AN INTRODUCTION TO ASSET MANAGEMENT SYSTEMS

AN INTRODUCTION TO ASSET MANAGEMENT SYSTEMS

1.1 Instructional Objectives

This module introduces the fundamental principles of an asset management system that
are common to agencies managing integrated infrastructures and other industries (e.g.,
trucking and rail). The applicability of these principles to pavement management will
be presented through a systems approach. Upon completion of this module, the
participant will be able to accomplish the following:
a. Identify the fundamental principles involved in asset management.
b. Understand the philosophy of asset management.
c. Describe the issues affecting the success of asset management today and in the future.
d. Understand the applicability of asset management concepts to other highway issues.
Over the years, private industry has implemented management systems to provide
quantitative and qualitative information about the agency’s resources and the facility’s
current and future performance levels (2). These systems, referred to as an Asset
Management System (AMS) or commonly as an Infrastructure Management System
(IMS) are being used to manage network inventories that include parking lots,
buildings, transit facilities, waterways, and utilities.

Although there is no one universally accepted

DEFINITION OF ASSET MANAGEMENT SYSTEMS (AMS):
definition of an AMS, these systems provide the tools that are necessary fo the
monitoring and preservation of a facility’s assets on a continuous basis to ensure the
efficient and effective use of the agency’s available and projected resources. More
specifically, asset management can be defined in the following way (2):
Asset management is a systematic process of maintaining, upgrading, and operating
physical assets cost-effectively.

Through the combination of sound engineering principles, accepted business practices,

and economic theory, AMS provide the tools necessary to improve the decision-making
process by providing timely information in an organized, logical, and justifiable
manner. As a result, an agency using Asset Management can improve the effectiveness
of its short-term decisions through an analysis of long-term impacts.

In order for an AMS to effectively assist an agency

COMPONENTS OF AN ASSET MANAGEMENT SYSTEM:
with the management of its assets and other resources, a system must be tailored to
match the resources and needs available. The framework of a system, however, is
fairly consistent and should be comprised of the following elements.
■ An inventory of assets
■ A method of assessing current condition or performance
■ A process for determining needs
■ Tools to evaluate and select appropriate strategies to address the needs
■ Methods to evaluate the effectiveness of each strategy

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Consequently, an AMS generally contains the following:

■ A centralized database for storing and retrieving inventory information
■ Performance prediction models that permit the projection of future asset conditions
■ Analysis tools that are customizeable to match the policies and procedures used by the
agency to identify and prioritize maintenance and rehabilitation needs
■ Reporting tools that provide a variety of informative reports, including detailed reports,
summary reports, and graphics

These elements are identical to the components of a pavement or bridge management

system; the variations occur in the types of assets being managed, the models used to
analyze the conditions, and the approaches used to determine needs.

In both public and private agencies, one of the

GOALS AND OBJECTIVES OF ASSET MANAGEMENT:
primary functions of a management system is to assist the agency with its decision-
making through processes designed to improve the flow of information and assist in
evaluating current and projected preservation strategies. Unfortunately, improvements
in decision-making are very difficult to identify and quantify, so agencies frequently
find it difficult to demonstrate the effectiveness of these systems. Improvements in
transportation system performance or improved profitability for a private agency are
more demonstratable measures of the success of these systems than the nebulous
improvements in decision making or improved communication of data.

Because of the difficulty in measuring the effectiveness of an AMS, many agencies

have identified goals for their management systems that specifically include items
whose improvement can be quantified. Additional benefits provided by the system,
while not specifically stated as goals, are gained through the effective use of the
management system but are not frequently documented through case studies.

In order to achieve the goals set out by the agency, specific objectives must be stated
that provide a means of achieving the goals. In general, the objectives should be
measurable although that is not always possible. The objectives stated by private
industry are perhaps more clearly quantifiable than those of governmental agencies due
to their need to remain competitive and profitable and their detachment from many
political and governmental constraints. A recent seminar on asset management
identified the following quantifiable objectives from an AMS (2).
■ Enhanced knowledge of inventory and asset value
■ Development of links that tie resource allocations to savings from replacement
■ Establishment of standardized processes and protocols
■ Consideration of life-cycle costing in the decision process

The same reference (2) also identified several agency objectives that would be difficult
to quantify. These include the following items.
■ Recognition of data as a corporate asset
■ Creation of a sense of ownership in assets by corporate managers and operators
■ Improved credibility in decisionmaking
■ Encouragement in processes that have managers think globally, but act locally
■ Improvements in teamwork, communication, and training

