Guide to Cross-Asset Resource Allocation and the Impact on Transportation System Performance (2015)

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N A T I O N A L C O O P E R A T I V E H I G H W A Y R E S E A R C H P R O G R A M NCHRP REPORT 806 Guide to Cross-Asset Resource Allocation and the Impact on Transportation System Performance Michelle Maggiore Kevin M. Ford CH2M HILL Chantilly, VA High Street Consulting Group Denver, CO Burns & McDonnell Kansas City, MO Subscriber Categories Administration and Management TRANSPORTAT ION RESEARCH BOARD WASHINGTON, D.C. 2015 www.TRB.org Research sponsored by the American Association of State Highway and Transportation Officials in cooperation with the Federal Highway Administration

NATIONAL COOPERATIVE HIGHWAY RESEARCH PROGRAM Systematic, well-designed research provides the most effective approach to the solution of many problems facing highway administrators and engineers. Often, highway problems are of local interest and can best be studied by highway departments individually or in cooperation with their state universities and others. However, the accelerating growth of highway transportation develops increasingly complex problems of wide interest to highway authorities. These problems are best studied through a coordinated program of cooperative research. In recognition of these needs, the highway administrators of the American Association of State Highway and Transportation Officials initiated in 1962 an objective national highway research program employing modern scientific techniques. This program is supported on a continuing basis by funds from participating member states of the Association and it receives the full cooperation and support of the Federal Highway Administration, United States Department of Transportation. The Transportation Research Board of the National Academies was requested by the Association to administer the research program because of the Board’s recognized objectivity and understanding of modern research practices. The Board is uniquely suited for this purpose as it maintains an extensive committee structure from which authorities on any highway transportation subject may be drawn; it possesses avenues of communications and cooperation with federal, state and local governmental agencies, universities, and industry; its relationship to the National Research Council is an insurance of objectivity; it maintains a full-time research correlation staff of specialists in highway transportation matters to bring the findings of research directly to those who are in a position to use them. The program is developed on the basis of research needs identified by chief administrators of the highway and transportation departments and by committees of AASHTO. Each year, specific areas of research needs to be included in the program are proposed to the National Research Council and the Board by the American Association of State Highway and Transportation Officials. Research projects to fulfill these needs are defined by the Board, and qualified research agencies are selected from those that have submitted proposals. Administration and surveillance of research contracts are the responsibilities of the National Research Council and the Transportation Research Board. The needs for highway research are many, and the National Cooperative Highway Research Program can make significant contributions to the solution of highway transportation problems of mutual concern to many responsible groups. The program, however, is intended to complement rather than to substitute for or duplicate other highway research programs. Published reports of the NATIONAL COOPERATIVE HIGHWAY RESEARCH PROGRAM are available from: Transportation Research Board Business Office 500 Fifth Street, NW Washington, DC 20001 and can be ordered through the Internet at: http://www.national-academies.org/trb/bookstore Printed in the United States of America NCHRP REPORT 806 Project 08-91 ISSN 0077-5614 ISBN 978-0-309-30852-6 Library of Congress Control Number 2015934723 © 2015 National Academy of Sciences. All rights reserved. COPYRIGHT INFORMATION Authors herein are responsible for the authenticity of their materials and for obtaining written permissions from publishers or persons who own the copyright to any previously published or copyrighted material used herein. Cooperative Research Programs (CRP) grants permission to reproduce material in this publication for classroom and not-for-profit purposes. Permission is given with the understanding that none of the material will be used to imply TRB, AASHTO, FAA, FHWA, FMCSA, FTA, or Transit Development Corporation endorsement of a particular product, method, or practice. It is expected that those reproducing the material in this document for educational and not-for-profit uses will give appropriate acknowledgment of the source of any reprinted or reproduced material. For other uses of the material, request permission from CRP. NOTICE The project that is the subject of this report was a part of the National Cooperative Highway Research Program, conducted by the Transportation Research Board with the approval of the Governing Board of the National Research Council. The members of the technical panel selected to monitor this project and to review this report were chosen for their special competencies and with regard for appropriate balance. The report was reviewed by the technical panel and accepted for publication according to procedures established and overseen by the Transportation Research Board and approved by the Governing Board of the National Research Council. The opinions and conclusions expressed or implied in this report are those of the researchers who performed the research and are not necessarily those of the Transportation Research Board, the National Research Council, or the program sponsors. The Transportation Research Board of the National Academies, the National Research Council, and the sponsors of the National Cooperative Highway Research Program do not endorse products or manufacturers. Trade or manufacturers’ names appear herein solely because they are considered essential to the object of the report.

