, and process issues. Organizational structure as it relates to clarity of roles, author- ities, responsibilities, and reporting relationships. All state DOTs—and most local government entities—are character- ized by an organizational structure that has evolved for con- struction and maintenance project development. In such a structure, various systems operations functions (e.g., ITS, traf- fic engineering, TMC management) are fragmented or decen- tralized across several traditional chains of command. At the state scale, the level of fragmentation versus consolidation applies to both a state DOT central office and at the district level, depending on the scale of each. It also includes the rela- tionships between them. As most SO&M activities are rela- tively new, there is often a lack of clarity about which unit is responsible for which activity or data. Both functional and geographic boundaries are unclear in terms of the following: • Roles and relationships among regional TMCs, districts, and the central office regarding program development; • Functions, support, and point-of-contact available to dis- tricts from central office units; • Guidance from the central office regarding applications priorities (with funding support) and consistency regard- ing platform, standards, data, and so forth; and • Standardized chain-of-command at the regional and dis- trict levels regarding incident management field activities among all players. Decentralization. The degree of local discretion versus central oversight (i.e., centralization versus decentraliza- tion) varies among states, particularly in response to size, with the larger states having decentralized most program development to the regions. Central office influence varies widely at the district level (where most SO&M services are developed and delivered), with greater independence evi- dent in the larger, multidistrict states. Degrees of fragmen- tation are evident from organization charts, with traffic engineering, ITS, TMC-based activities and maintenance often under different chains of command in both central offices and regional ones. 45

Alternative models. There are three different styles among mature states: • Functional (operations related): state DOTs where the cen- tral office tends to be focused on a single type of activity or project; • Divisional (geography related): state DOT districts operat- ing substantially independent of the state DOT central office; and • Matrix (combined): discussed in principle but not observed in practice. There appears to be a trade-off between statewide standard- ization and regional initiative incentivization. At the regional level within state DOTs, the same issue is reflected in the degree to which operations activity is focused on transportation man- agement centers (TMCs). Hierarchy. Even in states where there is a range of SO&M activities currently taking place, these activities have not been consolidated in the form of a formal program at the top-level division within the state DOT hierarchy, equivalent to mainte- nance and construction. SO&M activities are typically managed either as subsidiary components of a maintenance program, on a stand-alone ad hoc basis, or organized at the district level around a TMC. The Virginia Transportation Research Council survey cited earlier collected and reviewed state DOT organiza- tion charts (Virginia Transportation Research Council, 2005). This review revealed that several states have designated system operations units or divisions within their central offices and established new second-tier positions to provide oversight of operations activities. Responsibility, accountability, and incentives. Blurred or divided lines of responsibility make performance account- ability difficult. Central office managers typically have a limited direct contact with strategy applications in the field (except in small states) and, given the lack of performance information, do not hold project and regional activities managers accountable for the effectiveness of SO&M activ- ities. As with the traditional capital program, the account- ability focuses on project performance in terms of budget and schedule matters rather than in terms of measurable improvements in service. Largely absent is a clear frame- work of incentives (rewards) for individual and unit efforts. Technical capacity and staffing level. As reflected in the pres- ence or absence of the needed core capacities to develop and manage key SO&M activities, much of SO&M to date has been conducted by professionals benefiting from on-the-job training. Many state operations activities appear to be devel- oped and sustained by the intense and entrepreneurial efforts of middle-level unit manager champions who work within the existing system to implement projects. These activities have been observed to stall in terms of extension or improve- ment when the champion leaves his or her position. Most of the mature states have been or are now identifying the needed core capacities. Shortage of key expertise. There is a shortage of program- level managers in the public sector as a whole, for both cen- tral office and district-level positions, as states and the private sector compete for the limited number of experienced pro- fessionals. Even though several states have developed job specifications with indicated knowledge, skill, and ability cri- teria, they have been unable to fill such jobs directly. A key component is the set of measures taken to develop and sup- port staff professional development and to clarify their roles and careers in the departmental structure, including training, certification, rewards and incentives, active recruitment, and retention activities. A few states have set up their own inter- nal training activities or developed consortia academies for training purposes. Outsourcing. The difficulty in finding staff with the neces- sary capabilities, combined with constraints on staff sizes and hiring delays, has led some states into outsourcing a range of field functions, such as TMC operations, safety service patrols, maintenance, and systems development. Relationship to Program and Business Process Capabilities There is a high level of agreement that structure follows strat- egy and that decisions about organizational design must link clearly to agency intentions regarding improving business processes. The focus of these characteristics is to develop an organizational structure and staff capacities that are capable of developing and managing the key business processes, and of developing the systems needed for SO&M functions and for positioning SO&M within the agency at a level commen- surate with other core programs. Resource Allocation Definition The key resources that are subject to agency-level policy are capital resources for systems and technology (and their main- tenance) and operating resources in terms of staff positions and related support. Indicators and Ranges There is limited information or knowledge regarding the level of expenditures related to SO&M by state DOTs, even within the DOTs themselves. Some of the key indicators include SO&M expenditures as an eligible use of state and federal funds; resource adequacy in terms of relationships between 46

