National Cooperative Highway Research Program (NCHRP) Project 8-36 (67)

Transcription

1 Project No. Copy No. National Cooperative Highway Research Program (NCHRP) Project 8-36 (67) Best Practices in Using Programmatic Strategies in Statewide Transportation Plans FINAL REPORT Prepared for National Cooperative Highway Research Program (NCHRP) Transportation Research Board of The National Academies TRANSPORTATION RESEARCH BOARD OF THE NATIONAL ACADEMIES PRIVILEGED DOCUMENT This report, not released for publication, is furnished only for review to members of or participants in the work of the CRP. This report is to be regarded as fully privileged, and dissemination of the information included herein must be approved by the CRP. Dale A. Janik, P.E. Wilbur Smith Associates Columbia, South Carolina August 2007

2 ACKNOWLEDGMENT OF SPONSORSHIP This work was sponsored by one or more of the following as noted: American Association of State Highway and Transportation Officials, in cooperation with the Federal Highway Administration, and was conducted in the National Cooperative Highway Research Program, Federal Transit Administration and was conducted in the Transit Cooperative Research Program, American Association of State Highway and Transportation Officials, in cooperation with the Federal Motor Carriers Safety Administration, and was conducted in the Commercial Truck and Bus Safety Synthesis Program, Federal Aviation Administration and was conducted in the Airports Cooperative Research Program, which is administered by the Transportation Research Board of the National Academies. DISCLAIMER This is an uncorrected draft as submitted by the research agency. The opinions and conclusions expressed or implied in the report are those of the research agency. They are not necessarily those of the Transportation Research Board, the National Academies, or the program sponsors.

3 Project No. Copy No. National Cooperative Highway Research Program (NCHRP) Project 8-36 (67) Best Practices in Using Programmatic Strategies in Statewide Transportation Plans FINAL REPORT Prepared for National Cooperative Highway Research Program (NCHRP) Transportation Research Board of The National Academies TRANSPORTATION RESEARCH BOARD OF THE NATIONAL ACADEMIES PRIVILEGED DOCUMENT This report, not released for publication, is furnished only for review to members of or participants in the work of the CRP. This report is to be regarded as fully privileged, and dissemination of the information included herein must be approved by the CRP. Dale A. Janik, P.E. Wilbur Smith Associates Columbia, South Carolina August 2007

4 TABLE OF CONTENTS LIST OF FIGURES & TABLES... ii ACKNOWLEDGEMENTS...iii ABSTRACT... iv EXECUTIVE SUMMARY... 1 I. INTRODUCTION... 6 A. Problem Statement B. Objective and Scope II. LITERATURE REVIEW... 8 III. CONCEPTUAL STRUCTURE... 9 A. Ten Cardinal Decision Issues B. Phases Of Programmatic Investment Strategy Development C. Investment Strategies And Statewide Plans IV. METHODOLOGY A. Online Survey B. Depth Interviews C. Case Studies V. SURVEY FINDINGS A. Overview of Survey Response B. Important Factors in Investment Decisions C. Conclusions from Survey Results VI. GUIDANCE: DETAILED FINDINGS AND BEST PRACTICES A. Getting Started B. Forming a Strategy C. Making Choices D. Making It Work VII. CONCLUSIONS AND FUTURE DIRECTIONS REFERENCES APPENDIX A: Survey Instrument... A-1 APPENDIX B: Frequency Distributions of Survey Responses & Survey Results... B-1 APPENDIX C: Detailed Narrative of Survey Results... C-1 APPENDIX D: Interview Discussion Guide... D-1 i

5 LIST OF FIGURES Figure 1. Cardinal decisions in four phases of strategy development Figure 2. Florida s paradigm shift in recognizing the need for decisions Figure 3. Options in the Oregon Transportation Plan Figure 4. Pennsylvania Geographic and Programmatic Investment Process LIST OF TABLES TABLE 1 States Participating in NCHRP 8(36)-T TABLE 2 Strategy Elements and Important Characteristics for Investment Decision Issues TABLE 3 Getting Started Worksheet TABLE 4 Examples of Goals in State Transportation Plans TABLE 5 Relative Roles of SIS Goals in Determining SIS Needs, Setting Priorities and Selecting Projects TABLE 6 Strategy Formation Worksheet TABLE 7 Example of Performance Measures Under General Goal Areas TABLE 8 Making Choices Worksheet TABLE 9 Alaska Scoring Tables TABLE 10 Making It Work Worksheet TABLE 11 Culmination of Decision Elements in Making a Strategy Work ii

6 ACKNOWLEDGEMENTS The team acknowledges the NCHRP Panel, the state departments of transportation in Florida, Alaska, Oregon and Pennsylvania for their support in the development of this report, in addition to the transportation departments participating in depth interviews and responding to the online survey regarding investment decisions. iii

7 ABSTRACT Competing needs for scarce transportation investment dollars require states to make decisions about how to best allocate transportation dollars. Increasingly, states have implemented strategic approaches to investment management, linking statewide plans to funding levels and project level decisions about how and where to best spend transportation revenues. Programmatic investment strategies are seen as a consistent way for states to make decisions in the face of budgetary constraints with an understanding of different possible investment options and performance outcomes. This paper explores the cardinal decision issues associated with implementing statewide transportation investment strategies within the context of statewide planning. It also describes practices from throughout the United States, and offers guidance regarding the best practice for states seeking a programmatic approach to investment management. iv

8 EXECUTIVE SUMMARY This report / guidance document provides an overview of best practices for state Departments of Transportation (DOTs) in making strategic decisions about how to invest in programs like highway preservation, transit, ITS, roadway modernization, aviation, ports and others. A programmatic investment strategy is defined as an approach or methodology a transportation agency uses to understand investment needs and implement consistent choices to achieve desired system outcomes. A programmatic investment strategy enables the department to make consistent decisions about how to invest transportation dollars. State DOTs are continually faced with the challenge of limited funding and budget shortfalls because transportation funding is rarely adequate to address the full range of competing transportation needs within a state. Reauthorization funding levels fell below those anticipated by many state DOTs. Project design and construction costs often exceed budget earmarks and estimates. These issues require state DOTs to continually choose between how best to allocate their limited fiscal resources between competing projects, issues and needs such as capacity expansion vs. safety improvements, maintenance and preservation. Recent work by NCHRP, FHWA and other research organizations has explored best practices in statewide transportation planning, project selection for Metropolitan Planning Organizations (MPOs) cost estimation, cost/benefit methods, performance estimation, travel forecasting and many elements relevant to statewide investment decisions. However, no report to date has organized programmatic investment decisions into a best practice paradigm for defining and addressing the complete set of decision issues needed to comprise an overall strategic programmatic investment approach. The purpose of this report is to identify effective processes and best practices by which state DOTs can develop and employ programmatic investment strategies. This involves: Defining key elements of programmatic decisions that are important for an overall strategy; Describing how short and long-term transportation investment policies, programs and strategies are assembled from the initial determination that a policy is needed through the preparation of the policy for implementation; Describing how and why states utilize specific methods, technologies and processes to aid in different aspects of developing a strategy; and, Assessing the best practices for approaching and assembling a strategy. Because programmatic investment strategies are ultimately ways of organizing complex decisions about transportation systems, this research is organized around cardinal issues of decision-making from the business management literature. Based on Yates (1) decision management paradigm, ten cardinal decision issues are identified. 1

9 The cardinal decision issues used to characterize strategic decisions are: Need for a Strategy (knowing when and why a decision strategy is required); Mode of Decision-Making (knowing who must make decisions); Investment in Decisions (knowing how much effort to put into the decision); Developing Options (knowing what the choices are); Understanding Possibilities (understanding what the outcomes may be); Judgment Calls (understanding which outcomes are the most likely); Values and Priorities (knowing which outcomes are most desirable); Managing Tradeoffs (making choices between conflicting investments); Establishing Buy-In (ensuring investments are politically feasible); and, Practicality (ensuring investments are technically feasible). The best practice for statewide programmatic investment strategy addresses each of these ten issues in different planning steps with respect to state transportation investment decisions. For the purposes of this report, the issues are nested into practical phases of developing and improving practices in programmatic investment strategy. The phases include: Getting Started -- Getting started involves steps for understanding the need for a strategy at a particular time, developing a way to engage the actors who will participate in decisions (the mode of decision-making) and determining the resources that will be needed for developing the strategy (investment in decisions). Forming a Strategy -- Strategy formation involves steps for developing options, providing a way of identifying possible outcomes of different investment options (understanding possibilities) and a process for making judgment calls about which options are most likely to occur. Making Choices -- Making choices, informed by the strategy formation process involves steps for applying departmental values and priorities to possible outcomes that may result from different investment options, and managing trade-offs between mutually exclusive programs or projects. Making it Work -- Making a strategy work involves steps for identifying and addressing issues of political and technical feasibility (establishing buy-in and practicality) that may be required for effective delivery of the strategy to achieve the desired outcomes. 2

10 The following table provides a checklist for states to assess how they are currently addressing each issue, and decision tools that the state may utilize for addressing each issue in each phase of the process. Strategy Phase Getting Started Strategy Formation Making Choices Making it Work Decision Issue Implementation Elements How the Elements are Used to Support Implementation Decisions Under Scrutiny Need for a Strategy Mode of Decision- Making Investment in Decisions Developing Options Understanding Possibilities Judgment Calls Values and Priorities Managing Trade-offs Establishing Buy-in Practicality Mission or Vision statement and goals Structure of the actors who decide on projects and statewide investment levels. Assessment of resources needed to develop the strategy Understanding of what would happen if investments were made differently Management Systems/technical reports demonstrating relative performance impact of different investment options. Documentation of why a forecast or methodology is official Weighted set of priorities based on the expected impact of different investments. Process for prioritizing projects and programs based on values and expected outcomes Statewide planning process, structured public outreach and involvement of local and regional actors such as MPOs, RPOs, the state political establishment, local units of government and district partnerships. Environmental process, corridor studies, localized plans and pre-design studies. Explains why the STIP is developed, what the strategy does and why this strategy is followed Explains whom is making decisions and why they are the ones making the decisions. Explains that the state has done due diligence in setting priorities. Explains that the state has considered different ways to invest and shows that the priorities are not arbitrary. Explains and quantifies the benefits the state expects to achieve by supporting the projects it does. Anticipates questions about whether the benefits will really accrue, and explains why the state believes in the merits of its choices. Explains why one project is more important than another and why the state values one outcome over another. Spells out which projects and programs are supported by the strategy, and which are less important based on well defined values and methods. Articulates the rationale for decisions made under the strategy to key actors and decision makers based on how decision issues are addressed. Ensures investments made under the strategy can be implemented with the time and resources provided by the strategy. 3

11 An effective programmatic investment strategy addresses each of these issues in a transparent, consistent and objective way. The statewide planning process is a valuable tool for states to address investment decision issues in an orderly way that can be updated on the cycle of statewide plan updates. It can be concluded from this research that effective programmatic investment strategies address each of the cardinal decision issues of strategic decision-making. In current practice, each state has relative strengths and weaknesses with regard to how each issue is addressed. For example, a state with strong investment in management systems and models may adequately understand possible outcomes and have a systematic way of applying values when managing trade-offs yet may not have a consistently defined vision and set of goals. Other states may have well defined goals and performance measures from policy level plans, but may lack a structured process for developing and analyzing different options for actual investment levels and expected performance outcomes. This report and the worksheets offered in each section are offered as a mechanism for states to assess each aspect of their investment strategy to build on strengths in the process and improve weak areas based on the success of other states. The diversity of state transportation systems and departments makes it unlikely that there will ever be one preferred method or approach to any given issue recommended for all states. Each state must assess its current practice, planning resources and policy environment to determine how each issue is to be addressed in the unique context of its own state. Following are the general conclusions based on the findings of this report: (1) Effective investment strategies address each of the ten cardinal decision issues in ways that are objective, transparent and can be easily articulated to stakeholders. (2) Quantitative methods and technologies play a role in some aspects of an investment strategy but cannot address all of the decision issues that arise in the process. Quantitative methods and technologies are most useful for understanding possible outcomes of investment options, judging the likelihood of possible outcomes and managing trade-offs. (3) It is more important for planners, stakeholders and decision-makers to understand how decision issues are addressed than for methods to be complex, intricate or automated. States place a relatively low value on the speed with which decisions are made or the affordability of decision-making processes, placing a higher value on the objectivity, transparency and inclusiveness of the process. (4) Collaborative processes both within the DOT and with key transportation constituencies are as important, if not more important than models and technologies. This is especially true in when it comes to establishing a vision for the system, setting goals, determining values and establishing buy-in to the strategy. (5) The statewide planning process provides the state with an opportunity to organize methods, tools, staff roles and other processes into an investment strategy tailored to any given state. 4

12 Future research can significantly enhance the quality and state of the practice in transportation investment strategies. Some areas recommended for future research include: (1) The role of technologies in the investment decision-making process, (2) developing and applying modeneutral performance measures for statewide programs, (3) establishing consistency between transportation performance and economic analysis methods and (4) establishing prioritized values for systems performance. 5

13 I. INTRODUCTION This report / guidance provides an overview of best practices for state Departments of Transportation (DOTs) in making strategic decisions about how to invest in programs like roadway preservation, transit, roadway expansion, roadway modernization, aviation and others. A programmatic investment strategy is defined as an approach or methodology a transportation agency uses to understand investment needs and choices. A programmatic investment strategy enables the department to make consistent and transparent decisions about how to invest transportation dollars. These strategies often involve predictive models, costing and scoring worksheets, collaborative processes, professional judgment and other means to make decisions about how to best manage transportation investments. Increasingly states use these types of strategies to help them make decisions. To some degree, it is understood that all states must make decisions about how to invest in programs regardless of whether the decision-making process is organized or defined as a strategy or if it is simply understood as the practice by which the state makes transportation investment decisions. States may utilize statewide plans to different degrees in making investment decisions or may use other strategic processes to determine the investments reflected in their programs. This report explores how different aspects of programmatic decisions are approached within the context of different DOTs, outlines key elements of a programmatic investment strategy, and offers best practices for states seeking to utilize a strategic approach in these decisions. A. Problem Statement State DOTs are continually faced with the challenge of limited funding and budget shortfalls because transportation funding is rarely adequate to address the full range of competing transportation needs within a state. Reauthorization funding levels in SAFETEA-LU fell below those anticipated by many state DOTs. Project design and construction costs often exceed budget earmarks and estimates. These issues require state DOTs to continually choose how best to allocate their limited fiscal resources between competing projects, issues and needs such as capacity expansion vs. safety improvements, maintenance and preservation. Planning is all about choices, and the decision to fund any single project (or program) may mean a competing project (or program) will go unfunded. Advocates for specific projects and pressure from the public, and political and special interest groups not only complicate the decisionmaking process but demand state DOTs articulate and justify the decision-making process and reasoning used to make the choice. In response to limited funding and the need to articulate a clear and rational / transparent decision-making process by DOT leadership, many state DOTs have begun to develop and employ short and long-term programmatic investment policies, programs and strategies. Often these investment strategies are in a level of detail between a policy plan and a list of projects. These strategies may be aimed at guiding short-term STIP decisions and project selection, as well as to guide longer term policy planning and system investment strategies. 6

14 The methodology that employs programmatic investment strategies (often referred to as service packages or alternative scenarios ) uses basic transportation planning tools. The cornerstone of the approach is a technically-based (data) modal needs assessment that allows the state to quantify investment requirements (needs) by category (maintenance, preservation, modernization, expansion, for example). These terms can be used to describe needs in modeneutral language, so it is possible to introduce multimodal / intermodal features, and the analysis can be framed in apples-to-apples terms. A programmatic investment strategy or service package is a bundle of investment choices that mixes resources by program category and describes the impacts of the strategy from a performance perspective. Thus, policy-makers, decision-makers, and the public can understand how the transportation system will perform over time and can compare the impacts of their service package options side by side. A critical element of this approach is performance an investment strategy becomes, then, a choice or menu to guide transportation investments. A strategy that emphasizes highway capacity investments will have decidedly different performance attributes than one that emphasizes highway maintenance or alternative modes. The planning approach that uses the programmatic investment strategy concept as its centerpiece allows the crafting of a plan that includes resource allocation by improvement type without specifically identifying projects. In this way, project selection becomes a follow-on process in which the project mix in the capital program reflects the plan, and the outcome in terms of performance is both predictable and expected. This approach also helps build a strong linkage between the plan and capital program, something many states struggle to establish. B. Objective and Scope The purpose of this report/guidance is to identify effective processes and best practices by which state DOTs develop, employ, and implement programmatic investment strategies. This involves: Defining key elements of programmatic decisions that are important for an overall strategy both within and outside of the statewide planning process; Describing how short and long-term transportation investment policies, programs and strategies are assembled from the initial determination that a policy is needed through the preparation of the policy for implementation; Describing how and why states utilize specific methods, technologies and processes to aid in different aspects of developing a strategy; and Assessing the best practices for approaching and assembling a strategy. 7

15 II. LITERATURE REVIEW Early research into statewide planning methods and decisions dates to the 1979 NCHRP Report 199 (2) and its companion report, NCHRP 179 (3). These reports by Belomo, et al. evaluated how statewide plans addressed the development and analysis of investment options for both revenues and investments. The methods and techniques in these reports, while outdated represent early efforts in statewide plans at investment strategies addressing revenues, needs and allocations. In 1995, USDOT (4) published examples of statewide planning practices, illustrating different types and formats of statewide plans and the state of the practice in statewide planning at that time. In 1999 the FHWA (5) published a guidebook for states on financing the statewide plan, which addressed both funding sources to support statewide plans and a cursory assessment of integrating statewide planning decisions into the STIP. In 2002, the USDOT (6) (Noerager, et al.) published an evaluation of statewide plans in the U.S., providing an assessment of current practices in the statewide planning process. This document includes a general assessment of financial planning and performance measures in statewide plans. TRB s Transportation Research Circular E-C099, Statewide Transportation Planning: Making Connections (7) includes the presentations, resource papers, and summaries of views expressed by conference speakers, panelists, and participants at a May 2003 conference held in Duck Key, Florida. In 2004, FHWA (8) developed a briefing book on current project development practices at the MPO level, highlighting many strategic aspects of project decisions in developing a STIP. TRB Transportation Research Circular E-C091, Innovations in Statewide Planning: A Peer Exchange (9) summarizes a July 2005 peer exchange on innovations in statewide planning. In 2006, NCHRP Report 574 (10) Anderson, et al. provide Guidance for Cost Estimation and Management for Highway Projects during Planning, Programming, and Preconstruction. This report focuses only on the costing aspects of understanding needs, but is relevant to the issue of programmatic investment. Also in 2006, NCHRP Synthesis 358: Statewide Travel Forecasting Models (11) examined statewide travel forecasting models designed to address planning needs and provide forecasts for statewide transportation, including passenger vehicle and freight movements. The report explores the types and purposes of models being used, integration of state and urban models, data requirements, computer needs, resources (including time, funding, training, and staff), limitations, and overall benefits. The report includes five case studies, two that focus on passenger components, two on freight components, and one on both passenger and freight. To date, no report has explicitly offered a structure of strategic decision issues associated with programmatic investment decisions at the state level in relation to statewide planning and programmatic choices. This report builds on current knowledge of statewide planning as well as existing policy and business management research to offer a paradigm for establishing a best practice in strategic investment decision-making for state DOTs. 8

