Chapter Three - New South Wales, Australia

Roads and Traffic Authority (RTA)—www.rta.nsw.gov.au

Context

Infrastructure Managed By RTA 4,800 bridges 37 tunnels 3,300 signals 42,000 lane-kilometers (26,098 lane-miles) of arterial pavement 750 lane-kilometers (466 lane-miles) of unsealed road 200 million m2 (239 million yd2) of surface 9 vehicular ferries By local government, regional roads 13,600 km (8,451 mi) sealed roads 4,800 km (2,983 mi) unsealed roads 1,500 nontimber bridges 323 timber bridges By local government, local roads 20,000 km (18,642 mi) urban sealed roads 40,000 km (18,642 mi) nonurban sealed roads 82,000 km (50,954 mi) nonurban unsealed roads 7,600 bridges, including 2,600 timber

With more than 189,000 lane-kilometers of sealed road, New South Wales (NSW) has one of the most extensive road networks in Australia. The Roads and Traffic Authority (RTA) of New South Wales is the agency responsible for the major roads and bridges on this network. RTA's stated vision for its stewardship of this network is to assure “value for money” in its investment decisions, and to provide effective governance and risk management in partnership with industry and the state's communities.

According to RTA officials, the major challenges facing the transportation system include 1) major exponential growth in freight demand, 2) relatively flat growth in public transit use, 3) major exponential growth in private passenger demand, 4) increasing demands by utilities to use road corridors, 5) increased community expectations on safety and environmental quality, and 6) increasing roles for defense and security uses of the road, airport, and port systems. There has also been a trend toward bigger and heavier trucks being permitted on the road network, which has had design, safety, and operational consequences. From the asset management perspective, a 40 percent increase in truck mass limits since the 1960s has severely stressed an arterial and local road network built to the standards of the 1950s and 1960s.

New South Wales has 166 local government councils, and RTA has a road grant program of about A$150 million per year to help these councils improve their regional road network. New South Wales will also cover 50 percent of the cost of improvements to timber bridges.

Similar to other Australian states, New South Wales has been using public-private partnerships to build some major new projects, and has contracted out a portion of its road maintenance activities to private contractors (two to three contractors). In both cases, the provision of asset management strategies is incorporated into the concession deeds or contracts.

Drivers for Asset Management

The RTA definition of asset management borrows from many other definitions offered by organizations in Europe, the United States, Australia, and New Zealand:

• Consists of a broad, integrated systems approach to respond to customer-level-of- service needs to maintain, upgrade, and operate physical assets cost effectively
• Competes with other portfolios for scarce public funds (e.g., health and education)
• Relies on economic analysis and deterioration models

The New South Wales Department of Treasury is a major driver for RTA's approach to asset management. The department has adopted a policy with a stated objective of “managing infrastructure as a long term renewable asset and to use an integrated package of recurring maintenance with capital renewal to achieve modern standards without increasing functional capacity.”[21] Capacity increases are funded under a separate program. The Treasury expects each agency to adopt its own policy consistent with the Treasury's. It depends on RTA “to manage risks of technological redundancy and to separate expansion of effort from maintenance of effort.” The Treasury's policy is intended to address “past bias towards acquisition of new capital assets at the expense of appropriate asset maintenance.”

“With respect to asset valuation, we tell the accountants that we will follow your rules, but we will not let them drive investment.”
— RTA official

Of the sites the team visited during this scan, the NSW Treasury was one of the most active in encouraging asset management practice. The Treasury's directions for asset management in government agencies require the following:[22]

• Develop an asset portfolio to support and demonstrate service delivery.
• Set priorities for the assets to be managed.
• Develop a gap analysis between existing and required assets.
• Identify asset-related risks that affect delivered services.
• Identify asset performance levels required to achieve service performance established in a Results and Services Plan (RSP).
• Address risk and compliance with mandatory requirements or asset standards.
• Define the relationships between the RSP and Corporate Plan.
• Provide information for capital investment, asset maintenance, and asset disposal.