criteria-defined needs and available funding; staffing alloca- tion; and transparent criteria for resource allocation. SO&M expenditures as an eligible use of state and federal funds. To date, SO&M activities have been funded at a level that rarely merits its own budget category. As SO&M expands, the lack of clear funding source becomes an issue. Congestion man- agement and air quality (CMAQ) funds have been passed through to metropolitan areas for ITS investments, though rarely related to NRC. Federal-aid ITS deployment funds were, in the past, a major source of capital investment for state DOTs. The end of these programs has left SO&M competing for resources with well-established programs. In some cases, there is the additional issue of whether SO&M investments are an eligible use of state or federal funds—capital, operating, or maintenance. There appears to be wide variation among the states on this issue. In several states, legislative committees have explicitly excluded SO&M expenditures as an eligible use for certain state funding categories. What is clear is that few states have an SO&M program budget category that is considered in the multiyear or annual programming and budgeting process. Resource adequacy in terms of relationships between criteria- defined needs and available funding. SO&M has not been a for- mally defined program with its own budget category. Lacking line item status, it is without a known traceable funding level history. Only two states have clearly defined SO&M line item budgets. Without aggregated expenditures, management has little idea of what has been spent or budgeted for SO&M as compared to the established programs. Although, exclusive of occasional major ITS infrastructure investments and regu- lar snow and ice control reserves, SO&M annual expenditure levels rarely exceed 2% of total state capital budgets, fund- ing levels are always a concern, especially in the competition with legacy construction and maintenance programs for scarce resources. Only a small number of the mature states have undertaken a systematic SO&M planning/programming effort that provides a defensible basis for defining priority services and applications deployment, costs, and payoffs with a staging approach. Staffing allocation. A similar picture is apparent regarding staff resources, especially in the large number of states with hiring freezes or cutbacks in total staff slots. Whereas small numbers of slots have often been allocated (sufficient to man- age a small program), staffing for cost-effective SO&M expan- sion at both the central office and district levels has not been made available. Part of the problem is that the lack of formal program status means that it is difficult to know what is spent in aggregate on SO&M activities. Transparent criteria resource allocation. SO&M is not a high- level program or budget category in nearly all states. Almost all senior managers in state DOTs have no more than a gen- eral idea of the total resources allocated in aggregate to SO&M activities. Given the unfunded core program backlogs, cur- rent resource allocation is based largely on modest departures from past trends in capital and maintenance expenditures, not in a systematic, criteria-driven, cost-effectiveness frame- work for overall multiprogram resource allocation in which SO&M could effectively compete. Furthermore, states have not identified trade-offs among alternative investments (cap- ital versus operations) to best serve state DOT’s mobility mis- sion. To make matters worse, during budget cutbacks, several states have cut extremely effective SO&M services, such as safety service patrols, which have a limited internal or external constituency. The lack of a predictable transparent resource allocation process, including clear and accepted criteria for allocation and presumed sustainability, renders the effective implementation of SO&M difficult. Relationship to Program and Business Process Capabilities It is obvious that program development requires capital and staff resources to develop and manage the business processes associated with the program. The lack of resources creates a vicious circle in which lack of capability undercuts the ability to make the case for increased capability. Partnerships Definition Partners are organizations—public or private—whose coop- eration is essential to the execution of key SO&M strategy applications. They include PSAs (police, fire, and emergency services), other state agencies (toll authorities and environ- mental agencies), local governments, and regional planning and transit authorities. Indicators and Ranges All of the key strategy applications addressing NRC require the coordinated actions of several jurisdictional entities— both transportation and nontransportation—for effectiveness. There are four key types of jurisdictional issues: • Mixed ownership. Metropolitan areas require cooperation among local governments, the MPO, and the state DOT in both making ITS improvements and in real-time operations on roads, especially on both a corridor basis (for strategies such as incident management) and an areawide basis (for special events). • Multimodal opportunities. Transit operations involvement is relevant to planned events and major incidents where, with the support of operator coordination and traveler 47

