Determining Highway Maintenance Costs (2011) / Chapter Skim
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Attachment - Recommended Process for Determining Full Cost of Highway Maintenance Activities
Attachment - Recommended Process for Determining Full Cost of Highway Maintenance Activities
Pages 39-91
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From page 39... ...
Support programs, as their name suggests, are groups of activities that support the DOT's line programs -- for example, executive management and planning and research. • Likewise, maintenance program expenditures can be divided into two categories: line activity costs and maintenance program support.
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From page 40... ...
• In order to determine the full cost of any particular line activity, a fair allocation of both maintenance program support and enterprise support expenditures must be added to the line activity cost. Overview of Full Cost Determination Process Figure 2 illustrates the full cost determination process.
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From page 41... ...
and included in program support. Classification of Maintenance Expenditures Once all of the maintenance program activities and expenditures have been gathered, they must be classified as either line or support activities according to the following definitions.
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From page 42... ...
Step 2: Allocate Maintenance Support Expenditures to Line Activities Objective The objective of Step 2 is to establish the relationship between support and line activities in order to allocate an appropriate portion of maintenance program support expenditures to each line activity. Sources of Information and Key Considerations The best source of information regarding the relationships between maintenance support and line activities is the agency's maintenance personnel.
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From page 43... ...
However, as might reasonably be interpreted from its name, the mix-deicer support activity is only related to the deicing line activity. Table 3 illustrates the results of applying the benchmark approach to allocate support activity expenditures to the line activities.
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From page 44... ...
For the purposes of this example, therefore, total line program expenditure is $127,500,000, total support program expenditure is $8,000,000, and $7,500,000 associated with the equipment fund is excluded from the calculation. Step 4: Allocate a Portion of Enterprise Support Expenditures to the Maintenance Program Objective The objective of Step 4 is to establish the relationship between enterprise support and line programs in order to allocate an appropriate portion of enterprise support expenditures to the maintenance program.
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From page 45... ...
For example, the allocation of the program delivery support program to maintenance is The share of enterprise support that must be allocated to the maintenance program is therefore $1,284,314. Step 5: Combine Cost Categories to Derive Full Cost Objective The objective of Step 5 is to combine the line activity cost with the appropriate allocations of both maintenance program and enterprise support expenditures to determine the full cost of the line activities.
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From page 46... ...
The next step, therefore, is to allocate the maintenance program share of enterprise support expenditures to the line activities themselves. Consistent with the approach for program support expenditures, the benchmark approach involves doing this on the basis of line activity cost.
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From page 47... ...
In any of these situations, the simplified benchmark approach can be used to determine the full cost of maintenance activities. As its name suggests, the simplified benchmark approach simplifies Steps 2 and 4 with the assumption that all maintenance program and enterprise support expenditures support all line activities and all line programs, respectively, essentially placing Xs in every cell of the crosswalk matrices in Steps 2 and 4.
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From page 48... ...
. Where $LAIQ = line cost of line activity in question, $ALA = line cost of all line activities, and $AESM = allocation of enterprise support to the maintenance program.
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From page 49... ...
Step 4: Allocate a Portion of Enterprise Support Expenditures to the Maintenance Program As with the allocation of program support expenditures, both the benchmark and simplified benchmark approaches described and illustrated in this document consistently use the 49
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From page 50... ...
Step 5: Combine Cost Categories to Derive Full Cost All allocations of enterprise support expenditures to line activities so far have been made on the basis of the line activity expenditures identified in Step 1. However, alternative approaches to allocating the maintenance program's share of enterprise support expenditures can be considered in much the same way as has been discussed for Steps 2 and 4.
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From page 51... ...
The approach for allocating program and enterprise support expenditures to a subset of total line activity expenditure is no different than to the statewide line activity total (i.e., based on the line cost amount)
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From page 52... ...
52 Figure 3. Summary process, input, and result illustration.
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From page 53... ...
In addition, ALDOT has a number of statewide specialty maintenance crews; for example, it has three specialty bridge inspection crews as well as statewide crews for traffic signals, signs, and underwater inspections. ALDOT organizes its approximately 70 maintenance work activities into the following major categories: • Roadway and shoulder maintenance, • Drainage maintenance, • Roadside maintenance, • Traffic operations maintenance, • Structure maintenance, • Minor maintenance improvements, • Winter and emergency maintenance, • Service activities, • Overhead and support activities, and • Special maintenance.
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From page 54... ...
