Component 03

Performance-Based Planning

This chapter provides assistance to transportation agencies with the Performance-Based Planning component of Transportation Performance Management (TPM). It discusses where performance-based planning occurs within the TPM Framework, describes how it interrelates with the other nine components, presents definitions for associated terminology, and provides links to regulatory resources. The core of the chapter outlines practical steps for implementation of performance-based planning processes, and emphasizes the importance of developing strategies and priorities that align with agency goals. Performance-based plans serve as the foundation for performance-based programming, specifying how an agency intends to achieve performance outcomes. Guidebook users are encouraged to utilize the action plan included in this chapter and to take the TPM Capability Maturity Self-Assessment as a starting point for enhancing TPM activities.

Performance-Based Planning is the use of agency goals and objectives and performance trends to drive the development of strategies and priorities in the long-range transportation plan and other performance-based plans and processes. The resulting planning documents become the blueprint for how an agency intends to achieve its desired performance outcomes.

Introduction to Performance-Based Planning

Performance-based planning is an integral component within transportation performance management, a strategic approach that uses data to support decisions that help to achieve performance goals. Performance-based planning is the use of a strategic direction (goals and objectives) and performance trends to drive the development of agency strategies and priorities in the long-range transportation plan (LRTP) and other performance-based plans (e.g., safety, asset management, mobility/operations and freight). The identified strategies and priorities in these plans lead to the programming of projects selected to make progress toward performance targets, objectives and goals.

The main distinctions between a performance-based planning approach and a non-performance-based approach are:

The use of performance trends to identify areas of focus and evaluate portfolios of strategies;
Clear linkage between strategies and goals to determine investment priorities; and
The identification of the relative priority of strategies.

Performance-based planning builds on the foundation established by theStrategic Direction (Component 01) and Target Setting (Component 02). The planning process provides a forum to discuss, both internally and externally, how to turn strategic goals into actions on the ground. For each strategic goal, agencies examine performance trends to identify focus areas, derive strategies to address performance challenges and/or maintain existing results, and analyze alternative scenarios. Ensuing tradeoff discussions determine which strategies will be pursued and become concrete projects during the programming phase. The resulting planning documents become the blueprint for how an agency intends to achieve its goals and in turn its desired performance levels.

Performance-based planning is based on several main ingredients:

Data and measures: Data and measures used to establish targets (Component 02) will be documented, reiterated within performance-based plans, and used to drive the development of strategies;
Stakeholder input: Along with data, the plans are developed with visioning input from public engagement and the input of external partners;
Policy considerations: Identified strategies must reflect the policies and procedures of local, state, and Federal partners; and
Sharing data and information among silos: By its nature, the planning process facilitates communication and understanding among silos of expertise. The evaluation of strategies across performance areas requires open communication and exchange of information to better understand tradeoffs and the likelihood of success within a particular context.

While developing performance-based plans, agencies need to maintain a strong linkage to their strategic goals and study how these plans will guide programming. Planning involves the identification of strategies that are included in a variety of documents, which together drive the selection of projects in the programming phase. These two elements (planning and programming) of transportation performance management are combined and discussed in depth in FHWA’s “Performance Based Planning and Programming Guidebook.”¹

Performance-based planning and programming (PBPP) refers to the application of performance management within the planning and programming processes of transportation agencies to achieve desired performance outcomes for the multimodal transportation system. This includes a range of activities and products undertaken by a transportation agency together with other agencies, stakeholders, and the public as part of a 3C (cooperative, continuing, and comprehensive) process. It includes development of: long range transportation plans (LRTPs), other plans and processes (including those Federally-required, such as Strategic Highway Safety Plans, Asset Management Plans, the Congestion Management Process, Transit Agency Asset Management Plans, and Transit Agency Safety Plans, as well as others that are not required), and programming documents, including State and metropolitan Transportation Improvement Programs (STIPs and TIPs). PBPP is intended to ensure that transportation investment decisions are made – both in long-term planning and short-term programming of projects – based on their ability to meet established goals.

While the PBPP Guidebook discusses these elements together because of their extensive linkages, this TPM Guidebook separates them to articulate the unique implementation steps related to planning (Component 03) versus programming (Component 04). As demonstrated in Figure 3-1, planning starts agencies down the path toward implementation through the development of long-range and other performance-based plans. The resulting family of planning documents is then fed into programming activities to create the state transportation improvement program, business plans and budget documents.

Figure 3-1: Model of DOT Planning and Programming Relationships

Source: Adapted from Minnesota Department of Transportation’s Family of Plans²

Subcomponents and Implementation Steps

Figure 3-2: Subcomponents for Performance-Based Planning

Source: Federal Highway Administration

The definition of performance-based planning is: The use of agency goals and objectives and performance trends to drive the development of strategies and priorities in the long-range transportation plan and other performance-based plans and processes. The resulting planning documents become the blueprint for how an agency intends to achieve its desired performance outcomes. The performance–based planning component is comprised of two subcomponents as Illustrated in Figure 3-2:

Strategy Identification: The development of a range of strategies for achieving desired outcomes through the use of available baseline data trends, forecasting tools, economic analysis tools, and management systems (e.g., pavement management system). Strategies may include operational, expansion, asset management, and enhancement approaches.
Investment Prioritization: The evaluation of tradeoffs across alternative investment scenarios based on consideration and comparison of their impacts on performance targets and goals.