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Overall, these objectives are designed to achieve the overall goal of providing the
decision-makers access to the data they need to more efficiently and effectively manage
the facility’s current and future performance. As can be seen by a review of the
objectives listed above, the attainment of this goal requires the coordinated application
of a variety of technical principles, including engineering, planning, economics, and
budgeting. It also requires the involvement of individuals from all levels of the
organization, such as equipment operators, foremen, managers, owners, and
stockholders. For governmental organizations, it also requires buy-in from individuals
in a number of different divisions, such as maintenance, planning, and research. It is
this cooperative involvement that sets an effective implementation apart from a less
effective one.

Corporations practicing asset management report

BENEFITS TO USING AN ASSET MANAGEMENT SYSTEM:
that the systematic approach to managing its facilities is necessary to stay competitive
in today’s environment. As a result, the use of these systems is viewed as a necessity
rather than an optional activity; largely because of the benefits gained by the
organization. Some of the benefits realized by these organizations are listed below (2).
In general, these benefits provide improvements to the type and flow of information
used in the decisionmaking process or effect the productivity and cost-effectiveness of
the organization.
■ Improvements to program quality
■ Improved information and access to the information
■ Facilitates the economic assessment of various tradeoffs
■ Provides improved documentation of decisions
■ Provides improved information on return on investment and value of investments
■ Reduces both short- and long-term costs

Regardless of the type of agency using the management system, it will be most
successful in obtaining benefits if the following attributes are addressed through the
system (2).
■ It establishes a common understanding of performance measures and criteria
■ It provides understandable results in a user-friendly environment
■ It is customer-focused and mission-driven
■ It is accessible at many levels within the organization
■ It is flexible enough to be able to accommodate change within and outside the organization
■ It is linked to the technical analysis, decisionmaking, and budgetary processes
■ It facilitates the education of users and decision-makers

As discussed in the previous section, it is often

CONSEQUENCES OF POOR ASSET MANAGEMENT:
difficult to document the benefits derived from the implementation of an AMS. It is
less difficult to find examples of agencies and assets that could have been better
managed if a structured decisionmaking process had been in place. One of the most
obvious examples is the collapse of the Silver River Bridge on December 15, 1967
during rush hour traffic (11). Based on varying reports from witnesses, the entire
bridge collapse occurred within less than 30 seconds resulting in 46 deaths and 9

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injuries. Around this time period, a number of bridges across the nation also failed,
prompting Congress to madate a National Bridge Inventory (NBI) to identify the
structural and functional adequacy of all bridges on the nation’s highways; information
not previously collected. Using the inventory information, several states began the
development and implementation of bridge management systems.

There are other examples as cited in Ref. (11). The Miami-Dade Water Sewer
Department in Dade County, Florida provide an excellent example of a public works
agency that suffered due to the lack of information. In 1973, a metropolitan water and
sewer agency was established for the area. The agency was comprised of about 30
smaller systems and received federal money to bring all of the systems into compliance
with existing standards. Instead, the Department used the funds for capital expansion
projects enabling them to retain low water and sewage rates for the public. As a result
of this decision, maintenance activities were inadequately funded, leading to infiltration
and inflow. The outdated designs used in the systems led to widespread cavitation. In
the late 1980s, this eventually led to system-wide deterioration, culminating in the
collapse of a sewer pipe under the Miami River in 1992. The collapse, combined with
the frequent overflows caused by the infiltration and inflow, caused raw sewage to spill
onto roadways and into the Miami River and other bodies of water.

A similar event took place in Chicago, Illinois on April 13, 1992 when a freight tunnel
running under the Chicago River ruptured, causing 250 million gallons of water into
the tunnel system. Over 400 businesses flooded, causing many of them to shut down
for a week or more, resulting in damage estimates of over $1 billion dollars. In this
instance, city information provided to a company pounding piles near the tunnel
showed no record of any tunnels in the area. The city engineer in charge of monitoring
the piling job never made a final inspection, which could have alerted the city to the
problem prior to the collapse, because he was unable find a parking place close to the
site.

Transportation systems are also affected by poor asset management. The deterioration
of a road network frequently leads to a lower level of comfort for passengers, possibly
a lower rate of acceptable traveling speed, and increased operating expenses for
vehicles traveling on the road system. Further, these factors influence the efficiency
and cost-effectiveness of other industries such as shipping companies or other transport
agencies.