Step 2: Allocate Maintenance Support Expenditures to Line Activities Based on the nature of ALDOT's support activities observed above, the allocation of support expenditures to line activities is 54 Activity Classification Number of Activities Total Expenditure Percentage of Total Line 56 $109,443,589 93.4% Support 13 $7,693,100 6.6% Total 69 $117,136,689 100.0% Table A.1. ALDOT maintenance activity expenditure and classification.
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From page 55... ...
In this case, the program support allocation to each line activity is calculated using the following formula: Where $LAIQ = line cost of line activity in question, $ALA = line cost of all line activities, and $ASA = cost of all support activities. Therefore The allocation of maintenance program support to spot premix patching equals and The allocation of maintenance program support to guardrail maintenance equals $3,006,423 $109,443,589 211,33( )
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From page 56... ...
Step 4: Allocate a Portion of Enterprise Support Expenditures to the Maintenance Program Based on the enterprise program expenditure information obtained in Step 3, ALDOT has seven support programs and five line programs. However, a number of the support programs are related to only a subset of the line programs.
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From page 57... ...
The allocation of enterprise support to each line activity is calculated as follows: Where $LAIQ = line cost of line activity in question, $ASLA = line cost of all supported line activities, and $AESM = allocation of enterprise support to the maintenance program. Therefore The allocation of the enterprise support expenditures to spot premix patching equals and The allocation of enterprise support expenditures to guardrail maintenance equals Table A.6 shows the breakdown of full cost between the three cost categories of line, program support, and enterprise support for the two selected line activities.
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From page 58... ...
, and • 1505 – Routine fence maintenance Step 1: Gather and Classify Maintenance Program Activities and Expenditures ADOT provided expenditure and accomplishment data for 228 different maintenance activities obtained from its maintenance management system, PECOS, for the fiscal year ending June 30, 2008. This data was reviewed in conjunction with detailed activity descriptions, and activities have been classified as either line or support.
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From page 59... ...
Step 4: Allocate a Portion of Enterprise Support Expenditures to the Maintenance Program Based on the enterprise program expenditure information obtained in Step 3, ADOT has a single enterprise support program called Administration. This single program effectively supports all ADOT line programs.
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From page 60... ...
Step 5: Combine Cost Categories to Derive Full Cost The final step in the full cost calculation pulls together the line expenditure for each activity from Step 1 and the allocation of program support expenditure to each activity from Step 2, and combines these with an allocation of the enterprise support expenditures that were allocated to the maintenance program in Step 4. The allocation of enterprise support to each line activity is calculated as follows: Where $LAIQ = line cost of line activity in question, $ASLA = line cost of all supported line activities, and $LAIQ $ASLA AESM( )
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From page 61... ...
equals and $ , $ , , $ , , $814 366 74 504 568 5 174 527( ) = 56,560 The allocation of enterprise support expenditures to routine fence maintenance equals Table A.13 shows the breakdown of full cost between the three cost categories of line, program support, and enterprise support for the two selected line activities.
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From page 62... ...
This report presents the current level of service overall and within a number of categories for both the major and minor highways, as well as trend information. 62 Line Activity Cost Categories Full Cost Line Program Support Enterprise Support Guideline paint (large striper)
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From page 63... ...
Table A.16 shows the line activity expenditure and production information for the line activities selected. Step 2: Allocate Maintenance Support Expenditures to Line Activities Based on the nature of MoDOT's support activities observed in Step 1, the allocation of support expenditures to line activities is accomplished using the benchmark approach on the basis of line activity cost.
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From page 64... ...
Step 4: Allocate a Portion of Enterprise Support Expenditures to the Maintenance Program Given the enterprise program expenditure information obtained in Step 3, and recognizing that the single enterprise support program expenditure identified supports all three line program expenditure categories, there is no need to develop a crosswalk between line and support programs. The support program allocation is equal to: Where $LPIQ = cost of line program in question, $ASLP = cost of all supported line programs, and $SPIQ = cost of support program in question.
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From page 65... ...
Each county is assigned a county maintenance supervisor who oversees between two and five road supervisors. NCDOT's maintenance program currently includes approximately 120 discrete activities (each represented by its own 65 Line Activity Cost Categories Full Cost Line Program Support Enterprise Support Chip sealing $29,872,110 $17,470,151 $3,040,750 $50,383,011 Bridge deck repair $4,427,277 $2,586,863 $450,663 $7,464,803 Table A.19.
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From page 66... ...
