— WHITE PAPER

Destination: Transit Asset ManagementThe journey has begun – don’t get left behind!

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— October 1, 2018, is around the corner. Are you ready?

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—State of good repair (SGR)“The condition in which a capital asset is able to operate at a full level of performance.” This means that “the asset has to be able to safely perform its designed function, does not pose an unacceptable safety risk, and its lifecycle investments have been met or recovered.”8 Keeping assets in good repair improves safety, system reliability and performance, while lowering maintenance costs.

—SGR backlogThe cost to replace all transit assets with a condition rating that is below the midpoint on TERM’s 1 (poor) to 5 (excellent) scale. With limited funding, and as assets continue to wear and age, the growing backlog is a significant concern for the FTA – and for every transit agency nationwide.9

—Transit asset management“The strategic and systematic practice of procuring, operating, inspecting, maintaining, rehabilitating, and replacing transit capital assets to manage their performance, risks, and costs over their life cycles, for the purpose of providing safe, cost-effective and reliable public transportation.”9

— How we got on this pathIn mid-2008, roughly one-quarter of the nation’s bus and rail assets were in marginal or poor condition, based on the FTA’s Transit Economic Requirements Model (TERM) scale¹; by 2010, the figure had risen to one-third² and by 2013, it was at forty percent³. Over roughly the same time period, the state of good repair (SGR) backlog grew from $77.7 billion⁴ to $86 billion⁵; it is now at $89 billion and is projected to grow to $122 billion by 2032⁶.

The FTA began taking steps to “focus attention on transit capital asset preservation and renewal [in order to move] the industry towards an overall ‘state of good repair.’”⁷ It was no easy task: The US transit industry has long struggled to develop an effective, efficient and integrated asset management system that pulls maximum value from assets without jeopardizing business, financial and operational objectives.

Over the next several years, the FTA conducted roundtables, documented practices, developed case studies, and solicited input from transit agencies and experts across the country. The result was the Final Rule, which establishes a National Transit Asset Management (TAM) System, designed to improve public transportation capital assets through effective lifecycle management.

— What the Final Rule means for the transit industryThe Final Rule was designed to address the $89 billion price tag of replacing or repairing the nation’s aging transit infrastructure by incorporating best practices that will help broaden the reach of limited capital funding. The requirements are mandatory for “all recipients and subrecipients of Federal financial assistance under 49 U.S.C. Chapter 53 that own, operate, or manage capital assets used for providing public transportation.”⁸

The rule establishes “state of good repair” performance measures and dictates that transit agencies set performance targets that can be used to determine federal funding priorities. In addition, new asset inventory and performance information will be reported to the National Transit Database.

All public transportation providers were required to develop initial performance targets by January, 2017, and complete an initial TAM plan by October 2018. These TAM plans are required to be updated every four years, and are subject to Triennial Review by the FTA. The TAM plan must include an asset inventory, condition assessments of inventoried assets, and a prioritized list of investments to improve the condition of capital assets.

— When the Federal Transit Administration’s (FTA) Final Rule on Transit Asset Management took effect in October 2016, transit agencies were given until January 2017 to develop initial state of good repair targets, and two years to complete their initial Transit Asset Management plans. The first deadline has already passed, and the second will arrive in no time. Where are you in the journey?

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The requirements for Tier I agencies are more extensive than the requirements for smaller, Tier II agencies, as indicated in Figure 2 below. To help further reduce the burden on Tier II agencies, they also have the option of participating in a group plan instead of creating individual plans; group plans are subject to the requirements listed in Figure 2.

Tier Description

Tier I Operators of rail fixed-guideway public transportation systemsor operate ≥101 vehicles in peak revenue serviceor ≥101 non-fixed route vehicles in peak revenue service

Tier II Sub-recipient of 5311 funds or American Indian Tribe or <101 vehicles across all fixed route modeor <101 vehicles in one non-fixed route

Figure 1: Tier structure

Figure 2: TAM requirements

Figure 3: Asset category and class

Different agencies will have many different assets; however, there are a common set of categories and classes, defined by the FTA, into which assets fall. The category and class of assets shown in Figure 3 are grouped so that a common approach to inventory, management, monitoring and reporting can be achieved.