The number of examples of poor asset management is overwhelming. It is interesting

to note, however, that each of the examples presented in this section could have ended
much differently had an effective AMS been in place.

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1.3 Framework for Asset Management

Asset management involves the development and implementation of structured
processes to improve the decision-making capability of an agency. Without question,
processes and procedures can be developed to manage any type of asset independently,
or a group of assets making up a facility. The types of assets being managed, the
organization using the system, and the resources available all have a tremendous
influence on the level of sophistication of the system and the types of models used to
assist in the decision-making process.

Although the AMS will vary due to the factors discussed previously, a framework for
the system can be described. Agencies have found the most success with systems that
are developed with modularity in mind so that modules of the system can be updated
and replaced as technology changes or if other factors influence that portion of the
system. Figure 2.1 presents a simplified representation of the framework.

Figure 1.1 This figure represents the framework for a management system.

Asset
Inventory
Analysis
Central
Modules
Database
Location/
Asset
Referencing
Systems Report Modules
Graphics - Summaries - Map Links

A brief overview of each of the major components is provided in the following

sections.

In order to manage a group of assets, it is imperative that the agency

ASSET INVENTORY SYSTEM:
know which assets are included and conduct an inventory of the basic characteristics of
the assets. It is also critical that the condition of the assets be recorded through an
objective rating system and the age of the asset be estimated as closely as possible.

In order to manage the assets of an organization, it is

LOCATION/ASSET REFERENCING SYSTEMS:
imperative that the location of each asset be identified. In a transportation agency, this
means the development of a location referencing system that ties segments of the
facility to a geographical location. In a private-sector industry, this could mean
establishing the location of many geographically separated parking lots, establishing
referencing systems for buildings, or setting identifiers for equipment.

Information about the assets is stored in a central database that provides

CENTRAL DATABASE:
access throughout the organization. To be most effective, the database should
centralize the storage of asset information and facilitate the handling of data in an
efficient manner. A centralized database eliminates the need for the maintenance of

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separate databases for different types of information although databases that extract
information from the central database for analysis may be useful.

ANALYSIS MODULES: One of the most important functions of a management system is the
ability to analyze data so that various scenarios can be evaluated and effective short-
and long-term decisions can be made. To facilitate that analysis, modules must be
developed that can forecast future asset conditions and conduct multi-year analysis to
compare the impacts of various scenarios. The analysis should include modules that
effectively allocate resources to different types of expenditures, such as maintenance
and rehabilitation in a transportation agency. Agencies with a number of different
types of assets, such as a city managing several infrastructure components, may also
require modules that compare and contrast expenditures on one type of asset over
another.

The information contained in the database, and the results of the

REPORTING MODULES:
analysis, are only useful if the information can be conveyed to the user in a user-
friendly format that matches the users needs. Today, management systems make use of
graphical reporting features that convey important information in a manner that can be
assimilated quickly.

Some agencies have linked their management systems to geographical information

systems (GIS) that visually display information on agency maps. These systems are
very useful for linking and displaying different types of information.

1.4 Issues in Asset Management

In order to remain competitive in industry today, private-sector agencies find that the
use of asset management systems is imperative. Many highway agencies, although
interested in the capabilities of management systems, find that the full capabilities of
these systems are not being fully utilized for a number of reasons. Some of the reasons
given for a highway agency not using the capabilities of a management system include
the following (10).
■ The presence of a management philosophy that adheres to a worst-first policy
■ Outside influences that strongly influence the allocation of resources
■ A tremendous backlog of needs that the agency wants to address before considering more
cost-effective solutions that may place a heavy emphasis on maintaining assets in good
condition

In some highway agencies, management systems are not successful due to a lack of
cooperation and coordination between system users. As a result, agencies may find a
number of separate databases being maintained, with several common data elements
which could have been shared. This leads to duplication of effort, the potential for
different data being used by different divisions, and often leads to differing referencing
systems for identifying assets.

Even highway agencies that have been successful in implementing the philosophy of
asset management within their organizations face challenges in order to keep the
systems current and the data relevant to existing conditions. For these reasons, it is
imperative that each agency develop a process for periodically reviewing the models
used by the management system for identifying and recommending actions,

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incorporating new technology, and measuring the effectiveness of the system. Areas
found to be ineffective or non-representative should be replaced with more appropriate
models. This is most easily accomplished with modular systems that do not require the
entire system to be replaced as modifications are required.