Step 1: Gather and Classify Maintenance Program Activities and Expenditures NCDOT provided expenditure and accomplishment data for almost 400 different maintenance activities from its maintenance management system for the year ending June 30, 2009. Upon inspection of the data, it was evident that there were a mixture of new and old function codes (recall NCDOT recently consolidated its maintenance functions)
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From page 67... ...
Selected NCDOT line activity expenditure and production. Line Activity Line Activity Expenditure Support Activity Allocation Total Program Support Allocation Administration/ Supervision Other Miscellaneous Activities General Field Training All Other Support Activities Hot mix asphalt overlay $191,604,009 $10,730,835 $7,653,895 $950,758 $30,546,170 $49,881,658 Other pavement activities $133,547,059 $7,479,340 $5,334,728 $662,673 $21,290,531 $34,767,272 Roadside activities $84,727,195 $4,745,170 $3,384,548 $420,425 $13,507,501 $22,057,644 Maintenance activities $133,499,392 $7,476,670 $5,332,824 $662,437 $21,282,932 $34,754,863 Traffic activities $41,746,133 $2,338,004 $1,667,609 $207,148 $6,655,312 $10,868,073 Clean/wash bridge decks $1,347,186 $75,450 $53,815 $6,685 $214,773 $350,723 Other bridge activities $43,902,197 $2,458,755 $1,753,736 $217,847 $6,999,039 $11,429,377 All other (old)
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From page 68... ...
The allocation of enterprise support to each activity is calculated as follows: Where $LAIQ = line cost of line activity in question, $ASLA = line cost of all supported line activities, and $AESM = allocation of enterprise support to the maintenance program. Therefore The allocation of the enterprise support expenditures to hot mix asphalt overlay equals and The allocation of enterprise support expenditures to routine fence maintenance equals $ , , $ , , $ , , $1 347 186 649 281 065 73 776 221 = 153,077.
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From page 69... ...
The examples relate primarily to maintenance, recognizing that TxDOT's cost elements and accounting procedures apply across the board to all of the department's functions. TxDOT defines three broad categories of maintenance: routine maintenance, preventive maintenance, and major 69 Line Activity Cost Categories Full Cost Line Program Support Enterprise Support Hot mix asphalt overlay $191,604,009 $49,881,658 $21,771,495 $263,257,162 Clean/wash bridge decks $1,347,186 $350,723 $153,077 $1,850,986 Table A.25.
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From page 70... ...
Step 1: Gather and Classify Maintenance Program Activities and Expenditures Line costs associated with maintenance activities have been obtained from MMIS reports summarizing cumulative expenditures for FY 2009. Cost data in these MMIS reports are processed through the financial system and uploaded into the MMIS, an outcome of TxDOT's integrated systems approach.
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From page 71... ...
Enterprise support costs, or TxDOT's HQ Divisions-Offices component of costs, are covered in the following section. Maintenance program support activities are allocated to line activities in two components: one constituting direct costs, the second constituting indirect costs.
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From page 72... ...
Step 4: Allocate a Portion of Enterprise Support Expenditures to the Maintenance Program Allocation is again done through a percentage rate computed on the basis of total indirect costs divided by total direct costs. The computation is shown at the bottom of Table A.30.
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From page 73... ...
is 7.08% + 2.88% = 9.96%. Step 5: Combine Cost Categories to Derive Full Cost The combined percentage distribution factors from Tables A.29 and A.30 can be applied to the direct costs of individual maintenance activities in any district to obtain total line plus support costs for that activity -- or equivalently, total direct plus indirect costs.
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From page 74... ...
$141,883,737.51 Indirect costs of maintenance program support (computed by activity and district using district rates in Table A.31, aggregated program-wide and statewide) plus indirect costs of central-office divisions/offices using the divisions/offices rate in Table A.30 $52,705,669.38 Subtotal, line plus maintenance program support costs $1,006,921,097.65 Source: TxDOT MMIS Report, FY 2009, and FIMS Report, Maintenance Direct and Indirect Expenditures by Activity, FY 2009.
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From page 75... ...
WSDOT does not have a centralized MMS but instead it uses a combination of systems in order to budget, manage, 75 Activity Line Cost Support Cost Full Cost Unit Full Cost 110 Base removal/replacement $23,644,083 $5,508,975 $29,153,059 $64.01 per CY 270 Edge repair $14,328,973 $4,636,240 $18,965,214 $1.05 per LF 511 Mowing $37,668,195 $9,746,181 $47,414,377 $29.58 per AC 562 Reshaping ditches $4,129,289 $1,375,447 $5,504,736 0.25 per LF 650 Bridge decks $1,757,129 $351,769 $2,108,897 $42.70 per SF Source: TxDOT MMIS and FMIS Maintenance Program Reports, FY 2009. Notes: CY=cubic yards; LF=linear feet; AC=acres; SF=square feet.
