Strategically Prioritizing Your Capital Needs
As a result of the CPAC-T voting sessions, each ARRA project received a score that indicated how strongly it is linked to Metro’s goals. The project score is calculated by the Decision Lens software by multiplying votes (from CPAC-T) with weights (from ELT). In other words, the project score indicates its role in achieving Metro’s strategic goals and objectives. For example, the pie chart below illustrates how ARRA project, Update Platform Real-Time Signs, contributes to Metro’s strategic goals.
[Figure 2] Metro Pie 2
The final step in the prioritization process was the selection of ARRA projects under different funding scenarios. The Decision Lens tool optimizes based on high value and relative low costs to ensure a portfolio yields a maximum strategic benefit. The tool’s sophistication also enabled Metro to address project interdependencies (e.g., if additional rail cars are purchased, new maintenance facilities will also be required), fund projects with contractual obligations and reflect management overrides related to projects that were too critical to leave unfunded. Approximately 70% of the final funding decisions was directly based on the prioritization results.
In summary, the prioritization process established a transparent and collaborative approach to evaluating capital programs, building consensus and linking decisions to Metro’s strategic framework. The Decision Lens tool was crucial to providing a framework to facilitate the process that was easy to use. Metro was able to conduct “what-if” scenarios based on different funding levels, project constraints and management guidance. As a result, Metro became the first agency in its region to have an approved list of stimulus projects from its planning board.
Continuing Prioritization and the Future of Strategic Planning
Given the positive reviews by Metro managers regarding the cross-agency communication, collaboration and capacity-building generated by the ARRA project prioritization process, the agency pursued a similar effort to prioritize its more than $11 billion CNI. To systematically tackle this much larger scope, Metro applied lessons learned during the stimulus experience to make project-by-project examinations less time intensive.
In October 2009, Metro staff presented the CNI prioritization results to its board of directors highlighting which capital needs should be funded first and which would need to be deferred to beyond FY 2020. The Decision Lens tool enabled Metro staff to prioritize based on different funding constraints, project’s relative priority to other performance and customer/demand projects, project budget, asset age and policy considerations.
Using prioritization results, Metro staff could clearly communicate the impact of funding constraints to its board of directors. For example, if Metro's funding continued at recent levels (about $500 million per year), only 69 percent of Metro's performance needs would be met and zero funding would be available for customer/demand needs over the FY 2011 to FY 2020 timeframe. At historical funding levels, Metro would not be able to fully fund the investments needed to maintain the system's safety and reliability.
Metro was also able to highlight top priorities such as the rehabilitation of sections of the rail system that are more than 30 years old, replacement of older rail cars and buses, replacement/rehabilitation of three of Metro’s oldest bus garages and information technology system upgrades. Key customer/demand projects recommended as high priority include rail fleet expansion and power upgrades that would allow the full use of eight-car trains on all rail lines, safety and security enhancements, such as building a police training facility and expanding the Metrobus and MetroAccess fleet of vehicles.
The identification and prioritization of Metro’s capital needs were the first two phases of the strategic capital planning process being developed at Metro. As the figure below illustrates, the core of the strategic process is Metro’s agency goals which guide investment and implementation decision. Next, Metro staff will develop a six-year capital program (FY 2011 to FY 2016) based on the CNI prioritization results, committed project funding, preventive maintenance needs and other policy considerations. The first year of the capital program will represent Metro's FY 2011 capital budget. How prioritization results will guide capital reprogramming efforts remains unclear. Once the capital program is delivered, the final step is monitoring how efficiently the capital program was delivered and to evaluate progress made toward agency goals using performance measures. If strategic goals are being used to guide capital decisions, it will be vital to ask, “Did the investments make a difference?” All of the steps contained in this strategic planning process have existed at Metro, but the connection between these steps and agency goals is being strengthened.
