National Academies Press: OpenBook

Institutional Architectures to Improve Systems Operations and Management (2012)

Chapter: Chapter 9 - Alternative Institutional Models

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Page 63
Suggested Citation:"Chapter 9 - Alternative Institutional Models." 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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Page 64
Suggested Citation:"Chapter 9 - Alternative Institutional Models." 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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Page 64
Page 65
Suggested Citation:"Chapter 9 - Alternative Institutional Models." 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.
×
Page 65
Page 66
Suggested Citation:"Chapter 9 - Alternative Institutional Models." 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.
×
Page 66
Page 67
Suggested Citation:"Chapter 9 - Alternative Institutional Models." 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.
×
Page 67

Below is the uncorrected machine-read text of this chapter, intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text of each book. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.

In this chapter, alternative models of change in institutional arrangements are addressed. The models range from incre- mental to new institutions. The contributions of theory and experience in relevant countries are reviewed. Evolution or Revolution As indicated, higher levels of capability require greater institu- tional change. The transition across levels may become increas- ingly difficult within the existing institutional context. Owing to limitations on the span of control of top management (authorization, staffing, labor, partnership constraints), it may be more practical and politically easier to adopt a new model for key parts of the transportation agency’s SO&M program. Such a model may be forced on some or all of the SO&M activ- ities by external events. The Models “Models” refers to institutional arrangements for certain management and operational activities that are a departure from incremental change within the existing institutional framework of organizational roles, resources, and partner relationships. These alternative models have typically been applied to a given function statewide, or a set of functions on a geographical basis. The arrangements may relate to changes in responsibilities for major functions, as between levels of government or with the private sector. A range of institutional models has been reviewed from existing sources in the United States and through discussion with key professionals. In addition, information descriptive of some models has been derived from international sources. The first three models described below are representative of U.S. (and, where noted, international) experience; the fourth model is currently in use in the public utility sector. In the following discussion, the four models are described and are compared with each other against a baseline of the existing institutional structure, assuming an incremental approach. (A separate discussion of other international models con- cludes this chapter.) It should be noted that while the examples below are described in available material, there is minimal literature describing the models in terms of the four institutional elements by which they are compared. Activity Outsourcing This model is presumed to apply to a statewide program, although its components can occur at different rates on a regional basis. This model assumes systematic outsourcing of certain SO&M functions at the activity level, such as safety service patrols, TMC operations, and asset management, as per current practice in a few states, but with the transporta- tion agency maintaining program and individual activity contract management responsibility. While several states out- source TMC operations and safety service patrols in some metropolitan areas, only two states have substantially out- sourced most of these activities on a statewide basis. Program Outsourcing (Public–Private Partnerships) This model is presumed to apply to a statewide program, although its components can occur at different rates on a regional basis. This is distinguished from activity outsourcing by its inclusion of an entire set of activities (e.g., all real-time operations activities) into a single contract, with a program manager reporting to a separate public–private entity, and including management of other service providers on a large- scale geographic basis. There is no statewide U.S. example (although such public–private partnership models are in use in some U.S. tolled facilities), but the U.K. Highways Agency has established subnational regions (like state DOT districts) under which most operational and related maintenance functions are performed by a combination of dedicated staff and contractors. C H A P T E R 9 Alternative Institutional Models 63