16 III. CONCEPTUAL STRUCTURE Because programmatic investment strategies are ultimately ways of organizing complex decisions about transportation systems, this research is organized around cardinal issues of decision-making from the business management literature. Based on Yates decision management paradigm (1), ten cardinal decision issues are identified. These constructs are relevant to the issues associated with high-level strategic investment decisions and are used as a way to characterize programmatic strategies. For the purposes of this report, these issues are combined into different phases in the development and implementation of a statewide programmatic investment strategy. Best practices for each phase of the process are set forth in the conceptual structure and findings based on observations from state DOT practice under the methodology of this report. A. Ten Cardinal Decision Issues The cardinal decision issues used to characterize strategic decisions are: Need for a Strategy (knowing when and why a decision strategy is required); Mode of Decision-Making (knowing who must make decisions); Investment in Decisions (knowing how much effort to put into the decision); Developing Options (knowing what the choices are); Understanding Possibilities (understanding what the outcomes may be); Judgment Calls (understanding which outcomes are the most likely); Values and Priorities (knowing which outcomes are most desirable); Managing Trade-offs (making choices between conflicting investments); Establishing Buy-In (ensuring investments are politically feasible); and, Practicality (ensuring investments are technically feasible). The following is a brief discussion of each of these issues as they confront DOTs in making programmatic investment decisions. 1. Need for a Strategy Knowing the Need for a Strategy is the state s way of understanding when and why strategy is developed. For example, DOT staff and local stakeholders may spend a long time discussing the fact that a strategy for managing state transportation investments is needed before the DOT actually begins developing the strategy. An effective programmatic investment strategy defines why a strategic approach is being used for investment decisions, and provides guidance regarding when decisions are to be made or revisited. 9

17 2. Mode of Decision-Making A Mode of Decision-Making is a person, process or technology that effectively or practically makes a decision. In some states, computerized programs and methods dictate investment levels based on specific formulas and methods. In other states collaborative groups, policy boards or key staff members make these decisions. An effective programmatic investment strategy defines who holds the authority in setting programmatic investment levels and why. 3. Investment in Decisions The Investment in Decisions is the amount of time, budget or other resources that the DOT spends in the process of making decisions about how to invest in programs. For example, if the DOT hires a consultant for $200,000 to complete a study on the allocation of transportation revenues among programs and utilizes 100 hours of staff time to manage the study and another 300 hours of staff time to finalize an investment strategy, then the DOT has invested $200,000 plus 400 DOT staff hours into the decision-making process. If another DOT spends $10,000 and 300 hours of staff time holding a summit for state and local officials to come up with a strategy for investing state revenues in programs, then this state's investment in the decision-making process is $10,000 plus 300 DOT staff hours plus the time and effort by the summit participants. An effective programmatic investment strategy enables the DOT to manage the amount of time, effort or other resources to be spent on decisions about how to invest in programs. 4. Developing Options Developing Options is the process of coming up with different potential strategies for the DOT to consider regarding how to invest revenues in different programs. This is often a process of considering different combinations of investment levels in various programs that could possibly be supported by available revenues. Options may also include exploring new revenue sources as ways to support existing and future needs. An effective programmatic investment strategy gives the DOT a way of developing and structuring options as to how much revenue to expect, where revenue will come from and where it may be invested. 5. Understanding Possibilities Understanding Possibilities is the process of coming up with possible impacts or results that may follow a given investment option. This issue is often thought of as testing the options to understand what may happen, and compare the impact of different investment options on system conditions and performance. Some states rely more on models, methods and technologies to predict possible outcomes, whereas others rely on expert opinion or collaborative processes. An effective programmatic investment strategy gives the DOT a way of understanding (measuring and comparing) the possible outcomes of different investment options when deciding how to invest. 6. Judgment Calls Judgment Calls are necessary in programmatic investment decisions because there is often disagreement about which possible outcomes will actually result from any given option. The 10

18 Judgment Call ultimately determines who or what the DOT chooses to believe when such disagreements occur. For example, an automated software program may report that investing a given amount of money in bridges will leave the state with 15 structurally deficient bridges at the end of 10 years. However, a group of bridge engineers from the DOT, when looking at their inventory of bridge conditions, may judge that this investment level will leave at least 25 or more deficient bridges at the end of the period. Whom does the DOT believe regarding what to expect from this investment level? Does the DOT believe the software program, the group of engineers, or some answer in between? Judgment in the DOT rests with the person, thing or process that resolves these types of questions regarding which of the possible outcomes the department really expects to result from an investment strategy. An effective programmatic investment strategy provides guidance regarding how to make judgments about which possible outcomes are most likely to occur when different outcomes are possible. 7. Values and Priorities Values ultimately determine which outcomes are most important for the transportation system. Does the DOT place a higher value on safety, mobility, sustainability or other priorities? For example, a DOT might have to choose between an investment strategy that invests heavily in programs to reduce crashes, and another strategy that invests more in programs to reduce travel times. Which is more important safety or mobility? How valuable is a performance improvement in safety when compared to a performance improvement in mobility? Who decides what is important? Values determine how the DOT answers the above questions. An effective programmatic investment strategy recognizes the values that are important for the transportation system, and supports investment options consistent with the department s underlying values. 8. Managing Trade-Offs Managing Trade-Offs is necessary when the DOT faces exclusive decisions about how to invest scarce resources in programs. Managing Trade-Offs is the process whereby the DOT makes decisions about where to invest, and where not to invest in specific projects or programs. For example, if a state has $100 million to spend on research and development programs in a given number of years, the department is faced with competing demands. A pavement program is suggested to develop and pilot European design pavements, but will require a minimum of $70 million to achieve results. An ITS initiative is also suggested that will need $50 million to achieve results. Other more modest programs are offered at costs of less than $50 million. It is not possible to do both the ITS initiative and the pavement research and stay within budget constraints. How trade-offs are managed is largely an indication of the values of the department, as well as how the options are developed and how the possibilities are understood. An effective programmatic investment strategy gives the DOT a way of managing trade-offs consistent with the department s values with an understanding of the options available and the expected outcomes. 11

19 9. Establishing Buy-In Establishing Buy-In is obtaining the active support and cooperation the DOT needs from other actors in order to carry out a program or strategy. For example, if a state DOT offers a statewide investment strategy allocating revenues between highway and transit programs, districts or other entities, "buy-in" ensures that all of the involved entities resolve to work within the investment levels of the strategy. Buy-In does not mean that there is agreement on all aspects of the strategy, but it does mean that all actors involved in carrying out the strategy are committed to making it succeed. An effective programmatic investment strategy involves establishing buy-in from key actors needed for implementation. 10. Practicality Practicality refers to the technical feasibility of actions necessary to carry out a policy in the way it was intended. For example, if the DOT invests in a highway expansion program to build outer loops around all major trade centers, and it turns out that many of these centers are surrounded by wetlands or other areas where such roads can not be built, the program may not be practical for implementation. An effective programmatic investment strategy ensures that investment is made in programs that are technically feasible to implement. B. Phases of Programmatic Investment Strategy Development The above cardinal decision issues can be addressed incrementally at different phases of developing a programmatic investment strategy. Many issues are closely inter-related. For example, understanding the timing and need for a strategy is closely tied to determinations about the resources the department must invest in the strategy. The development of options is directly linked to the way in which possible outcomes of different options are understood. The underlying values of the department determine how trade-offs are managed and the most preferred options are selected. The issues of buy-in and implementation are tied to the political and technical feasibility which a strategy must ensure to be effective. For the purposes of this report, the issues are offered as planning steps which are nested into practical phases of developing and improving practices in programmatic investment strategy. The phases include: Getting Started -- Getting started involves steps for understanding the need for a strategy at a particular time, developing a way to engage the actors who will participate in decisions (the mode of decision-making) and determining the resources that will be needed for developing the strategy (investment in decisions). Forming a Strategy -- Strategy formation involves steps for developing options, providing a way of identifying possible outcomes of different investment options (understanding possibilities) and a process for making judgment calls about which options are most likely to occur. Making Choices -- Making choices, informed by the strategy formation process involves steps for applying departmental values and priorities to possible outcomes that may result from different investment options, and managing trade-offs between mutually exclusive programs or projects. 12

20 Making it Work -- Making a strategy work involves steps for identifying and addressing issues of political and technical feasibility (establishing buy-in and practicality) that may interfere with effective delivery of the strategy to achieve the desired outcomes. Figure 1 gives a visual overview of how each of the 10 cardinal decision issues is nested into different phases of programmatic decision-making. Figure 1. Cardinal Decisions in Four Phases of Strategy Development. Getting Started Need for a Strategy Why Do we Need a Strategy? Forming a Strategy Developing Options What are our options? Making Choices Values and Priorities What is Important? Making it Work Establishing Buy-In What is Politically Feasible and Publicly Acceptable Why Now? When will we update? Mode of Decision Making Who Are the Players in Determining this Strategy Understanding Possibilities How can we test for outcomes? Judgment Calls Managing Trade-Offs How do we choose between conflicting priorities? Practicality What is Technically Feasible and Practical? Investment in Decisions How Much Should we Invest in the Process of Developing this Strategy? How will we make judgments about which outcomes are most likely? The phases presented in Figure 1 provide the basic conceptual structure of this report. Best practices for state DOTs are offered for each of these phases of programmatic investment strategies. The phases and the steps within each phase are offered also as a way for a state DOT to review its existing practice, consider if any decision issues are not addressed by planning steps currently practiced in the state, and provide information regarding how other states approach each step. C. Investment Strategies and Statewide Plans Statewide plans are important to and used by many states in addressing different phases of a programmatic investment strategy. Some state DOTs use the statewide planning process primarily as a tool for getting started, defining only the high level need for decisions and setting general goals in policy level plans. Other state DOTs have more intricate statewide plans, including a full and forward looking investment strategy complete with options, impact assessments and choices about target investment levels for programs, corridors and geographic areas of the state. Some state DOTs have statewide plans that carry investment decisions to the project level, specifying particular projects that are important at the state level. Each state must decide the degree to which it will utilize the statewide plan as a guide for investment decisions when developing statewide plans. 13

21 The findings of this report and the collective experience of state DOTs suggest that the strongest, most replicable, defensible, transparent, and easily monitored transportation planning processes are those linking a statewide plan to capital project selection through a clearly articulated programmatic investment strategy. By allowing stakeholders and decision-makers to understand the consequences of transportation investment alternatives, including performance outcomes, state DOTs are able to forge stronger relationships with stakeholders, legislators, and local officials while building credibility through a high agency profile. This report / guidance provides examples of how state DOTs may use statewide plans to guide programmatic investment decisions. However, the report / guidance also examines current practices other than statewide planning that address important decision issues for transportation investments. 14

22 IV. METHODOLOGY To understand how decision issues are approached by state DOTs in programmatic investment strategies, state DOTs were invited to participate in this research in three different ways. An online survey of DOT officials; Depth interviews with selected DOT staff; and Case studies on particular aspects of strategy development. A. Online Survey An online survey was conducted in May The purpose of the survey was to introduce state DOT officials to the issues to be studied in this project and to solicit their input regarding how programmatic investment decisions are approached in their department. The survey inquired about the relative importance of different types of resources and tools for the DOT in addressing each issue. Specific inquiry was made regarding: The role judgment by a key individual in the department; The role of collaborative processes in the department; The role of quantitative methods; The role of statewide plans; The role of federal and state legislation; The role of technologies; The role of consultants of professional vendors; The role of elected officials and interest groups; The role of DOT policy boards; and, Scarcity of funds. These questions were intended to ascertain in general terms where different types of processes and practices are most utilized within an investment strategy. The survey also included an opportunity for respondents to identify desired characteristics of a good process for understanding each aspect of programmatic decision-making. Respondents had the opportunity to register the relative importance of the following features in how the DOT addresses each decision issue: Objectivity; 15

23 Inclusiveness; Transparency; Speed; and, Expense. These questions are included to ascertain in general terms those aspects of a strategy which are most sensitive to considerations of objectivity, inclusiveness, transparency, speed and expense. The overall intent of the survey was to ascertain what state DOT officials see as a good programmatic investment strategy, how such a strategy approaches key issues and what types of elements comprise such a strategy. Because it is often difficult for states to make general closed ended observations about their investment decisions, it was understood that some states may prefer an interview to a survey. Consequently the survey was not intended to provide a statistical sampling or census of all states and is not offered as the sole instrument for ascertaining information from states. The survey is intended to be descriptive of those states choosing to participate, with participation open to all 50 states. B. Depth Interviews To provide a more detailed description of how strategies are developed and implemented, depth interviews were conducted with 13 state DOTs. The depth interviews were conducted in April and May of 2007 to provide a more detailed description of specific tools, methods and processes that state DOTs have found to be effective in making investment decisions. The states for depth interviews were selected to provide a comparative and diverse representation of states facing different types of investment decisions for different mixes of programs throughout the United States. The states participating in depth interviews included: Arkansas Alaska Indiana Pennsylvania Ohio Virginia Oregon Georgia Utah Vermont North Carolina Delaware Florida 16

24 The overall purpose for the depth interview was to identify and characterize the ways in which DOTs approach the issues. For example, while the survey concludes that technology is important for understanding the possible outcomes of different investment levels, the interviews provide an indication of which technologies are important for specific issues, and how states use the technologies. C. Case Studies Case studies were conducted based on both the survey and the depth interviews. Each case study features a processes or approach to one phase of investment decision-making where one state has been particularly successful. The case studies give a real world illustration of how a state DOT effectively approaches the issues in each phase. The states selected for case studies include: Florida (Getting Started); Oregon (Forming a Strategy); Alaska (Making Choices); and, Pennsylvania (Making it Work). The findings from the survey are reported in general terms in Chapter V, whereas the findings from the interviews and case studies are summarized in the guidance provided in Chapter VI. This division highlights how different state DOTs approach each issue, and support conclusions regarding best practices for each phase of programmatic decision-making. The survey instrument is included in Appendix A. Appendixes B and C include a full frequency summary and written synopsis of survey results. Appendices D and E contain the interview discussion guide and interview documentation respectively. In all, 28 of the 50 state DOTs participated in this methodology in some way. Table 1 summarizes the ways in which each state has participated in this research. 17

25 TABLE 1 States Participating in NCHRP 8(36)-T67 State Participated in Survey Participated in Depth Interview Participated in Case Study Alaska Arizona Arkansas Connecticut Delaware Florida Georgia Indiana Iowa Kansas Kentucky Maryland Michigan Minnesota Mississippi Missouri Montana Nebraska New Jersey North Carolina North Dakota Ohio Oregon Pennsylvania Texas Utah Vermont Virginia Washington 18

26 V. SURVEY FINDINGS Transportation departments in all 50 states were invited to participate in an online survey probing for the relative importance of different resources and processes in associated with investment decision issues. DOT representatives from all 50 states were also called to encourage participation between 25 April and 18 May, In all, 22 of 50 states completed the survey, with some states opting to provide a depth interview, but not a survey. Between the interviews and surveys, 28 of the 50 states participated in the study. States from different geographic regions of the country responded to the survey ranging in size from Delaware to Texas. Geographic coverage spanned from Alaska to Georgia, including states from the West, Southwest, Midwest, the Great Lakes, Southeast and Northeast. A. Overview of Survey Response Overall 22 of the 50 invited state DOTs had a state official participate in the online survey. Most of the state officials (15 out of 22) responding to the survey were responsible for managing statewide investments with the remainder holding responsibilities for investment in specific programs. The respondents represented a diversity of experience levels, with approximately one third (7 of 22) in their current role for more than 20 years, another third (7 of 22) with a tenure of years in this capacity and the remaining third with less than ten years in this role. All but one of the respondents held some level of academic degree. Half the respondents were engineers, with two holding a masters degree in the field. Five respondents were planners, with two holding a masters degree in the field. Other disciplines represented included public policy (two respondents at the masters level), business management (2 respondents, one at the master s level), and one master of public administration. Some respondents also held bachelors degrees in other areas. The respondents were also diverse with respect to time in service. Seven of the 20 respondents held a most recent degree earned prior to Six completed their most recent degree between 1980 and 1990, five between 1990 and 2000 and five had completed degrees since the year These results indicate that the survey includes different disciplinary and generational perspectives on programmatic decision-making. B. Important Factors in Investment Decisions Survey respondents were asked to rate the importance of different factors in approaching different decision issues pertaining to programmatic investments. The importance of each factor for each cardinal decision issue was indexed based on (1) the number of states citing each factor as important, and (2) the score each state gave each factor rating its importance for transportation investment decisions. Table 2 summarizes the strategy elements and key characteristics state officials cite as important programmatic investment decisions (Table 2). 19

27 TABLE 2 Strategy Elements and Important Characteristics for Investment Decision Issues Decision Issue Important Strategy Elements Important Characteristics Recognizing the need for a strategy Determining who will make decisions (mode of decisionmaking) Determining the resources to invest in the strategy (investment in decisions) Developing investment options Understanding possible outcomes (understanding possibilities) Judgment calls of which outcomes are most likely Determining which outcomes are most important and desirable (values and priorities) Managing trade-offs Establishing buy-in Ensuring investments are technically feasible to implement (practicality) Scarcity of Funds Collaborative Processes Quantitative Methods State and Federal Legislation Collaborative Processes Scarcity of Funds State and Federal Legislation Quantitative Methods Elected Officials and Interest Groups Scarcity of Funds Collaborative Processes State and Federal Legislation Quantitative Methods Statewide Plans Scarcity of Funds Collaborative Processes Quantitative Methods Quantitative Methods Collaborative Processes Key DOT Officials Analytical Technologies Quantitative Methods Collaborative Processes Collaborative Processes Quantitative Methods Statewide Plans Scarcity of Funds Scarcity of Funds Collaborative Process Quantitative Methods Collaborative Processes Scarcity of Funds Quantitative Methods Scarcity of Funds Collaborative Processes Objectivity Inclusiveness Transparency Objectivity Inclusiveness Transparency Objectivity Inclusiveness Objectivity Inclusiveness Transparency Objectivity Inclusiveness Transparency Objectivity Transparency Objectivity Inclusiveness Transparency Objectivity Inclusiveness Transparency Objectivity Inclusiveness Transparency Objectivity Transparency C. Conclusions from Survey Results From the survey it can be concluded that different factors come into play in different aspects of programmatic decision-making. Political actors such as policy boards, elected officials and interest groups are often important for recognizing the need for investment decisions, determining who will make choices and are critical for establishing buy-in. However, collaborative processes within the planning and engineering community have an important role 20

28 in developing and understanding options, with quantitative methods and technologies playing a major role in understanding outcomes. States transportation officials report that objectivity is by far the most important characteristic for all aspects of the investment decision-making process. States consistently report that inclusive approaches are especially important for determining the resources to invest in decision-making, developing investment options, judging which outcomes are most likely, determining values for the strategy, managing trade-offs and establishing buy-in. Transparency is most important when states are recognizing the need for decisions, determining who will make decisions, understanding possible outcomes and ensuring the technical feasibility of investments. While the scarcity of funds is a key consideration in programmatic investment decisions, state officials report placing a relatively low importance on processes or decision-making approaches based on minimizing the expense or time that is required for making decisions. Overall states are willing to invest time and budget to ensure that investment decisions are objective, inclusive and transparent. The following guidance presented in Chapter VI, provides more descriptive detail regarding how these and other elements can be organized into an investment strategy. The guidance includes descriptions of how a state can use collaborative processes, where and how elected officials and transportation boards provide input to the process, how investment strategies may relate to statewide plans and the specific types of methods and technologies that support the process. The guidance highlights important considerations for each aspect of an investment strategy, each including a case study illustrating how one state has addressed the issues and briefly summarizing how other states address each aspect of programmatic decisions. 21

29 VI. GUIDANCE: DETAILED FINDINGS AND BEST PRACTICES A. Getting Started Getting started in the process of programmatic investment strategy entails three essential steps: (1) understanding the need for an investment strategy, (2) identifying and involving the decisionmakers central to the strategy (mode of decision-making) and (3) deciding how much time or resources to invest in the strategy (investment in decisions). Key issues to be considered in the best practice for getting started in a programmatic investment strategy are set forth here, followed by the Florida case study illustrating key success factors for a state effectively addressing these issues. The section closes with examples of current practice from throughout the country. Table 3 summarizes the key steps and expected results of addressing decision issues associated with getting started in a programmatic investment strategy. TABLE 3 Getting Started Worksheet Getting Started Steps To Follow Process to Use Results of the Step Characteristics of Best Practice DOT Staff Collaboration Step 1: Define the Need for a Strategy Review Legislative Requirements Consult Policy Boards Consult MPO's/RPO's Vision Statement and High-Level Goals Objective, Transparent, Inclusive Consult Advisory Committees Step 2: Determine the Mode of Decision- Making Step 3: Determine Investment in Decisions Structured Public Outreach Consult State Statute Consult Policy Boards DOT Staff Collaboration Assess current tools and technologies Assess data requirements and staff time available to support decisions. Develop a budget for developing and managing needed decision support technologies and processes. Well Defined Structure for Decision-Making Roles (Organizational or Flow Chart) Budget for departmental resources used to support decisions (schedule and budget for planning staff, technologies, outside vendors) to support decisions on a given time cycle. Objective, Transparent, Inclusive Objective, Transparent, Inclusive 22