In addition to the technical and agency issues that have already

HURDLES TO ASSET MANAGEMENT:
been discussed, there are a number of challenges that both private- and public-sector
agencies must consider carefully while planning the implementation of an AMS. These
hurdles entail a number of different areas, such as those listed below.
■ Technical hurdles
■ Institutional (agency) hurdles
■ Implementation hurdles
Each of the different types of hurdles will be introduced and discussed briefly in the
following sections.

In previous sections of this module, the importance of designing a

Technical Hurdles:
management system to match the decision making process within the organization has
been emphasized. This affects the success of the implementation in a number of ways.
First, the system must be able to match the needs of the various system users by
providing the types of information each user needs in a format that matches the level of
detail required. This factor influences the level of sophistication of the system and the
models used to assess conditions, forecast future conditions, identify needs, and
produce optimized programs for various budget scenarios.

The system must also be flexible enough to accommodate changes; both changes in
technology and changes in practices and procedures. These changes must be
incorporated without rendering the entire system unusable, once again emphasizing the
importance of a modular development.

It is also imperative that the agency develop processes that permit the evaluation of
system effectiveness through feedback loops that compare actual practices to the
system models. These processes could be used to compare the actual service of life of
a particular asset to the performance models incorporated into the management system.
If the feedback loops demonstrate that any of the models are inaccurate or in need of
updating, the appropriate changes should be made in order to provide an acceptable
level of effectiveness in the recommendations.

A technically sophisticated management system can only be

Institutional (Agency) Hurdles:
effective within an organization that gives credance to the recommendations from the
management system. This requires that the agency support the development,
implementation, and on-going support of the management system from top-level
management throughout the entire organization. It is difficult to maintain this level of
support from top management without demonstrating the success of the system to help
the agency better manage its assets through increased profits or higher levels of asset
conditions. This is especially difficult in the public sector where agencies are often
heavily influenced by political appointees and elected officials who place more weight
on short-term solutions than long-term objectives.

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In several agencies, pavement management development efforts suffered because of the

lack of coordinations between individual users of the pavement mangement system.
This lack of coordination between functions becomes even greater within agencies
responsible for the management of a number of assets previously managed using
separate tools. For example, pavements may have been managed using a pavement
management system, bridges managed using a bridge management system, and signs
managed with yet another system. Undoubtedly, each system required a full inventory,
condition assessment, database, and analysis tools.

Today’s management systems are capable of managing each of these different

infrastructure components through a more comprehensive and coordinated systemic
process. This requires that individuals from throughout the organization participate
together in system development meetings to ensure a more integrated approach to
managing the agency’s entire system. This may require some fundamental differences
in the way many agencies manage their assets, especially in the public sector. In the
past, turf battles often kept different types of information separated. Today, that
practice must change.

Implementation Issues:It is important for agencies using management systems to realize

that even after the system has been designed and implemented, there are on-going
efforts that are required. One requirement is continual support in terms of resources to
continue to collect the information needed to maintain the system, update the models,
and take into account new technological changes. If any one of these aspects is
ignored, it will not take long before the information from the system is outdated and the
confidence in the system recommendations destroyed.

It is also important that individuals working with the management system receive
opportunities for training and technology transfer through conferences, classes,
workshops, and other means. Participation with other agencies using management
systems is extremely beneficial for the exchange of information dealing with
implementation issues and/or uses of data. The Executive Seminar on Asset
Management sponsored by the Federal Highway Administration (FHWA) and the
American Association of State Highway and Transportation Officials (AASHTO) in
September 1996 is an excellent example of such an exchange of technology.

Over the past twenty years, there has been tremendous progress in the
Future Issues:
development of management tools to assist agencies make more cost-effective
decisions based on quality data. Even so, there are a number of areas to address in the
future to continue to enhance the capabilities available today.

From a global view, there is still a great deal of effort that can go into the development
of strategic investment analysis tools. In the public sector, there are few working
examples of management systems that provide for the comparison of investing in one
asset over another or investing in maintenance strategies over capital expenditures. As
these systems become developed and tested, this area will undoubtedly receive a great
deal of attention.

There is also a great deal of training that is still required among upper management,
politicians, and the public. While most people understand the importance of periodic

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AN INTRODUCTION TO ASSET MANAGEMENT SYSTEMS

maintenance to keep up the value and operation of a car, it is surprising that few apply
that same paradigm to our roads or our pipelines. Those individuals involved in asset
management must continue to promote the benefits as political terms end and new
management is brought on board.

