TARGET SETTINGTARGET SETTING

TEXAS STYLETEXAS STYLE

Mary Meyland, P.E.Director, SPPM Office, TxDOT

Performance Management Peer ExchangeChicago July 26, 2010

Session 2

Needs & encumbrances A BASEBALL

Revenues A GOLF BALL

Challenge A TENNIS BALL

LESS:

EQUALS:

Stimulus funds AN AIR-RIFLE BB

Texas Transportation System FundingA Sports Analogy

2009 – 2030 Time Horizon

Current Funding: Texas Pavement Quality

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MeasuredPerformance

PredictedPerformance

$41 Billion to keep at 90% Maximum annual rate

of loss = $5 Billion

POSSIBLE POLICY REMEDY: ROAD TIERS

“all roads are not created equal”(An idea close to tyranny in Texas)

How: Establish priority tiers of •roads and bridges, •maintained at different standards or condition targets

designed to maximize return of available revenue to the condition of the system.

But how to do we set these condition targets?

•• All 50 states were asked to complete a All 50 states were asked to complete a 1313--questionquestion survey. survey. •• At least 20 DOTs use MultiAt least 20 DOTs use Multi--Tier GoalsTier Goals•• Several other DOTs are Currently Considering MultiSeveral other DOTs are Currently Considering Multi--Tier Tier

Goals for the First Time.Goals for the First Time.

Aspects in Common...Aspects in Common...•• Financial ConstraintsFinancial Constraints•• Min/Max GoalsMin/Max Goals•• Focus on Statewide Priorities Instead of on Geographic Focus on Statewide Priorities Instead of on Geographic

DistributionDistribution•• Establish Public/Legal ExpectationsEstablish Public/Legal Expectations

The reports can be found in the following locations:The reports can be found in the following locations:

http://txspapp1/cst/ppo/White%20Papers/Multihttp://txspapp1/cst/ppo/White%20Papers/Multi--Tier%20Goal%20Interim%20Report%201%20Apr%2030%202010.pdfTier%20Goal%20Interim%20Report%201%20Apr%2030%202010.pdfhttp://txspapp1/cst/ppo/White%20Papers/Multihttp://txspapp1/cst/ppo/White%20Papers/Multi--Tier%20Goal%20Interim%20Report%202%20May%2024%202010.pdfTier%20Goal%20Interim%20Report%202%20May%2024%202010.pdf

State DOT MultiState DOT Multi--Tier Goal SurveyTier Goal Survey

Three-Tiered System –– Feb. 2010

Four-Tiered System –– June 2010

TWO BASIC APPROACHES TO TIER TARGET SETTING:

1. Ad-hoc “Engineering Judgement”• Trial-and-error• No explicit decision rules• “Satisficing” – use first feasible solution

2. Structured “Goal Programming” technique• High-efficiency algorithm, not trial & error• Consistent decision rules (transparent)• Optimizing – best solution by some criterion

AD-HOC TRIAL-AND-ERROR PROCESS:

Iteration 1

TIER GOAL COST

1 90% $300

2 80% $250

3 70% $150

Total $700

Budget = $500 Million

won’twork Iteration 2

TIER GOAL COST

1 ??% $ ???

2 ??% $ ???

3 ??% $ ???

Total $ ???

will itworknow ?

GuessAgain.

Tweakgoals –

Which?How much?

make guesses…

ATTRIBUTES OF “GOAL-PROGRAMMING” MODELS

• Data driven Costs of traffic delay and improvements

• Fast scenario generation uses the Excel “Solver”

• Includes all considerations as decision rules: Public preferences of minimal condition DOT policy ideal condition goals Economic value of traffic

→ Produces the optimal set of tier targets

Goal Model Definitions

“Goals” - these are user defined aspirational (if I ruled the world) goals. TxDOT analysis has proven that a good-or-better roadway condition exceeding 90% is not cost-effective. Texas Transportation Commission set our 90% goal in 1991.

“Targets” – these are the model determined realistic levels of service for the tiers constrained by the available budget.

MATHEMATICAL DEFINITION OF PRIORITIES:

Highway Tier Target Conditions: Score 1 > Score 2 > Score 3 Higher tiers need better conditions than lower.

Costs of Deviations from Goals: Weight 1 > Weight 2 > Weight 3 Deviating from high-tier goals are worse than deviating from lower goals.

ScoreGoals

Maintenance Budget = $400,000,000TIER 1: 90 Magnitude of the problemTIER 2: 90 Cost to meet Goals = $945,000,000TIER 3: 90

TIER PARAMETERS: Score Current Penalty Upper Lower Goals Scores Weights Limits Limits

TIER 1: 90 85 67 90 50

TIER 2: 90 80 17 90 50

TIER 3: 90 87 16 90 50

RESULTS:

Cost to meet Goals = $945,000,000

FINAL FINALTARGETS ALLOCATIONS

TIER 1: 88 $250,000,000

TIER 2: 80 $150,000,000

TIER 3: 70 $100,000,000

TOTAL $400,000,000

FINAL TARGET SCORES:

The Final Scores are those tier scores which minimize the sum of the weighted deviations from the Goals while fitting within the budget and meeting the priority criteria and staying within the upper and lower limits.

MATHEMATICAL DEFINITION OF PRIORITIES:

Highway Tier Target Conditions: Score 1 > Score 2 > Score 3

Costs of Deviations from Goals: Weight 1 > Weight 2 > Weight 3

Higher tiers need better conditions than lower.

Deviating from high-tier goals are worse than deviating from lower goals.

THESE BECOME EQUATIONS IN THE MODEL

ScoreGoals

TIER 1: 90TIER 2: 90TIER 3: 90

Maintenance Budget = $400,000,000

Cost to meet Goals = $945,000,000

Aspirational goals – if you had all the money in the world

Enter the budgetscenario.

Computed by the model from above aspirational goals.

TIER PARAMETERS: Score Current Penalty Upper Lower Goals Scores Weights Limits Limits

TIER 1: 90 85 67 90 50

TIER 2: 90 80 17 90 50

TIER 3: 90 87 16 90 50

Aspirational goals – if you had all the money in the world – these were established by Commission in 2001.

Tier conditions at present

Cost of delay of traffic on tiers, used as the measure of “badness” of deviating from goals.

Policy variables

RESULTS:

Cost to meet Goals = $945,000,000

FINAL FINALTARGETS ALLOCATIONS

TIER 1: 88 $250,000,000

TIER 2: 80 $150,000,000

TIER 3: 70 $100,000,000

TOTAL $400,000,000

FINAL TARGET SCORES:

The Final Scores are those tier scores whose cost fit within the budget of $400,000,000 and meet the priority criteria and stay within the upper and lower limits. And optimal: minimize total (weighted) deviations from the aspirational goals.

FOLLOW-UPS:

For status of Texas project, contact rhagquis@dot.state.tx.us

For expertise and assistance, contact the schools of Operations Research, Business, or Industrial Engineering of your major universities.

For more information on Goal Programming:• Textbook chapter pdf in meeting record• Google “goal programming in Excel”