30 Step 1: Understanding the Need for a Strategy States enter into the process of programmatic investment management in different ways. The underlying need for a strategy varies from state to state, as do the events triggering programmatic investment decisions. Common issues driving the need for an investment strategy include: (1) Unanticipated changes in the costs of programs, materials or other inputs to transportation systems; (2) Budgetary shortfalls and a department s need to justify changes in funding levels for programs; (3) Political pressures and state legislation mandating the state invest scarce resources in new or different programs; (4) Updates to a statewide plan or regularly scheduled reviews of investment levels dictated either by statute or internal policies; and, (5) Conflicting public interests regarding transportation values and the desired outcomes of programs. The need for a strategy can be derived or strengthened by the department s financial situation, because there is seldom enough revenue to finance all the needs, hence priorities must be set. To determine which specific programs, projects or types of activities should be funded, benchmarks or goals must be developed. Goal, Vision or Mission Statements. The over-arching need and purpose of the department s investment strategy may be set forth in a mission or vision statement. Such a statement is a general expression of the policy aims and goals the department seeks to achieve through its strategic investment of resources. Mission = Vision + Action. It is important for the mission statement to envision the type of system the department seeks to create and to specify those activities by which the state will realize the vision. By addressing vision and key activities of the department in specific ways, these statements can inform each of the decision issues of the department s investment strategy. The best practice is for the department to first develop a vision for the system and important activities before managing resource constraints. This ensures that the department will steward and leverage available resources to achieve an overall system vision, instead of dispersing resources among competing demands all of which may not ever be satisfied by available revenues. The statement can be brief and concise, but have at least two parts. One part will offer a vision of the transportation system the agency seeks to deliver. The other part will include actions the department seeks to undertake in pursuit of the vision. The Indiana Department of Transportation is an example: 23

31 INDOT will plan, build, maintain and operate a superior transportation system by enhancing safety, mobility and economic growth. The above statement specifies the overall vision of safety, mobility and economic growth and spells out departmental actions of planning, building, maintenance and operations as key activities accounting for investment. Such statements may be developed in a number of different ways: A statement may be provided by a transportation board or committee responsible for investment management; A statement may be codified in the legislative intent of transportation statutes; A statement may be developed by a Governor or appointed DOT Commissioner; or, A statement may be developed by DOT staff in collaboration with different elected actors, appointed actors and constituencies. States may further refine the over-arching need to make investment decisions by articulating specific goals. At the level of defining the need for decisions, statewide goals organize the vision for the system into general areas that should be addressed by the strategy. Goals for programmatic investment strategy should be specific enough to support the subsequent processes of developing options and assessing potential outcomes while general enough to allow for different investment options, and flexible enough to allow the state to apply subjective values to decisions. Goals may be defined in statewide plans, by policy boards, set forth in statute or defined through collaborative processes within the department. Some typical goal areas for programmatic investment strategies include: Preserve existing assets; Provide a safe transportation system; Provide sustainable transportation; Provide mobility to all residents; Support efficient goods movement and freight; Support economic development; Ensure efficient operations; Achieve balance between modes; and, Coordinate transportation investments with land use management. 24

32 Many states define the need for an investment strategy and set high-level goals in the statewide planning process. In 2006, when the Michigan Department of Transportation was developing its statewide plan, the state reviewed goal areas utilized in statewide transportation plans throughout the US. Table 4 is a summary of goals used in some statewide plans. TABLE 4 Examples of Goals in State Transportation Plans Goal Areas and Associated Goal Categories Safety and Security Goals Safety and Security Safety Security Existing System Goals System Preservation & Maintenance Management & Efficiency (Preservation, Operations, Etc.) System Operations & Management System Improvement Mobility 2 3 Sub Themes Accessibility X X Efficient Movement X X X Reliability X X X System Integration X X X Modal Choice/Intermodalism X X X X X Address Congestion, Add/Maintain Capacity X X X X X System Operations X Sustainability (environment, local coord, land use, health) Respect/Enhance the Environment Local Coordination/Collaboration/Communication Quality of Life/Environmental Stewardship Land Use Transportation Integration Environment & Public Health Balance Needs, Land Use & Environment Building Communities/Community based Design Maintain Air/Water Quality & Habitats/Watersheds 3 Recycling Organization/Administration Program Delivery, Institutional Capacity & Management Financial Resources & Stewardship Investment Efficiency & Effectiveness Economics & Freight Economic Development & Quality of Life Support/Promote the Economy Tourism Competitive Freight Movement Other Special Transportation Needs Strategic Projects/Program Goal Note: Numbers in cells reflect mulitple goals in that category Source: MI Transportation Plan, MDOT 2006 Michigan California Florida Colorado Maryland Minnesota Ohio New Hampshire Oregon Pennsylvania Washington 25

33 When there is broad-based participation and buy-in to the statement articulating the need for a strategy and its goals, the investment strategy is likely to be more disciplined and purposeful than when the need for the strategy is less defined. Providing a vision statement and goals clarifying the need and rationale of the investment strategy supports subsequent stages of the process, providing a guide for the formation of the strategy, choices made under the strategy and the implementation of projects supported by the strategy. Step 2: Identifying Decision-Makers (Mode of Decision-Making) To develop an effective investment management strategy a state must clearly know and understand who makes programmatic investment decisions and why. Decision-making authority varies from state to state. A successful programmatic investment strategy clearly defines the mode of decision-making and has the active support and involvement of key decision-makers throughout the formation of the strategy. Some possible modes of decision-making include: Programming by federal legislation or initiative. Some investments at the state and local levels are driven by federal factors. Congress uses its power to designate earmarks, demos and other project-level authorizations; this process tags federal funding for specific projects, and the funding cannot be used for other purposes. Congress also drives program decisions through the appropriation process, which set levels for certain types on investments (safety, enhancements, planning, etc.). The states either use the apportionment or lose the apportionment. Thus, SAFTEA-LU and other federal programs often stipulate DOT priorities through earmarks, special programs and other directives. When priorities are established at the federal level, the DOT must incorporate these projects into the overall program, regardless of whether the mandates are fully funded. To account for federal earmarks and priorities, the best practice is for the state to: Track and play an active role in the development of projects that may have active federal support; this may be achieved through participating in initial planning studies as well as engaging stakeholders in dialogue about these potential projects; Provide information for federal decision-makers relating potential federal or earmark projects to the state s overall performance goals and objectives. This may involve presenting potential options for how a federal investment may be made, as well as potential impacts on the state transportation system; and, Seek opportunities to realize statewide programmatic goals and objectives through the implementation of federal projects. This may involve developing complementary projects with state funds, or leveraging the federal investment with county and municipal partners to enhance the overall performance of the state system. Direct programming by state legislature. In some states, the legislature and its committees directly set investment levels for each program without involving the DOT in the decisions. In such states, investment levels are difficult to change and the DOT is primarily in the position of identifying projects and managing priorities within a strategy that is set in statute. Programming by an appointed transportation commission. In some states there is an independent commission, appointed by the governor which ultimately makes programmatic 26

34 investment decisions. In these states the DOT plays an active role in developing options, analyzing potential outcomes, making judgment calls and engaging stakeholders. However, the commission sets the goals and determines the overall mission and vision served by the strategy. Programming by DOT process. In some states, the DOT has an organized process of state officials who manage internal groups to collaboratively make decisions about investment levels in programs. In these states, the collaborative staff groups are charged with making decisions within budgetary constraints in ways consistent with the legislative intent of the state s transportation law as well as federal transportation law. DOT processes can be very efficient; can support changing of investment levels internally within the department and support a direct role of the DOT in tying statewide priorities directly to projects in the STIP. Programming by computer. Some states are highly dependent on computerized management systems to dictate needs based on a consistent methodology, minimum tolerable conditions and other analytical processes. In some states, a combination of computerized management systems stipulate optimal programmatic investment levels based on cost-benefit analysis, expected system conditions and performance and built in normative weights for different programs. When computerized software and automated methods are used directly to make decisions about investment levels, the process is clearly objective and transparent. However, over-dependence on automated methods may yield decisions lacking in human judgment regarding the credibility of results and may not be responsive to the changing values of the public and other stakeholders. It is important for a state to understand the mode of decision-making at the outset of strategy development. As the strategy is developed, it is important to involve other actors such as the public, stakeholder groups, federal and municipal government agencies and other agents of implementation. Developing a full public and stakeholder involvement process is not necessary to initially commit to developing an investment strategy; however the state can expect such a process to become increasingly helpful as a strategy is developed. Involving other actors. In Section D of this chapter, it is shown that early involvement of actors (such as special interest groups, media organizations or local constituencies) who are not governmental decision-makers can educate stakeholders in a way that supports buy-in to the process. Furthermore throughout this guidance, it is shown that potential roles for stakeholder constituencies, groups with special expertise and the general public can enhance the quality and feasibility of programmatic investment decisions. When programs are ultimately implemented at the project level, stakeholders and the public must be able to understand why specific projects are or are not considered. Involving the public and stakeholders early in the strategy process provides the department an opportunity to explain how investment decisions will be made within the overall planning process. Involving the public and stakeholders at this early stage can also influence the high-level goals and vision for how decisions are made as the strategy is formed and implemented in the STIP. Step 3: Investing in the Strategy (Investment in Decisions) When the state has a clear idea of why the investment strategy is needed and can clearly identify decision-makers within the strategy, the state must determine the level and type of resources to 27

35 expend on forming and implementing the strategy. Resources typically required for an investment strategy include: Staff time and budget. Many states have specific positions or business units explicitly devoted to the process of managing investment levels and making programmatic decisions. Investment in technologies. Investment in technologies enables states to update and integrate models and management systems to determine the potential outcomes of different investment levels. States with many competing programs, with complex urban and rural needs and with competing views of potential impacts often benefit from investing in technologies to support investment management strategies. Investment by appointed boards and commissions. In some states appointed boards, commissions and policy committees donate significant time and corporate or personal resources in the process. Investment by such stakeholder groups may be generally organized in a statewide planning process and continues to support programmatic decision-making when a plan is implemented. Investment in outside consultants. States may invest in vendors and outside consultants to offer technical expertise in developing options, analyzing outcomes and involving the public in programmatic decision-making. States most typically involve vendors or outside consultants in the development of models and technologies, or in the management of a statewide planning process. At the outset of developing or reviewing a programmatic strategy it is important for the state to identify which of these resources it will utilize. The availability of resources to invest in the strategy itself determines how subsequent issues in strategy formation, making choices and implementation are to be addressed. Considering available resources at the outset of forming the strategy enables the state to invest its time and budget into processes and technologies that will best support the decision requirements for investment management in that particular state. CASE STUDY GETTING STARTED Florida Case Study: From the Florida Transportation Plan (FTP) to Statewide Intermodal System (SIS) The State of Florida provides a case study illustrating the paradigm shift that can occur when the need and purpose of an investment strategy is clearly defined and understood. The Florida SIS is recognized nationally as an innovative planning concept to invest resources in an intermodal system with a very clear understanding of why investments are made, as they are, a clear structure of who makes decisions and targeted investment in specific aspects of the decisionmaking process. The Florida SIS is an example of how a state has translated a statewide plan into an investment management strategy to include all programs across different modes, programs and jurisdictions. The following case details how the state of Florida addressed the need for a strategy, determined who would make decisions, and has supported investment in transportation decisions under the SIS. 28

36 Consensus on the Purpose and Need for the SIS (Need for a Strategy) The 2001 Florida Transportation Plan. The 2001 Florida Transportation Plan indicated a need for a strategic intermodal system that emphasized economic competitiveness. Upon completion of the 2001 plan, the Florida Department of Transportation (FDOT) began considering ways to make this a reality. It was decided that instead of hand-picking specific people it was important to pick the organizations that needed to work together to develop a strategic intermodal system. In developing the steering committee for the SIS, the Florida DOT began to focus on a committee that would represent constituencies with an interest in investment across modes, as opposed a committee comprised of key individuals who had typically been involved in the planning process. Key groups represented on the SIS steering committee included: (1) Statewide transportation governmental and non-governmental entities; (2) Statewide non-transportation governmental and non-governmental entities; (3) Statewide Groups representing constituencies modes, special interests and other groups needed to send people who represented these groups, chosen by the groups themselves. The SIS Steering Committee. This committee first convened one year after the 2001 plan. The steering committee had over 45 members. Because of the committee was developed to represent different constituencies. It included many actors who had not previously been involved in transportation planning. This committee began the process by refining the vision of a strategic intermodal system. While the SIS would ultimately become a way of investing resources, a key success factor was the committee s recognition of the need for a vision of the type of system Florida needed to create. Consequently, the committee focused on envisioning what the system should be without regard to funding questions. Developing a vision for the SIS prior to deciding on a financial package enabled the committee to form a clear understanding of the over-arching need for the strategy. This was important as it enabled the vision for the SIS to later guide funding decisions, instead of a process whereby funding questions would dictate the vision. The result was a new paradigm for transportation within the State of Florida. The committee saw early on that if they only talked about the SIS and not regional systems they might make poor decisions. Discussion was visionary, but roles and responsibilities were discussed and developed along the way. FDOT leadership was on the steering committee so the leadership learned what the different views were. A key success factor in keeping the committee on track was the use of facilitated dialogue, with the committee s discussions facilitated by the Florida State University Conflict Resolution Consortium. The initial meetings of the SIS steering committee clearly articulated why an intermodal strategy was needed, what the strategy should do and the system the strategy sought to develop. This vision continues to be vital construct for Florida s overall programmatic strategy. SIS Goals. In developing the SIS, the Florida DOT engaged a collaborative process to organize the overarching need for the SIS into goals, which have supported decisions made for the system. 29

37 The following text is taken from Florida s DOT policy documents articulating the goals for the SIS (12): The goals and policy objectives that the Florida Department of Transportation (FDOT) and its partners have developed to guide implementation of the Strategic Intermodal System (SIS) will apply to all functions of FDOT, including planning, design, right of way, construction, maintenance, preservation and operations. This paper is intended to provide guidance to FDOT s various offices on issues that may arise during the transition of the SIS development process from planning to implementation, with an emphasis on: Safety and security; Preservation and management; Operations; and Design. This is a partial list of issues that may be expanded in the future. Recommendations addressing these issues will be developed through future internal discussions and through FDOT s public and partner involvement activities. Key to this discussion is an understanding of the five goals of the SIS and the relative roles of each goal in determining SIS needs, setting priorities and selecting projects for funding. Table 5 on the following page lists the five SIS goals and summarizes their respective roles in the SIS planning and program development process. The third and fourth goals of the SIS, which focus on increasing mobility, increasing the system s reliability and efficiency, enhancing Florida s economic competitiveness and helping diversify Florida s economy, will be the primary sources of measures for identifying and assessing SIS needs and the primary sources of factors for influencing prioritization and project selection. 30

38 TABLE 5 Relative Roles of SIS Goals in Determining SIS Needs, Setting Priorities and Selecting Projects Goal 1. A safer and more secure transportation system for residents, Businesses and visitors. Role in Determining SIS Needs Related needs compiled from FDOT and partner plans; included in SIS needs plan for purposes of coordination. Role in Setting SIS Priorities Extra consideration for SIS projects that provide secondary benefits to safety and security. Role in Selecting Projects for SIS Funding Projects funded by existing FDOT and partner programs, unless incorporated into other SIS projects. 2. Effective Related needs preservation compiled from FDOT and management and partner plans; of included in SIS needs Florida s plan for purposes of transportation coordination. facilities and services. Extra consideration for SIS projects that provide secondary benefits by preserving existing infrastructure and services and enabling better system management. Projects funded by existing FDOT and partner programs, unless incorporated into other SIS projects. 3. Increased mobility for people and for freight and efficient operations of Florida s transportation system. 4. Enhanced economic competitiveness and economic diversification. Primary source of measures for identifying and assessing SIS needs, along with goal 4. Primary source of measures for identifying and assessing SIS needs, along with goal 3. Primary factors for influencing priorities, along with goal 4. Primary factor for influencing priorities, along with goal 3. Primary emphasis of SIS funding, along with goal 4. Primary emphasis of SIS funding, along with goal 3 5. Enriched quality of life and responsible environmental stewardship. FDOT and partners conduct preliminary screening and fatal flaw analysis. FDOT and partners conduct proactive screening to determine positive or negative impacts and potential changes in project scope (e.g., mitigation or context sensitive design). Results of screening and permitting process help determine project readiness, one factor in project selection. 31

39 Although the goals are intended to guide the types of improvements FDOT and its partners make in the SIS, projects that have a primary emphasis on safety, security, preservation and management (related to the first and second goals) will continue to be covered by existing programs and funding sources. FDOT will track needs and projects related to these first two goals to determine where there are opportunities to coordinate the funding and implementation of multiple projects on a single facility that might support more than one SIS goal. The Mod e of Decision-Making for the SIS In 2003, the vision for Florida s SIS was written into state statute. In the years from 2003 to 2005 the Florida Department of Transportation worked to develop a funding strategy to support the SIS. The investment strategy was developed by the Florida Department of Transportation with informal consultation with the SIS committee. Every constituent could sign up for an e- mail subscription service where they receive information and provide input. In the period, the state also conducted two rounds of public involvement in 15 cities in 15 days to take input from stakeholders and from the public. Legislation enacted in 2005 had the financial in vestment area 75% on SIS 25% off the SIS. The legislation made it clear that DOT would continue to make the investment decisions within the consistency of the MPO process and local comprehensive plans. A key feature of the investment strategy for the SIS was a statutory change in the eligibility of the dollars for transportation investments. The SIS legislation made funding available not only for state highways but also for city or county roads, ports, railroads, channels and other modes of tr ansportation. Investment decisions were then guided by the overall resolve to support the SIS, instead of program or mode-specific drives to fund the needs of individual programs. While the mode of decision-making continued to be within the Florida DOT, the structure of decisions and options was fundamentally changed when the SIS legislation defined the purpose of decisions and investments. Figure 2 demonstrates the paradigm shift in investment decisions associated with the SIS legislation. Figure 2. Florida s Paradigm Shift in Recognizing the Need for Decisions 32

40 The Florida Department of Transportation did not reorganize to adjust to the new decision paradigm of the SIS. However, because the imperative to prioritize projects and investments around the SIS cut across programmatic and modal lines, the functional process of decisionmaking in the department changed considerably. Developing and delivering projects to support the SIS as defined in state statute provided a focal point for actors in different modal offices to collaborate on investment decisions both at the project and program level. To make decisions to support the SIS, as opposed to meeting individual program needs, a broader range of actors within the DOT are involved in each decision. The SIS has served as a catalyst for this collaboration because: The SIS provided a clear vision and departmental goal requiring the active input of different modal and geographic decision-makers in specific decisions. The SIS legislation provided funding for a system that by definition included elements of multiple programs and modes. The SIS, as defined in state statute, is focused enough to frame specific investment decisions while broad enough to include different programs and geographic units. An example of how the SIS vision changed decision-making at Florida DOT can be found in the department s policy of setting objective criteria for SIS facilities around functional transportation needs. Prior to the SIS, the need for a facility or investment may have focused around traffic levels and highway capacity, whereas under the SIS, the decision is understood in terms of how to utilize and organize programs to move people and goods from one place to another. Investment in Decisions Under the SIS Investment in Technologies. The Florida Department of Transportation has always invested significant resources into technologies to support decision-making. With a sophisticated statewide travel demand model, multiple freeway and highway performance assessment tools, GIS and asset management systems, Florida brought into the SIS process significant decision resources. One of the goals of Florida s Strategic Intermodal System plan is to identify statewide transportation needs and intermodal opportunities. The SIS Investment Tool is a suite of applications designed to make that information more available as well as assist in the analysis of improvement options. The SIT components include a system viewer which is comprised of a GIS viewer enabling planners to visualize key condition and performance indicators on SIS roadway segments, an analysis component allowing users to evaluate projects using Florida s weighted scoring techniques and a mapping component which enabling viewers to review and map the relative scores of projects on the system. Investment of Staff Time. One remarkable aspect of Florida s paradigm shift to the SIS is the limited investment of staff time available to support the change. The SIS was developed and implemented in a period when the DOT staff was reduced by 25%. The SIS had the impact of changing and focusing the attention of staff investment in decisions as the actual size of the DOT staff was streamlined. The reduction in DOT staff also led to a greater investment in the role of outside vendors and consultants in supporting investment decisions. 33