As this training takes place, there will be a gradual shift in the way organizations
manage their assets. Over time, agencies will focus more on the overall performance of
their assets and the return on investment from different investment strategies.
Consequently, these agencies will focus more on the best use of its assets as a whole,
rather than the management of assets as individual and separate pieces of the
organization.

This broader outlook will have a tremendous impact on the individuals providing
information to management. Historically, management systems have been operated by
individuals with training or experience in the engineering and other technical fields.
With time, the skills required to operate these systems will require training in other
fields, such as business, economics, and multiple-criteria decision making techniques
(such as multi-variate analysis).

Other changes can also be expected as technology changes and the philosophy behind
management systems becomes more accepted. These changes are expected to
influence the way we work, the type of work we perform, and the basis for making the
decisions we make.
1.5 Applications of Asset Management to Transportation Systems
For over twenty years, transportation agencies have been developing and implementing
management systems to help engineers, planners, and managers make more informed,
cost-effective decisions about the infrastructure components for which they are
responsible. For the most part, these efforts have involved pavement and bridge
management systems, although integrated infrastructure management systems have also
been developed in recent years.

To some degree, the need for transporation management systems arose out of concern
about the condition of infrastructure components. National studies on infrastructure
needs summarized the investments in the infrastructure that would be required in order
to maintain minimal condition levels (1). The Federal Highway Administration
(FHWA) summarized the condition of the nation’s highways and bridges in a study
conducted in 1989. This study reported that 11% of the interstate highways were in
unsatisfactory condition, 15.9% of interstate highway bridges were deficient, and an
average annual investment of $25 billion was required between the years 1987 and
2005 just to maintain 1985 condition levels. Today, these estimates severely
underestimate the growing funding requirements needed in the transportation area.

As a result of these studies, government agencies sought out methods to improve the
objectivity of their decision-making processes through systematic means of
determining existing conditions, identifying needs, and prioritizing the needs using
multi-year analysis techniques that reported the impacts of the decisions on future
conditions. Through the use of these methods, agency personnel were better able to
respond to fiscal constraints placed on agency resources.

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CONCEPTS OF ASSET MANAGEMENT SYSTEMS FOR TRANSPORTATION

The concepts of asset management are very similar to the concepts used by
transportation agencies in pavement management and infrastructure management
systems . Many of the components and procedures used in asset management are
directly applicable to a transportation system, as shown in the list below (1).
■ The assets must be inventoried
■ An objective form of condition measure must be applied to determine existing conditions
■ Performance measures must be applied and future measures of performance must be
estimated
■ An integrated database that maintains data quality and enhances data access must be
available
■ The system is optimized as a whole rather than merely the optimization of each individual
project
■ The selection of strategies requires an iterative process that considers life-cycle costs and not
just initial costs
■ Outputs must be in a useful format and must be readily available

These systems require a sound understanding of the inputs to the system, the way the
information is optimized, and any constraints that may limit the application of the
models. They depend on models that represent the behavior of the system and the
conditions under which maintenance and/or rehabilitation will be applied.

A number of approaches have been proposed for the broader application of these
principles to transportation agencies. One such approach (8), views a comprehensive
highway management system as a three-dimensional matrix, as shown in Figure 1-2.
The three dimensions represented by the system include the highway facilities, the
operational functions, and the overall system objectives. These dimensions are further
explained in Table 1-1.

This framework views the management of the highway as a multi-criteria decision

process in which each facility is managed in order to achieve overall system objectives.
It demonstrates the coordination and interaction issues that must be addressed for this
type of system to be used effectively.

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Figure 1-2 Three-dimensional matrix structure of a highway management system (8)

Table 1-1.

Highway Facility Operational System Objective

Function

Pavement Planning Service

Bridge Design Condition
Roadside Construction Safety
Traffic Control Device Condition Evaluation Cost
Maintenance Socioeconomic Factor
Improvement Energy
Data Management

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Inherent in the application of these principles to the highway network is the

inclusion of risk management principles. These principles permit the agency to
consider the probability that each factor used in the analysis will exist as
assumed, so that the agency can evaluate the likelihood of system optimization
under varying conditions. Risk analysis provides the agency with an overall
sense of the risk involved in following the recommended actions.

