Transportation Asset Management: Summary of the 11th National Conference (2016)

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3 OPENING SESSION Panelists’ Comments and Responses to Questions Frank Hornstein, Minnesota House of Representatives Tom Everett, Office of Infrastructure, Federal Highway Administration Paul Trombino III, Iowa Department of Transportation David Springstead, Metropolitan Atlanta Rapid Transit Authority PANELISTS’ COMMENTS Frank Hornstein welcomed conference participants to the Minneapolis–Saint Paul metropolitan area and Minnesota. He commended the agency staff, consultants, and other groups in attendance for maintaining the transportation system and discussed the importance of communicating with elected officials and politicians. Hornstein commented that asset management is often overlooked due to the short-term focus of most politicians today, as well as the fiscal constraints facing state and local governments. He noted that gaining support for increased funding for transportation by raising the motor fuel tax, authorizing a metropolitan sales tax for transit, or other options is very difficult. He suggested that funding for asset management can be especially challenging because it is less visible to the public and politicians than adding freeway lanes or other major projects. Hornstein noted that he uses information from the Minnesota DOT’s Pavement Condition and Performance Report in speeches and written materials. In this report, Minnesota DOT expects state highway pavement conditions to resume a long-term decline by the end of the decade, with pavements worse than the targets. Working together to present information to the public and policy makers at all levels to make the case for additional funding for transportation is an important issue. He suggested the need to generate urgency around the issue with the public. Hornstein noted that although the Minnesota legislature has approved some short-term transportation funding measures during the past few sessions, the long- term revenue problem has not been addressed. He suggested that obtaining adequate funding for asset management represents an ongoing concern. He further suggested that communicating the benefits of asset management to policy makers and the public should be a high priority for agencies.

transportation asset management 4 Tom Everett provided a welcome from FHWA, which has cosponsored all 11 transportation asset management conferences. He commented that the conferences provide a great opportunity to learn from the presentations and to interact with other participants, and he encouraged participants to share their experiences and ideas with others. Everett described the importance of transportation asset management to FHWA and noted that Congress has tasked FHWA with providing stewardship and oversight to the Federal-Aid Highway program. Billions of dollars have been invested in this system over the decades. Ensuring the wise use of public funds is part of FHWA’s responsibilities. Furthermore, he said the public also has an interest in how funds are expended and expects transparency in decision making, as well as a transportation system that meets their needs. Everett noted that the Moving Ahead for Progress in the 21st Century Act (MAP- 21) changed the Federal-Aid program to a performance-based program. He suggested that asset management is key to a performance-based program. Performance measures and targets are the destinations, and asset management is the vehicle to reach those destinations. He mentioned that MAP-21 also required states to develop risk-based asset management plans for pavements and bridges on the National Highway System. The Fixing America’s Surface Transportation (FAST) Act did not change that requirement. A “Notice of Proposed Rulemaking” on the infrastructure condition proposed rule was published in February 2015, and over 50 entities provided numerous comments on it. Everett said a final rule has been developed and should be published in the Federal Register in the fall of 2016. Everett reported that even without the final rule, 40 state DOTs were already developing asset management plans to meet the requirements. He reviewed the following definition of asset management used in the rule: “a strategic and systematic process of operating, maintaining, and improving physical assets, with a focus on both engineering and economic analyses based upon quality information, to identify a structured sequence of maintenance, preservation, repair, rehabilitation, and replacement actions that will achieve and sustain a desired state of good repair over the life cycle of the asset at minimum practical costs.” He stressed the importance of the six key segments in this definition. Everett noted that all agencies face the same challenge of how best to invest limited resources to achieve the greatest ROI. Factors that need to be considered include the purchasing power of the dollar, the aging infrastructure, increased demand on the system, increased project complexity, and the need for resiliency. Everett described some of the activities conducted by FHWA to support the development of state performance-based asset management plans. Available National Highway Institute courses include “Introduction to Transportation Asset Management” and “Developing a Transportation Asset Management Plan.” A web- based National Highway Institute course on “Introduction to Asset Management