41 Investment in Vendors. A number of vendors have been involved in developing the models, tools and technologies associated with development of the SIS. As state staff was streamlined during the period of SIS development, Florida s investment in professional vendors was greater than many other states and added national perspective and technical expertise to some aspects of the SIS paradigm. Investment by Other Actors. Since the SIS has been codified in state statute in 2003, other actors such as rail companies and seaports have invested more in the DOT transportation planning process. Because the SIS makes funds potentially available for modes previously ineligible for state funding, there is a greater incentive for actors to finance and undertake more comprehensive planning studies to demonstrate the potential rationale for specific projects in the SIS. By providing an incentive for non-state actors to invest in the planning process, the SIS has elevated the overall investment in planning decisions in Florida by inducing more planning activity by non-state actors with an interest in SIS projects. Investment Management in Florida Today Today, Florida s investment management process is policy driven with state statute codifying large parts of federal law in addition to defining the SIS. Safety is established as an over-arching valued outcome in project prioritization followed by system preservation. While the capacity program follows these two high priority areas, the existence of the SIS shapes decisions about investments in new infrastructure. Preference is given to statewide and significant projects on the SIS. Measurable objectives are identified in statute for the preservation program Florida statute also specifies system condition goals. Remaining funds not required for preservation and maintenance are considered discretionary. The long term goal is to make 75% of discretionary transportation investment into the SIS, with 25% reserved for regionally significant systems supporting the SIS. With clear programmatic targets set for preservation and maintenance programs and a clear vision for the investment of discretionary dollars across program areas in the SIS and regionally significant infrastructure, Florida has a very clear strategic direction guiding its investments at all levels. Key Success Factors of the SIS In all, Florida has identified key success factors in the development of the SIS from a statewide planning concept to a programmatic investment paradigm. Key success factors identified by the department include: Success Factors for Developing the SIS Paradigm from the Florida Transportation Plan Strong project management team; Active top management participation; Sufficient consultant/vendor resources; Constant communication within the department and with stakeholder constituencies; 34

42 Full public and partner involvement toolbox; Open, inclusive and continuous process. Success Factors for Involving Stakeholders Professional facilitation at key points; High level of technical expertise at all times; Intense networking among partners; Maximum use of information technology. Key Processes and Tools in the Process 41-member Steering Committee of partners; Multimodal Team of mid-level managers; Maximum use of live meeting/teleconference; Web site as clearinghouse of all information; Proactive outreach presentations & briefings; Focused meetings with business & rural. The Florida case provides an example of how a compelling vision for the transportation system with high level goals can affect a paradigm shift to guide investments in virtually all areas of transportation. Other states can benefit from the Florida case by understanding the power that can be gained by involving constituencies in forming a detailed vision for the transportation system, developing goals tied to the investment program and making the goals actionable in the development of projects in the state. Overall Florida is a good example of a state that initiated a high-level strategic vision to support other decision issues throughout the Department. HOW OTHER STATES APPROACH GETTING STARTED Alaska. Federal legislation is a key factor in Alaska s recognition of the need for strategic investment decisions. Alaska s approach to programmatic investments is associated with a set of unique circumstances. Beginning with TEA-21 there was a federal provision, applying only to Alaska which allows federal dollars to be spent on any public road in the state. This increased roads eligible for Alaska DOTs program from 30% of Alaska roadways to 100%. The consequence has been to dilute the resources available for the NHS and other functional systems to support local roads in Alaska s villages, many of which are in need of basic maintenance and improvement. Alaska will spend between $12 million and $15 million just on these needs, with another $15 million to cover preservation. The change in federal law precipitated Alaska s need for an investment strategy. 35

43 In 2003 Alaska responded to this need by codifying into state law a 1995 regulation which specified that 50% of revenues are to be spent on the National Highway System (NHS), 40% is to be spent on local and state roads, 8% on intercity routes and 2% on non-roadway programs. The need for the statute was driven by pressure from metropolitan areas to protect the above mentioned 40% for local and state roads as well as the 2% for non-roadway programs. When the investment shares were developed in 1995, approximately two months of staff time were invested in the process. Staff time is periodically invested in reviewing projects to identify how money is being spent and to ensure that investment levels are consistent with statute. The percentages and allocation of funds between programs was stipulated by agreement between the Governor and the state Legislature, and requires legislative action to enact any changes. The law provides no stipulation as to when the investment levels are to be revisited and does not explicitly tie a review of investment levels to a statewide long-range plan update. Arkansas. The need for a programmatic investment strategy in Arkansas is driven largely by fiscal constraints, under which the state develops its capital highway program from a 10-year fiscally constrained list of potential projects. The process has been in place since Decisions about investment levels for programs are made within the department, with a data- levels. The needs analysis system driven analytical process determining needs and investment grew out of the HPMS-AP and has been modified to reflect Arkansas conditions and priorities. The needs are grouped in various investment categories and the capital program is then developed to reflect these needs percentages. The primary investment made in programmatic decision-making in Arkansas consists of staff time and investment in the technologies and data systems used to quantify needs. Indiana. In Indiana, fiscal constraint is a critical determinant driving the need for a programmatic investment strategy. The state s 25-year Long-Range Plan is consulted when investment levels for the STIP (called the INSTIP ) are updated on an annual basis. Decisions about investment levels for programs are made collaboratively between key actors including the Commissioner of Transportation, the Deputy Commissioner and program fund managers. MPOs and the FHWA play also participate in the decisions. Indiana invests significant staff effort into its annual process of looking at programmatic decisions, with staff supporting both a public and stakeholder involvement process as well as providing technical reports and analysis. There is also significant investment in information systems and technologies, including a rigorous statewide model and other management systems utilized to ascertain needs and potential impacts of investment levels for roadway preservation, bridges and expansion. Pennsylvania. In Pennsylvania, the need for a programmatic investment strategy is precipitated by competing project needs and which emerge from the state s Metropolitan Planning Organizations (MPOs) and Rural Planning Organizations (RPOs). Competing needs require Pennsylvania to make allocation decisions both between geographic areas and between programs. 36

44 Decisions at the state level are made between different regions. As the fiscal arbitrator of these different needs and programs, the Central Office of the DOT determines how and when recommendations for MPOs, RPOs and districts will move forward. The need for a statewide strategy is also supported by periodic changes in economic circumstances or conditions which may precipitate a need to re-assess and make decisions about programmatic investment levels. Pennsylvania reassesses programmatic investment levels every two years, in its four-year STIP process and when its 12-year plan is updated. The mode of decision-making in Pennsylvania involves actors at the state, local and regional levels. The state determines investment levels first by geography, with allocation among program-specific projects made at the project level by MPOs, RPOs and DOT Districts. The final decisions about state investment levels in different geographic areas are made by key state officials in a process led by the Deputy Secretary for Planning. The process is collaborative and includes Pennsylvania s six deputy secretaries representing different programmatic areas. These include: Highways; Local and Area Transportation; Aviation; Safety; Administration; and Planning. While the ultimate mode of decision-making for programs at the state level is the collaborative process between the above actors, a key feature of programmatic decisions in the Pennsylvania DOT is the role of the Financial and Procedural guidance working groups. The Financial Guidance Working Group consists of Central Office Planning staff, FHWA, MPO and RPO representatives, and several District Executives. They focus on managing the financial nature/fiscal constraints of the program, but collect and consider data from many sources to support those financial decisions. This committee coordinates regularly with the Secretary. This group essentially makes the final recommendation for the STIP. While its primary focus is on investments in different geographic areas, the need to support each MPO or RPO given the unique needs of each geographic area is integral to the work of this group. A full case study on how choices are made in the Pennsylvania Financial Guidance Working Group within the context of PennDOT s investment management process is included in Section C of this Guidance document. The Procedural Guidance Working Group is a similar cross-section of the transportation community, but mostly different individuals from the Financial Guidance Working Group. They focus on system preservation and policy. Ninety percent of their consideration is system preservation and how to meet desired needs. They produce a letter that expresses their 37

45 conclusion, and this letter is supplied to the Financial Guidance Working Group to support the geographic allocation of revenues throughout the state. Because the Financial Guidance Working Group makes final recommendations to the deputy Commissioners, this group effectively makes many decisions determining investment levels among geographic areas of the state. Pennsylvania makes a major investment of staff time in the programmatic investment decision- making process. With several staff devoted to this process on an almost full-time basis, the PennDOT staff is actively working on the process for 21 of the 24 months between cycles with only three months off. The process begins in January and ends October of the following year. The resources are applied in the form of financial homework that goes into preparing for the pubic hearings, statewide meetings and Commission meetings. Significant time is also spent by the Procedural Working Group, as well as PennDOT staff (Central office and Districts) preparing to support the meetings themselves. While Pennsylvania does invest in management systems and other technologies, the primary investment in the process is the staff time devoted to supporting the working groups and the Deputy Commissioners in programmatic decision-making. Ohio. In Ohio, the programmatic investment strategy (referred to as the Program / Funds Management Process ) is driven by an ongoing need to prevent unanticipated shortfalls or costs to the system. Ohio s process is proactive so as to prevent the state from having to make decisions due to unanticipated changes that may occur in needs, revenues or costs. While the Program / Funds Management Process is well-honed and has a strong continuity, the process periodically must support major decisions that are required due to unpredictable events such as the recent large increases in construction costs. This results in the department doing on the fly adjustments within the context of the Program / Funds Management Process and an overall maintenance first philosophy. Decisions in Ohio are made in a collaborative process by a committee made up of representatives of major work units covering different programs. Examples of these include: Finance; Local Programming; Highway Operations; Facilities; Equipment; Districts; and Other work units. 38

46 Ohio s primary investment in the process is the staff time devoted to the reports that are generated in preparation for committee meetings. Because these reports are generated on a regular basis and draw data from existing asset management systems, there is not much time or preparation necessary. Committee meetings themselves can take most of a day, and happen once or twice a month over the course of a few months. Virginia. In Virginia, the underlying need for a transportation investment strategy is defined in the State Highway Plan and the State Multimodal Plan. Both have a 25-year time frame and are revisited every five years. The plans understand the purpose of the investment strategy is to allocate scarce resources in a consistent and transparent way given general performance goals and values. The criteria that drive allocation of funding in these two plans are very quantitative in nature (e.g., geometrics, congestion, etc.) due to the requirement that the criteria be objective. These long-range plans are policy plans, and are focused on corridors of significance. Virginia DOT (VDOT) is in the process of moving towards a long-range Surface Transportation Plan that will become more project-specific. The plans involve formulas which drive many of the project level investment decisions which occur on an annual basis. The short-range investment document is the six-year Capital Investment Plan (CIP), which is revised on an annual cycle. The CIP is a project-level document, except for secondary system projects, which are voluminous, and are documented in the Secondary Investment Plan (SIP). In the Capital Improvement Plan, as mentioned above, there are formulas that distribute funds among four roadway system categories: Interstate, Primary, Secondary and Urban. The formulas have been set by the Commonwealth Transportation Board (CTB) and codified by the state s General Assembly. The discretionary decisions that are made for investment decisions in Virginia are generally guided by VDOT s Policy Goal. The policy goals followed for the development and execution of the Six-Year Improvement Program are: Promote the safety of our citizens; Maintain the existing infrastructure; Use official revenue projections; Use best available project cost estimates; Minimize the use of debt; Pay off deficits on completed projects and do not create new deficits; Fully fund construction projects by the time they are complete; Bring phased projects or programs to a reasonable stage of completion; Require that new projects added to the program be eligible for federal funds; 39

47 Focus funding and project development on deficient and insufficient bridges; Focus funding on congestion relief; Recognize alternative modes, including transit, rail, bicycle and pedestrian pathways, as viable transportation alternatives; and Seek opportunities to leverage state funds through agreements with other public entities and the private sector. The pre-set formulas do much of the decision-making, leaving few discretionary dollars. What remains is used in accordance with the Policy Goals and CTB priorities, as well as to respond to projects that are at a point in their schedule where they require design or construction funding. Decisions about investments in Virginia are made at both the state and regional levels. The CTB may revise high-level statewide Policy Goals to reflect changing priorities. When specific decisions about investment in particular projects are made, they are made by different actors at state, local and regional levels. Decision-making actors may include the Commonwealth Transportation Board, the General Assembly, VDOT planning and programming staff, VDOT residencies (a Virginia residency is a grouping of three or four counties within a district), local urban officials and county supervisors. The level at which decisions are made about the allocation of funding within programs depends on the level of system affected by the decision. The following gives the mode of decisionmaking for allocation decisions for different levels of roadway systems in Virginia: System Interstate & Primary: Secondary: Urban: Mode of Decision-Making VDOT VDOT s Residencies bundle 1-4 counties together and work with county boards of supervisors Municipalities Virginia invests both technology and staff time into the programmatic decision-making process. Technologies include a statewide travel demand model and asset management systems. In its statewide planning process Virginia has also invested in the development of intricate formulas to guide investment levels. For its annual capital programming, VDOT staff typically spends 8-9 months in developing the program, with significant time required by Finance, Programming, Residencies and other departments within VDOT, as well as the investment of time and attention by the CTB. Oregon. The need for a programmatic investment strategy in Oregon is driven by scarcity of funds and the competing needs of different programs. The need is understood and articulated in the statewide Oregon Transportation Plan (OTP). 40

48 Needs far outstrip funds, therefore, the department must be creative as to how to meet needs with limited resources. The need for objectivity in setting priorities is very important to Oregon s process. The need for an investment strategy in Oregon is also supported by special legislative programs which provide funding for non-highway modes. While investment levels are set in statute, there is flexibility for certain types of revenues to be prioritized and managed through a DOT strategy. By state law, gasoline tax revenues may only be spent on highway programs hence, the Legislature periodically passes special legislation to support other programs, at which time the DOT supports a strategy for investing these funds. An example is the Connect Oregon program, which provided for investment in non-highway modes. The Connect Oregon legislation allocated non-highway funding to different programs: 20% for aviation, 30% for rail, 15% for transit and others were intermodal. The Legislature provided funds; specified the regions and set modal investment levels. Fifteen percent of Connect Oregon revenues were set aside for each of five regions and then there were specified allocations for modes within each region, and some that were statewide. While investment levels are set by the state Legislature, the statewide planning steering committee plays a key ongoing role in making recommendations for both projects and programs. Oregon s committee structure is further described in the subsequent sections on developing options, making choices and making a strategy work. Oregon s investment in programmatic investment decisions is primarily staff time, supplemented by a significant investment of time and effort on the part of non-governmental steering committee and policy committee members. Several permanent DOT staff positions are devoted to supporting this process. To a lesser degree, Oregon invests in professional vendors to provide models and technical resources to support the statewide planning and project development processes. Georgia. In Georgia, the need to make investment decisions is driven both by the scarcity of funds combined with congressional balancing requirements which legislatively stipulate that the Georgia Department of Transportation (GDOT) spends the same amount of capital funds in each congressional district. Another key construct of Georgia s need for investment decisions is the organization of transportation funding into Core Programs where the state must determine funding levels for each program. These programs follow federal funding categories such as NHS, Bridge, Safety and Maintenance. For those funding categories that are descriptive of a work type, like bridge or safety the fully matched federal apportionment becomes the capital program amount for any given year. The mode of decision-making in Georgia places a strong emphasis on the role of one key individual, with GDOT s Chief Engineer ultimately making the determination of funding between improvement types. Georgia s primary investment in the decision-making process comes through the investment of staff time at both the state level and the MPO level. Investment in models and information systems is augmented by MPOs which have travel demand models and other tools to support the process. Utah. Utah has recently struggled with the need to re-size its transportation program based on the scarcity of funds. Escalating construction costs and the need to finish programmed projects 41

49 has made it difficult to meet preservation levels in the short-term. The need for investments is set forth in the high-level four values/goals that are written into Utah s overall investment policy. These four goal areas include: Preservation; Optimization of Performance (Mobility) through operations; Safety; and Capacity. There is a long-range preservation plan which is utilized to develop preservation and rehab projects; as well as a separate plan for capacity, there are some other plans, like the comprehensive safety plan and the ITS plan. The need for decisions regarding expansion is driven by increasing demands on the system, and the manner in which the legislature may make funding available for expansion projects in any given budget cycle. For the capacity plan, Utah DOT has defined an extensive list of unfunded capacity needs which may be eligible if funding becomes available. The mode of decision-making in Utah varies depending on which program is affected by the decision. For investments in preservation, safety and operations decisions are made within the DOT at the state level. However regions within the DOT have a role in deciding on preservation needs, with Deighton asset management software also playing a major role in the decisions. For expansion projects, decision-making shifts to the state Legislature. The DOT may identify needs, but the Legislature decides on the overall expansion investment level as well as on specific projects and funding mechanisms. The Utah DOT makes a list of expansion projects and the Legislature selects projects and decides how to pay. Utah s investment in decisions is primarily department staff time for both preservation and nonpreservation programs. The Legislature sometimes brings in subject-level experts, including vendors to look at finance and revenue options. The primary investment in technologies to support decisions is in the Deighton asset management software, which identifies preservation and maintenance needs by roadway section. Vermont. In Vermont the need for an investment strategy is a requirement to support an annual capital budgeting process. To support capital budgeting, the state effectively needs to consider its investment levels each year as required by state statute. There is also a need to foresee emerging needs and it takes multiple years to complete projects, therefore the Vermont STIP has a four-year time horizon. Both the STIP and the budget are multi-year processes; however each year another year of projects is brought into the out years of the program such that there is always a four-year horizon in both the STIP and the budget. Elected officials at the legislative level and in the Governor s office are important in Vermont s mode of decision-making. Vermont DOT s budget steering committee makes recommendations to executive departmental staff, which fine-tunes a draft submission, that is then adjusted by the Governor s office and the changes end up at the Legislature. Legislative committees make some 42

50 changes each year. As Vermont s asset management systems and processes have become increasingly transparent at the DOT level; fewer changes in programmatic investments have been made in the Legislature. There is also local participation in project level decisions, with 11 regional planning commissions and the single MPO submitting lists of their priorities, which are incorporated into the state DOT recommendations each year in the annual budgeting process. Vermont invests both staff time and technologies in supporting the investment decision process. A significant portion of DOT staff commit a significant amount of time to the annual investment decision-making process. The budget steering committee is comprised of deputy Secretary of the agency (chair) and deputy directors and program managers, who each present their own priorities and case to the committee. The process consumes staff time at this level for a five to six month period before the Governor s budget is fully prepared. Vermont also invests in the use of data and technologies such as the PONTIS system for understanding bridge needs, and the privately-provided Deighton software also used by other states to determine investment needs and impacts. Delaware. The need for investment decisions in Delaware arises within the context of local comprehensive plans in Delaware s three counties. The transportation elements of the comprehensive plans essentially provide the rationale for state investment decisions. Other precipitating factors for a major statewide transportation investment decision in Delaware might be a natural event, such as flooding or tropical storms. The Legislature and the Governor review major changes in allocations each year. From year to year there are not huge and precipitous changes as Delaware s program is fairly stable and is developed in a very bottom up fashion from county level comprehensive plans. The goals and purpose of investments are set forth in the transportation elements of these plans. DOT staff effectively makes technical level investment decisions in collaboration with municipal and county staff and other state departments (agriculture, education etc.). County public works/planning and zoning (municipal as well) also participate in decisions about projects, which ultimately determine the statewide programmatic investment levels. Delaware s investment in transportation investment decisions is primarily in the form of staff time at both the state DOT and at the municipal and county levels. Delaware invests more in the collaborative process of project development than in quantitative methods or technologies. North Carolina. In North Carolina a number of factors underscore the need for programmatic investment decisions. One unique aspect of North Carolina s highway system is that North Carolina Department of Transportation (NCDOT) is responsible for about 80% of the state s highway mileage, with counties owning no roads, and cities owning only local streets. For this reason, the state has a need to make funding determinations for a larger system than it might otherwise manage. A strategy is also needed because of state legislation requiring the state to balance investments among North Carolina s 14 divisions. Federal programs constrain where certain funds can be invested. The state also has a need to balance funding between different modal and other programs. North Carolina s need to make investment decisions for transportation revenues has been set forth in the goals of North Carolina s 2004 statewide plan, which is currently being 43