Throughout the remainder of this course, the

SYSTEMS APPROACH AND ITS APPLICATION TO PAVEMENTS:
participants will focus on the application of these principles to pavement management.
In reality, there are many similarities to the approaches being used in asset management
with those that have been used for many years in the pavement management field.
Both require the use of a systematic process to perform the following tasks (3).
■ Identifying the key links between one or more strategies, where investment in one strategy
(such as preventive maintenance) affects another (such as reconstruction)
■ Defining the various strategies for improving the effectiveness of these interactions
■ Evaluating and implementing the strategies to enhance the overall performance of the
transportation system

The systems model is further developed in the literature (7). The authors in Ref. (7)
describe a process that involves defining the system elements and boundaries as well as
the agency goals and objectives. Once these elements have been defined, the agency
develops the system models and outlines an analysis procedure that the system will
follow. The final step involves the development of output formats that can be used to
convey the information contained in the system to the users in a timely fashion.

The systematic process for pavement mangement is well documented and successfully
used in a number of organizations, as will be demonstrated throughout this course. The
approach requires a change in the agency’s traditional way of thinking by taking into
account the availability of useful information, the ability to forecast future conditions,
and the results of an economic analysis.

Agencies successfully
BENEFITS REALIZED BY HIGHWAY AGENCIES USING ASSET MANAGEMENT CONCEPTS:
utilizing structured management systems claim to have benefitted from the use of
standardized processes for decision making. When asked to identify the benefits that
their agencies have realized through the implementation of a pavement management
system, state highway agency personnel provided the following information (9).
■ A systematic process that operates within the practices, policies, and constraints of the
agency
■ The ability to forecast future needs
■ A better understanding of the impacts of project timing or treatment selection on the long-
term condition of the network

These types of benefits can be generally classified as the results of improvements made
to the decision-making process through improved access to information about the
facility. There are other types of benefits that may be realized, such as improvements
to the productivity of an agency. For example, private-sector agencies have reported

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improvements to the delivery of client services from some point in the future (say 2
days) to real time delivery (1).

In order to realize these benefits, the agency using the management system must realize
that a management system must fit within the agency in order to be useful. It is
imperative that the agency’s culture be conducive to, and accepting of, the information
available. The following factors should be considered to derive the greatest benefit
from a management system (10).
■ Management should understand the philosophy behind the system recommendations as well
as the constraints with which it operates
■ The system recommendations should reflect the projects that provide the most benefit to the
agency, assuming normal conditions are met. There are, however, no guarantees of this
benefit
■ Different strategies can be developed to match different goals. For that reason, the agency
should clearly identify the goal that it is trying to meet
■ Management systems provide tools to assist the agency; they are not meant to be a
replacement for the experience and expertise of agency staff

1.6 Examples of Agencies Using Asset Management Systems

In order to demonstrate the application of AMS to transportation agencies, several
examples of integrated systems from both the private- and public-sector are provided.
These examples demonstrate the principles of asset management and the broad
application of these principles to achieve an overall agency objective.

Because of the diversity in agencies with assets to manage, there

USE OF ASSET MANAGEMENT:
are an almost unlimited number of ways that AMS can be implemented. Private-sector
agencies focus their objectives on methods that directly impact the ability of the
organization to make a profit. Any areas that do not contribute to the profitability of
the organization over time are usually sold or closed. Public-sector agencies do not
focus on profitability, but may focus more on the most cost-effective use of available
funding and the overall service level provided to the end user. Two examples are
provided of agencies using asset management to improved the effectiveness of their
organizations; one example is from the private-sector and the other is from the public-
sector (2).

Due to the changes brought

GTE's Use of Asset Management in the Telecommunications Industry:
on by deregulation, the telecommunications industry has seen tremendous changes in
the competitiveness of the industry. Consequently, GTE has seen its focus shift from
efforts to meet regulatory requirements to improved customer satisfaction. GTE uses
its asset amangement system to provide the following functions:
■ Network management and inventory, including what, where, use, and condition
■ Provisioning - providing and configuring equipment to provide needed services
■ Planning and engineering, including growth and replacement
■ Financial recordkeeping

During the Executive Seminar on Asset Management, a representative from GTE drew
parallels between the telecommunications industry and the transportation industry that
are relevant to asset management. These include the following points (McNeil 1996).