information, a modal opportunity exists to provide options for travelers and possible reductions in congestion impacts. • Functional authority. Incidents involving public safety and law enforcement are the primary jurisdiction of police (state and local) emergency response, whereas medical issues involve fire and emergency medical entities. Law enforce- ment and emergency response entities typically have com- mand in crash settings, with the state DOTs providing support services, especially in relation to traffic control. • Private services. Private towing and recovery services and contracted private entities for patron safety service and asset management are also key players in the best practice concepts of operations for NRC strategy applications. The relationships vary from contract to legal and administra- tive arrangements. As suggested in Table 6.1, it is apparent that these entities all have different functional or geographic priorities that must be reconciled for effective, cooperative application of the conven- tional NRC strategies, where several parties play key roles. This reconciliation is often developed to a workable arrangement on an informal basis. However, such temporary arrangements often deteriorate with turnover in personnel and cannot be relied as the basis for sustainable improvement. A longer-range concern is the limits on interagency co- operation and collaboration to achieve the highest level of strategy application. The existing jurisdictional configuration— established for generations—may not support the most effec- tive approach to NRC. Indeed, other countries exhibit more consolidated jurisdiction. Presently, state DOTs—and larger local government trans- portation agencies—have various business models regarding the allocation of various SO&M functions among DOT staff, private-sector entities, and other public entities (both public safety and general purpose local government). Business mod- els vary in the level of state DOTs’ proactiveness in asserting transportation interests; in the degree to which DOT person- nel execute some functions; and in the level and type of col- laboration with (and in some cases devotion to) MPOs, local governments, and PSAs. There is also a range of relationships with the private sector in the degree and amount of outsourc- ing. Public and private partnerships are increasingly a critical component of systems operations in response to such issues as lack of coordination, instability, and reduced effectiveness. Key issues include alignment and partnerships with public agencies for effective field procedures and private-sector part- nerships for effective field procedures. Alignment and partnerships with public agencies for effective field procedures. With few notable exceptions, partnerships with PSAs, other state agencies, local governments, and MPOs have been based largely on a legacy of informal understand- ings, evolved for reasons that have little to do with optimal- ity. Rather, they are the heritage of custom, presumed legal jurisdiction, policies regarding agency size, and other factors. There are a series of issues that require close cooperation if the effectiveness of SO&M is to be improved, including clar- ification of legal authority, standardization of roles, consis- tent interagency postevent follow-up, and management of private-sector third parties such as towing and recovery. The absence of more formal commitments (memoranda of under- standing, revised regulations, and co-training) and agreed- upon roles and procedures undercuts more aggressive systems operations. An informal approach also limits the potential to achieve no-cost procedural modifications (evidenced in some states) that can accommodate priorities of partners without compromising their own in areas of incident management, environmental control, and integrated corridor management. There is a parallel set of issues relating to the relationships between state DOTs (particularly but not only in interstate corridors), the general-purpose local governments who own or manage major arterials (especially those that are part of freeway-arterial corridors), and the MPOs, which are respon- sible for planning. There have been a few bellwether formal public-public partnerships in metropolitan areas in the form of regional operations collaboration, formalized with charters and sustainable over a decade or more, typically in metro- politan areas where there are relatively few jurisdictions. Appendix D presents examples of several types of collabora- tion among state DOTs, local governments, MPOs, and other regional entities. 48 Table 6.1. Agency Mission Priorities Transportation Local Law Fire and Private Mission Agency Government Enforcement Emergency Contractor Law enforcement Low Low High Medium Low Emergency response Medium Medium High High Low Responder safety High High High High High Congestion management High Medium Low Low Medium

