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Right-Sizing Transportation Investments: A Guidebook for Planning and Programming (2019)

Chapter: Chapter 1 - Introduction to Guidance

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Suggested Citation:"Chapter 1 - Introduction to Guidance." National Academies of Sciences, Engineering, and Medicine. 2019. Right-Sizing Transportation Investments: A Guidebook for Planning and Programming. Washington, DC: The National Academies Press. doi: 10.17226/25680.
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Suggested Citation:"Chapter 1 - Introduction to Guidance." National Academies of Sciences, Engineering, and Medicine. 2019. Right-Sizing Transportation Investments: A Guidebook for Planning and Programming. Washington, DC: The National Academies Press. doi: 10.17226/25680.
×
Page 2
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Suggested Citation:"Chapter 1 - Introduction to Guidance." National Academies of Sciences, Engineering, and Medicine. 2019. Right-Sizing Transportation Investments: A Guidebook for Planning and Programming. Washington, DC: The National Academies Press. doi: 10.17226/25680.
×
Page 3
Page 4
Suggested Citation:"Chapter 1 - Introduction to Guidance." National Academies of Sciences, Engineering, and Medicine. 2019. Right-Sizing Transportation Investments: A Guidebook for Planning and Programming. Washington, DC: The National Academies Press. doi: 10.17226/25680.
×
Page 4
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Suggested Citation:"Chapter 1 - Introduction to Guidance." National Academies of Sciences, Engineering, and Medicine. 2019. Right-Sizing Transportation Investments: A Guidebook for Planning and Programming. Washington, DC: The National Academies Press. doi: 10.17226/25680.
×
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1 This guidebook offers a business process with analytical methods to identify, evaluate, and implement effective multimodal transportation right-sizing solutions. With ever-increasing awareness of shifting socioeconomic trends, limited funding, and natural resource con- straints right-sizing is now at the forefront of conversations among both researchers and practitioners. Moreover, the discourse on transportation investments has recently evolved from a focus on describing “crumbling infrastructure” and unmet needs to a more strategic, albeit difficult, discussion about reconsidering needs and investment efficiencies. Technology can make infrastructure more flexible, raising questions about when costly expansion proj- ects can be a trade-off against more affordable options like managed motorways, congestion pricing, transportation systems management and operations (TSMO), carsharing, and other solutions. Right-sizing an expensive portfolio of transportation assets is an appealing policy discus- sion because of the opportunity to eliminate undue life-cycle costs and free agency and wider economic resources for higher uses. To do so, however, decision makers understandably must ask the following questions: What does it mean to rightsize a transportation system? How can decision makers identify right-sizing opportunities within the project and policy development process? By what actions and outcomes can an agency reasonably understand that it has rightsized (or is right-sizing) its portfolio? How is this right-sizing approach any different from simply making what seem like the best decisions at the time, given limited resources? This guidebook provides a practical structure, policy recommendations, and a toolkit of technical methods for operationalizing the right-sizing discussion. Right-sizing is placed in the practical context of transportation agency planning and programming. The guidebook further offers ways to address right-sizing needs and opportunities within the larger context of the transportation system and relationships with public and private sector partners. It describes how and why right-sizing approaches lead to different and more efficient transportation invest- ment decisions than the status quo. Special attention is given to the right-sizing initiation pro- cess. It is essential that decision makers be empowered to consider right-sizing throughout the infrastructure life cycle and strategically within existing agency business processes. Otherwise, if the issue is never raised, the available methods and tools for realizing right-sizing opportuni- ties will never be applied. The intention of this guidebook is to provide the basis for future research into topics like sensitivity testing in project prioritization, incentives for private investment in the transporta- tion system, and structures for integrating economic, travel demand and asset management systems, as well as other topics. C H A P T E R 1 Introduction to Guidance

