Use of Performance Targets to Support Cross-Asset Resource Allocation
A basic approach allocating resources across multiple types of assets is to define a set of performance targets by asset type. Development of TAM performance targets should be supported by data and the life cycle management approach described in Chapter 4. A resource allocation process that includes multiple types of investments, such as safety and mobility, may incorporate other targets, as well.
Target-setting is the process of setting specific values that an organization expects to achieve for a set of performance measures. Target-setting is important within the broader area of performance management, introduced in Chapter 2. Setting performance targets is consistent with best practice in asset and performance management. In its Transportation Performance Management (TPM) Toolbox, FHWA describes the benefits of setting performance targets:
- Driving a conversation about current conditions and how to achieve future outcomes
- Creating a method for evaluating processes currently in place, particularly data quality and measurement definitions used by the agency
- Guiding the prioritization and allocation of resources
- Enabling assessment of strategy effectiveness by focusing on linking goals, objectives, and measures to policy and investment decisions
- Forming a powerful argument for additional or alternative investments
- Managing expectations by clarifying what outcomes are desired
It is important to note that an organization may set targets at a strategic, tactical or operational level to support different applications:
- A strategic target is one which an organization expects to meet at some future time and reflects the agency’s overall goals and objectives. For instance, an agency’s long-term target for overall pavement condition is an example of a strategic target.
- A tactical target is a value an organization needs to meet to help support its strategic targets. For instance, to support a high-level target for pavement condition, an agency might set a tactical target to perform a specific amount of repaving work per year in each district.
- An operational target is one that helps track the day-to-day performance of an organization, such as the average time to respond to an incident. Operational targets are often used to support continuous improvement in standard operating procedures and process improvement tracking and monitoring.
The TPM regulations initiated by MAP-21 have specific requirements for state DOTs and MPOs to set performance targets for NHS pavement and bridge conditions, as well as for other areas outside of TAM, such as mobility and safety. In these regulations, a target is defined as the value for a performance measure the agency expects to achieve given available funding, rather than a desired or aspirational value. The benefits of target-setting are equally applicable regardless of whether an agency is setting targets specifically to comply with FHWA requirements or for other purposes.
There is a strong tie between target-setting and resource allocation. A target can both inform what investments an agency needs to make and help communicate the expected results of an investment strategy.
When an agency sets strategic targets to support allocating resources, the process is typically iterative. For instance, an agency might first determine the desired level of performance that best supports its goals and objectives, such as the overall performance that would result from maintaining all assets in good repair or the desired level of service for a set of assets. It would then be necessary to determine the level of investment (or allocation of other scarce resources) required to support this level of performance. At least one—and potentially many—iterations are required for an agency to determine a target performance that is not only consistent with its goals and objectives but also attainable given available resources. At each step, it can be helpful to use predicted performance given a certain allocation of resources to help communicate investment trade-offs and guide decision making.
Once an agency sets its strategic targets, it can then set tactical and operational targets. Developing and tracking such targets allows for better assessment of the actions to be performed at different levels of the organization to support strategic targets, and whether the agency is on track to meet its strategic targets – also termed “line-of-sight integration of decision making.”
Key points in setting performance targets to support TAM resource allocation include:
- Targets should be consistent with agency goals and objectives. Absent a specific constraint on resources, an organization should allocate resources as required to support its goals and objectives. For investments in existing assets, this should follow the life cycle plans developed as described in Chapter 4. If resources are constrained, it may be necessary to revise the life cycle strategy followed for one or more asset classes to focus investment on specific areas, although this may result in higher costs or worse performance in other areas over time.
- Use management systems to support target development. Pavement, bridge, and other asset management systems provide robust tools for summarizing current conditions and predicting future conditions and performance. In setting performance targets, it is important an agency use the analytical capabilities these systems offer in order to develop targets supported by data using a documented, repeatable process. Management systems are useful tools to help the decision-making process, but should support the process, not define it. Establish the allocation process the agency wants, and find tools that help implement it.
- An agency may have different targets for different subsets of a network. Particularly with strategic targets set at a network level, it will generally be the case for some subsets of the network or different geographic areas that performance will exceed the overall target, while others will lag behind the target.
- Factors not considered in management systems can impact performance. While management systems can help determine realistic targets, a decision maker should note the simplifying assumptions these systems make and thus remain aware of additional factors that may impact performance. For instance, management systems typically assume treatment on an asset can be performed in a single decision period, and the resulting impact on performance is immediately observed. In reality, projects often require multiple years to complete and there may be significant lag between when funds are committed and a resulting change in performance is observed. Factors outside the scope of management systems may also impact performance, such as diversions for emergency events or variability in condition assessment data and deterioration rates.
The budget-setting process used by CDOT and described in its 2018 TAMP is an example of a resource allocation process emphasizing use of performance targets to support cross-asset resource allocation. CDOT organizes its asset inventory into 11 different asset classes. Different management systems and approaches are used for each asset class to calculate current conditions and predict future performance given a specified budget and other data. The figure illustrates the asset classes and systems used to support analysis of each asset class as of 2018.
The measures used summarize conditions that vary by asset class. For instance, for pavement CDOT predicts percent of pavement with high, moderate, and low drivability life. For bridges, CDOT predicts percent of bridges in good/fair/poor condition based on the FHWA bridge condition measure. For maintenance and buildings CDOT predicts a level of service on a letter grade (A to F) scale.
On an annual basis CDOT performs a separate analysis for each asset class of existing conditions and predicted conditions for different budget scenarios. The manager for each asset class then presents a budget request and business case for the asset class in a workshop setting. Workshop participants, including the asset class managers and representatives from each CDOT region, then vote on the allocation of budget by asset class. The allocation serves as a recommendation to CDOT’s Transportation Commission, which is charged with adopting CDOT’s budget. Separate processes are used in each asset area to prioritize work once the budget is established.
TAM Peer Exchange Presentation
CDOT Asset Classes and Analysis Systems
Source: William Johnson, 2018 FHWA TAM Peer Exchange