Requirement Applies to

1. Inventory of capital assets2. Condition assessment of inventoried assets3. Description of analytical processes or decision support tools4. Investment prioritization

Tier I and Tier II

5. TAM and SGR policy6. TAM implementation strategy7. List of key annual activities8. Summary of resources to develop and carry out TAM plan9. Evaluation plan for continuous improvement

Tier I only

Category Class

Equipment Construction, maintenance, service vehicles

Rolling stock Railcars, buses, other passenger vehicles, ferries

Infrastructure Fixed guideway, signal systems, structures, power

Facilities Maintenance facilities, parking facilities, passenger facilities, administrative facilities

— Key elements of the FTA’s Final RuleThe specific requirements of the TAM rule depend upon whether a transit provider is classified as Tier I or Tier II, which relates to the size of the operation as shown in Figure 1.

Figure 4: Asset inventory and condition assessment

CategoryTAM plan element

Asset inventory Condition assessment

Equipment All non-revenue service vehicles and equipment > $50K used in the provision of public transit, except third party equipment assets

Only equipment with direct capital responsibility; no third party assets

Rolling stock All revenue vehicles used in the provision of public transit

Only revenue vehicles with direct capital responsibility

Infrastructure All infrastructure used in the provision of public transit

Only infrastructure with direct capital responsibility

Facilities All facilities used in the provision of public transit (excluding bus shelters)

Only facilities with direct capital responsibility (excluding bus shelters)

The asset inventory is further refined using criteria that establishes a minimum asset dollar value, and agency ownership / capital responsibility as shown in Figure 4:

— SGR and safetySafety is a driving factor behind the FTA’s Final Rule, but it is up to each transit provider to determine what constitutes an “unacceptable safety risk.” This enables individual agencies to bring their own expertise to bear in prioritizing their specific funding needs to satisfy SGR requirements.⁹

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— “...state of good repair directly relates to the safety of a public transportation system, as the likelihood of accidents increases as the condition of equipment and infrastructure worsens.”10

111th Congress

Figure 5: Category, condition, targets and measures

Asset category Performance measure Applies to

Equipment Age-based Only non-revenue service vehicles with direct capital responsibility

Rolling stock Age-based Only revenue vehicles with direct capital responsibility by mode

Infrastructure Percentage of guideway direction route miles with performance restrictions

Only fixed rail guideway, track, signals, and systems with direct capital responsibility

Facilities Percentage of facilities with an asset class rated below condition 3 on the TERM scale

1-Maintenance and administrative and passenger stations and parking facilities2-Passenger stations (buildings) and parking facilities with direct capital responsibility

With assets categorized and placed into the proper inventory, agencies must then analyze asset performance and set targets each year. In addition to targets, providers must supply recent condition data and financial projections, and annually submit their target projections for the following fiscal year, as well as condition assessments, performance results, and a report on changes and progress to the National Transit Database.

Equipment and rolling stock assets will be measured by percentage of remaining useful life benchmarks (ULBs). The ULBs can be the default values established by the FTA, or defined by the agency based on its individual operating environment. Infrastructure assets (mostly applicable to rail) will be measured by percentage of assets with performance restrictions, and facilities assets will be measured with a condition rating as defined by the FTA’s TERM scale of 0 to 5. The table in Figure 5 shows the minimum required condition to be measured, the performance targets, and the measures by category:

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— Asset management and asset management systemsWhen asset management is not optimized, passengers, workforce, management and the business are at risk. Structured asset management enables transit operators to make faster, better-informed decisions in both daily operations and long-term planning strategies in order to deliver safety, reliability, sustainability and long-term prosperity.

Optimizing asset management can have some bumps in the road, and may be challenging for the transit sector for many reasons. For instance, you may have:

• No clear asset management policy, plan or strategy in place

• Difficulty demonstrating cost-effectiveness to key stakeholders

• Inconsistent, unsystematic or varied approaches to risk management within the organization

• Difficulty evaluating the benefit of proposed work and/or quantifying the impact of not performing work

• Operational cost inefficiencies; too many teams duplicating activities and competing for resources

• Too many ”fire-fighting” incidents, despite increased asset spending

• No long-term investment plans or justification for urgent projects

• No single, accurate, and trustworthy source of information on existing assets, or their function or condition

• Outdated processes, procedures and technology

If one or more of the statements above ring true, then asset management can help.