2 Right-Sizing Transportation Investments: A Guidebook for Planning and Programming 1.1 What Is Right-Sizing? Transportation agencies are challenged to enact business processes for developing and sus- taining an infrastructure portfolio of the appropriate size, function, and composition to serve changing economic needs. Agencies struggle to maintain aging transportation asset portfolios that were constructed for bygone eras, as new and emerging needs far outstrip available rev- enues. What once were appropriate solutions to transportation problems have, in some cases, become mismatched due to the current reality of changing traffic patterns, growing life-cycle costs, environmental effects, and complex, evolving stakeholder expectations. Some agencies buried in life-cycle costs simply allow assets to degrade or they neglect emerging needs by citing limited funding. Other agencies seek ways to strategically “disinvest” in some assets to make resources available for alternate uses. Still other agencies seek jurisdictional transfers or private sector participation to keep pace. Most solutions require rethinking how and why the agency can afford to own, maintain, and modernize its portfolio. In the face of these challenges, “right- sizing” offers a process by which a transportation agency can make intentional decisions to adjust the size, extent, function and composition of its existing or planned infrastructure and service portfolio in response to changing needs over time. This guidance addresses right-sizing both as a potential agencywide initiative and as an incremental approach that can be applied to specific programs or projects. Right-sizing means seeking an appropriate level and type of investment that avoids overinvesting or underinvesting, overbuilding or underbuilding, and overserving or underserving the market based on customer and system requirements. Effectively applied, a right-sizing strategy will contribute to economically sustainable investments that create greater life-cycle value for society when compared with other alternative investment strategies. Right-sizing addresses the fundamen- tal mission of transportation agencies to deliver infrastructure and services that are financially sustainable while also supporting desired levels and forms of economic development and well-being. 1.2 Evolution of Right-Sizing as an Investment Paradigm Right-sizing as an investment paradigm is not a radical or even a new concept. Right-sizing can be understood as a natural evolution in how transportation agencies make investment deci- sions. Right-sizing emerges from the confluence of existing investment decision paradigms, including value engineering, needs-based planning, and performance-based planning. A Focus on Value Generation Value engineering—the systematic review and analysis of transportation projects to deliver needed function at the lowest overall cost—provides an important baseline upon which right- sizing can build (FHWA 2014). Value engineering seeks to balance value delivered by transpor- tation infrastructure with a justifiable level of investment. While value engineering is introduced as a transparent and technical balancing process, its implementation has revealed intricate chal- lenges. Experience shows that balancing least cost with delivered value creates a challenge for agencies, as they need to account for both (1) the complex drivers and indicators of value in a transportation asset portfolio and (2) the value transactions inherent in the investment deci- sions within transportation infrastructure. Arriving at a decision making paradigm appropriate for the complexity of those implicit transactions requires evolving beyond the simplifications of needs-based or even performance-based planning and programming. Specifically, it requires evolving into a more value-based frame of decision making. The intention of this guidance document is to lay the foundation for such a paradigm.

Introduction to Guidance 3 Validating Needs Under the longstanding needs-based planning paradigm, existing infrastructure has been developed through comparison of today’s situation (or tomorrow’s projection) with a set of minimum tolerable conditions. This comparison may be based on a historical understanding of need that looks backward rather than forward. Needs-based planning defines a “need” as any shortcoming in current performance (or projected performance at current build levels) relative to a set understanding of what is acceptable. Potential remedies are evaluated based on whether the outlay required is less than the cost of imposing the deficiency on system users. Under needs-based planning, however, limited consideration is given to validating needs or questioning whether projected deficiencies would actually occur. Typical needs-based planning does not necessarily consider whether today’s remedy would suffice for future conditions or represent the best and highest use of all resources (public and private). This guidebook offers approaches for validating an agency’s understanding of needs. A Focus on Desired Performance and Systemic Outcomes The era of performance-based planning responds to funding constraints and growing multi- modal system complexity by shifting focus away from a simplistic view of needs and simply treat- ing deficient infrastructure elements. Instead, performance-based planning looks more widely at the most efficient ways to achieve system performance outcomes. Performance-based plan- ning considers the need to balance investment across different modes and performance areas to achieve an efficient mix (e.g., between highways and transit infrastructure) for the underlying transportation market realities. Implementing performance-based planning can make particular sense in an era of increased uncertainty surrounding future development patterns, transporta- tion technologies, and comparative user needs. That form of consideration leads to questions about what is the right-size of an infrastructure asset, program, or service. The Right-Sizing Focus on Addressing “Misalignments” Evolving one step beyond those foundational investment paradigms, right-sizing seeks improved alignment between the life-cycle cost, capacity, extent, condition, and function of a piece of infrastructure (or a program) and its intended current and future use. The concept of a right-size is not raised in any absolute sense, but rather refers to an overarching objective of striving for alignment between need and cost. This alignment is achieved by accounting for changes that have occurred since legacy infrastructure was designed or accounting for factors that were simply overlooked in the past. Right-sizing decisions pertain to reaching alignment between • Owners responsible for maintaining the infrastructure in the long term. • People or entities paying for the infrastructure. • People or entities using the infrastructure. • People or entities making decisions about the infrastructure. Right-sizing decisions refer explicitly to situations in which either there is a current mis- alignment of the previously mentioned interests or to situations in which changing condi- tions make it likely that such a misalignment will occur if planners do not address change in a strategic way. An example of a misalignment may be local land use changes and developer investments leading to the overuse of a state facility. In this case, opening local areas for new development may generate significant wealth for developers and tax base for municipalities, while imposing mounting expansion and life-cycle costs on a statewide transportation budget. In this example, value is created and harvested yet there is deficiency, inefficiency, and scarcity

