ERM – Guide for effectively Linking Performance Measures, Risk Management, and Process Improvement 

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Champion(s)

Sadika Khan

Avenue Consultants

[email protected]

385-485-5212

Addie Hunsaker

Avenue Consultants

[email protected]

Shaunna Burbidge, PhD

Avenue Consultants

[email protected]

801-336-7991

Patrick Cowley

Utah Department of Transportation

[email protected]

801-648-5459



Guide for Effectively Linking Performance Measures, Risk Management, and Process Improvement


Funding

$400,000

Research Period

24 months

Description

Great research has been done to help integrate Asset Management, Performance Management and Risk Management (NCHRP 08-113) and for implementing Enterprise Risk Management (NCHRP 20-24(105)). Agencies often have programs (performance management, Risk management, and process improvement) that operate separately but are linked rather linearly. Performance management shows where we’ve been, Risk management highlights what would inhibit us from achieving a desired future, and process improvement links well to development of mitigation measures. In the vein of the above-mentioned research, a guide to step from one area to another would make these programs more effective and linked within the agency.


Literature Search Summary

All transportation agencies must effectively manage asset condition and performance while identifying and addressing risks potentially undermining performance goals. In order to provide well maintained, reliable, and up to date networks, three management practices work together within an agency. Process improvement is the task of identifying, then proactively improving the current processes within an organization in order to achieve greater efficiency, functionality, and quality. Performance management utilizes system information to strategically achieve investment or policy goals. Risk management works to identify and mitigate uncertainties that may arise by using analytical and managerial strategies. Past research has often focused on these management practices separately, or one in conjunction with another. This study aims to show how effective linking of these management practices leads to improved organizational functions overall.

Process improvement is of general interest to DOT’s as well as any large organization seeking to improve internal efficiency and quality of established processes. As a result, past study has been performed into the subject of improving internal processes within an organizational framework, though less research exists on process improvement within DOT’s. Study often focuses on improvement in a specific process, as opposed to a more holistic view of overall process improvement within an organizational context. Process improvement has also been linked in study to risk management, as risk management processes require consistent improvement to meet new challenges.

Risk management has been a particular focus of much past research. It has been suggested that by managing performance to achieve objectives the risks to those objectives can be identified and mitigated accordingly. A well-considered evaluation can lead to substantial rewards and accomplishments. Whether it is at the top of an organization's strategy, or it is on the frontline of the organization's daily operations, risk management should be ingrained in the daily operations of the organization. From the active discipline perspective, risk may also be defined as: “The systematic application of policies, procedures, and practices to the identification and management of uncertainty or variability on achievement of agency objectives.” In order to describe boundaries, similar to the risk appetite, the agency needs to consider general guidance on risk treatment-selection decisions. Since risks differ, it is unlikely that there will be a precise guide that is suitable for all decisions. An analysis of benefits and costs should be considered in categories where costs and benefits can be estimated. Research has also been performed into how risk is now inferred or implicit in many decisions concerning agency investments. The selection of pavement treatment sections is based in part on the risk associated with providing poor pavement to high-volume roads compared to low-volume roads. The project selection process takes into account the risks caused by missing or inadequate traffic control devices or by potential structural failures.

Regarding the relationship of performance measures to other management practices, past research has suggested that current FHWA rules do not workably link performance and risk, leaving a DOT’s management of these elements to be uneven. However, research has indicated that these systems of management prove to be most effective when working hand in hand. Effective Performance measures and related management, along with the definition and quantification of risk, is essential to risk management. Likewise risk management informs performance management about the projection of uncertain elements such as funding.

Overall, this study will build on past research by creating an effective frameworking linking process improvement, performance measures, and risk management within the organizational context of a transportation agency. This will provide more detail on the relationship between these management practices and the benefit that a strong relationship between them brings to an organization.


Objectives

The objectives of this research are:
1. Gather information on best practices for each discipline.
2. Clearly outline successes and best practices in each field.
3. Define any obstacles and opportunities that may exist in linking the disciplines.
4. Highlight common/uncommon language between the disciplines that may cause confusion.
5. Develop a framework on how to best link the disciplines.
6. Determine the best communication tools to support the framework.


Urgency and Potential Benefits

Without the establishment of a global framework that links performance measures with risk management, and process improvement, the future efficiency of DOT’s may be impacted and redundancies in workflow and information systems may be introduced. Additionally, communications between parties at DOT’s may be affected without the incorporation of process improvement, leading to disruption of plans due to mixed responses. Improving the framework by which risk and performance are measured may be financially beneficial, due to increased efficiency and more proficient communications between parties. Developing the relations between these three processes within a framework may mitigate the aforementioned issues while simultaneously aligning agencies in their efforts to reach key goals and objectives.


Implementation Considerations

Within a DOT, it is expected that employees and directors directly associated with development of process improvement, along with Risk and Performance Management departments will be the most likely to utilize the results of this research. Any departments within a DOT associated with Process Improvement and Risk/Performance Management through project work would also utilize this information. After research is complete, a DOT will be able to implement study findings by updating or strengthening their current risk management and performance measurement strategies based on the reported study results. Training, any required updating of systems, and development of new processes may be required. Presentation of study findings to risk or performance management managers, and other project managers within the DOT could be an effective method of creating awareness of updates to current risk and performance measurement and management practices. Communication of findings can be relayed to departments associated with risk or performance management, to ensure that updated practices can be implemented across multiple levels.


Champion(s)

Sadika Khan

Avenue Consultants

[email protected]

385-485-5212

Addie Hunsaker

Avenue Consultants

[email protected]

Shaunna Burbidge, PhD

Avenue Consultants

[email protected]

801-336-7991

Patrick Cowley

Utah Department of Transportation

[email protected]

801-648-5459


Others Supporting Problem Statement

Please add at least one supporting organization.

Potential Panel Members

Please add at least one potential panel member.

Person Submitting Statement

Patrick Cowley
Utah DOT
[email protected]
801-648-5459

Notes

AASHTO Strategic Plan Alignment: This project aligns to the AASHTO Strategic Plan by developing transportation standards and guidance. This research will aid DOTs in the furthering of organizational excellence and effective services by providing a framework through which risk and performance can be effectively measured while creating improved processes organizationally. This framework will further align internal and external agencies and their transportation interests by suggesting global updates to effective performance and risk management. As current guidelines are analyzed and potential updates are identified, transportation agencies and systems can improve through the promotion and implementation of these new processes. From this endeavor, DOTs will be able to develop continual process improvement, ensure stronger alignment among committees, and in turn create effective transportation workforce capabilities.




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