“Asset management” encompasses everything an organization does to derive value from its assets. An “asset management system” is a key component of asset management; it refers to a strategic set of systematic and integrated business processes for operating, maintaining and improving physical assets, with a focus on both engineering and economic analysis of high-quality information. This information (data) is used to define maintenance strategies that will achieve and sustain the desired state of good repair, as defined by the Final Rule. The result is a balance between cost, risk and performance over the lifecycle of the assets.

An asset management system does not happen overnight, nor can it happen in a vacuum. It cannot be the responsibility of a single department or two; it is an agency-wide effort that must responsibly flow down from top-level business objectives. This will often require more than just process changes – it may require cultural changes as well.

Putting an asset management system in place and developing a TAM plan can seem like a daunting task. Fortunately, you don’t need to start from scratch – well-established standards offer a roadmap to success.

— Asset management system: It’s not your software systemThere are many software systems available today to help manage assets, but don’t confuse an “enterprise asset management (EAM) system” with “asset management system” as defined by ISO 55000! EAM software systems (or CMMS, etc.) are truly indispensable tools for supporting your asset management efforts, but they are still only tools – how well they function will depend on the policies, processes and human effort you put into them.

— Let’s optimize!“Optimization” is a popular term these days, and it can often be misused. It doesn’t simply mean “to improve” or even “make it the best it can be”; it is specifically about recognizing competing priorities and resource constraints, and determining the most appropriate path for your agency based on your needs.

— Funny thing about assets...Assets don’t fail simply because of their age. In fact, 89% of all complex machinery failures are not related to age at all11. Equipment fails because of its condition, the intensity of use and type of usage. Many factors are involved in poor asset utilization, such as lack of integration and disconnected systems and processes. Transit providers must be able to understand and resolve conditions in their operations confidently, with a clear audit trail, and also be able to demonstrate this capacity to stakeholders.

—So...how do you get underway?The Final Rule is all about improving asset management and putting an asset management system in place, so let’s take a closer look at what that means.

North Sea Oil & Gas adopts the term “asset management” following the Piper Alpha Platform disaster and the oil price crash.

Australia & New Zealand face falling services levels and cost escalations; the public sector publishes “Total Asset Management Manual.”

PAS 55 updated. Developed by 50 organizations from 15 industry sectors in 10 countries.

The International Organization for Standardization (ISO) accepts PAS 55 as the basis for development of ISO 55000, 55001 and 55002.

IAM initiates the collaborative project to create an asset management ISO standard.

ISO 55000, 55001 and 55002 are formally launched.

The Institute for Asset Management (IAM) and the British Standards Institute (BSI) develop Publicly Available Specification (PAS) 55, the first public specification for optimized management of physical assets.

Late 1980s 2004 2009 2014

1993 2008 2012

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— Asset management system standardsThe general concept of asset management has been around as long as there have been assets to manage, but well-documented and widespread asset management standards only date back to the late 1980s and have recently culminated in the ISO 55000 international standard for managing physical assets, as shown in Figure 6.

ISO 55000 provides an overview of asset management systems, ISO 55001 specifies the requirements, and ISO 55002 provides guidelines for implementation. Used in combination, this set of documents represents what is required of an organization to achieve its business objectives.

The standards can be applied by any organization for any type of assets, but they specifically target the management of physical assets to sustainably achieve business goals, and help those who are trying to:

• Create value for their organization from the asset base

• Establish, implement, maintain and improve an asset management system

• Plan, design, implement and review asset management activities along with service providers

These standards are a holistic, integrated framework that can systematically balance risk, cost and performance over an asset’s lifecycle12. This framework also integrates well with other management systems, such as ISO 9001 Quality Management System, and ISO 14001 Environmental Management System.

Standards such as ISO 55000 promote good asset management practices and will help transit agencies maintain a clear alignment between their strategic plans and specific asset management activities performed by staff personnel. This “line of sight” approach ensures everyone in the organization, from the C-suite to the shop floor, understands their role, responsibilities, accountability and authority, and how they contribute to the strategic plan.

Figure 6: Evolution of asset management standards

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Identification of non-conformance, corrective actions and continual improvement are other major elements covered by the standards. The “Plan-Do-Check-Act” process built into the structure of the management system ensures the organization continues to grow and improve over time by monitoring conditions and adjusting as needed.

There’s no question that the ISO 55000 standards can give your agency a solid framework for developing your TAM plan – in fact, the FTA consulted the standards while developing the Final Rule.13 Nevertheless, it should be noted that the requirements for ISO 55000 are more extensive than the requirements for the TAM plan, and a fully-compliant TAM plan can be developed without utilizing/complying with ISO 55000.

