Indicators of Road Maintenance Effectiveness

In the theory of economy and management there are various definitions of effectiveness. Depending on the object, the effectiveness of which is to be assessed, one may speak of effectiveness of the economy, market, sector, enterprise (organisation) or – as in the case of this report – the national road authority. In the PWN Polish Dictionary effectiveness is defined as a “positive result, performance, producing an effect, efficiency, result of business activity defined as a ratio of the effect obtained to the outlay”. Effectiveness, however, is not a clear-cut term and measuring it requires a precise definition of the objectives and a selection of appropriate tools.

Effects and outlays may be compared in the economic and technical context. Economic effectiveness means that a given production quantity is achieved by means of the lowest possible costs or financial outlays. On the other hand, technical effectiveness means that the highest possible production quantity is achieved by means

of the given production factors. Technical effectiveness is thus a wider term than economic effectiveness. Achieving technical effectiveness is not synonymous with achieving economic effectiveness, either, because economic effectiveness besides the technology of the production process includes also prices of production factors.

Furthermore, in the context of managing transport infrastructure it is necessary to point out the difference between financial effectiveness and socio-economic effectiveness. An analysis of financial effectiveness actually takes into account only the outlays (costs) in terms

of financials, that is investment outlays, replacement expenditure and operational (maintenance) costs, whereas the socio-economic analysis – apart from the costs actually incurred – considers also monetised social costs (expressed in pecuniary values), which are not internalised in the financial account (so-called external costs). Thus the socio-economic account includes, for example, costs such as environmental costs or the users’ time costs. And thus the technically effective production is not always effective from the economic point of view, and production, which is effective from the financial perspective does not have to be by nature effective from the socio-economic perspective.

Definitions of Effectiveness

Indicators and Methodology of Research

On the other hand, in management sciences, effectiveness means a capacity to implement a strategy of an enterprise (organisation) and is an important tool for measuring effectiveness of its activities.

Consequently, we can speak of effectiveness in achieving the objectives set or, simply, of management effectiveness. Since the category of effectiveness usually refers to quantities, management effectiveness relates to the ratio of the “as it is” status to the “as it should be” status, that is compares to a certain benchmark (Koźmiński, Piotrowski (ed.) 1997, p. 568). Such benchmark may be defined within an organisation or may include a comparison to the best organisations around.

Management effectiveness is also evaluated in a more or less subjective manner by the organisation’s customers or other stakeholders.

However, such an evaluation is usually not formalised. Evaluation of management effectiveness is of different dimension than the assessment of economic effectiveness and may not be equated with it.

However, the evaluation of management effectiveness usually includes elements of effectiveness assessment in socio-economic terms.

Accordingly, economic effectiveness and management effectiveness have both an internal dimension, which is effectiveness seen from the perspective of an enterprise (also called X -efficiency, managerial or technical efficiency) and external dimension, including opinions and satisfaction of customers (users) or in a few cases – their external costs (so-called allocative or social efficiency) (Liebenstein, 1966).

For the purpose of the research topic, the effectiveness of national road maintenance is referred to both effectiveness of activities by individual road authorities and effectiveness of the entire system of finance and public administration, including in particular the existing system of financing the road infrastructure (investment as well as maintenance projects). The present report analyses the effectiveness of the national road authority (GDDKiA) that operates under the specific environmental conditions (legal, administrative, financial and socio-economic).

Considerations regarding the administrative division of roads and the principles concerning road finance and budget exceed the objectives of this report.

To measure the effectiveness of management processes, various Performance Indicators (PI) are used, which in reference to road maintenance are often defined as Maintenance Performance Indicators – MPI. The most important indicators are called Key Performance Indicators (KPI).

Economic Effectiveness vs.

Management Effectiveness

Indicators and Methodology of Research

Indicators of road infrastructure maintenance effectiveness may be divided into three basic groups:

I. Technical indicators, also called Asset Performance Indicators (API), which are usually only of a technical nature, but which can also refer to life-cycle pavement costing and combine the technical and economic analysis. Technical indicators in road engineering must not be confused with those performance factors that define the scope of carried-out works and are in fact non-technical

indicators. Basic technical maintenance indicators are not indicators of technical effectiveness analysis, either.

II. Non-technical (operational) indicators, also called Operational Performance Indicators (OPI), which reflect the operational aspect of road maintenance management effectiveness. As there are many objective difficulties in the socio-economic analysis of road maintenance processes, in the road engineering practice some operational indicators “replace” the socio-economic ones. For instance, the costs of road users due to delays caused by roadworks, which are difficult to estimate, may be replaced with, for example, a time limit for traffic hindrances caused by maintenance works.

III. Economic indicators, which consist of financial indicators and socio-economic indicators. In the case of road engineering and management, except for road structures and sections or motorways operated on fully commercial principles (complete revenue and cost calculation), the analysis at the financial level comes down to an analysis of cost effectiveness (due to the lack of revenues the standard financial indicators are usually of a negative value).

Indicators of the socio-economic effectiveness are subject to the Cost Benefit Analysis (CBA). However, though CBA is now common in case of investment projects, it is carried out only in a few

countries for the purposes of bigger maintenance projects.

Indicators based on maintenance costs and outlays reflect the economic aspect of road maintenance management effectiveness.

Analyses of road infrastructure maintenance effectiveness may be carried out at three levels – the technical level, by assessing the parameters of the technical condition of roads, the operational level by assessing the management effectiveness, which is the subject matter of this report, and the economic level, including not only the costs of maintenance, but also road users’ costs (table 1).

Effectiveness Indicators

Indicators and Methodology of Research

Table 1. Indicator analysis of road maintenance effectiveness

ASSET PERFORMANCE – load capacity – depth of ruts

– potholes in the pavement – cleanness of the road – other – performance to target

indicators

– financial or cost indicators – financing level

– socio-economic indicators

Source: own classification.