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33 CHAPTER 4 Conclusions and Suggested Research There is broad recognition that recent investment levels in 2. Allocate maintenance support expenditures to line transportation infrastructure have been and remain inade- activities, quate. As a result, the pressure on state DOTs to do more with 3. Gather and classify enterprise programs and expenditures, less has never been greater, and agencies continue to actively 4. Allocate a portion of enterprise support expenditures to pursue opportunities to lower costs while striving to maintain the maintenance program, and or even improve performance. In the maintenance arena, this 5. Combine cost categories to derive full cost. has led an increasing number of state DOTs to consider the options of outsourcing and publicprivate partnership for The process strongly encourages a team approach and some maintenance services. should include agency personnel that are knowledgeable Although cost is not the only factor that must be consid- about the maintenance program, agency financial account- ered when exploring such alternative delivery methods, it is most often cited by advocates, both for and against, in order ing practices, and agency information systems. The process to support their position. To date, however, there has been developed leverages well-established OMB guidelines for no widely accepted process for determining the costs asso- the identification and allocation of indirect costs, and exist- ciated with performing highway maintenance if done by ing state DOT approaches to satisfying FHWA's indirect the transportation agency itself. Furthermore, on review of cost allocation requirements. Consistent with the use of a many existing reports and audits that compare in-house and team approach and OMB guidelines, and contrary to initial outsourced costs, it is evident that often, some of the ele- expectations, the full cost determination process does not ments making up the total agency cost of an activity are not vary as a result of differences in agency, maintenance pro- properly considered or, in some instances, are not included. gram, and/or maintenance activity characteristics. The only The cost elements most frequently missed or mishandled variation between calculations relates to the inputs and are those related to maintenance program and agency-wide sources of data that are leveraged in each step of the process. (or enterprise) support. The full cost determination process The full cost process developed is practical and robust, as described and demonstrated in this report is designed to fill demonstrated by its application to six state DOTs, with con- this gap. siderable variation in maintenance program structure, geo- graphic location and characteristics, agency size, and infor- 4.1 Full Cost Determination Process mation systems environment. The benefits of performing the full cost calculation go The process developed is flexible enough that it can be ap- beyond satisfying the objective to enable the calculation of plied to any specific maintenance activity, and it ensures that any maintenance activity's full cost, thereby providing a the resulting full cost incorporates a fair share of both main- critical input into agency decisions regarding in-house ver- tenance program and enterprise support. The full cost deter- sus contractor performance of any particular maintenance mination process is composed of the following five steps: activity. Gathering the necessary data and performing the calculation requires a thoughtful review of the maintenance 1. Gather and classify maintenance program activities and program structure and activities as well as the distribution expenditures, of expenditures to activities and to the different elements of