Private-sector partnerships for effective field procedures. Private-sector outsourcing has been increasing in the larger states as an important means of delivering several of the key operations services in the field, including TMC operations, safety service patrols, towing, routine maintenance response, work zone traffic control, supply of traveler information, and routine ITS and traffic control asset maintenance. Experience to date has raised concerns relating to the clarity and standard- ization of scopes and relationships and the performance man- agement of contractors. In addition, substantial outsourcing raises the question of the transportation agency’s ability to retain its core capabilities. The scale of these activities suggests the importance of a comprehensive and consistent statewide approach to determine the appropriate type and level of staff core capacity, and to develop procurement and contract man- agement procedures that insure maximum effectiveness. Relationship to Program and Business Process Capabilities Many of the factors underlying the ability to develop effective working partnerships supporting NRC strategy applications are outside the transportation agency’s span of control. Func- tions key to the effectiveness of these applications can be pro- vided by partners, both public and private. A basic business process involves joint planning with local governments and MPOs and execution of strategy applications in the field. Strategy application effectiveness is directly proportional to the partners’ ability to share the transportation agency’s interests— especially those related to reduced delay and disruption— while pursuing their own objectives. In the public sector, this goes beyond cooperation to partners’ willingness to adjust the manner in which their objectives are met to achieve the objective of minimizing delay. In the private-sector contrac- tor environment, it places emphasis on carefully structured performance-based contractual conditions. Summary Conclusions Regarding Key Institutional Characteristics Supporting Effective Business Processes The combination of the survey and interview findings, previ- ous state DOT-oriented research, and the identified character- istics of different types of private-sector entities converged to reveal four characteristic traits associated with the differences between the more product-oriented entities (transitioning transportation agencies with a modest SO&M focus) and those that appeared to have a stronger operations orientation (as represented by the more mature state DOTs). Table 6.2 summarizes the key findings in the mature versus transition- ing state DOTs in the four key institutional categories. Moving in the directions exhibited by the more mature entities involves coping with four principal challenges: cul- ture, organizational structure, resource allocation process, and partnerships. The culture has a strong civil engineering orientation, includ- ing legal authority and leadership and program structure sub- stantially focused on construction and maintenance programs. This legacy orientation includes unrealistic assumptions about 49 Table 6.2. Comparison of Institutional Characteristics: Mature versus Transitioning Process Agencies Institutional Element Features Associated with Transitioning Process Agencies Institutional Element Features Associated with Mature Institutional Element Called “Ad Hoc” Process Agencies Called “Rationalized” Culture/Leadership Organization/Staffing Resource Allocation Partnerships • Construction project development legacy dominant • Lack of visible policy or leadership for SO&M • SO&M not a formal program • Fuzzy legislative authority regarding roles in field • Subordinate role and divided portfolios of SO&M managers • Shortfall/turnover in qualified staff • Components of SO&M in fragmented units • No dedicated program budget • Lack of standardization/documentation • No performance outcome measures • Differing partner priorities unresolved • Fuzzy role of private sector • SO&M understood and supported by top management • SO&M has core program status • Clear legal authority for operations roles in field • Customer level of service acknowledged as key mission • Top level SO&M management positions established in central office and districts • Professionalization and certification of operations core capacity positions • Operations is formal, visible sustainable budget line item • Trade-offs between operations and capital expenditure considered • High level of operations coordination among key players in service delivery • Outsourcing performance managed while maintaining agency’s core capacities