The National Academy of Sciences is a private, nonprofit, self-perpetuating society of distinguished scholars engaged in scientific and engineering research, dedicated to the furtherance of science and technology and to their use for the general welfare. Upon the authority of the charter granted to it by the Congress in 1863, the Academy has a mandate that requires it to advise the federal government on scientific and technical matters. Dr. Ralph J. Cicerone is president of the National Academy of Sciences. The National Academy of Engineering was established in 1964, under the charter of the National Academy of Sciences, as a parallel organization of outstanding engineers. It is autonomous in its administration and in the selection of its members, sharing with the National Academy of Sciences the responsibility for advising the federal government. The National Academy of Engineering also sponsors engineering programs aimed at meeting national needs, encourages education and research, and recognizes the superior achievements of engineers. Dr. C. D. Mote, Jr., is president of the National Academy of Engineering. The Institute of Medicine was established in 1970 by the National Academy of Sciences to secure the services of eminent members of appropriate professions in the examination of policy matters pertaining to the health of the public. The Institute acts under the responsibility given to the National Academy of Sciences by its congressional charter to be an adviser to the federal government and, upon its own initiative, to identify issues of medical care, research, and education. Dr. Victor J. Dzau is president of the Institute of Medicine. The National Research Council was organized by the National Academy of Sciences in 1916 to associate the broad community of science and technology with the Academy’s purposes of furthering knowledge and advising the federal government. Functioning in accordance with general policies determined by the Academy, the Council has become the principal operating agency of both the National Academy of Sciences and the National Academy of Engineering in providing services to the government, the public, and the scientific and engineering communities. The Council is administered jointly by both Academies and the Institute of Medicine. Dr. Ralph J. Cicerone and Dr. C. D. Mote, Jr., are chair and vice chair, respectively, of the National Research Council. The Transportation Research Board is one of six major divisions of the National Research Council. The mission of the Transporta- tion Research Board is to provide leadership in transportation innovation and progress through research and information exchange, conducted within a setting that is objective, interdisciplinary, and multimodal. The Board’s varied activities annually engage about 7,000 engineers, scientists, and other transportation researchers and practitioners from the public and private sectors and academia, all of whom contribute their expertise in the public interest. The program is supported by state transportation departments, federal agencies including the component administrations of the U.S. Department of Transportation, and other organizations and individu- als interested in the development of transportation. www.TRB.org www.national-academies.org

C O O P E R A T I V E R E S E A R C H P R O G R A M S AUTHOR ACKNOWLEDGMENTS The research team would like to acknowledge organizations from the following states for sharing their current resource allocation practices or participating in NCHRP Project 08-91 workshops and tool testing: New Jersey, North Carolina, South Carolina, Utah, and Virginia. The participation of state highway officials at the California, Illinois, Kansas, Missouri, North Dakota, Utah, SCOP/SCOPM, New Jersey, WASHTO, and MAASTO workshops is also greatly appreciated. The team at CH2M HILL, most notably Dr. Qiang Bai, Ms. Alyson Welsh-Reaves, Dr. Mohammadsaied Dehghanisanij, Mr. Steve Dilts, and Ms. Michele Ford, supported tool prototype development, develop- ment of workshop materials, and project quality management and control. Mr. Craig Secrest and Mr. Kyle Schneweis (HSC) were instrumental in developing agency case studies to inform implementation, with Ms. Julie Lorenz developing a workshop structure and ideas for future application and implementation of the framework and tool prototype. CRP STAFF FOR NCHRP REPORT 806 Christopher W. Jenks, Director, Cooperative Research Programs Christopher Hedges, Manager, National Cooperative Highway Research Program Andrew C. Lemer, Senior Program Officer Sheila Moore, Program Associate Eileen P. Delaney, Director of Publications Doug English, Editor NCHRP PROJECT 08-91 PANEL Field of Transportation Planning—Area of Forecasting John H. Daly, III, Genesee County (MI) Road Commission, Flint, MI (Chair) Scott Richrath, Colorado DOT, Denver, CO Jason J. Bittner, Cambridge Systematics, Inc., Chicago, IL Stan Burns, Utah DOT, Salt Lake City, UT Silvana V. Croope, Delaware DOT, Smyrna, DE Matthew S. Haubrich, Iowa DOT, Ames, IA Vanloan Nguyen, Virginia DOT, Richmond, VA Alan M. Warde, New York State DOT, Albany, NY Nadarajah “Siva” Sivaneswaran, FHWA Liaison Matthew Hardy, AASHTO Liaison Thomas Palmerlee, TRB Liaison