51 updated. The plan understands investment decisions in terms of different tiers of facilities comprising the North Carolina Multimodal Investment Network (NCMIN) tier. The need for decisions is organized based on the requirements of the NCMIN tier system into Statewide, Regional and Subregional tiers. This structure set forth in the 2004 Plan supports programmatic investments at different levels. North Carolina invests significant resources into programmatic decisions. After making an initial investment in vendor fees to develop the NCMIN tier in the statewide plan and a preferred investment option, the primary investment in the decision-making process has been staff time which has been utilized to articulate and develop consensus for the preferred investment option set forth in the statewide plan. The North Carolina Board of Transportation is a key player in decision-making for statewide investment levels. The Board makes the ultimate decision to accept a preferred investment option in the statewide planning process. Other important decision-makers in the strategy include the Secretary of Transportation and DOT staff, including fiscal staff, operations staff and program development staff, as well as staff at the MPO level. The process is facilitated by the Program Development Branch of NCDOT, which reviews technical information about the highway network and project readiness to develop an annual program and add new projects to the seven-year STIP. Board of Transportation members, in consultation with Division engineers and the public determine the expansion portion of the highway program. B. Forming a Strategy When the need for a statewide investment strategy is well understood, resources are available to support such a strategy and decision-makers are clearly identified, the DOT must utilize available resources to present options to decision-makers with an understanding of possible and likely outcomes. The formation of a strategy to support programmatic decisions in the DOT therefore requires a process for the next three steps of an investment strategy. These include: (1) developing and presenting investment options, (2) objectively forecasting possible outcomes associated with the options (understanding possibilities) and (3) exercising appropriate judgment calls about the likelihood of system impacts from different investment levels. Key issues to be considered in the best practice in forming a programmatic investment strategy are set forth here, followed by the Oregon case study illustrating key success factors for a state effectively addressing these issues in a statewide planning process. The section closes with examples of current practice from throughout the country. Table 6 summarizes the key steps and expected results of addressing decision issues associated with forming a programmatic investment strategy. 44

52 TABLE 6 Strategy Formation Worksheet Forming A Strategy Steps To Follow Step 4: Develop Options Step 5: Assess Potential Outcomes (Understand Possibilities) Step 6: Judge Likely Outcomes (Judgment Calls) Process to Use Collaborative Process Policy Boards MPOs, RPOs Advisory Committees Performance Measures Quantitative Methods HPMS or HERS-ST PONTIS Travel Demand Models Pavement and Bridge Information Management Systems Economic Imact Models (REMI, IMPLAN, TREDIS and Others) Collaboration Among Key Staff Vendor or Independent Review Designated key staff member Results of the Step Meaningfully Different Ways to Invest Scarce Revenues (Investment Scenarios) Forecast of Conditions and Performance Associated with Each Option, using consistent methods and performance measures. Official State Assessment of Expected Outcomes of Each Option Key Characteristics of Best Practice Inclusive, Objective, Transparent Objective, Transparent Objective, Transparent Step 4: Developing Options States may develop options for different investment scenarios in a number of different ways depending on the DOT resources, the factors driving the need for the strategy and the size and complexity of the transportation system supported by the strategy. Options can be thought of as investment or service packages which allocate revenues to different programs and geographic areas over several funding periods. Issues such as state or federal legislative restrictions on how revenues can be spent, statutory caps or floors for specific programs, and the need for geographic and modal balance in state programs are key considerations. Some of the ways options are developed include: Options developed as scenarios in the statewide planning process; Options developed by DOT staff at the request of the elected leadership; Options provided by other governmental actors such as metropolitan or regional planning organizations; 45

53 Options based on incremental modifications to existing policy; and Options developed by computerized software programs with decision rules rooted in performance optimization, cost-benefit analysis or other quantitative methods. Tools like HERS-ST and, state DOT asset management software and some statewide integrated model platforms can generate options to optimize specific performance targets based on user-specified parameters. Options may be organized differently depending on the state s planning and policy environment. Some different types of options include: Base Case or Business as Usual In developing options, states usually first consider a base case or business as usual option. A business as usual option is important because it allows the state to consider the overall longterm impacts of its existing revenue and investment structure. This option may also help the state to assess its overall b acklog of current unmet needs in certain program areas, and allows the state to consider whether its existing revenue stream will keep pace with inflation to protect the buying power of transportation revenues. Assessing a base case option for any investment decision helps the state to understand and anticipate the revenue and performance gaps associated with continuing existing policies. By understanding the implications of a business as usual option, states can better identify issues and unmet needs that might be addressed by other options. Options that differ based on different revenue assumptions States may consider different ways to improve upon their current programmatic allocations by demonstrating the ways to invest potential new revenue streams. Options may be developed to understand how performance gaps can be reduced if additional revenue becomes available for different programs. Options of this type are helpful when the DOT is seeking additional revenue, or when the state needs to articulate how additional revenues would be spent and why. Options that differ based on the allocation of existing revenues among programs States without significant potential to increase revenues may develop options to improve certain aspects of system performance by strategically changing investment levels. For example, a state may shift revenues from highway modernization to highway preservation programs in order to manage existing assets. These options are helpful for comparing the potential impact of unmet needs in different programs and managing trade-offthis type may also be helpful for the department in articulating why additional revenues are when choices must be made. Options of needed in addition to finding ways to optimize the use of scarce resources. Options that differ based on different geographic allocations of revenue States may choose options to allocate revenues between different corridors, tiers of national, state and regionally significant facilities, districts or regional organizations instead of programs. 46

54 These options can be very helpful when questions of urban vs. rural needs are considered, or when the state is committed to specific corridors of significance. However, geographic or corridor-based options may not lend themselves to the use of specific performance measures, which often depend on assumptions about the types of improvements (for example roadway modernization vs. preservation vs. transit or other programs) that will be made within each geographic area or corridor. Step 5: Determining Potential Outcomes (Understanding Possibilities) The DOT must evaluate different programmatic investment options to understand and articulate possible impacts on system performance and the state s overall economic performance. Most states have internal management systems to forecast potential impacts of different investment levels on pavement and bridge conditions. Some states have statewide traffic forecasting models to determine traffic levels and highway levels of service that may result from different investment levels in roadway expansion and new construction. Performance measures are an important tool for determining and assessing potential investment outcomes. When goals are set forth in a manner consistent with the best practice described in Section A of this guidance, it is possible to organize and select performance measures to use in the determination of potential outcomes for any given investment option. Table 7, excerpted from the 2006 Michigan Transportation Plan, provides an example of some performance measures that can be selected based on a given state s overall goals and need to make investment decisions. 47

55 th ad nwa y system ted a ccess management plans equate shoulders for non motorized use TABLE 7 Example of Performance Measures Under General Goal Areas 48 Performance Management Measures % of bridges in ʺgoodʺ or ʺfairʺ condition % of pavement lane miles in ʺgoodʺ condition % of runways in ʺgoodʺ or ʺfairʺ condition % of local transit vehicles eligible for replacement % of system meeting acceptable IRI Number of jobs supported by MDOT expenditures Customer/stakeholder satisfaction rating Fatality rates Crash rates Annual RR crossing fatalities/crashes (s upports PMs 8&9) Annual local transit fatalit ies/crashes (supports PMs 8&9) Annual highw ay fatalities/crashes (supports PMs 8&9) A nnual bike/ped incidents/injuries (supports PMs 8&9) Annual deer related incidents (supports PMs 8&9) # of airports with adopted emergency service plans Cost of crashes per 100 million VMT (supports PMs 9) Seat belt usage rate Number of passenger terminals served by 2 or more modes Number of intermodal facilities with NHS connections Hours of delay % of system meeting target LOS # of airports with all weather access Annual cost of delay (supports PM 20) % of population served by local tr ansit # of airports with an adequate primary ru % of sys tem miles with adop % of system wi Goal Areas and Objectives Stewardship Goal 1.1 Preserve the quality and condition of all transportation system elements 1.2 Conduct sound asset management practices to optimize the benefits of 1.3 Leverage transportation funding to maximize transportation investment 1.4 Maximize the benefits of transportation investment to the Michigan 1.5 Minimize negative/maximize the positive impacts on the physical and 1.6 Improve coordination between transportation decision making and land use Safety & Security 2.1 Reduce fatality, injury, and crash/incident rates on all modes 2.2 Reduce vulnerability of transportation facilities/users to terrorists, natural 2.3 Reduce economic losses due to transportation crashes and incidents 2.4 Manage risks to ensure system and border crossing continuity for 2.5 Provide a safe environment for transportation users through the ʺ3 Esʺ System Improvement Goal 3.1 Ex pand intermodal connectivity and the number of modal options for 3.2 Address bottlenecks to reduce congestion, enhance continuity, improve 3.3 Improve travel time reliability and predictability for passengers and freight 3.4 Modernize facilities to accommodate efficient movement of people, goods, 3.5 Address congestion to reduce its cost to businesses and the State s economy 3.6 Respond to the unique transportation needs of economic development 3.7 Expand transportation system access 3.8 Reduce delay 3.9 Employ CSS to respond to public values Operations Goal 4.1 Improve existing system capacity through the application of new 4.2 Coordinate transportation services supplied by both public and private 4.3 Address institutional barriers to inter jurisdictional cooperation 4.4 Collaborate with providers to deliver programs and services better, cheaper, 4.5 Manage highway access to balance capacity and development 4.6 Collaborate with private sector to improve efficiency of intermodal 4.7 Enhance the transportation experience through better, more timely traveler 4.8 Operate systems to ensure the public has an adequate set of transportation Denotes PMs recommended Denotes PMs recommended as subordinate measures SOURCE: MI Transportation Plan, A B C D E 10 F G

56 Determining potential outcomes in a consistent and transparent manner is often difficult for many state DOTs. Some issues of particular concern include: Consistent Treatment of Transportation Modes States struggle with the need to treat modes consistently when assessing impacts of different programmatic options. For example, engineering principles may provide a clear quantitative assessment of impacts for pavement and bridge condition whereas the impact of investment in transit or freight programs may be more difficult to quantify. A key success factor for the consistent treatment of modes is the selection of mode-neutral performance measures. Measures such as travel time, monetized capital depreciation (of roadways or other transportation capital) and fatality or injury rates are some examples of performance measures that may be applied across modes. Relevant and Feasible Performance Measures The use of performance measures enables the DOT to benchmark one investment option against others and make consistent comparisons. For example, if Pavement Serviceability Rating (PSR) is used as a measure of system condition. The expected resulting miles of highway at different PSRs by functional classification may be projected and compared consistently between a number of different preservation funding levels. Measures such as PSR for pavement, structural sufficiency for bridges and Level of Service (LOS) or Volume/Service Flow (V/SF) for mobility are commonly applied in statewide plans and in investment management strategies. These measures are often mode-specific, and are helpful for identifying needs and gaps within specific programs. However, they are less useful when considering options that represent different allocations of revenue between modes. If the DOT can quantify the advantage of investing in a preservation or roadway expansion program in terms of PSR or V/SF, but cannot quantify the advantage of investment in a transit or aviation program, the DOT may have difficulty truly comparing the potential impacts of different options. Some states organize performance measures into an economic impact methodology in which all performance measures are monetized over different funding periods. This supports cost/benefit analysis as a way of comparing options. The monetization of potential impacts can also support an overall assessment of statewide impact to earnings, output and employment by industry for the entire state expected to result from different transportation investment levels. Tools such as REMI Transight and TREDIS have attempted to convert transportation impacts into different mode-neutral economic impact projections. These tools are still in the early stages of their development, and often overlook many practical considerations and inconsistencies between the models and management systems used to evaluate conditions and performance implications of specific programs. If inconsistent performance metrics and assumptions underlie the monetization of expected impacts, then an economic performance-based impact methodology may have bias in favor of specific progra ms. The ongoing need for methodological research and development of mode-neutral performance 49

57 measures and their application is a critical research need for states to develop and improve programmatic investment strategies. Consistency of Data Management Systems States typically utilize investment management systems both to track system conditions and performance and to forecast the potential impact of improvements that would be supported by different investment levels. At the level of programmatic investment strategy, states confront the issue of consistency of management systems with regard to: Forecasting ability -- Differences in traffic forecasts may yield an apples to oranges comparison when an overall programmatic investment strategy is analyzed applying different traffic assumptions to different programs. For example, some states forecast traffic volumes using a statewide model, but may use linear extrapolation techniques to arrive at traffic assumptions in their pavement and bridge management systems. Some states only track conditions and performance for some areas, and forecast in others. This creates a challenge in which possible future impacts for some programs are better understood than others. Inconsistency in forecasting can create a bias in favor of those programs that can quantify an adverse future impact of reduced funding. The best practice is to develop a consistent set of forecasts of system conditions and performance with clearly understood methods to assess the needs of any programs where existing management systems do not provide forecasts directly. Project vs. state level systems -- Some data management systems are organized in such a way that it is difficult for states to develop statewide reports on overall impacts of changes at the program level. For example in some states, systems are designed only to assess one project at a time, or to support a decision about specific projects at the district or MPO level. The data requirements of such systems often require assumptions for general statewide analysis that could bias the understanding of impacts in the aggregate. Project level systems also may look at impacts independently of other investments. For example, the preservation needs from a management system may fail to take into account changes in traffic levels if it is assumed that there will be capacity expansion elsewhere on the system. The best practice is to seek ways to synthesize available systems to assess needs using the same performance measures, and organize an architecture relating different systems. For example, this may entail processes such as linking forecasts from statewide traffic forecasting model to section conditions file for pavement and bridge systems. Programmatic targets vs. performance measures -- Given the difficulty of establishing a mode-neutral performance measurement framework, some states rely on gap analysis and full engineering needs analysis to infer performance outcomes. For example, a state will estimate the total need for each program based on the available management systems and will compare options based on a percentage of 50

58 needs met. The definition of needs in this case may be subjective based on the degree to which management systems can quantify the impact of unmet needs. For example a state may determine it can complete preservation projects on 80% of its system in a 30-year period and maintain 70% of its transit equipment in the same period. This approach quantifies what the state can do, but does not attempt to forecast conditions and performance impact of unmet needs resulting from the investment decision. When available data does not adequately support specific performance measures, the best practice is to have a consistent way to maintain and present information about the nature of needs met by the program. This may be accomplished by describing how funds are being invested in the program from one time period to the next. For example, if a state resolves it can cover 70% of its identified ITS needs, and does not have performance measures that describe the impact of ITS, the agency should be able to consistently describe the ITS systems being supported, and the remaining needs in this program from one funding period to the next. The absence / presence of a management system for a particular mode or program -- Some states do not have management systems for all of their programs, and cannot quantify existing system-wide conditions and performance for certain program areas. When this is the case, a programmatic investment strategy requires incrementally assessing specific projects or programs, their costs and the expected advantages of the investment. This may be accomplished by selecting performance measures and applying them consistently on all project level studies. For example, suppose there is no statewide management system available to report conditions, performance and needs for bicycle-pedestrian infrastructure and services. It is still possible to select a set of bicycle and pedestrian performance measures and guidelines to be used each time an individual study is performed in this program area. The consistent use of performance measures on project-level studies is appropriate for any program where the state can select performance measures, but does not have a statewide management system. When the state has performance measures in the absence of a statewide data management system, the best practice is to: (1) consistently apply statewide performance measures on project level studies; and (2) incorporate these studies into the statewide picture of needs and priorities based on these measures. Step 6: Judgment of Impact (Judgment Calls) Given the challenges associated with determining the potential impact of investment options, states often must exercise judgment regarding how likely certain impacts are to occur. Technologies like statewide travel demand models, HERS-ST and REMI Transight are increasingly used to reach general conclusions about needs and the performance impacts. States may question the assumptions and methods of such tools given the unique conditions of a particular state, region or metropolitan area. This judgment may be applied at different levels by different actors depending on the nature of the problem. Some ways states resolve this are: 51

59 Judgment Applied by Technical Staff In some states, the DOT staff may directly apply judgment to the analysis of potential impacts of different investment options. In these cases, the staff uses their tacit knowledge of the management systems, the state and other data to second guess or adjusts anticipated impacts of different options. When this type of judgment is applied, the key success factor is for staff to document (1) why the adjustment was made and (2) why the resulting anticipated impact of an option should be believed. DOT staff judgment is most appropriate when the issue is primarily technical, and it is clear that the information systems or impact methods alone may provide an incomplete or misleading assessment of possible outcomes or unmet needs. Judgment Applied by One Key Official In some states there is a key official who makes judgment calls about the likelihood of outcomes. In these cases, the DOT may find that different methods of analysis yield different conclusions about the impact of investment options. For example, if the state utilizes an internal pavement management system to assess PSR implications of increased preservation funding, and compares that with the same analysis in HERS-ST, two conflicting views of preservation needs may emerge. Another example of the need for judgment may arise if a general summary from statewide management systems suggests a dollar figure for 20-year bridge needs, yet the sum of bridge needs developed by districts comes to more than this total. Which number represents the need the state should believe when making investments? In cases where there are conflicting conclusions about needs and the implications of funding levels, one key official with sufficient knowledge, authority and credibility in the department may have a role in determining the most likely outcomes of different investment options. Judgment by Consultants A state may hire a vendor or professional consultant to compare different analyses of impacts and resolve differences. This is typically done when the DOT staff have differing opinions and an objective third party analysis is needed, or when the DOT staff lack the tools or experience to discern between different assessments of outcomes. A vendor may be a professional consulting firm, a university research center or a non-profit organization. The key criteria for outside vendors to effectively make judgment calls about investment outcomes are: Competency. Vendors should have expertise in the methods, management systems and technologies by which different assessments of outcomes are developed. Objectivity. Vendors should not have a vested interest in any particular geographic area or program that may be perceived to bias their judgment. Familiarity. Vendors should know the state and its transportation system well enough to understand the suitability of different methods or technologies for a particular state. 52

60 Credibility. Vendors must maintain sufficient credibility with stakeholders and state officials for their judgment to be accepted by all actors in the investment decision process. Judgment Reserved for a Board or Policy Commission When there are different views about potential outcomes of investments, the DOT may find that both views should factor into transportation choices. When this is the case, the department may present a policy board or commission with different analyses based on different assumptions. In this case, the DOT staff must clearly explain the assumptions accounting for the differences and the board must decide which assumptions to believe in the process of making choices. The advantage of reserving judgment for a board or policy commission can be to empower the board to control more of the information used in making choices, to educate the board about the process and to relieve the DOT of responsibility for making assumptions that may be questioned later. Disadvantages arise when the assumptions underlying different views are too technical for the board to grasp or if the views of potential impact are so controversial as to cause division on the board. However, different views regarding potential investment outcomes must be resolved if the board is to move forward to begin making choices about the relative merits of investment options. Judgment Reserved for Elected Officials When different views about potential outcomes of investment options are highly controversial and have significant impact on choices, judgment may be deferred to a Governor, elected transportation Commissioner or legislative committee. When a judgment of conflicting views of outcomes reaches this level it is vital that the DOT consistently and objectively represent both possible outcomes and clearly explain the differences in assumptions and their implications for transportation choices. The advantages and disadvantages of reserving judgment for elected officials are similar to reserving judgment for boards or policy committees. However the political stakes are naturally higher. The task of educating the elected officials and the need for the DOT to be objective in the process becomes paramount when judgment calls rise to the level of appointed and elected groups. The best practice is to make necessary judgment calls about expected outcomes before proceeding with choices between investment options because: Conflicts about potential outcomes may overshadow discussion about the relative value of outcomes to the department; Conflicts about potential outcomes may make it difficult to identify and manage trade-offs between different investments; and/or Conflicts about potential outcomes may make it difficult to establish buy-in to an investment strategy. Whether judgment calls are made at a technical level by DOT staff, by a key DOT official, with the assistance of professional vendors, by boards or elected officials it is critical that consensus is 53