— “When a company conducts a gap assessment...it is gaining information to make its asset management strategy more effective and efficient. If an organization pursues this type of improvement initiative, it will have a heightened probability of success with an asset management program.”15

ReliabilityWeb

—

Starting the journey: the gap assessmentThe first step to implementing standards is understanding your organization’s existing maturity level relative to the requirements of the standards and the compliance requirements of the Final Rule. This is best accomplished by completing a gap assessment. As the name implies, a gap assessment will help you to determine what you are doing well, what you could do better and what you are not doing at all (no one is perfect!).

There are self-assessment guidelines available, but as the ISO cautions, “...management reviews, assessments and audits all require the assessor (or auditor) to know what to look for, and to recognize adequacy and ‘fitness for purpose’ in what they find.”14 You may know your agency better than anyone, but trained subject matter experts will give you access to broader asset management domain knowledge and diverse industry experience that can help you avoid pitfalls such as unconscious bias, “paralysis by analysis,” and even basic fear of the unknown that can blind you to potential process innovations.

The competencies of the audit team will directly impact what is gained. A seasoned professional services organization can help you to understand where your organization is in terms of existing gaps, then guide your prioritization efforts and assist with devising the most appropriate action plans.

The gap assessment must also use an established methodology that is calibrated to a recognized maturity scale, and that results in quantified measures and recommendations. Assessments that are focused on the specific requirements of the standards or the compliance requirements of the Final Rule involve detailed interviews with cross-functional members of the organization, gathering appropriate evidence and documenting the findings for traceability. Such detail will bring clarity and purpose to the organization. Once armed with quantified, detailed assessment results and recommendations, the organization can begin the journey to close the gaps.

This journey can transform a business, so to get the best possible outcome, transit agencies are well-advised to seek the help of a deep bench of asset management professionals that can provide a solid, proven base of knowledge and experience.

Overall, a good asset management system provides many benefits, including:

• Improved communications, cross-functional integration and heightened risk awareness for top managers

• Improved return on investment and reduced cost without sacrificing objectives

• Enhanced customer relations with improved performance and control of product delivery

• Improved asset investment decisions by effectively balancing costs, risks and performance

• Improved health, safety & environment performance, governance, and reduced liabilities such as insurance through demonstrated compliance

• Improved long-term planning through lifecycle management

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— Asset management benefits are exponentialEffective asset management has a wide range of benefits. Some can be directly assessed and quantified, such as reduced capital and maintenance costs, increased asset availability and reduced risk exposure. Other benefits can be much more difficult to measure, but may be equally or more important in terms of revenue generation, budget management or overall business performance. Just a few examples would be improved reputation, customer satisfaction and stakeholder support.

Some of the more obvious benefits, such as improved communications, common goals and a more consistently-applied risk reduction process can be realized quickly.

—Did you know?“Funds from other FTA grant programs may also be used to cover costs related to TAM plans....Costs related to creating a TAM plan itself are an eligible expense under the section 5307 Urbanized Area Formula Program and the section 5311 Rural Area Formula Program.”9

ISO 55000 states that other benefits can include, but are not limited to:

• Improved financial performance

• Informed asset investment decisions

• Managed risk

• Improved services and outputs

• Demonstrated social responsibility

• Demonstrated regulatory compliance

• Enhanced reputation

• Improved organizational sustainability

• Improved efficiency and effectiveness16

In addition to the “soft” benefits realized by program and process improvements, savings in whole-life asset cost can also be realized over time. These benefits will show up in leading and lagging performance indicators specific to your business.

— The best time to start is yesterday!There are thousands of different transit systems in the US, from complex big-city networks to small operators in rural communities, and with the TAM plan deadline steadily approaching, these agencies will all be vying for professional assistance at the same time; don’t wait to wait to get underway. Asset management is a best practice that will benefit operators of all sizes by building better-maintained, safer and more reliable transit systems. It is a smart way to make strategic and targeted investments that get the most from available, limited capital funds, but it is a journey – there are no shortcuts.

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—ABB Professional ServicesGap assessment services

Proper asset management takes time, resources, commitment and a forward-thinking culture. When done correctly, the benefits are far-reaching and can help an organization achieve critical short-term goals such as the TAM plan while supporting the long-term vision.