5 Panelists’ Comments and ResPonses to Questions Plans” is also available. FHWA consultants can provide on-site assistance with data and gap analyses. The FHWA Asset Management website contains a wealth of information and will be further enhanced after the final rule is published. Everett concluded by highlighting activities conference participants could undertake, including identifying personnel within their agencies involved in asset management, communicating with FHWA division staff in each state, and learning from others at this conference. He also encouraged participants to stay engaged after the final rule is published and to continue their participation in conferences and information sharing. Paul Trombino noted that risk management can be thought of as controlling and constraining risks. Government agencies are often risk averse, which can stifle innovation and creativity and inhibit the decision-making process. He suggested that public agencies have to be “risk advantageous” or willing to take risks, including risks associated with the long-term management of assets, to ensure that unwise investments are avoided. It is important to have a process for risk management, but the process should not be so overly constraining that it inhibits innovation and creativity in delivering the products that sustain the transportation system. Trombino suggested that it was important to consider asset management from the customer’s point of view. The people who use a transportation asset are the customers, not the asset itself. He stressed the importance of thinking from a customer’s perspective. There is a need to move beyond MAP-21 and to consider performance-based organizations, not just performance-based asset management programs. Performance management is an organizational issue that requires organizational change. Trombino noted that just adding performance metrics does not necessarily change the way an agency performs and how well decisions are made concerning assets. Trombino described the evolution of asset management at the Iowa DOT by saying that asset management was one of the first strategic topics discussed internally when he became director in May 2011. Those discussions began an organizational shift at the department to a new vision focusing on performance measurement, organizational improvement, and research. Improving the organizational decisionmaking process was an important part of the new focus to transforming the department into a performance- based organization. He suggested that if performance management is not addressed at the organizational level, it will be difficult to deal with at the program level. Trombino reported that the Iowa legislature increased the state gasoline tax by $0.10 a gallon in 2015. He noted the challenge of making decisions on what is affordable when the entire system is not affordable. Asset management defines the process for making good investments in the system. He stressed the importance of having a good process for determining investments in the system regardless of the amount of available funding. Asset management provides that process.

transportation asset management 6 It is important to communicate the state DOT’s decision-making process to policy makers and the public. Trombino suggested that providing information on performance management, asset management, and the overall transportation system from an engineering and economic perspective to policy makers and the public was key to increasing transparency and promoting a robust, open decision-making process. He further suggested that this approach allows transportation agencies to take short-term and long-term risks. In closing, Trombino described introducing asset management to the seven- member Iowa Transportation Commission, including explaining the short-term and long-term views of the system and the decision-making process. He noted that the annual update and discussion, which occurs in February or March, is highly valued by commission members. Trombino stressed the benefits of engaging decision makers in the asset management process. David Springstead provided a perspective from one of the many transit agencies actively using asset management. He stressed his passion for asset management, being fiscally responsible with public funds, building highly functional collaborative teams, pursuing positive outcomes, and making real impacts. Springstead suggested that conference participants had an obligation as transportation professionals to produce accurate and meaningful information for making investment decisions that result in positive outcomes for the public. The conference provided the opportunity for participants to collaborate, share experiences, and learn. He challenged participants to share with colleagues the information on best practices, as well as new tools and techniques to help advance the use of asset management. Cross-jurisdictional and cross-modal aspects of asset management are important means to better leverage and maximize resources. Springstead said he thought most conference participants would agree that a solution in which the city, the region, and the state have a fully collaborative and transparent decision-making process anchored on reliable and predictable data would result in optimized investments. He further suggested that most people would agree that investments among modes and jurisdictions within a metropolitan planning organization’s boundaries should be leveraged to maximize public benefits. An example he cited of these types of opportunities was obtaining enough right-of-way as part of a new freeway interchange to accommodate a future passenger rail line. Many areas of the country have outbuilt the capacity to maintain the system, so it is important to consider operation, maintenance, and capital renewal costs in capital improvement programs. In addition, Springstead noted that many assets financed over a 30-year period do not last that long, especially advanced technology projects. Springstead suggested that transportation agencies all face major infrastructure needs with limited resources. Further, there are competing interests for those limited

7 Panelists’ Comments and ResPonses to Questions resources. Rather than continuing along the same course, he discussed the need for innovation and strategic thinking. There is a need to reduce operations and maintenance costs and to be strategic about capital investments. He provided an analogy to owning a home: a homeowner has a mortgage and must make ongoing repairs and improvements. He also noted that neighbors help each other, pooling resources and expertise to make improvements, just as transportation agencies should. Springstead made the case for collaboration, for leveraging assets and funding, and for focusing on maximizing the benefits to the public. Jurisdictional boundaries do not matter to the traveling public and to freight movers. The goals should be to provide a seamless, reliable, and safe mode of transportation to the public and to promote the economic vitality of a city, region, state, and country. These goals require collaboration and collective planning. Springstead noted that although there are complex issues in meeting these goals, they are achievable. Transportation planners should focus on identifying agency needs, obtaining accurate and timely data, establishing a method to prioritize projects, establishing a plan and a project delivery mechanism, and establishing targets and measures. Targets and measures are important to measure success and help propel programs forward. In closing, Springstead stressed the need for a fully collaborative and transparent decision-making process based on reliable and predictable data and the importance of collaboration among stakeholders. Community investment districts provide a good example of collaboration among stakeholders. He further suggested that the message from the federal level was that needs and priorities should be managed at the regional and state level, not at the federal level. MAP-21 and the FAST Act focus decision making at those levels based on the development of required plans. He encouraged conference participants to share ideas, collaborate, and plan to solve issues to optimize the benefits to the public. RESPONSES TO QUESTIONS The panelists responded to the following questions as part of the opening session. Current legislation has accelerated the rate at which asset management is being used in transportation agencies. How do you see asset management developing in the next several years, and what do you think will be instrumental to making that happen? Everett suggested that initial decisions on resource allocation represent a simple form of asset management. The sophistication of the tools and techniques used in asset management has improved over time. When FHWA began allocating funding for transportation projects, the states and FHWA also began applying asset management. The FHWA asset management rule will likely shape the future