In addition to the Treasury directives, RTA officials identified other reasons for greater emphasis on asset management in the agency. The government's transport minister and the community at large expect RTA to provide the most cost-effective service possible. Asset management helps RTA do this. In addition, asset management enhances RTA's relationship with other agencies, such as the Department of Infrastructure, Planning, and Natural Resources and the Treasury. It helps RTA compete for funds with other agencies at the state and federal levels, and provides greater scrutiny and accountability for program and project management. Finally, asset management allows RTA to provide better workforce planning, an important challenge with its aging workforce. RTA has had very stable political leadership, with the most recent minister staying for 8.5 years. This has allowed RTA to develop a strong base of support for asset management among government leaders.

Organization for Asset Management

At the state level, a Cabinet Standing Committee on Infrastructure and Planning reviews and endorses major infrastructure proposals and asset strategies for roads, transport, energy and utilities, education, health, and housing. This committee must approve proposals before they can be considered by the Cabinet's Budget Committee and subsequently included in an agency's capital plans.

Within RTA, the Directorate of Road Network Infrastructure is responsible for network development and maintenance, spending about 70 percent of RTA's budget. The Infrastructure Maintenance Branch in this directorate was responsible for preparing RTA's Infrastructure Maintenance Plan, a plan credited with convincing politicians to allocate more funding to asset preservation. Other directorates, especially the Traffic and Transport Directorate and the Motorways Directorate, also share responsibility for asset management of the road infrastructure. This organizational structure has been endorsed by the Treasury and has been instrumental in securing increased funding for asset maintenance. For example, after RTA highlighted road infrastructure needs through this structure, the government agreed that revenue from recent increases in Sydney Harbour Bridge tolls and other road-user charges will be dedicated to maintenance work in Sydney and other parts of New South Wales.

Decisionmaking Approach

RTA's investment decisionmaking and corporate resource allocation processes focus on two major types of projects, whose definition has been agreed to by the Treasury.

1. Infrastructure asset management entails "customer works and services to ensure route assets are available for reliable operation and performance of their existing functionality and are in compliance with current legislative, regulatory and community safety and environmental standards. The ‘existing functionality' of route assets is defined as projects and services to ensure routes are open for travel under all ‘non-disaster' weather conditions by all general access vehicles together with restricted access vehicles permitted on that route, at speeds up to the designated speed environment for that route without widespread speed limits imposed for safety purposes."
2. Network development entails "customer works and services that expand the functionality of routes to improve congestion, provide reliable and predictable travel conditions, support land use development, and enable travel by vehicles other than General Access and those Restricted Access Vehicles already permitted on that route."

RTA's definition of asset management excludes network development, but does allow the upgrading of bridges and pavements through rehabilitation or reconstruction.

“We are not separate from the political process; we are part of government. Thus, our role in asset management is to inform this process and influence it.”
— RTA official

Every NSW agency is required to have a strategic plan that explains how the agency intends to use its service delivery, back office, and funding/asset strategies to achieve its desired service delivery results. The plan typically contains the agency's vision, mission and values. A service delivery strategy identifies and prioritizes the agency's clients and their key service delivery requirements over the next 3 to 5 years. The strategy describes how the mix of services provided by the agency will lead to achievement of the agency's desired results.

The Treasury requires each agency to also have a Results and Services Plan (RSP) that provides information on the following:

• Services an agency provides
• Results an agency is trying to achieve for the community
• Result indicators and service measures
• Emerging and strategic issues that may have an impact on service delivery or results
• Major risks that may prevent a service from being delivered as planned
• Risk-management strategies
• Major strategies or initiatives necessary to ensure organizational capability to deliver services and achieve results
• How strategic issues will be managed
• How performance will be reported

In some cases, the RSP could be satisfied by an agency's Statement of Intent. Figure 16 shows the alignment among the Corporate (or strategic) Plan, the Results and Services Plan, and the Asset Strategy. Figure 17 shows the flow of decisionmaking and information in support of RTA's asset management program.

Figure 16.Alignment among Corporate Plan, Results/Services Plan, and Asset Strategy at the Roads and Traffic Authority.

Figure 17.Decisionmaking structure for asset management in New South Wales.