61 reached about what outcomes are likely to occur. The absence of a credible and official assessment of the impacts of different investment options threatens the process of making choices in a programmatic investment strategy. CASE STUDY: STRATEGY FORMATION Oregon Statewide Plan: Understanding Options and Outcomes In Oregon, different statewide programmatic investment options are developed in the long range (25-year) statewide planning process. A steering committee develops the options in the planning process based on input from policy committees. Internal staff develops specific options for modeling based on these scenarios. Staff makes key assumptions about tax rates, revenue levels and programmatic mixes associated with each option. A professional vendor is also utilized to assist with the development of options for modeling purposes. For anticipating potential outcomes of investment decisions, Oregon has an integrated statewide travel forecasting model of transportation, land-use and economic relationships. The model is supplemented with information obtained using HERS-ST. Investment decisions also utilize management system information for pavement, bridge and safety projects. Highlevel scenarios are analyzed with these various systems and results are synthesized in the statewide planning process. The following summary from the Oregon Transportation Plan (13) details how investment options and potential outcomes may be represented for developing a high-level programmatic strategy. Oregon s Statewide Investment Options (Developing Options) To analyze policy choices and the impacts of potential changes, the Oregon Transportation Plan (OTP) Steering Committee examined seven investment scenarios in the 2006 update of the Oregon Transportation Plan. The scenarios fit into three categories: The reference scenario served as a basis to which all other scenarios were compared. The sensitivity scenarios examined the impacts of increasing fuel prices and relaxed land use policies. Four policy scenarios examined the impact of potential OTP policy decisions involving revenue levels, revenue sources and priorities. Figure 3 illustrates the relationships between scenarios. All the scenarios examined the potential impacts of policies or future conditions on Or egon s transportation system, economy and land use. 54

62 Figure 3. Options in the Oregon Transportation Plan Source: Oregon Transportation Plan, 2006 The reference scenario examined a proposed funding level that allows the state to maintain current purchasing power through 2030 by generating additional funding either from existing or new sources. This scenario assumed (1) the equivalent of an annual $0.01 per gallon fuel tax increase, beginning in 2006, dedicated to roadway operations, maintenance and preservation activities; (2) the equivalent of a $15.00 increase in the state vehicle license fee in 2010 and every eight years to 2030 for roadway modernization activities; and (3) $7.1 million in 2010 and $10 million per year thereafter dedicated to urban transit capital; this is money which is currently being used to pay back bonds for existing transit systems, with the bonds retiring in The high fuel price scenario investigated the impact of major increases in fuel prices during the plan period. The relaxed land use scenario investigated the impact of increased availability of land for development across the urban fringe and rural areas throughout Oregon in a general sense. The flat funding scenario evaluated the impact of declining purchasing power due to inflation that would result if no additional funds were raised to support transportation. The maximum operations scenario assumed operational improvements would be made instead of the capacity expansion assumed in the reference scenario. These improvements included highway operational investments made by ODOT and enhanced transit services made by local and regional agencies. The major improvements scenario evaluated the impacts of projects that were beyond the scope of the reference scenario, including projects identified in existing Metropolitan Planning 55

63 Organization plans and potential new lanes on I-5 and I-205 between Eugene and the Oregon / Washington border. This scenario assumed ODOT and other agencies could raise the funding necessary to meet many of the feasible needs for all transportation modes across the state. The roadway pricing scenario examined the impacts of road pricing strategies in Oregon, primarily focused on the I-5 and I-205 corridor between Eugene and the Oregon/Washington border. The organization of the investment options in Oregon s statewide plan show how scenarios can represent different assumptions about transportation needs, costs, revenues and economic conditions. The Oregon scenarios represent different investment levels in programs and also suggest how different mixes of specific projects may fit into an overall investment option. Assessments of Outcomes in Oregon s Statewide Plan (Understanding Possibilities) The OTP staff used several tools to analyze the scenario policy directions and the impacts of different levels of funding. These tools included the ODOT statewide transportation, land use and economic model, findings from metropolitan planning organization travel demand models, and other research and expertise. The statewide model is designed to compare and contrast state and regional impacts of different transportation investments and changes in policy. The model allows analysts to compare the magnitude and direction of different combinations of policies and investments side by side. The statewide model does not provide the information needed to evaluate specific projects addressing local bottlenecks and other local capacity problems. These effects are addressed through other tools, such as metropolitan models and detailed traffic analyses. Overall, travel times are expected to increase across the state, but there is no significant change in travel time for freight movements. Because truck movements tend to be spread across the day, peak congestion periods impact trucks less overall. Economic growth is based on the Oregon Office of Economic Analysis forecast. The state as a whole is expected to see over 30 percent economic growth over the plan period. More workers would be accessible to employers than in the base year. The average ton-mile of travel for trucks is expected to decline over time, suggesting that freight activity is concentrating or growing faster in existing urban areas. Businesses are expected to use land more efficiently, getting more production out of the same amount of land. Sensitivity Scenarios High Fuel Cost Scenario -- Increasing fuel prices would dampen economic activity in Oregon. Growth in employment and gross state product would slow for the state overall. The Portland region would be less affected than other regions due to its large size and more compact development pattern. The further an area is from the major trade hub of Portland, the more high fuel prices would lead to economic concentration 56

64 and isolation. A rapid fuel price increase could have significant impacts on choice of mode for both passengers and freight, with more passengers choosing, for example, public transportation and more freight moving to rail. Relaxed Land Use Scenario -- At the statewide level, there appears to be a sufficient supply of land available in the reference scenario for development. Thus, increased availability of land for development across the urban fringe and rural areas throughout Oregon would have no significant effect on the Oregon economy as a whole. However, this is not likely to be the case at the local level where infrastructure might not provide sufficient capacity to serve new development that follows a less compact pattern. Policy Scenarios Flat Funding Scenario -- If funding were to remain the same nominally, purchasing power would decline by 40 to 50 percent by 2030 in the flat funding scenario. Major Findings: The state would fall behind on system maintenance and preservation more quickly than in the reference scenario. Gains that the state has made through recent investments would be set back, especially through the deterioration of pavement and bridge conditions. Long term costs for rehabilitation and replacement would increase. Although the decline in statewide highway mobility is not severe, local impacts would be significant. Maximum Operations Scenario -- Gains from operational improvements would be significant, especially when improvements are made to transit operations and frequency. However, much of the gains from operational improvements are already being realized with current operations. In addition to operational improvements to the freeway system in the Portland area, Oregon is expanding these efforts to other parts of the state and to the arterial system. Major Findings: Travel times and transport costs would be reduced, and future development would likely be more compact than in the reference scenario. The most positive impacts of operations would be in the Portland Metro, Salem/Keizer, Eugene/Springfield and other metropolitan areas. Nationally, accidents, stalled vehicles, weather, work zones and other incidents cause about 50 percent of travel delay. Thus, safety and operational improvements would reduce delay. 57

65 In the Portland area, currently transit saves 28 to 40 percent of delay while existing operational strategies save 10 percent. With full Intelligent Transportation System (ITS) deployment, nationally there is a 4 percent improvement in travel times as well as benefits to safety and reduced emissions. Major Improvements Scenarios -- Two major improvements options were considered: Additional regional transportation plan projects and projects of statewide significance, beyond those included in the reference scenario. These included improvements to all modes, but most of the capacity-adding projects were located in the Portland area, the Willamette Valley and Central Oregon. The above projects, plus additional lanes between Eugene and Portland on I-5 and I-205. Major Findings: Modernization of highways and freight rail in the Portland area and the Willamette Valley would have a positive impact on the rest of the state because of connections to commercial centers. Travel times would be reduced when major improvements are made, but the benefits tend to be largest in the Willamette Valley. Roadway Pricing Scenario -- The roadway pricing scenario examined the impact of tolling lanes on I-205 and I-5 between Portland and Eugene. Major Findings: Of all the strategies including major improvements, tolling would have the greatest impact on travel times. Pricing would tend to concentrate land use and economic activity into existing urban areas. In major urban centers (such as Los Angeles), tolled facilities are generating sufficient revenue to cover operating and capital costs. In medium-sized urban areas (such as Portland), tolled facilities may be able to pay operating costs but probably not capital costs. Across the nation, tolled facilities have had a positive impact on congestion. The Role of Judgment in Oregon s Investment Process The understanding of these options supports the development of a preferred high-level investment strategy for Oregon. These options were developed during the planning phase and did 58

66 not include the identification of projects. Within Oregon s transportation programs, options and impacts for individual project level investments continue to be developed with the most likely and desired outcomes decided within the context of Oregon s overall transportation goals and values. This is typically addressed during the development of facility plans and selection of projects within the Statewide Transportation Improvement Program (STIP). In Oregon s planning process, if different views of potential investment outcomes arise over the impacts of funding levels in any given program, there are two potential outcomes. The first way of making judgment calls is for the OTC to ask staff to revisit the investment scenarios and ultimately this would lead to an amendment of the Oregon Transportation Plan. The second way is to update investment levels in Oregon s bi-annual process in which the OTC approves the program levels for the various programs within the STIP. In either case the Oregon Transportation Commission (OTC) will take the final action. This action may modify the investment framework for the development of the STIP. When the OTC takes action on program funding levels the judgment call based on the latest information regarding the performance measures associated with the various programs, new information from the management systems indicating the needs (particularly for bridge, pavement and safety) and other issues which might be unique to that two year period. The Deputy Director plays a key role in determining both the initial program investment levels and any proposed changes presented to the Commission. Prior to forwarding a recommendation to the Commission, the Deputy Director works with staff to assess the impacts (financial, system condition) of the proposal. Discussion of the Oregon Case Oregon provides an example of how high-level options can be developed to represent different assumptions about the future, different ways of raising and investing revenue and the im plications of different transportation investment decisions. The case also demonstrates how earlier decisions regarding the overall need for the investment strategy and the investment in models and other technologies can support the development and analysis of options at the state level. The Oregon scenarios are instructive as they show how other policy factors, such as land use and economics may have implications for system performance outcomes. Oregon is a state that has thoroughly considered and analyzed options both at the statewide programmatic level with sufficient detail to include specific projects in the formation of the strategy. The Oregon example is good for Oregon, in that the complexity of options and outcomes can be supported by ODOT data. The Oregon example is also a terrific model for other state DOTs to consider, as it encompasses the basic ingredients of programmatic investment strategies. While the mix of options may vary for different states based on prevailing conditions in each state and the distinct factors that will be critical over each plan s timeframe, the Oregon process represents a best practice for developing and understanding investment options and possible outcomes within the context of long range statewide planning. Not all states develop and consider options within the context of a statewide planning process. States utilize different degrees of technology and intricacy at assessing investment options at different levels. 59

67 HOW OTHER STATES APPROACH STRATEGY FORMATION Alaska. When Alaska s initial regulation for programmatic investment levels was developed; the DOT staff generated three different options or investment scenarios for the state. The development of options was a collaborative process including officials appointed by the Governor. It consisted of planning directors, Commissioners and Deputy Commissioners. Alaska did not utilize sophisticated management systems or models in the anticipation of outcomes for investments at the program level. However HPMS and other management systems are typically utilized to prioritize within programs at the project level. Statewide programmatic outcomes were considered subjectively by the same group of officials who developed the options. While Alaska does use project level management systems to consider possible impacts of decisions, staff judgment plays a greater role in shaping the departments understanding of likely investment outcomes. Alaska is currently expanding its capability for assessment of potential statewide impacts of investment levels and revenue gaps. A professional vendor is playing a key role in Alaska s development of ways to understand the impact of revenue gaps and programmatic decisions. Collaborative staff judgment is applied to assessments of needs which are generated from Alaska s project level management systems. The DOT staff considers possible implications of investments in a process whereby input and opinions are provided regarding possibilities that may not be considered in management systems. The judgment process is rigorous and detailed with the potential impacts of decisions such as changes in materials considered as affecting the impacts that are shown through available management systems. Because Alaska has very active political interest groups with strong concerns over the impacts of transportation investments, it is not uncommon that judgment about impacts may be reserved for appointed or elected groups. Arkansas. Arkansas is beginning to consider performance-related scenario building of investment options. The typical approach in for an investment option in Arkansas today is to identify engineering needs using an agreed set of Minimum Tolerable Conditions (MTCs), design standards, and costs. Arkansas is considering the development of programmatic options by changing the Minimum Tolerable Conditions by which highway needs are defined. Arkansas does not have a statewide travel demand model or other technical tools to generate performance-related information. However, the Arkansas Highway and Transportation Department (AHDT) does use its home-grown needs analysis to predict future performance. The list of performance measures is limited to pavement condition, bridge condition, and capacity (V/C). The AHTD struggles with the problem of quantifying safety and new location needs, but uses the needs output from available management systems to develop the majority of the capital program. The Department also attempts to attain some geographic balance using lane miles on the state system as a measure. Because the Arkansas process places a strong emphasis on hard technical data as the foundation of the investment strategy, subjective judgment primarily occurs at the staff level to ensure potential outcomes of investment levels can be transparently understood within the context of available data. 60

68 Virginia. In Virginia, statewide programmatic investment options and investment scenarios are developed in the 25-year State Highway and Multimodal Plans. When money is invested, the VDOT Finance Division prepares a financial package for programs, which includes specific allocation packages. These allocation packages are then, in turn, allocated to specific projects by the various parties responsible for each aspect of the system. Consideration is given to which projects to fund, but most scenario-based work of the Capital Improvement Program (CIP) happens at the lowest level of system responsibility (i.e., Interstate, Primary Secondary and Urban), accompanied by regular discussion with VDOT s local assistance division or programming division. High level consideration of investment outcomes are assessed in the 25-year plan. Virginia has a statewide travel forecasting model and management systems for different programs which are used in this process. The Commonwealth Transportation Board (CTB) assesses outcomes based on available models and data when developing priority goals and allocation formulas. Within programs and allocation packages there has not been an emphasis on testing outcomes, since most investments are formula-driven. With VDOT s intended move towards cost-basis funding, payback will become a very regular, required consideration for investment within programs, which will represent a change from past practice. Indiana. In Indiana, investment options are developed more at the MPO or district level than at the statewide level. Options are typically driven by existing system needs. Possible outcomes for highway and bridge maintenance investments are assessed based on system condition through highway and bridge management systems. Incremental improvements to other aspects of the system may be assessed with respect to the potential for economic impact. In addition to its management systems for pavements and bridges, Indiana maintains a robust statewide travel demand model, and has utilized different applications of HERS-ST. However many of these tools are primarily applied at the project or corridor level more so than for assessing impacts of statewide investments at the program level. When there is a need for judgment regarding expected investment outcomes the Commissioner of the DOT legislatively has the ultimate authority in most of Indiana s investment decisions. However, different ideas about potential investment outcomes are also discussed at frequent District forums where investment priorities are discussed. Pennsylvania. In Pennsylvania, different programmatic investment options are not considered at the statewide level. Instead, Pennsylvania arrives at statewide levels based on how funds are allocated to different geographic regions, and how priorities are set within each region. The Financial Working Group manages the allocation of resources to different geographical regions and districts, and the allocation of resources to different programs occurs at the regional or district level. For this reason, investment options are considered at the Metropolitan Planning Organization (MPO) or Rural Planning Organization (RPO) level. Possible outcomes from different investment levels in programs are assessed at the MPO or RPO level to examine the degree to which regional or MPOs goals are being met. The state DOT supports this process by presenting statewide analysis, including information about statewide needs and anticipated performance impacts of programs to both the Financial Working Group 61

69 and to MPOs and RPOs. Each MPO or RPO examines how investments are expected to improve the performance of their regional or metropolitan system. Finally, all the District, MPO and RPO performance evaluations are rolled up and examined at the state level. However, the most rigorous assessment of investment outcomes occurs first at the district or regional level, and it is at this level that the analysis of possible outcomes supports choices about investments. When different views of potential outcomes arise, judgment rests with the Pennsylvania DOT, even though options are developed at the MPO/RPO level. The process at the regional level is designed to be as collaborative as possible by sharing information at all stages of the process. Consequently, judgment calls at the MPO/RPO level often resolve questions about possible outcomes without the need for a judgment call from the state DOT. Ohio. In Ohio the programmatic investment process is incremental and does not involve overall statewide options for investment levels in different programs. Investment scenarios are developed only for Major New facilities, but not for all statewide revenues. Investments in capacity additions are mostly handled through the Major New process. Major shifts and investment scenarios take place for proposed Major New expansion projects than for the preservation Program/Funds Management process. Ohio s effort to anticipate outcomes is based on planning level management tools. These tools (for example, for pavement and bridge management) are relatively unsophisticated, but sufficient for their purposes. Consequently, Ohio is very dependent on staff judgment through a collaborative process to make determinations about outcomes that are most likely to occur from gaps or changes in investment levels. When different views of potential outcomes arise, judgment is applied in a committee-style manner characterized by discussion and comparison of viewpoints. The prior Director (Secretary) would often function as a tie-breaker if needed, but most often the committee was able to work though issues. Georgia. In Georgia investment options are largely determined by the congressional balancing requirement, with the Chief Engineer making incremental changes to historic allocation based on information from GDOT and MPO staff about changing technical needs. Within Georgia s 15 MPOs, scenarios may be analyzed using travel demand models to support a collaborative process with GDOT to assess the performance impact and traffic patterns that may result from particular investments. Judgment in GDOT s investment process ultimately rests at the state level with the GDOT Chief Engineer. Utah. Options in Utah are understood in terms of projects included and selected on lists for expansion dollars. Utah tends to develop one large list of projects instead of using holistic scenarios. A recent bonding decision in Utah has involved looking at existing environmental issues and looking at the impact on contracting, project sequencing and other considerations. The assessment of outcomes is suggesting the need for a more strategic development of options. Utah used various methods and tools for understanding possible outcomes of investments. The Deighton software described in Section A of this chapter is used for understanding the preservation deficiencies associated with unmet needs. The planning and data/statistical group in 62

70 Utah DOT does background work closely with the MPOs in considering different impacts for expansion and modernization investments. Most of the assessment of impacts for expansion projects is done internally within the state DOT. The DOT considers growth projections in the process in analyzing scoring variables for project selection based on impact; however historic performance is often the variable more so than future performance. Utah is trying to develop measures for economic development criterion, as a Tier II factor. If a possible impact is questioned, the department gathers more data. Often a regional director will make the judgment as to the official assessment, or the issue may be referred to a statewide committee (called TRANSMAT). If consensus cannot be reached about anticipated outcomes, ultimately the issue may go as high as the deputy director. This doesn t happen very often. This happens mainly when a judgment call is needed on an issue involving a high level of political sensitivity. Delaware. In Delaware transportation investment options are initially developed in comprehensive planning process. They are developed by counties with DOT participation; and followed with more detailed studies in which the possible impacts are specific enough to support modeling, which is often done by MPO staff or professional vendors. When outcomes are considered for particular projects or initiatives, Delaware uses traditional methods and tools. Some commonly used tools include Delaware s travel demand model (which also covers portions of Pennsylvania and Maryland), micro-level modeling in SYNCHRO and commonly used asset management tools like PONTIS and Deighton Asset Management software. Delaware is making efforts to add more robust performance measures to the process for investments not readily quantifiable by these types of systems. Considerations such as aesthetics and context-sensitive-design are hard to measure. When judgment is required to determine between possible outcomes that may result from an investment, Delaware applies different layers of judgment to resolve different views of impacts. The first layer is an attempt to judge the expected impact of an investment through a collaborative process between the Secretary of Transportation and the program managers involved responsible for the program where the investment is proposed. Technical judgment calls are often made at this level. For some determinations, the next layer of judgment entails engaging the Governors office, where the Governor s staff is involved in considering possible outcomes of investments. If the judgment is not resolved at this level, the possibilities are then carried to the final layer of judgment when different possibilities are presented to the Legislature. However, judgment is usually final by the time it gets out of the department. The layers of judgment occurring at the Governor s office are rarely required and it is extremely rare for a judgment call to reach the level of the state Legislature. Vermont. Because of the size of Vermont s program, one major project can significantly change the statewide allocation of revenues between programs. For this reason, options are developed from year to year. Individual project needs and costs play a major role in the statewide budgetary options considered each year. The state requests for each transportation program manager to produce different options for what programs could accomplish if funded at 63

