where should we invest? or comparing apples with oranges 1 garry sterritt asset investment manager,...
TRANSCRIPT
Where should we invest?or
comparing apples with oranges
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Garry SterrittAsset Investment Manager, Roads Directorate, Transport for London
Apples vs. oranges!!
• It’s like comparing apples to oranges!!– This is a logic fallacy– A particularly deceptive
argument which seems correct
– ...but upon further examination is found to be incorrect
• We compare apples and oranges all the time!!
• How do you value an apple to an orange?– Cost / offers– Taste - personal
preference– Ease of access!– Filling effect, etc.
• These are your Value Criteria– Common criteria
enable an objective and fair comparison
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...the same holds true for highways
• We all have a diverse asset base
• ...but they all serve a common purpose
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Asset Quantity
Carriageway 580km network length (2554 lane km)
Footways 2,989,370m2 (over 1000km)
Bridges & Structures Over 1800 structures
Tunnels 13 major road tunnels
Lighting Over 45,000 lit assets
Drainage Over 45,000 gullies & 800km of drains
Green Estate Over 40,000 roadside trees
What are the questions & criteria?
• What are we trying to answer:
– How much should we invest in our highway assets?
– Where do we invest to get the best outcomes?
• What defines our value criteria?
– Goals and objectives: Mayor’s Transport Strategy
– Vision for TfL Roads Directorate: Safe, reliable and cared for streets
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Common Value Criteria and a common currency
Two questions: Common Value Criteria
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Where to invest?
Value Management
Prioritised programme of
works
Rate & cost schemes &
options
Identify candidate schemes
Analyse condition data
Network intelligence
Asset budgets & strategies
How much to invest?
Asset Investment Planning
Asset inventory & condition data
Asset deterioration models & cost data
Investment scenarios & strategies
Analyse and compare
investment options
Agreed budget, asset splits &
asset strategies
Budget
Common Value Criteria
• Safety Risk• Function Risk
• Financial
Common Currency
• “It’s easy to have common Value Criteria, but they are not directly comparable between assets”
• For example, if condition data informs safety or customer satisfaction, then:– Carriageway – SCANNER, DVI, SCRIM, CVI– Footway – CVI, DVI– Bridges – BCI– Lighting columns – structural testing– Trees – condition survey
• All have different scales, meanings, collection techniques etc.– So the Value Criteria need to be translated to and
expressed on a common currency, e.g. £££
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How do you translate asset information to a common currency?
• The magic formula is as follows:– Commitment from key/senior staff
– Staff time and resources
– Use real world examples, across all asset types, to support discussions and decisions
– Understand the differences between asset types
– Bring domain experts together
– ...and locking them in a room until they agree!
• It is challenging and we are only part way along our journey
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Asset Investment Planning
Asset Investment Planning:Balancing Safety Risk, Cost & Satisfaction
• Strong correlation between SOGR and Customer Satisfaction
• SOGR has a major impact on WLC (Capital and Revenue)
• SOGR of bridges and structures has a lower impact on customer satisfaction
• A low SOGR results in higher risk exposure
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State of Good Repair HIGH LOW
HIGH
Cust
omer
Sat
isfac
tion,
Risk
and
Who
le Li
fe C
ost (
WLC
)
Decision Zone
Safety Risk
Whole Life Cost
Customer Satisfaction
CARRIAGEWAY
State of Good Repair HIGH LOW
HIGH
Cu
sto
me
r S
atis
fact
ion
, Ris
k an
d
Wh
ole
Lif
e C
os
t (W
LC
)
Decision Zone
Safety Risk
Whole Life Cost
Customer Satisfaction
BRIDGES
Our approach
• Complex analysis due to number of assets and variables involved, e.g.– Deterioration over a 10 to 20 year period
– Treatment options, costs and effects
– Budget constraints vs. performance targets
• We needed an Investment Planning Model that could cater for all asset types– Generic framework that enables the asset, its state,
deterioration, costs and strategies to be defined
– Enables different asset types to be analysed in the model at the same time, i.e. budget trade-offs
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What does the customer want?