The ABB professional services organization offers gap assessment services that deliver quantified measures and help prioritize recommendations for action planning. Using a recognized audit approach, ABB professionals will help clarify your current standing, identify shortcomings and opportunities, and assist in developing a roadmap to close the gaps.

ABB professionals can identify potential quantifiable improvements such as reduced capital and maintenance costs, increased performance and availability, reduced equipment failures or unplanned outages, and reduced risk exposure.

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1. US Department of Transportation, Federal Transit Administration. (October 2008). Transit State of Good Repair: Beginning the Dialogue. Retrieved from: https://www.transit.dot.gov/sites/fta.dot.gov/files/docs/SGR.pdf.

2. US Department of Transportation, Federal Transit Administration. (June 2010). National State of Good Repair Assessment. Retrieved from: https://www.transit.dot.gov/sites/fta.dot.gov/files/docs/National_SGR_Study_072010%282%29_1.pdf.

3. US Department of Transportation, Federal Transit Administration. (2013). Transit Asset Management. Retrieved from: https://www.transit.dot.gov/TAM.

4. US Department of Transportation, Federal Transit Administration. (June 2010). National State of Good Repair Assessment. Retrieved from: https://www.transit.dot.gov/sites/fta.dot.gov/files/docs/National_SGR_Study_072010%282%29_1.pdf.

5. US Department of Transportation, Federal Transit Administration, Federal Highway Administration. (2013). 2013 Status of the Nation’s Highways, Bridges, and Transit: Conditions & Performance Report to Congress. Retrieved from: https://www.fhwa.dot.gov/policy/2013cpr/pdfs/cp2013.pdf.

6. US Department of Transportation, Federal Transit Administration, Federal Highway Administration. (2015). 2015 Status of the Nation’s Highways, Bridges, and Transit: Conditions & Performance Report to Congress. Retrieved from: https://www.fhwa.dot.gov/policy/2015cpr/pdfs/2015cpr.pdf.

7. US Department of Transportation, Federal Transit Administration. (October 2008). Transit State of Good Repair: Beginning the Dialogue. Retrieved from: https://www.transit.dot.gov/sites/fta.dot.gov/files/docs/SGR.pdf.

8. US Government Publishing Office. (July 26, 2016). 49 CFR Part 625 – Transit Asset Management. Retrieved from: http://162.140.57.127/cgi-bin/rieveECFR?gp=&SID= 431710dd28460adcaace7b2b61fff363&mc=true&n=pt49.7.625&r=PART&ty=HTML.

9. US Department of Transportation, Federal Transit Administration. (July 2016). 49 CFR Parts 625 and 630; National Transit Database; Transit Asset Management; Final Rule; Notices; National Transit Database: Capital Asset Reporting; Transit Asset Management: Proposed Guidebooks. Retrieved from: https://www.gpo.gov/fdsys/pkg/FR-2016-07-26/pdf/2016-16883.pdf.

10. 111th Congress. (2009-2010). S. Rept. 111-232 - Public Transportation Safety Act of 2010. Retrieved from: https://www.congress.gov/congressional-report/111th-congress/senate-report/232/1.

11. Nowlan, F.S., et al. (1978, December). Reliability-Centered Maintenance. Retrieved from: http://www.barringer1.com/mil_files/AD-A066579.pdf.

12. International Organization for Standardization. (2014). ISO 55000:2014 – Asset management – Overview, principles and terminology. Switzerland: ISO.

13. US Department of Transportation, Federal Transit Administration. (July 2016). 49 CFR Parts 625 and 630; National Transit Database; Transit Asset Management; Final Rule; Notices; National Transit Database: Capital Asset Reporting; Transit Asset Management: Proposed Guidebooks. Retrieved from: https://www.gpo.gov/fdsys/pkg/FR-2016-07-26/pdf/2016-16883.pdf.

14. International Organization for Standardization. (2016). ISO 55000 Asset management – What to do and why. Switzerland: ISO.

15. ReliabilityWeb. (2014). Research Report on Asset Management Practices, Investments and Challenges 2014-2019. Retrieved from: http://starboard-consulting.com/wp-content/uploads/2015/03/Asset-Management-Practices-Investments-Challenges.pdf.

16. International Organization for Standardization. (2014). ISO 55000:2014 – Asset management – Overview, principles and terminology. Switzerland: ISO.

—Endnotes

—abb.com/enterprise-softwareinfo.pges@abb.com

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