Performance Measures

RTA has used network performance measures for many years as part of its system stewardship and governmental accountability responsibilities. Performance measures are found in several different categories, primarily relating to customer outcomes, achievement of customer needs, and delivery of government commitments. Each performance measure has specific characteristics associated with it, including management accountability, coverage and scope, reporting frequency, reporting level, information source, and benchmarking suitability.

For asset management, the performance measures used most often include those relating to community satisfaction, safety, asset retained value, age of pavement and structures, and network reliability. The asset management-related performance measure reported in the latest RTA annual report was ride quality and pavement durability (along with fatalities and traffic speeds/volumes for seven routes to and from Sydney). Figure 18 illustrates some of the measures RTA officials use to monitor network performance.

Figure 18.Examples of Roads and Traffic Authority performance measures.

The NSW Treasury identified several key factors for performance indicators in its maintenance strategy guidance to other agencies. They are repeated below because they provide a good checklist for developing a performance-based asset management program.[23]

• Indicators should focus on outcomes achieved rather than action taken.
• Consistency in definitions and methods of measurement is essential to ensure results can be analyzed and compared over time.
• Simplicity should be as highly valued as reliability. Complex approaches are expensive and often need a high level of expertise.
• Rarely do numbers alone tell the story. Qualitative information on performance is equally useful.
• Indicators should be explicit in their format and expressed as a percentage, ratio, or some other numerical format.
• The number of indicators used at any management level should be limited to a maximum of about seven. Larger numbers of indicators tend to lose relevance and their impact is diluted.
• Indicators should be underpinned by an information system that enables the information required by the indicator to be readily available.
• In defining success, experience has shown that input at the development stage from those using the indicators will help engender ownership and support for the application of the indicators.

Because of the usefulness of the guidelines prepared by the NSW Treasury in developing an asset strategy, the NSW template for doing so is reprinted in Appendix E.

Asset Management Information Systems

RTA has information systems for inventory and condition data that can be used to assign project/work tasks as well as to monitor systems performance. The physical assets monitored include road pavements, bridges, corridor assets, traffic facility (signs, lines and markings), and traffic signals.

RTA has purchased commercial software to manage its road network inventory data. The Road Asset Management System (RAMS) is the repository of road pavement and corridor inventory and condition data, including engineering history. A Traffic Asset Information Management System (TAIMS) keeps track of the traffic facilities inventory (road signage, pavement markings, line marking, and safety barriers), including work task scheduling and management. RTA has separately developed in-house information systems to manage bridges (BIS) and slope stability, works ordering, contract management, and project management systems.

Maintenance work is tracked through a Maintenance Contract Management (MCM) system. When maintenance work is completed, reports are submitted to the asset management group for recording in RAMS, BIS, etc. Regional maintenance planners are responsible for tracking planned maintenance.

RTA uses a link/node location referencing system to locate its inventory and condition data on the state road network. This is used in conjunction with global positioning systems (GPS) technologies for asset inventory updates. Given a common referencing system, inventory and condition items can be co-located and displayed with other spatial characteristics.

Figure 19 shows the results of the integrated asset information system. The information describes key characteristics of a short portion of the highway from Melbourne to Brisbane. The information includes the condition and operational characteristics in comparison to performance measures, indicating deficiencies by color (red implies that standards or measures are not being met). The right side of the figure shows the projects planned in this corridor over the next 5 years.

Data Collection

Data collected for the asset management systems include 1) structural condition for pavements, bridges, culverts, vehicular ferries, and utilities under highways; 2) dimensions (widths and heights) for tunnels, truss bridges, utilities over highways, lane and shoulder widths, and turning space; 3) operational performance such as traffic flow, incident management systems, ventilation/fire management systems for tunnels, and frequency of road-passing opportunities; 4) safety such as skid resistance, road and bridge width, road shape, alignment, deformations, and ride quality and lane widths affecting driver fatigue; and 5) environmental characteristics such as noise, pollutant emissions, and water pollution.