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From page 76... ...
Step 1: Gather and Classify Maintenance Program Activities and Expenditures WSDOT provided expenditure and accomplishment data for 266 different maintenance activities (or work operations, as they are referred to within the agency) that make up its M2 subprogram, as well as total expenditure information for two relevant maintenance support subprograms: M1 – Maintenance Management and Support, and M5 – Inventory and Stores Administration.
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From page 77... ...
Step 2: Allocate Maintenance Support Expenditures to Line Activities Based on the nature of WSDOT's support activities observed previously, the allocation of support expenditures to line activities is accomplished using the benchmark approach on the basis of line activity cost. On this basis, and using the descriptions of activities, a crosswalk of line and support maintenance activities was developed.
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From page 78... ...
Key observations about the support activities related to the two selected line activities are as follows: • All winter operations line activities, including the two selected, receive an allocation of winter radio operations and winter field supervision. • Only anti-icing/deicing app liquid and winter safety patrol receive an allocation of mixing deicing fluids since these are the only line activities that consume deicing fluid.
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From page 79... ...
Based on the data from WSDOT's financial management system, therefore, total line program expenditure is $2,343,762,001, total support program expenditure is $162,877,765, and $78,040,851 is excluded from the calculation based on its classification as special/pass-through. Step 4: Allocate a Portion of Enterprise Support Expenditures to the Maintenance Program Based on the enterprise program expenditure information obtained in Step 3, WSDOT has six support programs and 10 line programs.
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From page 80... ...
Line Activity Cost Categories Full Cost Line Program Support Enterprise Support Snow plowing truck $7,095,338 $1,993,926 $671,304 $9,760,568 Anti-icing/deicing app liquid $6,445,140 $1,958,326 $609,788 $9,013,254 Table A.39. Full cost breakdown for selected WSDOT line activities.
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From page 81... ...
In 2007/2008, approximately $420 million of the $1.1 billion maintenance budget was paid to contractors, or 38%. The Caltrans maintenance program is composed of just over 500 discrete activities organized into 16 families, which are in turn grouped into seven broader groups.
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From page 82... ...
The majority of maintenance activities are run by the districts, although there are some activities that are coordinated on a statewide basis -- for example, structures inspection. Caltrans uses the following three systems to capture and manage maintenance cost data (one integrated maintenance management system and two financial accounting systems)
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From page 83... ...
In order to comply with this policy, Caltrans calculates two types of indirect cost rates: 1. Program functional rates: This rate covers the indirect costs associated with an individual program and subprogram.
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From page 84... ...
It is the difference between the prior year's recovery of indirect costs and the prior year's total functional indirect costs, as expression (6) shows: Where RICPY is the prior year's recovery of indirect cost.
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From page 85... ...
The carryforward is intended to take into account the sum of money or debts from the previous year. It is the difference between the prior year's recovery of indirect costs and the prior year's administration indirect costs, as expression (15)
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From page 86... ...
• Infrastructure operations and maintenance administration. Maintenance Costing Systems Mn/DOT uses the following financial and maintenance management systems for collecting, integrating, and managing maintenance operations cost data.
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From page 87... ...
. VTrans' maintenance program expenditures are displayed in two levels of reports: • The allotment report tracks total expenditures for maintenance, covering all monies appropriated by the legislature.
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From page 88... ...
VTrans continues to improve MATS, in conjunction with the tri-state team and its system development framework, to provide a comprehensive agency-wide approach to managing, tracking, and reporting maintenance program costs and accomplishments. MATS has evolved as a Web-based product, and VTrans is considering loading it onto personal handheld devices such as PDAs.
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From page 89... ...
An activity report is completed for each individual activity performed during the day. The multiple activity reports for a given day are compiled within the MATS DWR to compute both costs and accomplishments of maintenance activities.
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From page 90... ...
This adjustment maintains the integrity of the unit cost and total cost data from both a performance-based and an invoice-paid perspective. Material Costs Material costs are handled by MATS either in stockpile calculations or as over-the-counter purchases.
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From page 91... ...
(The recommendation is to treat these costs as expenditures that are not reported on the DWR.) Indirect or Overhead Costs Some indirect costs are tracked directly in MATS (e.g., fringe benefits on maintenance labor, and labor time reported in overhead-type maintenance activities)
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