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

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Presentation on theme: "Where should we invest? or comparing apples with oranges 1 Garry Sterritt Asset Investment Manager, Roads Directorate, Transport for London."— Presentation transcript:

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

2 Apples vs. oranges!! Its 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 2

3 ...the same holds true for highways We all have a diverse asset base...but they all serve a common purpose 3 AssetQuantity Carriageway580km network length (2554 lane km) Footways 2,989,370m 2 (over 1000km) Bridges & StructuresOver 1800 structures Tunnels13 major road tunnels LightingOver 45,000 lit assets DrainageOver 45,000 gullies & 800km of drains Green EstateOver 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: Mayors Transport Strategy –Vision for TfL Roads Directorate: Safe, reliable and cared for streets 4

5 5 Common Value Criteria and a common currency

6 Two questions: Common Value Criteria 6 Where to invest? Value Management 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 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

7 Common Currency Its 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. £££ 7

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 8

9 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 10

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 11

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 12

13 Investment Planning Model (MS Excel) 13

14 14 Value Management

15 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 15

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 16 Risk Scoring Financial Scoring

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 17

18 Value Management: Risk Scale 18 Risk ZoneDescription 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

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

20 20 LIKELIHOOD £0-0.1m£ m£ m£0.5-1m£1-2m£2-5m£5-10m£10-25m£25-50m£50+m CONSEQUENCES Structures & Tunnels C/W & F/W VM cross-asset matrix Drainage Lighting

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

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 Dont 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 22

23 23 Thank you


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