Road inventory data (including condition data) are collected through a combination of in-house resources and contract services. Road condition data (roughness, rutting, cracking, video, and skid resistance) are managed by a unit in RTA's central office. Data are made available to regions via corporate information systems. Bridge condition inspections are managed regionally, defined with a four-tier inspection regime (drive through, condition- rating elements, engineering inspection, and load capacity) and schedules depending on the criticality of the structure (timber bridges every year, other structures every 2 years, and underwater inspections every 4 years).

“The challenge is to make asset management and maintenance management ‘sexy.’”
— RTA official

Smart sensor technology is starting to be used to monitor a variety of assets (slope and retaining wall stability and bridge health monitoring), and to determine use (volume, load, and speed) and incident management response.

Figure 19.Results from the New South Wales integrated asset management system.

Analysis Procedures and Prioritization

The analysis procedures and prioritization schemes RTA uses depend on the type of asset program being considered. For network and road capacity expansion, benefit-cost analyses are used to justify investment. For maintenance-of-service effort, or what would be called infrastructure asset management, projects are prioritized through a risk management process. Separate program budgeting occurs for different types of projects and agency services triggered via a deficiency or gap analysis. Within the maintenance program, a two-stage process is used to prioritize allocations. These stages or prioritization levels include the following (in order of priority):

• Prior government commitments (e.g., disaster relief or financial assistance to local governments) and business management needs (e.g., data collection and information system support)
• Maintenance of the state road network, including keeping the route functioning (e.g., slope stability), assuring safety (e.g., pavement conditioning and bridge widening), assuring minimum risk to the value and integrity of the asset (e.g., painting bridges and reconstructing pavement to enhance useful life), and assuring productive and reliable level of service

After government commitments have been taken care of, priority is given first to safety improvements (risk minimization), then to retained value, and then to asset functional reliability.

Similar to other Australian states, heritage bridges provide an important challenge to the structures asset preservation program. Many bridges in New South Wales are considered historical, and the asset management process deals with such bridges as special cases.

The concept of risk management permeates the asset management prioritization process at RTA. Such an approach is based on Australian/New Zealand standards for risk management, corporate risk evaluation criteria, scenario analyses, and promotion of safety improvements as top-priority investments.

Asset values are determined by an estimated replacement cost approach (derived from recent construction unit rates and redetermined every 5 years with yearly increments in between) and straight-line depreciation to determine an asset value. Pavement and earthworks are depreciated at different rates. Bridges are similarly valued, using different depreciation rates (steel/concrete at 100 years and timber at 60 years). The total road system asset value is estimated at A$65 billion (including land).

Public-Private Partnerships

RTA has entered into several public-private partnerships (PPP) for toll roads. One such project, called the Eastern Distributor, was awarded a 48-year concession in 1997 to build, operate, and maintain a freeway connecting several of Sydney's major roads. The 48-year term was arrived at after lengthy negotiations involving public consultation over an acceptable design (the originally estimated concession term was 35 years). The resulting compromise included additional bridging over the toll road to create more open space, and moving the tunnel portals away from sensitive environments (botanical gardens and an art gallery). This road now averages around 3 million vehicles per month.

The operator's agreement required conducting routine maintenance and repair, identifying premature deterioration, keeping maintenance records, and making sure the asset met the handover obligations. The road operator provides a maintenance plan for such activities as inspection, cleaning, and consumable replacement; reports on unplanned maintenance; and undertakes planned major maintenance tasks (e.g., pavement resurfacing or replacement of major mechanical or electrical components such as a jet fan).

Another PPP project will open soon. This project placed a greater emphasis on asset management in the request for proposals. In this case, an asset management database is required that classifies assets according to hierarchy and spatial location, the historic profile of design and construction data, asset condition, and maintenance servicing records. An asset management system using deterioration modeling that predicts future asset condition and develops maintenance profiles (life cycle optimization) must be put in place. Condition deterioration (e.g., roughness and pavement condition) of individual assets is calibrated to actual historical profiles, and asset condition is assessed on a regular basis and reset after remedial work. Real-time monitoring of key performance indicators is part of the operator compliance with the deed requirements. In addition, an asset manager position must be created as part of the concessionaire's organizational structure.