New Cooperative Operations Collaboration New regional operations relationships have been established either through a consolidation of the SO&M responsibilities (state and local) of existing public agencies into a new entity or through a new set of planning and operations collabora- tive relationships. These types of organizations appear to reflect willingness on the part of state DOTs to devolve com- plex metropolitan or regional multijurisdictional operating activities, rather than lead such efforts themselves. There are several entities of this type in the United States, most of which were established in the 1990s, that were incen- tivized by FHWA incentive funding (currently less available). These entities do not assume all of a state DOT’s SO&M func- tions and activities and have dedicated purposes that vary widely. Some have coordinated planning functions and one or more real-time operations functions, such as traffic conditions analysis and dissemination (TransCom), TMC, arterial and/or freeway operations (FAST, TSSIP, NITTEC, FAST-TRAC), incident management and HOT operations (TranStar), bridge and tunnel operations coordination and resource allocation (BATA), and weather information development and dis- semination (CLARUS). As this model exists in several versions in the United States, several examples have been described and compared to illus- trate key features and differences, presented in Appendix E. The most interesting features include: • Membership and lead agency—typical local government- led consortium. • Scope and span of control over distinct regional activities— wide variation, but normally includes local and state facilities. • Degree of formality of formation—legislation or memo- randum of understanding. • Use of TMC and colocation—in most cases. • Funding—typically voluntary from multiple sources. Public Utility Model This model, presumed to apply to a statewide program, is by definition privately managed and funded by user fees, under public policy and regulatory oversight. There is no known example in highway-related SO&M. The closest examples are regional transit authorities that provide transit operations at the metropolitan (or regional) scale, with professional man- agement and local and state government boards of directors. These authorities are not self-supporting from user fees, and they depend on state and local tax sources. An emerging ver- sion of a public utility model may be public authority or pri- vate HOT and toll road development and operations at the network level. This represents a high level of operational control over a limited set of facilities, but examples already exist where SO&M applications are managed by such entities including, in some cases, control of the law enforcement func- tion. This model has limited relevance at the present time, in the absence of a separate financial base via user fees and a pric- ing orientation. In the long run, the introduction of mileage fees, possibly combined with publicly regulated private oper- ating franchises, might approximate this model. Combinations and Evolutions The above alternatives are not entirely exclusive and some evolutions are clearly possible. For example, the first two models are not inconsistent with an incremental approach as a response to resource limitations or a performance manage- ment driven policy, with state DOTs maintaining essential control over policy, resources, and activities. At each stage in such an evolution, more and more attention to performance (oversight rather than execution) is implied. With each stage, there are also more substantial changes in the roles of public entities. In Table 9.1, the four models are described and compared to the incremental approach in terms of the key institutional elements. The last row in the table also assesses the likelihood of each model to advance SO&M quickly. Implications of Alternative Models Regarding Key Institutional Issues The following sections expand on the implications of these alternative models relative to the key elements of institutional architecture. Culture and Leadership The incremental approach, as a baseline, is structured toward increasing levels of understanding and orientation toward SO&M as a formal program. Outsourcing and public–private partnerships introduce partial or substantial changes in the busi- ness model, reflecting not only an introduction of a new DOT mission and responsibility (and improved cooperation with other public entities) but also an adjustment in the appropriate role of the public sector versus the private sector, e.g., the public sector sets policy and standards and provides performance- based oversight to private sector entities who actually perform the function. The policy underlying such a change in the busi- ness model is already evident in large-scale asset management contracts of several states and is also reflected in public– private toll road development. The development of a new public entity represents a public acceptance of the importance of SO&M and the need for intensive cooperation. The 64

Table 9.1. Characteristics of Alternative Institutional Models Baseline— Program Incremental Change Outsourcing (PPP) Managed incremental Outsourcing all field New Cooperative Public Utility improvements as per activities into single Operating Entity Independent entity Operations Capability contract, including Establishment of with separate Maturity Model with Activity oversight—on long-term regional operating management and minimal change Outsourcing basis to achieve entity as joint venture resource base, in organization Selected operations partnership (U.K. of agencies with enterprise (current status, activities individually Highway Authority, regional operations- management, and Model most DOTs) outsourced toll authority model) related jurisdiction public regulation Culture Leadership Organization and Staffing Resource Allocation Partnerships Capability to Advance SO&M Quickly • Established with operations- oriented culture • Leadership selected for operations experience and leadership • Organization developed specifically for real-time service provision • Full operational functions provided • Technical capacity retained from market • Flexibility in staff as needed • Independent funding source from state budget or user fees • Presumes assumption of key roles as essential for effective oper- ations • Involves realloca- tion of functions from DOTs, PSAs • High • Dependency on widespread understanding/ acceptance of oper- ational mission • Slow to change via external, internal education • Heavily dependent on external (political) factors • Requires leadership • Consolidation of fragmented units • Development of full functions required • Shortfall in technical and management • Need for training in specialties • (Programming and budgeting assumed) • Reduced fragmenta- tion and increased span of agency con- trol of resources • Relationships informal • Slow realignment due to independent missions, resources • Relationships formal (MOU) • Moderate • Presumes increased understanding/ acceptance of operational mission as core function • Change in mindset from execution to oversight • Reduction in direct customer contact • Heavily dependent on external (politi- cal) factors • Presumes degree of mainstreaming • Reduced staffing requirements • Development of full functions required • Core capacity maintenance • Establishes activity level resource commitment • Impact of changes in level is external • Flexibility in response • Performance contracting • Moderate • Note: Can be combined with program outsourc- ing and/or new cooperative entity models • Reduced depen- dency on internal understanding/ acceptance of operational mission as core function • Change in mindset from program execu- tion to performance oversight • Reduction in direct customer contact • May be influenced somewhat by outsourcing orientation • Presumed partner- ship orientation management • Minimal staffing requirements • Development of full functions required for planning/funding only • Core capacity maintenance • Establishes program level resource commitment • Funding level explicitly related to performance • Impact of changes in level is external • Flexibility in response • Performance contracting • High • New culture of customer service • (Presumably) selected to new mission • Minimal staffing requirements • Establishment of full functions required for plan- ning/funding only • Core capacity maintenance • Likely to outsource most functions • Establishes program level resource commitment • Funding level explic- itly related to performance • Performance contracting • High