NCHRP Report 806: Guide to Cross-Asset Resource Allocation and the Impact on Transpor- tation System Performance presents guidance for state transportation agencies on allocating limited resources among asset classes and organizational units to provide optimal system performance. The guidance includes discussion of analytical tools to support decision mak- ing and is supplemented by a prototypical spreadsheet-based implementation of the guide’s analysis framework. State departments of transportation (DOTs) and other local and regional agencies must invest public resources—funds, land, staffing, and others—to develop and operate a trans- portation system that will provide mobility—efficiently, safely, and with the least possible environmentally adverse impact—to support the economy and enhance quality of life. These investments are made to construct, maintain, preserve, enhance, rehabilitate, or replace a diverse portfolio of physical assets such as pavement, traffic signals, guardrails, bridges, signs, and drainage structures. Deciding how best to allocate inevitably limited resources across these various types of assets to provide acceptable transportation system perfor- mance poses a persistent and difficult challenge for agency managers, elected officials, and the public. The objective of this research was to develop a guidebook to assist senior DOT managers who must analyze and communicate the likely system performance impact of investment decisions across multiple types of transportation assets. Such managers must consider (a) the several dimensions of system performance important to stakeholders (such as mobility, safety, and community livability); (b) the multiple measures an agency uses to describe condition and level of service of particular classes of transportation-system assets (such as pavements, signals, and drainage structures); and (c) the targets that an agency may set for the various dimensions of performance. This research was undertaken to develop a practical framework and analysis tools for dealing with this complex problem. The research was conducted by a team led by CH2M Hill, Inc., of Chantilly, VA. The research team conducted a critical review of the state of knowledge and practices trans- portation agencies use to allocate resources among multiple classes of assets and to fore- cast and judge the impact of resource allocation decisions on system performance. Current practice was found to be based largely on allocation by organizational units (most commonly geographic districts or program areas) without mechanisms for considering agency- or system-wide implications of resource allocation decisions, a situation often termed “siloed” by practitioners. The research team then developed an analytical framework for addressing cross-asset resource allocation issues and the likely impacts of cross-asset resource alloca- tion decisions on transportation system performance. The framework became the basis for F O R E W O R D By Andrew C. Lemer Staff Officer Transportation Research Board

an objective-weighting and mathematical optimization procedure for considering alterna- tive allocations of resources across organizational units. A prototype spreadsheet-based tool was produced to implement the procedure and tested with several participating agencies. The team conducted additional testing in a workshop held in April 2014 in conjunction with the Transportation Research Board’s 10th National Conference on Transportation Asset Management. The team refined the framework and prototype tool based on the testing. The princi- pal research product is the guidance presented in this document on cross-asset resource allocation. The guidance, meant to be used by DOT staff and others responsible for mak- ing programmatic resource allocation decisions in an agency, is designed to facilitate both strategic thinking about resource allocation and adoption of practical analysis methods. The prototypical spreadsheet tool, implemented using Microsoft Excel, is available as an ISO image that can be downloaded from the project web page at http://apps.trb.org/cmsfeed/ TRBNetProjectDisplay.asp?ProjectID=3398.

1 Chapter 1 Research Summary 1 1.1 Problem Definition and Project Purpose 2 1.2 Framework Summary and Tool Overview 3 1.3 Framework Benefits and Challenges 4 1.4 Research Components 5 1.4.1 Literature Review 9 1.4.2 Practice Review 11 1.4.3 Workshops and Tool Testing 12 Chapter 2 Research Guidebook 12 2.1 The NCHRP Project 08-91 Framework 12 2.1.1 Goals and Objectives 13 2.1.2 Performance Measures 14 2.1.3 Project Impact Assessment 16 2.1.4 Decision Science Application 19 2.1.5 Trade-off Analysis 19 2.2 Incorporating Risk 21 2.3 Tool Prototype 21 2.3.1 Technical Components 22 2.3.2 User Benefits 23 2.4 Technical Challenges and Success Factors 23 2.4.1 Setting a Planning Horizon 24 2.4.2 Identifying Must-Do Projects 24 2.4.3 Ability to Analyze User-Specified Performance Measures 24 2.4.4 Identifying Performance Measures by Functional Class 25 2.4.5 Handling Alternative Funding Structures 25 2.4.6 Integrating Data from Existing Management Systems 25 2.4.7 Allowing for Geographic Constraints 25 2.4.8 Clear Reporting of Performance Outcomes in a Simplified User Interface 27 Chapter 3 Testing the Tool Prototype 27 3.1 Summary of Testing Opportunities 27 3.1.1 Pre-Workshop Activities 27 3.1.2 Workshops and Content 28 3.2 Audience 29 3.3 Findings 33 Chapter 4 Tool Implementation Playbook 33 4.1 Applying the Tool for Agency Decision Making 33 4.2 Example Applications and Use Cases 34 4.2.1 Overarching Project Prioritization 34 4.2.2 Program-Level Analysis C O N T E N T S

34 4.2.3 Project-Level Analysis 35 4.2.4 Performance Analysis and Target Setting 35 4.2.5 Scenario Analysis 36 4.2.6 Establishing Relative Priorities 36 4.2.7 Risk Analysis 36 4.3 Getting Started—Self-Assessment 38 4.4 Using the Tool 39 4.4.1 Data Integration and Performance Measures 39 4.4.2 Weighting, Scaling, and Scoring 40 4.4.3 Trade-off Analysis and Optimization 40 4.4.4 Top-Down Analysis 41 4.4.5 Risk Analysis 42 Chapter 5 Conclusions and Next Steps 45 Works Cited 47 Attachment Technical Memorandum: Cross-Asset Resource Allocation Workshops