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■ Both sectors depend on a public network that is owned and operated jointly by several
independent companies. Individual organizations are responsible for their own assets but
close coordination is required
■ There are hundreds of thousands of network pieces that have to be managed. This includes
maintaining information on what they have, what its condition is, and how they will plan for
future capacity expansion
■ The economic value of the assets is large, representing a large fixed base
■ A large investment is required each year to maintain and expand the assets
■ The assets are geographically dispersed

GTE stressed that future issues in asset management will continue to focus on the
transition from information that was needed in the past to new forms of information
needed in the new competitive environment.

The Port Authority of New

Asset Management in the Port Authority of New York and New Jersey:
York and New Jersey is a quasi-government organization formed over 75 years ago
with an annual budget of $2.6 billion, with a quarter of that devoted to capital
expenditures. Because of its quasi-government role, the Port Authority has the ability
to reinvest its revenues into its facilities, which has been beneficial considering fiscal
constraints imposed by changes in State and local governments and the business sector.
Each major entity of the Port Authority manages its assets independently.

The Port Authority faces a number of challenges that directly relate to its asset
management practices. These include the following:
■ An increased emphasis on cost control
■ Continued trends to divest, outsource, and privatize
■ Increased emphasis on delivering immediately visible improvements in customer service
■ Increased antipathy to long-term planning
■ Increased expectations on the part of elected officials and political appointees that financial,
business, political, and environmental conflicts will be resoloved

The Port Authority sees the structured decision-making process made possible through
the use of an AMS as the means to better services to its users, more business
opportunities, and a streamlined agency.

1.7 What is Pavement Management?

Pavement management has been defined in various reports and books. In general,
pavement management practices are based on the concept of finding a cost-effective
combination of treatments to apply at any given time to give the desired level of
service. Pavement management systems (PMS) that can evaluate various strategies use
the expected impact of maintenance and rehabilitation treatments on the future
performance of the road surface to:
§ Identify those that need treatment.
§ Identify the mixture of preventive maintenance and rehabilitation actions that will
provide the desired overall condition within imposed constraints.

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A PMS or road surface management system is a decision support tool that is designed
to be used to help make cost-effective decisions concerning the maintenance and
rehabilitation of pavements and road surfaces (13,14,15,16). Many refer to a set of
software programs as pavement management. This is really a misnomer, since the
software does not manage or make decisions. The personnel in the organization
manage pavements and make decisions; the software only assists in information
management and decision support.

Pavement management systems provide a means to organize the massive amount of

data that develops with a road and street network. When the data storage and analyses
are automated, a PMS stores data, retrieves data, and makes multiple complex
calculations quickly and efficiently.

Pavement management has been used to describe management of highway, road and
street networks with paved surfaces while road and street surface management, or just
road surface management, has been used to describe management of road and street
networks with both paved and unpaved surfaces (17). Most principles are the same for
both systems. However, the unpaved surfaces use more of a work management system
without much prediction of condition and less consideration of treatment impact on
condition.

In the broadest sense, pavement management covers all phases of pavement planning,
programming, analysis, design, construction, and research (18). As implemented in
most agencies, PMS have been developed to primarily address maintenance,
rehabilitation, reconstruction, and, sometimes, new design. They are generally
restricted to looking at the maintenance and rehabilitation needs of the existing
pavement system and very seldom consider the need for additional pavement area to
address increased traffic capacity. Increased capacity needs are normally addressed in
congestion management or other planning activities. Other management systems may
also identify the need for new pavements or pavement maintenance and rehabilitation
needs.

Maintenance addressed in pavement management is primarily programmed or planned

maintenance such as surface seals and crack seals. Pavement management systems do
not try to predict where a pothole will appear nor the frequency of routine maintenance
activities such as pothole filling, temporary repairs, etc. Maintenance management
systems should interface with the pavement management systems. Maintenance
management systems normally address maintenance work requirements and standards
for selected maintenance treatments. The planning for the need of programmed
maintenance normally comes from the pavement management or road surface
management system.

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1.8 Need for Pavement Management

There are over 6 million km (almost 4 million miles) of highways, roads and streets in
the United States (12). For many years, highway agencies have used various methods
to manage the funding of highway needs within their jurisdiction. New construction of
new roads were probably the best managed with planning groups being developed in
larger agencies to address where new highways would be built and to determine which
should be funded.

Maintenance and rehabilitation generally were managed with less formal methods. In
several cases, crises management developed, especially in smaller agencies, as the
standard method to address maintenance needs when funds were short. Within the last
20 to 30 years, pavement management systems have been developed to help plan
maintenance and rehabilitation of pavements (18). Management systems are necessary
to avoid crisis reaction in public works (19). They are the application of systems
engineering and basic management concepts to managing our infrastructure. It
provides a structured and documented way to help get the most out of funds spent on
the infrastructure.