the level of service benefits from modest capacity programs, and is accompanied by limited knowledge of the potential of SO&M and limited interest in, or ability to facilitate change and capitalize on opportunities offered by external events to advance operational capabilities. (Limited knowledge is reflected in the low expectations of users and other stakehold- ers regarding operations potential.) This perspective is often reflected in a fuzzy agency mission and the absence of a formal policy commitment to, or stakeholder support for, customer mobility needs, backed by realistic strategies and performance accountability. The organizational structure is configured for construction and maintenance project development, often leaving SO&M functions (e.g., ITS, traffic engineering, and TMC manage- ment), fragmented and in various traditional chains of com- mand, with limited staff capacity in certain technical areas necessary to improve operations. Resource allocation processes are without formal accom- modation for ITS-related investments. These resources are often viewed as the first place to cut. Partnerships (interjurisdictional roles and relationships) among operations participants, including PSAs, local gov- ernments, MPOs, and the private sector, are exacerbated by informal and unstable partner relationships in congestion management activities. The experience of the more mature states suggests that addressing these challenges is essential to the development of more effective programs and strategy applications. Process Maturity as a Bridge to Identifying Levels of Maturity Whereas strategies to improve technical and business processes maturity are not the focus of this project, process levels of maturity have been used as a device to structure a set of cor- responding levels of institutional maturity. Table 6.2 depicts the range of institutional characteristics based on the process maturity level supported. A characteristic set of institutional features associated with transitioning process agencies is called “ad hoc.” A corresponding set of institutional features is associated with agencies exhibiting more mature processes. As described in Chapter 5 and illustrated in Table 6.3, a parallel, three-level distinction for institutional maturity was developed from correlations of institutional maturity with the three distinct levels of process maturity by add- ing a third (ideal) level called mainstreamed. Each level of process maturity is associated with changes in institutional architecture. Level 1 is reflected by the many transportation agencies that are transitioning into SO&M as an identifiable managed activity. At the other end of the maturity scale is Level 3—an ideal agency culture, fully staffed within an efficient organi- zational structure, a transparent resource allocation process for SO&M, and formal relationships with partners. Between the transitioning situation and the ideal is Level 2, already evident in some state DOTs that are committed to formaliz- ing SO&M as a core program and are making changes to 50 Table 6.3. Correlation between Process Maturity Levels and Institutional Architectural Levels Program and Process Level 1 Level 2 Level 3 Capabilities Transitioning Mature Integrated Scoping Technical processes Technology and systems development Performance measurement Institutional Architecture Level 1 Level 2 Level 3 Elements Ad Hoc Rationalized Mainstreamed Culture/leadership Organization and staffing Resource allocation Partnerships Needs based and standardized Planned, mainstreamed Rational quantitative evaluation Outcomes used Championed/internalized across disciplines Aligning, trained Criteria-based program Formal, aligned Full range core program Integrated, documented Standardized C/E systems/platforms Performance accountability Customer mobility committed Professionalized Sustainable budget line item Consolidated Narrow and opportunistic Informal, undocumented Project oriented, qualitative Outputs reported Mixed, hero driven Fragmented, understaffed Project level Informal, unaligned