transportation asset management 8 direction of asset management, but states already know what needs to be done to manage assets. He noted that the rule will include compliance dates. Everett cited several factors that will influence the future direction of asset management, including the demand from policy makers for data-based, performance-based decision making; reduced funding; increased demand on the transportation system; and the availability of more sophisticated tools. For example, he noted that the advances in bridge management were impressive. Risk factors, including financial risk as well as focusing on strategic investments and preservation, will also influence the future direction of asset management. He noted the importance of leadership and commitment at all levels within transportation agencies to help advance asset management. Trombino stressed the importance of having the right data. He suggested that changes in the data being used in asset management will allow agencies to analyze the economic benefits and the ROI from transportation projects. Springstead suggested that focusing on a simple, functional, and effective asset management system was a good way to begin. Sophistication can come later. He stressed that building a strong foundation first was important. Why do you think some organizations are moving faster than others to adopt asset management? What do you think are some of the key drivers that exist in the organizations that have been quick to adopt asset management? Trombino responded that some agencies not embracing asset management view it as a compliance issue rather than a means of improving their decision-making process and fostering better investments. Organizations focused more on change are embracing performance-based asset management. He noted that although having data management systems is important, data management is not asset management. That is, having data to manage the system is not the same as assessing the best investment strategies for the future. Trombino noted that different skills and different organizational goals are needed for performance-based asset management. He suggested that asset management for pavement and bridges is easier than for other assets, including information technology, which is more challenging. Everett commented on the importance of leadership and commitment for successful asset management programs at an agency. The support of the top executives is critical to advancing asset management, including the development of more sophisticated tools and approaches.

9 Panelists’ Comments and ResPonses to Questions Springstead noted the importance of ensuring that operations and maintenance personnel and the capital programming staff are fully engaged. All groups responsible for funding, allocating resources, operating, and maintaining the system need to be involved in the asset management process. There is a need to promote the right culture and to communicate success stories, cost savings, and effectiveness. Springstead agreed that leadership from the top of an agency is important, but he also stressed the need to cultivate the involvement of personnel throughout an organization. What should regionalized asset management look like? Are there strategies an agency could adopt to optimize its program while benefitting the region as a whole? Springstead suggested that the first step is ensuring that your own program is in order, including having accurate and timely data. Sharing your priorities and issues with other regional partners is a second step. Variations in data between agencies appear to be a common problem in many areas. Agencies use different data collection methods, analysis techniques, and report formats. He noted that coordinating data collection and analysis, including establishing a common baseline, would benefit all agencies and help advance regional asset management. According to Springstead, it is also critical to include the right people or regional coordinating teams to ensure trust and professionalism; moreover, all agencies must benefit. Getting organized and clearly arranging data in a common platform are key. Focusing on the highest risks to the region that supports the economic engines of the cities and the state is also important, as is focusing on a common goal that benefits all agencies and the region as a whole. What steps do you think transportation agencies need to take to become more resilient when dealing with uncertainties such as extreme weather events? Trombino responded that most state DOTs have to deal with some type of extreme weather event. He recounted the story of becoming the Iowa DOT director in May 2011 just before the worst flood in the history of the state. The situation illustrated the importance of flooding to the transportation system, with segments of the Interstate system underwater, and how the agency responded to an extreme weather event. He reported that a risk review was conducted to better understand the vulnerable segments of the system and to better prepare for future events by using a balanced approach focused on the most important segments of the system. The risk review also pointed out the need to include personnel from all departments and levels in examining risks and developing asset management plans.

transportation asset management 10 Trombino further noted that because much of the highway system in Iowa was constructed in floodplains, flooding is going to occur. There is only so much the department can do to protect the system, depending on the type and extent of extreme weather. He described two nontraditional approaches that can assist in better preparing the system for extreme weather events. The first approach is forecasting the potential for future floods to assist in making decisions on critical infrastructure investments. The second approach is investing in improvements to the tributaries feeding the major rivers in the state to reduce potential flood impacts. It may be challenging to justify these types of investments, which might include revitalizing vegetation by using traditional transportation funding; however, the potential benefits enhance the ability to respond to future floods and long-term water quality and water flow. Trombino stressed the importance of taking a balanced approach to dealing with extreme weather events. Springstead added the importance of considering resiliency in the capital program. Examining all aspects of a project, from the location through design and into operation, is key to a resilience system. For example, the cost of real estate is influenced by numerous factors. Property in a floodplain may be less expensive, but future flooding may cause operational problems and structural damage to facilities, resulting in increased costs. Checking all the touch points of a proposed asset will help with its long-term resilience. He noted that the Metropolitan Atlanta Rapid Transit Authority (MARTA) uses the term “stresses” rather than “resilience” in examining environmental factors that may affect the life of an asset. Trombino also suggested it was important to prioritize funding for the resilience of key infrastructure and to establish standard operating procedures for other assets, such as bus route detours for roads that are likely to flood in major rainstorms.