public utility model represents a more radical (and not yet real- ized) change in the business model away from a public agency to an enterprise model. This approach may be approximated in the context of regional private toll road operations. Dedicated and sustained leadership is needed to introduce and maintain changes from the legacy context to any reconfig- uration of roles or resources. Such changes are also dependent on unique circumstances (limited number of key players) and, to date, special external pressures, such as financial shortfalls, coordination problems, or major disruptions. Organization and Staffing The establishment of a stand-alone, purpose-dedicated entity provides staffing flexibility and some relief from civil service constraints, and clarifies accountability for the chartered SO&M functions. These models are, by definition, designed to substitute for state DOT staff and to acquire special capability at a competitive cost. From a management and accountability point of view, it is shifting the state DOT staff function from concern with execution to a focus on outcomes and, at the same time, highlighting the need to identify core capacities. Resource Allocation Although the cost of SO&M as a proportion of overall state DOT budgets (exclusive of snow and ice control) is small, rarely above 2%, SO&M expenditures are frequently seen as competing with well-established and justified maintenance programs (and sometimes capital) for scarce resources—the challenge, in effect, being one of policy. In some instances, the transition toward more outsourcing has been hampered by legislative and stakeholder resistance to diversion of funds. The first two alternative models monetize certain compo- nents of an SO&M program that may overcome staffing constraints and create a visible budget item. Outsourcing programs are on annual or multiyear contracts, providing different levels of stability. Competitively bid longer-term contracts permit the private entity to invest in more efficient service delivery. While this represents a degree of formaliza- tion of an SO&M program, it has also made these elements vulnerable to budget cuts. A new operating entity is likely to involve a budget as a matter of agreement among the partic- ipating entities, but is also subject to individual participant budget variation. A new utility like entity, by definition, has its own source of funding (such as dedicated taxes or tolls). Partnerships A key feature exhibited by the current, more mature state DOTs is the formalization of partnerships via memoranda, joint training, and regular performance review. The develop- ment of a special-purpose entity, by definition, finesses much of the partnership alignment problem, some of which is sub- sumed in an interagency agreement. Partnerships and new entities are also likely to be dependent on outsourcing and the public–private partnerships involved, and permit resolution of most partnership issues via contract. The International Perspective In the review of alternative institutional models that might be relevant to the U.S. context, international comparisons were made among countries that share sufficient cultural similar- ities such that differences in other institutional elements can be revealing. There is limited written material on institutional models internationally. One of the key sources is the 2006 FHWA Scan of Active Traffic Management. The U.K. Highways Agency has recently completed an as-yet-unreleased scan of incident man- agement experience in six countries: Holland, France, Australia, United States, Germany, and Sweden. This Investigation and Evaluation of Road Incident Management Approaches: Interna- tional Initial Review Report was conducted in part by members of this project team and provides a useful up-to-date parallel to the FHWA scan. A comparison of the U.K. and U.S. scans interestingly reveals a grass-is-greener phenomenon, with the U.K. observers admiring the range of experimentation in the United States and the U.S. observer admiring the simpler institutional structures with a national transportation agency, single law enforcement entity, and apparently closer coordi- nation among agencies from a single level of government out- side the United States. Given the availability of written material and direct contacts, the comparisons were focused on the United Kingdom and Australia, with limited consideration of the Netherlands, France, and Japan. Account must be taken for the fact that these countries are smaller (in population and size) and less diverse than the United States and vary considerably in their national and subnational government structures. For example, it is difficult to compare the activities of the U.K. (national) Highways Agency or the Dutch Ministry of Transport, Public Works, and Water Management (Rijkswaterstaat) with a state DOT, although they bear similar types of responsibilities. The variations in institutional models in the United King- dom, Australia, and the Netherlands reflect a high national priority on traffic management. In particular, all three coun- tries focus on reliability, reflecting a consensus of the relative leverage of managing NRC. This priority translates into some key differences from typical U.S. state DOT policy in terms of these items: • Explicit congestion management policy; • Clear divisional responsibility for operations; 66

