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USACE’s National Asset Management Approach: Improving Organizational Decision-making

In bygone days, decisions regarding the allocation of limited federal funds for maintenance of navigation projects often hinged on which district could make the most compelling case. Operation chiefs with the U.S. Army Corps of Engineers (USACE) crammed into a room each year to pitch why their projects deserved funding priority over other navigation facilities. Facts and figures were used to build their case, but those skilled in the art of persuasion often had the upper hand. “The good looking and articulate often won the day,” said Jim Fisher, operations chief, Pittsburgh District.

That began to change three years ago when USACE initiated the National Asset Management approach. This approach looks at operational risk, the condition of critical components, and their relationship to keeping a lock operating. “Now the process is much more impartial. We pass everything through the risk screen,” said Fisher, who assists the national team in charge of formulating and implementing the Asset Management approach. “We’re documenting a standard process that can be repeated; that is based on sound engineering and probability analysis as well as expert opinion. The process gauges the probability of failure as well as the consequences of failure.”

Eventually managers will be required to look at risk through each phase of a navigation facility’s life cycle from cradle to grave – planning, design, construction, operation and maintenance, and recapitalization or disposal. Risk is defined as the probability of failure times the consequences of failure. “It’s a mathematical calculation,” Fisher said. “The challenge becomes how you quantify the probability of failure and the consequences of failure.”

The first step in determining risk is to conduct a condition assessment of a facility’s components. The assessment considers current component condition; its historical performance; the most recent evaluations derived from engineer inspections; and other factors. Risk is a combination of this condition information with adverse consequences that would result from the component’s failure. The computation of risk is the mathematical answer of three sequential questions: How likely is the component to break? If it breaks, does it affect service? If it does affect service, how long will it be until service is restored and what is the value of the lost services?

“A component can be the rustiest, oldest operating component at the facility, but if it still works as it was designed, its condition is good enough,” Fisher said. “Risk also depends on the function of the operating component. The operational risk of a malfunctioning 155-ton lock gate is far greater than the operational risk created by a malfunctioning traffic signal light at the end of the lock wall.”

The analysis of operating condition information helps determine the probability of failure. That determination feeds additional considerations such as compliance with laws and regulations; safety to employees and end users; homeland security of critical infrastructure; and most significantly, economic impacts. “It gets complicated,” he said.

Recovery time or the time it takes to bring a broken critical component back into service is pivotal in calculating risk. “If I lose a miter gate, it might knock the lock out of service for two weeks; if I lose the machinery that operates a miter gate, I could quickly install a winch to temporarily operate the gate until a permanent fix is funded,” Fisher said. Both are critical operational components with differing recovery times and risks that weigh differently when considering how to manage these assets.

Likewise, this approach considers available resources to address a possible breakdown. The Pittsburgh District’s repair fleet moors just downstream of the first navigation facility on the Ohio River near Pittsburgh and can respond to repair needs quickly. By contrast, the Portland District is without an in-house repair fleet and must rely on the availability of contractors should a lock break down on the Columbia River. The same component that takes two days to repair in Pittsburgh could take months to fix in Portland.

This level of scrutiny helps inform business-line managers on how best to assign priority for maintenance. The calculation of economic impacts tied to recovery time – the amount of money industry fails to make during downtime – is essential to assigning priority, but presents a challenge when trying to equate across a national inventory. To establish consistency in the consequences of failure as well as the probability of failure, the Asset Management team obtains consequence data from the Planning Center of Expertise for Inland Navigation located in the Huntington District in West Virginia.

“The center uses traffic statistics for each navigation project and the savings for using the waterways rather than rail or truck to estimate the increased transportation cost of an unexpected lock closure,” said Bill Frechione, a USACE economist in Pittsburgh. A project with a medium probability of failure but a high consequence in terms of increased transportation costs could have a higher risk value than a project with a high probability of failure but low consequences. So the project that is less likely to fail would receive funding priority over the project that is more likely to fail.

For districts, an approach based on risk may mean that local priorities give way to regional or national ones. In fiscal year 2013, the greatest share of maintenance work within the Ohio River navigation system will occur in Huntington District, not Fisher’s home district in Pittsburgh. “Both Louisville and Pittsburgh districts will send their fleets to Huntington because they have the greatest risk,” Fisher added.

Currently focused on the navigation inventory, the Asset Management team is looking to apply its process to USACE infrastructure, including hydropower facilities; levee and flood barrier projects; reservoir dams; and even recreation areas. But next up on the list, said Fisher, is USACE’s network of coastal navigation structures that protect large commercial vessels, major ports, and other infrastructure along the U.S. coastline. In a time of ever-tightening operations and maintenance budgets, Fisher said the Asset Management approach will save taxpayers money by ensuring federal funds go to critical projects that provide the most national benefit.

This article first appeared in the 2011-2012 edition of the U.S. Army Corps of Engineers: Building Strong®, Serving the Nation and the Armed Forces publication.