1. Where should we invest? or comparing apples with oranges
Garry Sterritt
Asset Investment Manager, Roads Directorate, Transport for London

2. 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

3. ...the same holds true for highways
We all have a diverse asset base
...but they all serve a common purpose
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

4. 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

5. Common Value Criteria and a common currency

6. Two questions: Common Value Criteria
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
Where to invest?
Value Management
Prioritised programme of works
Rate & cost schemes & options
Identify candidate schemes
Analyse condition data
Network intelligence
Asset budgets & strategies
Budget
Common Value Criteria
Safety Risk
Function Risk
Financial
Not looking at specific assets, thinking generically
Asset Investment – long-term, 10 to 20 years – coarse analysis
Value Management – 3 to 5 year detailed programme of works – refined analysis
The criteria we use for setting the budget must align with the criteria we use for deciding which schemes we invest in, otherwise there will be a mis-match between Investment Planning and Value Management

7. 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. £££

8. 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

9. Asset Investment Planning

10. 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
Cost, Customer satisfaction and risk  SOGR
SOGR – condition and/or performance measures
Different for each asset type

11. 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

12. 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
Gives the acceptable range
Some assets will not have a customer satisfaction score, e.g. Bridges, they will be more engineering driven

13. Investment Planning Model (MS Excel)
Model contains carriageways and footways
Building in bridges, lighting and drainage
Further work needs to be done on the direct comparability of the Value Criteria and common currency

14. Value Management More advanced that Asset Investment Planning work
By necessity, because we need to have a forward programme of works

15. 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

16. 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
Risk Scoring
Financial Scoring
An extra value Criteria has been introduced – Environment
Not considered necessary in investment modelling; difficult to model
Can be more readily assessed at scheme level

17. 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
Use to produce 2011/12 to 2013/14 programme

18. Value Management: Risk Scale
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
Trade off – risk vs. cost

19. Where to Spend: Optimising
Optimise risk for the defined budget
Each scheme has several options where risk and cost are evaluated for each
Forward Programme
Option 1
Scheme B
Optimum Bundle
Option 3
Scheme C
Option 2
Scheme D
Scheme E
Scheme F
Scheme H
c/w
str
lig
Scheme A
Option 1
Option 2
Option 3
Scheme B
Scheme C
Carriageway
Optimise
Scheme F
Option 1
Option 2
Option 3
Scheme E
Scheme D
Structures
Scheme I
Option 1
Option 2
Option 3
Scheme H
Scheme G
Lighting

20. VM cross-asset matrix Drainage C/W & F/W Structures & Lighting Tunnels
LIKELIHOOD
1-2 10 20 30 40 50 60 70 80 90
100
2-4 9 18 27 36 45 54 63 72 81
4-8 8 16 24 32 48 56 64
8-15 7 14 21 28 35 42 49
15-30 6 12
30-50 5 15 25
50-75 4
75-100 3 2
150+ 1
£0-0.1m
£ m
£ m
£0.5-1m
£1-2m
£2-5m
£5-10m
£10-25m
£25-50m
£50+m
CONSEQUENCES
Drainage
C/W
&
F/W
Structures
&
Tunnels
Lighting

21. Updated VM Matrix Not a theoretical paper exercise
Developed through workshops using real examples and attended by domain experts

22. 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

23. Thank you