71 different levels. This provides the state a set of options for each program funded at different levels. The options are often more forward looking for pavement and bridge programs, where management systems enable managers to assess emerging needs and the conditions and performance impact of unmet needs. Programs like transit and rail have less quantitative ways of constructing options and presenting the potential implications of different investment levels. For programs where long-term impacts of different investment levels cannot be quantified in management systems, there is significant difference of opinions about the potential impacts of investments. For these programs (transit and rail programs are examples), the judgment call about expected impact plays a greater role in investment decision-making process. Judgment calls may occur at several levels. First the DOT budget committee will make a recommendation to the Secretary and Deputy Secretary, who will decide whether to accept the recommendation and forward to Governor s office. The Governor s office may choose to believe the anticipated impact of an investment recommendation, or may make changes which the department may accept or may resolve with the Governor s office through a collaborative process. Judgment calls about investment impacts are usually resolved before the budget reaches legislative committees. North Carolina. North Carolina makes significant use of the statewide planning process in developing investment options. The 2004 statewide plan included an extensive process to develop multiple investment scenarios, each with its own unique performance measures. The options allocated revenues in different ways between programs and between the statewide, regional and subregional categories of the North Carolina Multi-Modal Investment Network (NCMIN) tier system. In the 2004 plan and the current update, the impact of unmet needs and the magnitude of revenue gaps are utilizing tools like HPMS-AP, BNIP and HERS-ST. Statewide management systems are also used to assess specific preservation needs and the impact of gaps at the project level. This is especially true for setting investment levels for North Carolina s interstate and safety programs. NCDOT staff makes judgments regarding the likelihood of outcomes reported in the statewide planning process and in the development of the seven-year program. When the need for a judgment call rises to the Board of Transportation level, the judgment rests with the board member deemed most appropriate for the program or project where the impact must be decided. C. Making Choices Choices are at the heart of planning and budgeting. When a state confronts different investment options, understands potential outcomes and has judged which outcomes are most likely to occur, the state must ultimately decide the best option based on which outcomes are most desirable. Making choices to support programmatic investment decisions requires carrying forward the next two steps of a programmatic investment strategy. These steps entail: (7) determining what investment outcomes are most valuable to the state when investing limited revenues (values and priorities) and (8) deciding what trade-offs are acceptable in determining where to invest or not invest when options are mutually exclusive (managing trade-offs). 64

72 Key issues to be considered in the best practice in making choices in a programmatic investment strategy are set forth here, followed by the Alaska case study illustrating key success factors for a state effectively making strategic transportation investment choices. The section closes with examples of current practice from throughout the country. Table 8 summarizes the key steps and expected results of addressing decision issues associated with making choices in a programmatic investment strategy. TABLE 8 Making Choices Worksheet Making Choices Steps To Follow Process to Use Results of the Step DOT Staff Hierarchical Order of Step 7: Collaboration Values Determine Values and Key Characteristics of Best Practice Consult Policy Boards Inclusive, Priorities for Relative Weights Objective, Structured Public Transparent Outreach System Goals and Desired Outcomes Step 8: Manage Trade-Offs State Statute Weighted Scoring Worksheets Iterations of Formulas or Computerized Weighted Scoring Technologies to find Investment Mix Maximizing Most Desired Performance Outcomes (May Include Cost/Benefit Analysis) Structured Collaboration Among DOT and MPO or RPO Staff Attached to Specific Predicted Outcomes Prioritized Ranking of Programs or Projects Prioritized Project Lists Within Programs Inclusive, Objective, Transparent Step 7: Values and Priorities Transportation values are the basis for making choices about transportation investments. Values can best be understood as the relative weight the state attaches to potential investment outcomes, and an ordering of the overall goals for the system. It is in this stage of the process that the state must decide which goals are most important. An effective programmatic investment strategy seeks to utilize limited funding to create a system that is most congruent with the values of the public, the elected leadership and stakeholders most affected by the system. When there is an over-arching vision statement defining the need for the 65

73 investment strategy and goals are articulated as described in Section A, it is often easier for the state to value different possible outcomes. When high-level goals for the system are already established, valuing desired outcomes may be a process of organizing system goals into a hierarchy whereby the department clarifies which goals are most important. States may prioritize goals and establish values within or outside of a statewide planning process. Establishing a consistent set of values for a programmatic investment strategy can be difficult. The process requires the department to determine that one desired outcome is more important than another desired outcome. For this reason, it is often an elected or appointed transportation board or commission, a governor or a body outside of the DOT that sets forth the values driving in vestment choices. Given the importance states place on objectivity in this process, establishing a system-wide system set of values and the weighting of goals is often done within a statewide planning process or with other highly structured public and stakeholder involvement activities. The values for the investment strategy must be consistent with the overall goals and need for the strategy. The process for valuing outcomes must also associate goals with outcomes that can be anticipated or measured as a result of different investment options. Values are therefore closely tied to goals and performance measures as described in Sections A and B. While performance can be measured without valuing outcomes, values ultimately come into play when performance impact of different options is understood and choices must be made. Values for making transportation investment choices may be developed in a number of ways, including: Values written in statute or policies from elected leadership In some states the statute for transportation funding clearly associates values with specific p rograms. When the legislative intent of a program is focused or clearly defined, the values for making choices can be infer red from state statute. For example, if a special state transportation bill is passed for safety improvements, it is clear that investments under this program must be valued based on their anticipated safety outcome. However transportation statutes often specify a number of different values, but may specify a hierarchy of values such as stating the primary intent of funding bill is to preserve existing assets, then to improve the safety of the system, then to provide modal balance. If statute does not clearly specify the values that are to drive investment decisions, the governor or appointed DOT commissioner or secretary may establish values as a matter of policy. Many states have departmental policies of safety first or fix it first to stress the higher value of a safety or preservation outcome followed by a succession of other values ranging from mobility to sustainability to economic competitiveness. When values are clearly defined in statute or otherwise by elected or appointed leaders, the primary task of the DOT is to associate specific weights and performance measures to those predefined values when making investment choices. 66

74 Values defined by an independent board or commission If the elected leadership does not directly and clearly set forth the values for the system, an appointed board or commission may undertake this task. Most states have a state board of transportation or commission which fulfills this role. However, if the values of the board are not codified and consistently applied, the board and the DOT may struggle with making consistent choices or achieving any particular outcome in the long term. If an independent board or commission can define for the DOT a hierarchy of values, the DOT can more effectively manage funds and programs to ensure progress towards the most desired outcomes over time. Values derived from public and stakeholder involvement in a statewide plan The statewide planning process is an opportunity to establish values for the transportation system with a broad based public and stakeholder outreach that covers all aspects of the system. A facilitated public and stakeholder involvement process generates ideas about what is important for the transportation system in such a way that increases the likelihood of buy-in to investment decisions when the strategy is implemented. States like Florida, Michigan and Oregon define clear values and priorities for desired outcomes in the statewide planning process. These states enjoy broad based stakeholder understanding of programmatic investments and are able to make consistent choices at the state level. Values defined in a structured ongoing public and stakeholder involvement process States may hold transportation summits, or have a policy of ongoing outreach to public and stakeholder groups to provide input to help the DOT staff or a transportation board or commission in setting values for the system. Often such processes are created in a statewide plan, but continue after the plan is developed. Maintaining a consistent outreach to stakeholder groups and to the general public serves both to educate the public about transportation issues and to see that values driving choices are current with the public interest. Oregon, Florida and Pennsylvania are all states where such groups have an ongoing role in determining values for the system. Overall, in establishing values for transportation investment strategies, key success factors are: Values reflect the public interest and emerge either from elected leadership or from broad-based public and stakeholder involvement processes; Values are specific enough to be associated with measures of performance under different investment options; Values are well understood by both governmental and non-governmental actors associated with making investment decisions; and,\ Values are hierarchical in nature, and clearly indicate the relative desirability of different performance outcomes of investment options. 67

75 Step 8: Managing Trade-offs When investment options are weighed against the values and desired outcomes for the system, trade-offs will emerge between mutually exclusive programs. For example if a state values safety over system preservation, the state may tolerate a lower pavement or bridge condition to make funds available for improving crash hot-spots. If a state values system preservation over mobility, the state may forego roadway expansion or multi-modal programs to maintain a higher level of pavement and bridge condition. There are several ways states may apply values to different options when making trade-offs. Some practices include: Scoring Matrices. Scoring matrices apply weights to performance outcomes through a formula or scoring system. This process involves the development of scoring tables, in which performance outcomes are weighted based on the relative value of outcomes to the state system. The use of scoring matrices can be very transparent, and can be undertaken in common software like Microsoft Excel. However, the assessment of statewide priorities and trade-offs can become very cumbersome if programmatic investments are analyzed based on the culmination of project-level matrices. The Alaska case below provides an example of the use of scoring matrices at the project level. Collaborative Processes. This process entails subjectively discussing anticipated outcomes of different investment options in a collaborative process structured around an agreed hierarchy of values. Subjective application of values to manage trade-offs is helpful when data and systems are not available for quantifying values or outcomes. The key to managing trade-offs in this way is a clearly defined mode of decision-making as described in Section B, and a hierarchy of values will understood by all participants in the process. Incremental Revision of Options. This process begins by defining an ideal set of outcomes based on established values, then incrementally revising options and expected outcomes through an iterative process of modeling in which investment options are incrementally revised and analyzed with different balances of investment levels in programs until results show that desired outcomes can be most closely met. In this type of process funding levels are traded between programs as possible outcomes are re-analyzed until the analysis shows that a given mix of investments represents the closest possible match the desired performance levels given financial constraints. This type of process requires tools that help analyze investment outcomes in ways consistent with Section B of this guidance. When the relative value of outcomes can be monetized in terms of dollars (for example the value of a life saved by a safety improvement relative to the value of time saved by a mobility improvement), cost/benefit analysis can be used to assess different iterations of investment options with different trade-offs. States may use tools such as HERS-ST, HPMS-AP, Deighton software and state-developed asset management systems in conjunction 68

76 with economic impact tools like REMI, IMPLAN and TREDIS to support this process. CASE STUDY: MAKING CHOICES Making Consistent and Strategic Choices in Alaska In Alaska, values for the transportation system are established in the political process, with both the Governor and the Legislature taking an active role in making choices. Because Alaska has many active political interest groups, the values of particular groups may come into play as project stoppers. In particular the constituency valuing sustainability becomes very involved in decisions at the legislative level, and may seek choices not to invest in areas where there is a perceived risk of adverse environmental impact. Because of Alaska s highly volatile transportation policy environment, prevailing values may be different from one decision to the next, based on the political process and the direct political economy among interest groups. Given this challenging policy environment, the DOT has been very effective at managing trade- through a weighted scoring system at the project level, which clearly attaches values to offs different types of projects and anticipated outcomes. The scoring process was initiated by the Governor in order to establish greater transparency regarding choices made at the project level. Alaska has established categories in which projects for all modes can be scored against anticipated performance outcomes in a way that is weighted to account for underlying values on the system. The categories include: Remote and Trail Projects; Urban and Rural Projects; Projects supporting the Governor s Trails and Recreational Access for Alaska (TRAAK) program; Transit Projects; and, ITS Projects. Within each category, the anticipated outcome of a project is assessed with regard to specified transportation values. The values include: Economic Benefit; Health and Quality of Life Safety; Improvement of Intermodal Transportation; Participation of Local and Other Entities; Departmental Priority; 69

77 Public Support; Improved Access to Selected Land Uses; System Preservation; and, Joint Projects with Other Agencies. Within each project category, each value is assigned a weight from 0 to 5. Based on departmental values, the maximum weight allowed for any of the above values may be capped, for example, readiness for environmental approval can never be assigned a weight of greater than 2 for a Remote and Trail project; however Safety can always be valued at the maximum possible value of 5. By defining the values that may be associated with projects, and assigning maximum and minimum weights to these values, Alaska develops priorities at the project level that are consistent with the value the state places on different possible statewide outcomes such as safety, quality of life, economic vitality and the considerations. There is another dimension to the Alaska process as well. The weighted values are balanced with the anticipated outcomes of projects and the judgment regarding the likelihood of the desired outcome. The expected outcome with respect to any given value is rated on a scale of +5/-5, in which a score of -5 indicates the expected outcome is likely to be a negative impact on the system with respect to a particular value, and a score of +5 indicates a highly positive impact. This scoring of projects allows Alaska flexibility to apply subjective judgment in cases where an objective performance measure cannot be assessed for each area of system performance. Trade-offs and prioritization between projects is achieved by organizing values and anticipated outcomes into a two dimensional matrix. Table 9 on the following pages provides an example of how weights are applied to different expected outcomes for urban and rural projects scored under the Alaska methodology (14). 70

78 TABLE 9 Alaska Scoring Tables Urban and Rural Projects Criteria Scoring Criteria Standards (5) 1a. Economic benefits if not new mode or facility. Weighting: 0 or 4 1b. Economic benefits if new mode or facility. Weighting: 0 or 4 (3) (0) (-3) (-5) Supports economic Supports capacity or Supports minimal, N/A N/A benefit; endorsed in an new access specifically speculative or economic development built to support temporary economic project by regional regional or local opportunities or governmental agency industrial, commercial benefits or provides or representative or resource non-crucial benefit to group. development existing economic activity. Consideration of costs and benefits via an analysis demonstrates: No documentation N/A provided. project has very project has average monetary and/or project has below average monetary significant monetary non-monetary benefits. a nd/or non-monetary benefits. and/or non-monetary benefits. Economic benefits analysis in 1a. and 1b. shall not consider benefits due to project construction. 2. Health and quality of life (Air and water quality, neighborhood continuity, access to basic necessities) Weighting: 1 This project provides a significant contribution to improved health or quality of life, or reduces or removes a significant existing negative factor. This project provides a moderate contribution to improved health or quality of life, or reduces or removes an existing negative factor. Project will have no effect either positive or negative on quality of life issues. This project provides a moderate degradation to health or quality of life. This project provides a signi ficant degradation to health or quality of life. 71

79 TABLE 9 Alaska Scoring Tables (continued) Urban and Rural Projects Criteria Scoring Criteria Standards (5) (3) (0) (-3) (-5) 3. Safety. Proposes mitigation which is Proposes mitigation No mitigation is Proposes features Proposes features which are Weighting: 5 recognized in practice to address which is recognized in demonstrated to address which are recognized recognized in practice to A) a major portion of crashes on a segment or intersection with a crash rate exceeding the Critical Rate defined in the HSIP Program, or, B) historical crash patterns practice to address A) a major portion of crashes on a segment or intersection with a crash rate above the statewide average, or, a crash problem or potential in other categories. A) crashes on the project's segments or intersections have a in practice to worsen A) a major portion of crashes on a segment or intersection with a crash rate at or above the statewide worsen A) a major portion of crashes on a segment or intersection with a crash rate exceeding the Critical Rate defined in the HSIP Program, or, identified from 3 or more crashes, at least two of which involve deaths or major injuries, or C) documented high accident B) historical crash pa tterns identified from 3 or more crashes per year, or C) traffic crash rate below the statewide average, or, B) historical crash patterns identified are average, or, B) historical crash patterns to 3 or more crashes per year, or B) historical crash patterns identified from 3 or more cras hes, at least two of which involve deaths or major potential or risk between a major non-motorized use facility and vehicular traffic. conflicts between a primary non-motorized use facility and less than 3 or more crashes per year, or C) no demonstrated traffic C) traffic conflicts between a primary non-motorized use injuries, or C) documented high accident potential or risk between a major nonmotorized vehicular traffic. conflicts between a non-motorized use facility and vehicular traffic. facility and vehicular traffic. use facility and vehicular traffic. Minimum latest available 10 year record. When using anecdotal crash information from first hand ( EMS, Fire, Police, M&O - on-scene responsibility) = maximum score is 4 points. When using anecdotal safety information from second-hand sources (n ot on-scene responsibility) or data not recognized in practice = maximum score 2 points. 4. Improves intertransportation or modal lessens redundant facilities. Weighting: 3 Would clearly reduce the need for capital investment in another mode and result in a reduction in operating costs by reducing May reduce the need for capital investment in another mode and result in a reduction in Do es not impact other mode requirements. May increase demand on another mode possibly requiring additional capital expenditure. Will increase demand on another mode requiring additional capital expenditure. redundancy in our system or greatly improves the connection between modes for travelers or freight. operating costs by reducing redundancy in our system or would moderately improve the connection between modes for travelers or freight. 72

80 TABLE 9 Alaska Scoring Tables (continued) Urban and Rural Projects Criteria Scoring Criteria Standards (5) (3) (0) (-3) (-5) 5. Local, other agency or user Contribution of state match, design, right-of-wayper Contribution covers no N/A N/A contribution to fund capital costs. each 8% of project and/or materials: 1 pt capital costs; Weighting: 5 cost. contributes nothing. Match required by state match policy shall not be considered In this question. Only contributions that exceed the required match contribution shall be considered. 6a. Local, other agency or user contribution to fund M&O costs. (For non-dot or DOT unsuited to Sponsor will assume ownership if currently a DOT&PF facility; or Sponsor will assume full M&O responsibility; or Sponsor contributes nothing. Continued sponsor N/A N/A long-term ownership. ) sponsor will assume sponsor will assume ownership & operation Weighting: 0 or 5 ownership of another DOT&PF facility of similar M&O cost. full M&O of another DOT&PF facility of similar M&O cost. of locally owned facility = 1 pt.; And results in significant local maintenance savings = 2 pts. STIP commitment must be in writing and passed by the governing body of the community or tribe before points will be assigned. 6b. Departmental M& O costs and Very high M& O Moderate M&O Not an M&O priority; Not an M&O priority; Not an M&O priority; priority (Use for DOT facilities.) Weighting: 0 or 5 priority. priority. little effect on M&O costs. would increase M& O costs moderately. would increase M&O costs significantly. 7. Public support? Weighting: 3 Preponderance of public record including a resolution from the local elected body Majority of public record shows support for project; and nominally supported in Public record is divided or undocumented toward project; and not Majority of public record shows opposition to project; and not supported in Preponderance of public record shows opposition to project including a resolution shows support for project and fully supported in official official state or local plans. supported in official state or local plans. official state/local plans. from the local elected body and/or contravenes official state or local plans. state/local plans. 8. Environmental approval Environmental Environmental Environmental Environmental Environmental readiness? approval likely with approval likely with approval likely with approval extremely approval unlikely. Weighting: 2 Categorical Exclusion or already complete. Environmental Assessment or draft Environmental Impact Statement. difficult 50/50 chance. document circulated. 73