• Formal planning and budgeting for operations; • Specific professional specialty and training; • Use of operations-related performance criteria to measure agency functions; and • A high degree of outsourcing. Australia and the Netherlands share the strong operations orientation of the United Kingdom, but geographic differ- ences lead to different models. In Australia, closer to the U.S. legacy model, traffic management is at the state and regional (urban) level, but also exhibits strong transportation– law enforcement relationships and a strong focus on per- formance measurement. Unlike in the United Kingdom, operations are not a stand-alone division or budget. The Netherlands, with its simpler institutional framework, has taken an even more aggressive step with active traffic man- agement and the introduction of GPS-based road pricing by 2011. While the culture and institutional arrangements are quite different in Japan, there is a similarity with the United Kingdom and Netherlands in the consolidation of author- ity for operations in a single agency—the national police— and in strong public–private partnerships, especially in the provision of traffic information. Appendix A presents a comparison of the United States, United Kingdom, and Australia regarding planning, imple- mentation, operations, and maintenance of ITS and SO&M, insofar as they suggest relevant models. Reallocation of Roles A noticeable difference emerging in the international scans is the impact of (relative) institutional simplicity derived from the major role played by the national government in nonfederal countries. This eases the ability to develop a policy consensus and minimizes the jurisdictional fragmentation. In particular, this is visible in the differences between such countries’ national unified goals process (which involve various aspects of systems operations and management, such as incident management, making it easier for many countries to develop consensus) and the U.S. National Traffic Incident Management Coalition (NTIMC), which require a higher level of effort in reaching agreement even on high-level principles alone. The most striking example of the evolution of the U.K. Highways Agency over the last decade, regarding the delivery of both operations and maintenance services, is outsourcing to private entities. The road network is divided into 14 oper- ational areas, with each area managed by a managing agent contractor. England has also been divided into four traffic- operations regions. The formal mission has developed a much stronger focus on reliability, safety, and information, as evidenced by the aggressive implementation of active traf- fic management schemes. This network operations focus has led to a set of institutional changes in its support. The follow- ing organizations within the Highways Agency contribute to incident management: • The Traffic Officer Service represents an increase in the Highways Agency’s role in incident and emergency man- agement, taking over non–law enforcement traffic manage- ment role from the police (including incident command in minor incidents). This service includes a fleet of patrol vehi- cles that operates in coordination with the regional control centers, supporting incident and emergency services, with highways and law enforcement personal colocated. • The private sector and the regional managing agent con- tractors maintain a strategic network to meet service level agreements. They play a key role in managing incidents by providing tactical incident management to the Traffic Offi- cer Service and asset repair required as a result of incidents. • The National Traffic Control Centre, National Incident Liai- son Officers, and the Highways Agency Information Line are countrywide (similar to statewide) organizations that coor- dinate among regions and major emergencies as necessary. This model represents a combination of focus on opera- tions in the transportation agency, a renegotiation of a more active role for the Highways Agency among the key players in some of those highway operations, dedicated incident response function, and aggressive recourse to the most aggressive strat- egy applications. 67

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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.

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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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