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4 CHAPTER 1 Introduction 1.1 Background ular maintenance activity, which is a key consideration for decisions regarding service delivery. This objective was accom- Because of growing demands and resource limitations plished through the following tasks: for highway maintenance, state departments of transporta- tion (DOTs) and other highway agencies often consider non- 1. Collection and review of information relevant to the prac- traditional means for financing and contracting these services. tices for determining the costs associated with perform- For example, some state DOTs have considered the options of ing highway maintenance activities. The literature review outsourcing and publicprivate partnership of some mainte- spanned a variety of sources, including agency reports and nance services. However, identifying the most desirable option audits exploring maintenance costs and comparisons of for a specific maintenance activity requires knowledge of the in-house and contractor costs, research findings, govern- transportation agency's full costs associated with such activity. ment requirements, as well as other information relating Often, some of the elements making up the total cost of an to transportation agency cost tracking in general and main- activity are not appropriately considered or, in some instances, tenance activity costs specifically. In addition, structured are not included. The cost elements most frequently missed interviews were conducted with maintenance and finance or mishandled are those related to maintenance program and personnel at 10 state DOTs. The DOTs were selected in agency-wide (or enterprise) support. order to provide a range of combinations of three char- There is no widely accepted process for determining the acteristics: geography (climate, terrain, degree of urban- costs associated with performing highway maintenance if ization), size of system (lane miles, bridge deck area), and done by the transportation agency itself. Research was needed management information systems sophistication. The to identify current practices, review relevant information, and interviews focused on how each agency determines and develop a rational process that considers all cost elements and tracks maintenance costs, the systems and processes used, thus provides a realistic estimate of the costs of maintenance and agency attempts, if any, to determine the full cost of activities. NCHRP Project 14-18 was conducted to address maintenance activities. this need. 2. Identification of the cost elements required to accurately determine the full cost of any specific highway mainte- nance activity. These cost elements included salaries and 1.2 Objective and Research Approach benefits, materials, equipment, and other charges that rou- The objective of this research was to develop a practical tinely make up maintenance activity costs; maintenance and robust process for determining an agency's full costs asso- program support costs such as program administration ciated with performing highway maintenance. The process and the state maintenance engineer; and enterprise sup- needed to be flexible enough that it can be applied to any spe- port costs such as executive management, finance, human cific maintenance activity, and it needed to ensure that the resources, and legal offices or departments. resulting full cost incorporates a fair share of both mainte- 3. Preliminary evaluation of cost determination approaches nance program and enterprise support. The primary appli- identified in Task 1 for the full set of cost elements iden- cation of the process will be to enable agencies to compare tified in Task 2. This task focused on the practices and the cost of in-house versus contractor delivery of any partic- procedures available for determining the costs associated