The operator for a PPP project (not the concessionaire) discussed recent developments and emerging trends in PPP arrangements that will have different consequences on different stakeholders. For example, the increasing use of maintenance standard codes in contracts clarifies the scope of maintenance tasks and reduces the risk of dispute. Incorporating key performance indicators into contractor agreements and monitoring operator performance against these indicators provides an excellent method for monitoring critical areas of performance, but runs the risk of entailing excessive costs for data collection. The trend toward using a contracting agent to operate a facility and passing additional risks from the concessionaire to this operator could result in substantial cost increases, and a shift from what has been a trusted partnership to a relationship based more on contract language.

Innovative Public Agency/University Partnership on Asset Research A new road tunnel under Sydney Harbour was RTA's first BOOT (build, own, operate, and transfer) project. RTA entered into a 30-year contract with the Sydney Harbour Tunnel Company (SHTC) that expires in 2022. RTA/SHTC entered into an innovative partnership with the University of New South Wales as part of a project to monitor the corrosion of a new road tunnel under Sydney Harbour. The tunnel was designed with a 100-year life. A transition tunnel structure was cast in-situ below sea level and under the Sydney Opera House. This structure was the most complicated and critical section for the long-term durability of the tunnel. The A$750 million project was implemented under a public-private partnership, with a maintenance sinking fund established upfront to deal with periodic and unexpected maintenance needs. Routine inspections were part of the concession deed, with specific requirements for corrosion rate measurement and crack movement monitoring. The University of New South Wales, in partnership with the tunnel authority, developed new and innovative concepts for maintaining this critical asset. The university developed a new curvature mapping projection that allows identification of corrosion hotspots, pioneered a micro cement crack injection capability that is a new corrosion remediation approach, developed a local cathodic protection technique, and conducts lab tests to identify the influence of crack width on corrosion rate. The interesting characteristics of this case were 1) joint management of a maintenance sinking fund to ensure suitable condition at handover, 2) detailed analysis to identify and qualify risks, 3) novel remedial strategies to manage risks at minimum costs, 4) research to fill the gap in routine knowledge, and 5) state-of-the-art techniques to add value to the long-term durability of the tunnel infrastructure.

Observations

Similar to other Australian states, RTA shows a high level of consistency among the agency's many levels of decisionmaking in what it is trying to accomplish. Performance measures are in large part a reason for this, as is a serious effort to think carefully about how one plan relates to another. Because of Treasury guidelines, asset management is integrated in these plans, as is an asset management policy.

RTA has reached an agreement with Treasury on what constitutes maintenance versus major rehabilitation. Sometimes a fine line exists between the two, and RTA has established the boundaries of its asset management program to include minor rehabilitation projects.

The Road Asset Management System (RAMS) appears to have very good functionality for decision support (see figure 17). It can display a variety of information useful to road managers, including condition and performance deficiencies, relevant standards, and proposed projects in the corridor.

RTA has concerns about whether straight-line depreciation and accounting standards are the appropriate way to value assets. RTA has discussed this issue with Treasury, and although RTA still reports value and remaining life according to the guidelines, it relies on its asset management systems to help define priorities.

Finally, the New South Wales learning experience with public-private partnerships and the appropriate role for asset management is very important. The evolution in the consideration of asset management responsibilities between the first project's and second project's concessionaire contract was dramatic (the same is true in the Victoria case).

RTA has adopted a serious approach to asset management as it pertains to PPP projects. This could be an important lesson for the United States, which is turning increasingly to public-private partnerships for major project investment.

[21] See http://www.treasury.nsw.gov.au/pubs/tpp2004/tpp04-3.pdf
[22] New South Wales, Total Asset Management Template, Report TAM04-06, Sydney, NSW, Sept. 2004. http://www.treasury.nsw.gov.au/tam/pdf/tam_template.pdf.
[23] NSW Treasury, Asset Maintenance Strategic Planning, Report TAM 04-3, Sydney, NSW, Sept. 2004, See, http://www.treasury.nsw.gov.au/tam/pdf/asset_maintenance.pdf.