4 Right-Sizing Transportation Investments: A Guidebook for Planning and Programming of resources supporting the infrastructure. The payers and beneficiaries are misaligned in this example, as are the payers and decision makers. Figure 1 further demonstrates the relationship between typical planning decisions (which intrinsically seek the right-size for any piece of infrastructure) and corrective right-sizing deci- sions, in which interventions are needed to bring or to sustain infrastructure into a right-sized condition. Right-sizing decisions are defined by the recognition of a change in intended function or standard of the infrastructure. Consequently, right-sizing decisions can involve preservation, reconstruction, modernization, replacement, expansion, or enhancement projects. Because right-sizing decisions are different from other investment decisions, the best prac- tices from needs-based planning or even performance-based planning require adaptation to support right-sizing situations. Scenarios such as replacement with a downsized asset, deferred investment, implementation of flexible design standards or performance targets, or jurisdic- tional transfer are fundamentally different from the typical scenarios of preservation, expan- sion, and prioritization, which transportation agencies are accustomed to considering. 1.3 Intended Audience and the Case for Right-Sizing Effective right-sizing relies on a combination of three key elements: • Intelligence, that is, an understanding of changing conditions and needs that precipitate the need to rightsize and the objectives of right-sizing, • Authority, that is, the ability to take the necessary actions in support of right-sizing, and • Resources, including ownership typical of relevant assets and services, as well as funding and staff resources to achieve right-sizing objectives. If these prerequisites are not present in a single agency, right-sizing requires partnerships. Examples include collaboration between a state department of transportation (DOT) and a city, or a metropolitan planning organization (MPO) and member localities or private developers. Through partnerships, right-sizing has the potential to deliver a range of benefits, including • Efficient management of public assets, to enable preservation dollars to go farther. • More flexibility in using assets to achieve economic development outcomes. Normal Investment Decisions Right-Sizing Decisions • Maintenance (to an existing standard) • Repair/Replacement (to an existing/current design) • Expansion (to an assumed stable/certain forecast) • Defer/Disinvest Through Non-Action (in effect, relaxing or waiving a condition/performance standard) • Modify the Design Standard/Target (intentionally reclassifying the asset and its role) • Replace the Asset (making it smaller/more economical) • Change Jurisdictions (better aligning objectives and ownership) • Decommission an Asset (allowing for reuse of land) Figure 1. Distinguishing between normal investment decisions and right-sizing decisions.

Introduction to Guidance 5 • Improved understanding of needs through data sharing and cooperation. • Faster and more beneficial infrastructure response to changing economic markets. • More diverse and sustainable investment streams to support infrastructure over time. To address the diversity of partners involved, the guidebook addresses both the needs of state DOTs and other agencies and stakeholders that may initiate or participate in a right-sizing effort. Irrespective of the initiating agency, different stakeholders may have different motivat- ing factors for participating in a right-sizing effort. Stakeholders may differ with respect to the perceived benefit of a right-sizing effort, what the right-size solution should entail, and how the solution should be implemented. For this reason, the guidebook is offered for state, local, and private entities for the following purposes: Addressing Diverse Views of Right-Sizing Success The benefits of a specific right-sizing project or program can flow to a variety of different stakeholders and differ across those stakeholders. State departments of transportation, counties, and municipalities may each have different motivating factors when it comes to assessing their transportation infrastructure, and these factors can therefore translate to different metrics of success. As an example, the benefits of a right-sizing project in the form of a jurisdictional trans- fer for a state DOT could include reducing ongoing maintenance of an asset in order to preserve resources for other parts of the system that serve longer-distance travel. The benefits of that same project for a municipality could include repurposing the asset to fit the needs of the local community while enhancing local development opportunities. Local characteristics may also affect objectives and the nature of right-sizing, including unique chal- lenges and opportunities in urban, rural, and suburban areas. Therefore, success requirements for the same right-sizing effort differ depending on the audience. While right-sizing always aims at achieving overall societal gains through more efficient use of resources, the path to that efficiency requires pinpointing and addressing diverse perspectives on what constitutes success. The guidebook is for use by all parties in identifying and addressing such differences. Addressing Partners with Diverse Right-Sizing Capabilities In addition to the ultimate benefits of right-sizing outcomes, agencies may also be motivated to rightsize a system to access the different levers of control available to a coalition of right- sizing partners. For example, a state may be motivated to include a municipality in determin- ing the right-size for a corridor in order to benefit from the authority of municipal land use controls in managing the facility. Land ownership, size and scale of asset management, regula- tory power, and funding availability all vary from agency to agency and from urban, to rural, to suburban communities. Right-sizing partnerships can lead to unified understanding of an asset’s value, enabling agencies to coordinate these levers of control, thus achieving benefits for all parties. The guidebook provides information and evaluation tools intended to provide partners with both a basis for analyzing how a right-sizing initiative can benefit their organization and constituents, and what capacity their organization has to initiate—or partner in—a right-sizing effort.

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Transportation agencies across the United States are afflicted with aging infrastructure, unstable funding, changing performance expectations, and programs that need updating to meet future demand effectively and efficiently. Yet, these agencies are charged with ensuring ongoing alignment between the life cycle cost, capacity, extent, condition, and function of a piece of infrastructure or a program and its intended current and future use.

The TRB National Cooperative Highway Research Program's NCHRP Research Report 917: Right-Sizing Transportation Investments: A Guidebook for Planning and Programming provides a guideline for identifying right-sizing opportunities where greater social and economic value can be realized by repurposing, reusing, or fundamentally resizing existing transportation system assets.

There is an executive summary associated with this report, as well as several supplementary materials, including:

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