81 TABLE 9 Alaska Scoring Tables (continued) Urban and Rural Projects Criteria Scoring Criteria Standards (5) (3) (0) (-3) (-5) 9. Surface rehabilitation. Primarily 3-R and a PMS Primarily 3-R; a Primarily major N/A N/A or deficient width/grade/alignment (w/g/a). Weighting: 5 recommendation for rehab within 2 years, or a gravel surface badly deteriorated portion of the project addresses serious foundation problems. reconstruction; addresses longer- range or serious surface or rehabilitation. deformation. or Moderately deficient w/g/a relative to or No w/g/a Significantly deficient w/g/a relative to standards. standards. deficiencies. 10. Cost, length, AADT evaluation. Use same approach used in preparing STIP. Scored automatically. Weighting: Deficient bridges? Deficient bridge(s) needing Deficient bridge(s) No bridge N/A N/A Weighting: 3 replacement*. eligible for deficiencies rehabilitation**. * Eligible for replacement means the bridge has a sufficiency rating of less than 50 points and has been determined to be eligible for replacement by ADOT&PF Bridge section. ** Eligible for rehabilitation means the bridge has a sufficiency rating between 50 and 80 points and has been determined to be eligible for rehabilitation by ADOT&PF Bridge section. 12. Functional class. Major Arterial = 5 Major Collector or Local Roads/Streets N/A N/A Weighting: 5 Minor Arterial = 4 Urban Collector = 3 or Unclassified = 0 Minor Collector = Other factors not specified. Each PEB member is allocated 2 points for each project scored. Between 0-5 points may Negative points may be Weighting: 2 be allocated to eac h project from this "pool" of points. Points from Remote, Rural/Urban assigned to projects that and other STIP categories must be used for projects within the same category. are excessive in scope, cost or deemed not in state s interest. If negative points assigned; 4 or more PEB members must jointly agree and identify the reasons for this decision. 74

82 The Alaska case provides an example of a programmatic in vestment strategy that: Is bottom up arriving at statewide investment levels by developing projects in a highly consistent manner. Relies on subjective judgment in the decision-making process and is less dependent on sophisticated models or management systems for understanding outcomes, but also provides less detail about expected outcomes. Consistently applies a set of transportation values to project level decisions and can be applied to a broad ra nge of programs. The strengths of the Alaska case are in its simplicity, its applicability at the project level, its transparency and its organiza tion of values and judgments. Such a process can work very well for project level decisions where possible outcomes may not be readily quantified and understood. The Alaska model may not be directly ap plicable to states where the political environment places more statewide progr ammatic impetus on the DOT for top-down approaches or where choices must be made at the statewide level between entire programs over many funding periods. However, the definition, organ ization and weighting of values relative to expected outcomes using matrices is a strong and consistent conceptual structure that may guide transporta tion choices at the program, dist rict or project level in other states. Alaska is a good example of a point or grading sy stem applied to projects. The key to getting any point system to work is the initial wor k of determining it structure and the values and performance assessment methods implicit in the system. The system must be supported by accurate data that are exten sive enough to supp ort the process. More importantly, before implementation such a system must be successfully applied to a control group of projects to ensure the results are intuitive and consist ent. It is best to test a weighted scoring process using a control group which is a package of projects that the DOT has already prioritized and has conf idence in their results. In the testing, the point system must be able to replicate an accepted control group priorities. Such a pre-test can ensure the scoring process in the future will yield results consistent with th e criteria the state has endorsed. Proofing a scoring method against an accepted program before using the scoring method supports the future use of this method such that its future results are subject to less scrutiny. HOW OTHER STATES APPROACH MAKING CHOICES Arkansas. In Arkansas, a pre-set values system is not util ized for making programmatic choices at the state level. The project level options and possible outcomes are designed and analyzed in such a way to be as transparent as possible, enabling the public, legislators and other stakeholders to understand projects and weigh in regarding values on any given project. The Arkansas Highway Transportation Department (AHTD) works through a public involvement process to gather input from intere sted parties, including legislators to assess the role of values at the project level. Trade-offs in Arkansas are typically managed in a data-driven analytical process where projects to are prioritized improve d eficiencies as defined by Minimum Tolerable Conditions. Any 75

83 special decisions regarding the prioritization of any given project are made based on values raised by legislators or other stakeholders. Virginia. In Virginia, the values for potential investment outcomes are organized into the Policy Goals of the 25-year statewide plan. These goals are translated into formulas that are used for the allocation of funds within programs. Indiana. In Indiana, the values and most desired outcomes of investments are determined by the Deputy Commissioner for Planning. When trade-offs have to be managed, safety, system preservation and maintenance are first priority. There are also new capacity projects that are generally agreed upon, but since letting dates may shift due to the timing of completion of engineering, the timing of some of those projects are adjusted as well, including the spilling over to future programming periods. Pennsylvania. In Pennsylvania, to some degree, the values underlying transportation policy are driven and defined by the Secretary. Also, the collaborative nature of the Financial Working Group allows for decisions to be made regarding desirable outcomes. In addition to the collaborative approach between the state and its Metropolitan and Rural Planning Organizations, there is room for discretionary investments provided in the form of (a) 20% of highway funds are available for particularly expensive projects that cause spikes in any one district (therefore they are named Spike Funds, and (b) a $25M fund that is used by the Governor for economic development-oriented transportation investments. Ohio. In Ohio the committee responsible for the STIP decides values and sets priorities for programs and for projects. The committee s mission is to keep system deficiencies (e.g., weightlimited bridges) to reasonable, predictable levels. Programmatic funding levels are decided based on significant experience and historic monitoring, so the desirable outcomes usually have a great deal of consensus throughout the process. The committee, as a whole, accepts input form all working levels within the DOT regarding the wisdom and effectiveness of investments and target outcome performance levels. When it becomes apparent that a chosen level is not delivering expected results, the entire organization recognizes the issue and attempts to correct the situation within the context of the regular cycle of the Program / Funds Management process. An example is the use of a PCR target of 65 for freeways and 55 for two-lane roads. The DOT has come to understand over time, through operations and district feedback, that 55 is not sufficient, so they are revising investment levels and will examine investment levels to try to raise that rating. This feedback gathering takes place both in the formal process and on an ongoing, informal basis. Oregon. In Oregon, policy committees on sustainability, safety and security and economic development were developed in the statewide planning process. These committees had an integral role in determining the values and most desirable outcomes for the system as articulated in the statewide plan. The committee members became very knowledgeable about the transportation system in this process, therefore in addition to the plan itself, the policy committees and their members support the overarching values for investment decisions through implementation. 76

84 Trade-offs are managed under the over-arching values system of the statewide plan in ways consistent with legislative requirements. For example, there is a legislative mandate setting a minimum amount for modernization minimum mod (%) goal. The pavement management system helps with determination as to how achieve pavement condition standards; the commission sets specific standards by region. The bridge program is special; there was a major investment package passed two legislative sessions ago as a special program for bridge rehabilitation. Outside of this program, the bridge management system is used to develop investment levels in bridges based on percentage of deficient bridges. Those are the more structured processes. Special programs include ITS and highway operations. The relationship of this process to the overall budget and the STIP has changed in response to revenue shortfalls. In the face of revenue shortfalls, the Oregon Transportation Commission has placed a high value on system preservation, seeking to maintain investment levels for bridge and preservation and that diverted funds from operations and safety investments. Trade-offs and values may also be set in special legislation. For example, Connect Oregon reflects the value Oregon places on modal balance. The legislation called for and funded investment specifically in non-auto modes. The project-oriented nature of this program stipulated very specific priorities, with about 20% of the funding for aviation, 30% for rail, 15% for transit and the remainder for other intermodal projects. The Legislature provided funds, allocating 15% to each of five regions and 25% for statewide investments. The Connect Oregon legislation furthermore set non-highway modal investment levels both for the statewide funding and for the funding in each region. The program was seen as very successful and is now being followed up with a bill called Connect Oregon II which will set values and priorities for non-highway investment in a similar way. Georgia. The values driving Georgia s transportation investment choices are considered in the collaborative process whereby GDOT considers trade-offs and transportation requirements with each of the state s MPOs and with local officials in rural Georgia. For decisions in rural areas, the knowledge local officials provide of local conditions is a factor in determining desirable outcomes. The process to manage trade-offs and ultimately include projects in the final STIP begins with meetings between the District Planning / Programming Engineers and city / county representatives. Together they draft a program that is submitted to GDOT. The Department may then comment and suggest revisions based on statewide considerations regarding what the department deems the most important elements of overall system performance. Utah. The values driving investment in Utah s transportation system are tied to the four highlevel goal areas described in Section A (preservation, optimization of performance, safety and capacity). The valuing of these goals has evolved over time, with Utah s mission and vision statements over many years. Utah s transportation values have been developed within the Utah DOT through annual strategic development workshops and are reviewed annually. Values are codified in a strategic document setting forth Utah s transportation values along with performance measures. The top three goals (preservation, performance optimization and safety) are valued nearly equally in investment decisions. These three values vary from project to project. Capacity expansion is less valued than the other three goals in UDOT s regular program, but is supported by supplemental funding made available by Utah s Legislature. 77

85 For Utah s expansion program, the DOT has a list of potential projects, the Legislature has commissioned a task force to prioritize, and fund these needs, which involves managing tradeoffs. An important tool in Utah s management of trade-offs is a scoring process in which quantitative data and expected outcomes are applied using scoring sheets to prioritize projects. Variables used in the scoring include volume, projected growth, V/C and other measures to provide a score for any anticipated capacity project. This process was approved by the Legislature. There is minimum safety criteria set for whenever a preservation project is done, hence values are often combined in one project. There is generally a uniform value for scores related to safety, preservation and operations, with a lesser value associated with capacity impacts. To ensure no key values go unaddressed through the management of trade-offs, the state provides some block allocations to programs with a minimum funding level for each program. This guarantees that the entire programmatic allocation is not entirely all driven by one scoring method. Vermont. In Vermont the values driving decisions may vary from year to year through the iterative process by which projects are advanced in that year s annual cycle. In the current process the budget committee within the DOT makes recommendations to the Secretary of Transportation. This initiates an iterative process in which different mixes of projects are traded between the budget committee, the Secretary and individual program managers. Values and desired outcomes emerge in this process each year. There is also some statutory language about what should be included in project prioritization. Internally the agency also has goals and objectives, which discuss values in general terms, but a hierarchy is not suggested. The Departmental policies provide some structure for the values. Generally, safety and security are prioritized first, then preservation before other possible outcomes. This value system has evolved as a best practice understood within the Department. Vermont is an example of a small state with limited infrastructure assets, and this plays a role in how trade-offs are managed. One major highway or bridge project may significantly affect the proportional allocation of revenues among Vermont s transportation programs in any given year. For this reason, Vermont manages trade-offs each year in a bottom-up fashion, in which specific major projects are considered as trade-offs that determine the overall statewide allocation of revenue. This project-by-project way of managing trade-offs adds to the strategic importance of issues such as project life cycles, and year-to-year variations in the cost of a particular improvement type. Delaware. The values for desirable investment outcomes in Delaware are identified in the statewide transportation plan and in budget documents prepared by the DOT. The observed hierarchy of values is (1) safety, (2) preservation, and then (3) congestion. These values are the result of a public involvement and review process in the statewide planning process and are adopted by counties as part of comprehensive plans. The Metropolitan Planning Organizations (MPOs) have formal weighted processes of applying values through performance measures under these three over-arching values. Performance measurement, asset management technologies and a well defined values system yields a refined 78

86 prioritization process for Delaware that is useful for determining which outcomes are most important and for managing trade-offs in prioritizing projects each year. When there is controversy surrounding project-level trade-offs, the Delaware DOT directly involves the public in decisions about trade-offs with elected and appointed officials collaborating on choices. Final decisions about trade-offs are made in the Legislature after a hearing at which the DOT presents the recommended priorities in open forum after collaborating with the Governor s office. North Carolina. The Board of Transportation (BOT) plays a major role in determining the outcomes that are most important for NCDOT s program. The Board ultimately determines which investment option in the statewide plan is preferred, with departmental staff providing technical input to advise the board about the options. Trade-offs between exclusive programs or projects may be made by an individual board member, or may be determined by the Board as a whole, depending on the nature of the trade-off and whether it is between projects or programs. D. Making It Work Making a strategy work entails applying the values, priorities and preferred programmatic options to the development and delivery of projects. Key issues to be considered in the best practice in making an investment strategy work are set forth here, followed by the Pennsylvania case study illustrating key success factors for a state effectively utilizing a workable investment decision-making strategy. The section closes with examples of current practice from throughout the country. In making a strategy work, steps one through eight of the recommended practice in subsequent sections of this chapter support the final steps of (9) establishing buy-in to investment choices and ensuring practicality of investment priorities. Table 10 summarizes the key steps and expected results of addressing decision issues associated with making a programmatic investment strategy work. If the strategy is set forth in a statewide plan, making it work often involves providing a practical way for area transportation partnerships, metropolitan and regional planning organizations and districts to use the strategy in developing a STIP. Implementing a strategy requires a way for the department to apply statewide and high-level investment and decision principles at the project level. Issues such as the technical feasibility of projects, the political feasibility of trade-offs and the transparency of decisions become important at this level. Table 11 shows how the different elements of a programmatic strategy can be applied to projects to support and explain decisions to the stakeholders and to the public. To provide consistent and defensible project-level decisions, the body or bodies developing the STIP must understand the elements of the strategy shown in Table 11. The Alaska case provided in Section C of this guidance is an example of how choices can be made with a transparent application of values and expected possible outcomes at the project level. Each state may develop its own tools and instruments for applying values and anticipated outcomes based on the state s available data, tools and management systems. However, a transparent process for 79

87 previous phases in the strategy, from goals through trade-offs, is vital for making the strategy workable and easy to articulate. TABLE 10 Making It Work Worksheet Making it Work Steps To Follow Process to Use Results of the Step Key Characteristics of Best Practice Consult Policy Boards Inclusive Step 9: Establish Buy-In to Investment Choices Step 10: Ensure Technical Feasibility (Practicality) Structured Outreach to Local Government Actors Structured Public Outreach Obtain Legislative Support for Programs Environmental Review Process Costing and Scheduling of Projects Allowing Sufficient Time and Resources for Implementation Public and Stakeholder Understanding of State Investment Priorities and Choices Projects Ready for Delivery on Schedule Objective Transparent Objective Transparent 80

88 TABLE 11 Culmination of Decision Elements in Making a Strategy Work Strategy Decision Issue Implementation How the Elements are Used to Support Phase Elements Implementation Decisions under Scrutiny Need for a Strategy Mission or Vision statement and goals Explains why the STIP is developed, what the strategy does and why this strategy is followed Getting Mode of Structure of the actors Explains whom is m aking decisions and Started Decision- who decide on why they are the ones making the Making projects and statewide investment levels. decisions. Investment in Decisions Accounting of resources used to Explains that the state has done due diligence in setting priorities. develop the strategy Developing Options Understanding of what would happen if investments were made differently Explains that the state has considered different ways to invest and shows that the priorities are not arbitrary. Understanding Management Explains and quantifies the benefits the Strategy Possibilities Systems/technical state expects to achieve by supporting the Formation reports demonstrating projects it does. relative performance impact of different investments Judgment Calls Documentation of why a forecast or methodology is official Anticipates questions about whether the benefits will really accrue, and explains why the state believes in the merits of its choices. Making Choices Values and Priorities Managing Tradeoffs Weighted set of priorities based on the expected impact of different projects. Process for prioritizing projects and programs based on values and expected outcomes Explains why one project is more important than another and why the state values one outcome over another. Spells out which projects and programs are supported by the strategy, and which are less important based on well defined values and methods. Step 9: Establishing Buy-In and Acceptability of Decisions The degree of stakeholder involvement throughout the development of a strategy is directly tied to the ultimate level of buy-in and acceptability for project level decisions made under the strategy. If stakeholders have been involved in the development of the strategy, disagreement with a project level decision can be articulated in terms of values, judgment or possible outcomes. This elevates the project level discussion and clarifies the conditions that must be met to reconcile stakeholder interests with state level priorities. When political or media scrutiny is applied to a project-level decision, the state is in an optimal position when it can clearly describe 81

89 the investment options that have been considered, explain the anticipated outcomes of the project and point to values driving the decision. The early and continuous involvement of stakeholders at the strategic level as described in Section A of this chapter can lead to the development of projects that meet the needs of particular constituencies in ways consistent with o verall values and goals for system performance. It is also possible that the expectations of stakeholders and constituencies regarding desired state transportation investments may change as constituencies become more educated about system conditions, performance and values. It is much more difficult to explain the entire strategy, the options considered, outcomes expected and the values driving state decisions to stakeholders who are aware of only one decision on one project and have no other role in the process. The following are some examples o f ways that states establish buy-in to an investment strategy: Buy- In Through the Statewide Plan. Statewide plans, with steering committees, policy committees and broad-based pubic and stakeholder outreach processes can provide stakeholder involvement in an investment strategy. The Florida case, provided in Section A and the Oregon case, provided in Section B, are examples of cases where a statewide planning process educated stakeholders in ways that ultimately supported project decisions under an investment strategy. While neither Florida nor Oregon enjoy 100% buy-in to project level decisions, disagreements are understood in terms of underlying policy issues, and overall consensus about the direction of transportation programs is maintained. Buy-In Outside a Sta tewide Planning Proc ess. If the strategy is not formed in a statewide plan, a rigorous process and outreach to stakeholders and constituencies is the best practice for supporting buy-in to implementation. Workshops, round-tables and presentations to lo cal, regional and statewide groups allow the state to articulate: Why it has an investment strategy; The investm ent options it has considered statewide; How the state determines expected outcomes; The state s transportation performance priorities; and How specific projects are assessed with respect to desired performance outcomes. When the state presents this information, it is important for the state to engage stakeholders with questions, answers and open discussion about how the STIP is developed and how projects get into the program. This type of process enables the public to understand the objectivity, transparency and consistency of the state s investment decisions. When the STIP is developed on a regular annual or bi-annual cycle, strategically conducting such outreach can be a way of anticipating the competing priorities that may need to be managed in the STIP process. Vermont and Delaware are examples of states that establish buy-in this way. 82

90 Step 10: Technical Feasibility of Projects (Practicality) When project-level decisions are implemented at the STIP level within a statewide investment strategy, technical feasibility plays a role in priorities within a given program area. This is especially true of expansion projects, where environmental processes and right of way acquisition significantly affect project costs and delivery schedules. Often a project that is consistent with the overall values of the system and with an anticipated performance impact superior to other projects may be deferred, foregone or given a lower priority due to concerns of technical feasibility. Some issues that are important to consider when implementing projects under a strategy include: Potential impact on wetlands or environmental habitats; Potential impact on historic, cultural or other sensitive sites; Potential costs and economic impacts of right of way acquisition; Potential need for mitigation of air quality or noise associated with the project; Potential impacts of the project on non-state systems and other modes; and, Potential impact to the human environment and sensitive populations (environmental justice). The involvement of knowledgeable staff about issues of technical feasibility can provide information about these considerations when deciding which projects to implement and when. CASE STUDY: MAKING IT WORK Pennsylvania: Building Consensus at State and Regional Levels In Pennsylvania, the political and technical feasibility of projects is ensured by making statewide decisions regarding geographic allocations, and leaving the programmatic mix to regional transportation partnerships through districts, Rural Planning Organizations (RPOs) or Metropolitan Planning Organizations (MPOs). The programmatic investment strategy is flexible, and determined by over-arching geographical decisions made by the Financial Working Group (FWG) described in Sections B and C of this chapter. In Pennsylvania the statewide Financial Working Group (FWG) initiates the investment management process every two years. The process begins with the FWG holistically considering the overall needs of different geographic jurisdictions, which include districts, MPOs and RPOs. The existing geographic allocation of revenues is used as a baseline, from which adjustments are made based on changes occurring within specific areas of the state. Changes may include shifts in population, development trends, changes in transportation costs or other drivers of system utilization. The FWG makes statewide decisions, but is comprised largely of representatives of different metropolitan and regional planning organizations who have an understanding of how decisions must be made at the regional level. Over the life of the FWG, all but seven of Pennsylvania s 23 MPOs and RPOs have held seats in the FWG. 83

91 The Pennsylvania DOT (PennDOT) presents technical data and information about statewide conditions, performance, forecasts and other emerging issues at both the FWG and at the Regional MPO / RPO level. This information is actively considered at all levels in both the statewide geographic allocations, and the programmatic allocation of resources within each regional area. Figure 4 illustrates how programmatic investment decisions are made under the Pennsylvania Model. Figure 4. Pennsylvania Geographic and Programmatic Investment Process 84