1.9 Summary
Asset management systems are being successfully used in the private, public, and
quasi-government sectors to improve the decision-making process within these
organizations. These systems are effective means for improving the profitability of an
organization, or the cost-effectiveness of the utilization of funding allocations.

Ultimately, it is the objective of both private and governmental organizations to

improve the services provided to its customers, whether through the more timely
distribution of a product or a smoother road to travel on. The use of asset managment
provides agencies with the tools necessary to improve the services provided to its
customers in the following ways (2).
■ Improved convenience
■ Improved service (e.g., comfort, reliability, and safety, in a transportation context)
■ Savings passed on from the owner/operator to the customer
■ More accessible facilities and services due to more efficient operation

The practioners of pavement management can benefit through repeated dialogues with
agencies practicing asset management. The changes in our government at the national
and state level, and the accountability required of elected and appointed officials, are
changing the way transportation agencies must do business. Those agencies practicing
pavement management, and using the outputs to improve the decision-making within
their organization, can be proud of the fact that their technical and managerial
approaches can be compared to the leaders in private industry - those agencies
practicing asset management because it makes sound business sense.

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REFERENCES

1. McNeil, S., Asset Management: A Dialog Among Public and Private Sector
Managers, Summary Report of an Executive Seminar on Asset Management,
FHWA Contract DTFH61-95-X-00028, October 1996.

2. Asset Management: Advancing the State of the Art Into the 21st Century
Through Public-Private Dialogue, FHWA and AASHTO, 1997.

3. Meyer, M.D., Incorporating Intermodalism Into Transportation Planning,

TRNews 173, July-August 1994, page 29.

4. Ismart, D., State Management Systems, TRNews 173, July-August 1994, page
2.

5. McNeil, S., Asset Management: State of the Art, Issues and Practice, White
Paper prepared for the Executive Seminar on Asset Management, FHWA
Contract DTFH61-95-X-00028, August 1996.

6. McNeil, S., M. Markow, L. Neumann, J. Ordway, D. Uzarski, Emerging

Issues in Transportation Facilities Management, Journal of Transportation
Engineering, Volume 118, No. 4, ASCE, July/August 1992.

7. Hudson, W. R., S.W. Hudson, Pavement Management Systems Lead the Way
for Infrastructure Management Systems, Proceedings - Vol. 2, Third
International Conference on Managing Pavements, Transportation Research
Board, National Academy Press, Washington, D.C. 1994.

8. Sinha, K.C., and T.F. Fwa. On the Concept of Total Highway Management,
Transportation Research Record 1229, TRB, National Research Council,
Washington, D.C., 1987.

9. Zimmerman, K.A., ERES Consultants, Inc., Pavement Management

Methodologies to Select Projects and Recommend Preservation Treatments,
NCHRP Synthesis 222, Transportation Research Board, National Research
Council, Washington, D.C., 1995.

10. FHWA Demonstration Project 108, Course Materials, FHWA, Washington,

D.C. 1996.

11. McNeil, S., The Risks of Not Properly Managing Assets, Conference
Proceedings, 1997 National Workshop on Pavement Management, FHWA,
July 20-23, 1997.

12. Transportation in the United States – A Review, U.S. Department of

Transportation, Bureau of Transportation Statistics, 1997.

13. AASHTO, "Guidelines for Pavement Management Systems," American

Association of State Highway and Transportation Officials, Washington, DC,
1990.

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14. Peterson, D. E., "Pavement Management Practices," NCHRP Synthesis 135,

Transportation Research Board, Washington, DC, 1987.

15. FHWA, "An Advanced Course in Pavement Management Systems," Federal

Highway Administration, Washington, DC, 1991.

16. OECD, "Pavement Management Systems," Organization for Economic Co-

operation and Development, Paris, France, 1987.

17. ASCE, "Local Low Volume Roads and Streets," Available through the Office
of Technology Assistance, Federal Highway Administration, Washington, DC,
1992.

18. Haas, R., W. R. Hudson, and J. Zaniewski, Modern Pavement Management,

Krieger Publishing Co., Malablar, FL, 1994.

19. Gole, B., "Management vs. Crisis Reaction," APWA Reporter, American
Public Works Association, Chicago, IL, August, 1985.

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