rationalize organization, staffing, resource allocations, and partner relationships toward that end. These relationships reveal a pattern of institutional evolution toward configura- tions that are increasingly supportive of effective SO&M processes. The three distinct levels of institutional capability maturity have been defined as follows: • Level 1: Ad Hoc. An architecture reflecting a legacy civil engineering culture in which SO&M activities are accom- modated on an ad hoc and informal basis, typically as a subsidiary part of maintenance or capital project arrange- ments. This level, as exhibited in transitioning states, is reflected in a legacy organizational structure and informal resource allocation, fragmented SO&M activities, ad hoc project-oriented business processes, and a narrow SO&M program with no clear sense of performance. • Level 2: Rationalized. An architecture exhibited in mature states that reflects an appreciation of SO&M as a distinct activity, with adjustments in arrangements, resources, and roles to accommodate the distinct features of SO&M. • Level 3: Mainstreamed. A hypothetical, fully integrated, ideal architecture in which SO&M is considered a core mission, with appropriate formal and standardized arrangements (equivalent to other core programs) configured to support continuous improvement. In combination, the relationships between the process lev- els and their capabilities, on the one hand, and the institution architectures and their supporting features, on the other, con- stitute the Institutional Capability Maturity Model. Table 6.4 presents the criteria that define the institutional architecture levels in greater detail. Each cell represents either a point of departure or a target for improving architecture to the next level. It provides criteria for each element at each level, but it does not provide guidance on the strategies for moving to the next level. Transportation agencies can plot their current state of play and targets for improvement. 51 Table 6.4. Criteria for Institutional Capability Maturity Levels of Capability Maturity Level 1 Level 2 Level 3 Elements Ad Hoc Rationalized Mainstreamed Culture/ leadership Organization and staffing Resource allocation Mixed, hero driven • Operations value not widely appre- ciated (lack of message). • Middle management heroes promote program. • Full legal authority not established. Fragmented, understaffed • Legacy roles: Some fragmentation of key functions and boundaries, both horizontally and vertically. • Hero driven: Reliance on key indi- vidual for technical knowledge and champions for leadership. Project level • Resource allocation at project level, ad hoc, unpredictable, buried, invisible. • Apparent limited eligibility of existing funds for operations. Championed/internalized across disciplines • Visible agency leadership citing opera- tions leverage, cost-effectiveness, and risks. • Customer outreach and feedback. Aligned, trained • Transportation Management Center (TMC) focus with vertical and horizontal authority or responsibility alignment for operations for the life of a project. • Accountability to top management. • Core capacities established with knowl- edge, skill, ability specifications, training, and performance incentives in clear career paths. Criteria-based program • Budget allocation for operations driven by transparent criteria on effectiveness and life-cycle needs basis. • Funding levels based on relationship to identified needs. Commitment to customer mobility • Customer mobility service com- mitment accepted as formal core program. • Clear legal authority for opera- tions roles; actions among trans- portation agency, public safety agencies (PSAs), local govern- ment clarified. Integrated • Top-level management position with operations orientation established in central office and districts. • Professionalization and certifica- tion of operations core capacity positions including performance incentives. Sustainable budget line item • Operations is a formal, visible, and sustainable line item in agency’s budget—capital, operating, and maintenance. • Trade-offs between operations and capital expenditures considered as part of the planning process. (continued on next page)

52 Table 6.4. Criteria for Institutional Capability Maturity (continued) Levels of Capability Maturity Level 1 Level 2 Level 3 Elements Ad Hoc Rationalized Mainstreamed Partnerships Informal, unaligned • Nontransportation entities unaligned with transportation objectives, procedures relying on informal personal basis. • Outsourcing to private sector used for isolated functions. Formal, aligned • Rationalization of responsibilities by for- mal agreements across institutions (transportation agency, PSAs, private). • Outsourcing revised to meet agency technical, staffing, and management objectives. Consolidated • High level of operations coordina- tion (memorandums of understand- ing) among owner/operators with TMC consolidation. • Outsourcing performance man- aged while maintaining agency’s core capacities.

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TRB’s second Strategic Highway Research Program (SHRP 2) Report S2-L06-RR-1: Institutional Architectures to Improve Systems Operations and Management examines a large number of topics concerning organizational and institutional approaches that might help transportation agencies enhance highway operations and travel time reliability.

The same project that produced SHRP 2 Report S2-L06-RR-1 also produced SHRP 2 Report S2-L06-RR-2: Guide to Improving Capability for Systems Operations and Management.

An e-book version of this report is available for purchase at Google, iTunes, and Amazon.

An article on SHRP 2 Report S2-L06-RR-1 was published in the January-February 2013 issue of the TR News.

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