• We asked road users, in face-to-face surveys:– To identify their preferred intervention level– To identify their minimum acceptable intervention level
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Investment Planning Model (MS Excel)
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Value Management
Value Management
• Value Management - a systematic approach for identifying, assessing, prioritising and optimising a portfolio of projects, based on an agreed set of Value Criteria, which maximises contribution to the business objectives for a defined budget
• A process for ensuring fair allocation of resources, taking account of value drivers and scheme specific information
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Value Management Criteria
• Safety – the risk posed to the public
• Functionality – the risk to network performance; including but not restricted to, availability and reliability
• Environment – the risk posed to the environment
• Financial – providing WLC savings considering both direct costs to TfL and indirect costs to the economy
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Risk Scoring
Financial Scoring
Value Management documentation
• Value Management of the capital programme– Part 1. Overview– Part 2. Carriageways– Part 3. Footways– Part 4. Structures– Part 5. Tunnels– Part 6. Lighting– Part 7. Drainage– Part 8. Safety barriers– Part 9. Green estate
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Value Management: Risk Scale
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Risk Zone Description
CRITICAL
80 to 100
Action must be taken as soon as reasonably practicable to ensure safety
HIGH
60 to 80
Action must be taken within the programme year to prevent an escalation in (i) Critical Priority schemes; and (ii) incidents of accidents, delays and congestion
MEDIUM
40 to 60
Action should be taken within the programme period to support delivery of Mayoral objectives, State of Good Repair outcomes, reduce incidents of accidents, delays and congestion, and reduce Whole Life Costs
LOW
< 40
Action may be appropriate on the basis of WLC savings and reducing future disruption
Where to Spend: Optimising• Optimise risk for the defined budget
– Each scheme has several options where risk and cost are evaluated for each
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Sch
eme
A Option 1
Option 2
Option 3 Sch
eme
B Option 1
Option 2
Option 3 Sch
eme
C Option 1
Option 2
Option 3
Carriageway
Sch
eme
F Option 1
Option 2
Option 3Sch
eme
E Option 1
Option 2
Option 3Sch
eme
D Option 1
Option 2
Option 3
StructuresS
chem
e I Option 1
Option 2
Option 3Sch
eme
H Option 1
Option 2
Option 3Sch
eme
G Option 1
Option 2
Option 3
Lighting
OptimiseForward
Programme
Option 1Scheme B
Optimum Bundle
Option 3Scheme C
Option 2Scheme D
Option 3Scheme E
Option 1Scheme F
Option 2Scheme H
c/w
c/w
str
str
str
lig
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Structures &
Tunnels
C/W &
F/W
VM cross-asset matrix
Drainage
Lighting
Updated VM Matrix
• Not a theoretical paper exercise
• Developed through workshops using real examples and attended by domain experts
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1 £3.00 £10.00 £30.00 £100.00 £300.00 £1,000.00 £3,000.00 £10,000.00 £30,000.00 £100,000.00
2 £1.50 £5.00 £15.00 £50.00 £150.00 £500.00 £1,500.00 £5,000.00 £15,000.00 £50,000.00
5 £0.60 £2.00 £6.00 £20.00 £60.00 £200.00 £600.00 £2,000.00 £6,000.00 £20,000.00
10 £0.30 £1.00 £3.00 £10.00 £30.00 £100.00 £300.00 £1,000.00 £3,000.00 £10,000.00
25 £0.12 £0.40 £1.20 £4.00 £12.00 £40.00 £120.00 £400.00 £1,200.00 £4,000.00
50 £0.06 £0.20 £0.60 £2.00 £6.00 £20.00 £60.00 £200.00 £600.00 £2,000.00
100 £0.03 £0.10 £0.30 £1.00 £3.00 £10.00 £30.00 £100.00 £300.00 £1,000.00
250 £0.01 £0.04 £0.12 £0.40 £1.20 £4.00 £12.00 £40.00 £120.00 £400.00
500 £0.01 £0.02 £0.06 £0.20 £0.60 £2.00 £6.00 £20.00 £60.00 £200.00
1000 £0.00 £0.01 £0.03 £0.10 £0.30 £1.00 £3.00 £10.00 £30.00 £100.00
10000 £0.00 £0.00 £0.00 £0.01 £0.03 £0.10 £0.30 £1.00 £3.00 £10.00
100000 £0.00 £0.00 £0.00 £0.00 £0.00 £0.01 £0.03 £0.10 £0.30 £1.00
1000000 £0.00 £0.00 £0.00 £0.00 £0.00 £0.00 £0.00 £0.01 £0.03 £0.10
3 10 30 100 300 1,000 3,000 10,000 30,000 100,000
LIK
EL
IHO
OD
(1
in
x y
ears
)
CONSEQUENCES (£'000)
Conclusions
• You can compare apples with oranges
• You can compare different highway assets– ...but it takes some work to develop/embed the process
• You need a common set of Value Criteria, a common currency and commitment
• Don’t expect it to be perfect– It can evolve and be refined over time
• It provides a fair and objective basis for:– Determining investment needs; and– Prioritising investment
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Thank you