Strategy identification is where agencies answer the question, “How will we achieve our agreed-upon goals, objectives and targets”? By examining performance trends and using a range of forecasting tools during the target setting process (Component 02), agencies evaluate different approaches to making progress toward the goals identified in the Strategic Direction (Component 01). Once a menu of strategies has been developed, agencies begin to bundle strategies under different scenarios to assess tradeoffs across performance areas through the investment prioritization process. The risks associated with individual strategies and portfolios of strategies are also evaluated to determine the likelihood of unforeseen events impacting (positively and negatively) the predicted outcomes. To provide direction for the selection of projects, agencies determine the relative priority of different goals and performance outcomes. The resulting planning documents outline an investment prioritization method from which future programming decisions can be made. Table 3-1 lists the steps necessary to implement performance-based planning.

Table 3-1: Performance-Based Planning Implementation Steps
Source: Federal Highway Administration

Strategy Identification	Investment
1. Clarify internal and external roles and responsibilities for effective collaboration	1. Assign internal roles and responsibilities
2. Identify key performance issues for each strategic goal and objective	2. Develop scenarios to evaluate strategies
3. Assess a strategy’s effect on outcomes	3. Establish relative importance of strategic goals to guide strategy prioritization
4. Define and evaluate strategies against desired characteristics	4. Document investment prioritization process
5. Document strategy identification process

Performance-based planning should be viewed as an exploratory exercise, with creativity welcomed but firmly grounded in performance data, strategic goals, and risk assessment. The planning process encourages discussion and exploration, but rests on an analysis of influencing factors and a prioritization process that is well understood by stakeholders. The resulting plans should clearly communicate strategies that will be used to attain targets established during target setting (Component 02).

Clarifying Terminology

Table 3-2 presents the definitions for the performance-based planning terms used in this Guidebook. A full list of common TPM terminology and definitions is included in Appendix C: Glossary.

Table 3-2: Performance-Based Planning: Defining Common TPM Terminology
Source: Federal Highway Administration

Common Terms	Definition	Example
Goal	A broad statement of a desired end conditions or outcome; a unique piece of the agency’s vision.	A safe transportation system.
Objective	A specific, measurable statement that supports achievement of a goal.	Reduce the number of motor vehicle fatalities.
Risk	Threats to and opportunities for achieving strategies, goals, and targets.	An extreme weather event causes unanticipated costs.
Strategy	A well-defined pathway toward reaching a target, goal, or objective.	Increasing bridge inspections to decrease % falling into SD category.
Target	Level of performance that is desired to be achieved within a specific time frame.	Two % reduction in the fatality rate in the next calendar year.
Transportation Performance Management	A strategic approach that uses system information to make investment and policy decisions to achieve performance goals.	Determining what results are to be pursued and using information from past performance levels and forecasted conditions to guide investments.
Visioning	The process of setting or confirming goals and objectives.	Envisioning the characteristics of a transit agency providing equitable, efficient, and dependable service.

Relationship to TPM Components

The ten TPM components are interconnected and often interdependent. Table 3-3 summarizes how each of the nine other components relate to the performance-based planning component.

Table 3-3: Performance-Based Planning Relationship to TPM Components
Source: Federal Highway Administration

Component	Summary Definition	Relationship to Performance-Based Planning
01. Strategic Direction	The establishment of an agency’s focus through well-defined goals/objectives and a set of aligned performance measures.	The purpose of the strategies developed during the performance-based process is to make progress toward the goals and objectives defined under the strategic direction.
02. Target Setting	The use of baseline data, information on possible strategies, resource constraints and forecasting tools to collaboratively establish targets.	Targets define the results the strategies in the plans are striving to achieve.
04. Performance-Based Programming	Allocation of resources to projects to achieve strategic goals, objectives and performance targets. Clear linkages established between investments made and their expected performance outputs and outcomes.	Performance-based planning develops the criteria for prioritizing projects for programming, and for evaluating the efficacy of the delivered projects.
05. Monitoring and Adjustment	Processes to monitor and assess actions taken and outcomes achieved. Establishes a feedback loop to adjust programming, planning, and benchmarking/target setting decisions. Provides key insight into the efficacy of investments.	Strategy Identification (subcomponent 3.1) is informed by the analysis of the effectiveness of alternative strategies (before/after analysis) with respect to established goals. Monitoring provides crucial insights about what adjustments are necessary and when new strategies are needed.
06. Reporting and Communication	Products, techniques and processes to communicate performance information to different audiences for maximum impact.	Planning documents provide an opportunity not only to communicate agency goals and objectives, but also to clarify how an agency proposed to make progress toward agreed upon performance outcomes.
A. TPM Organization and Culture	Institutionalization of a TPM culture within the organization, as evidenced by leadership support, employee buy-in, and embedded organizational structures and processes that support TPM.	The performance-based planning process provides a forum to discuss internally and externally how to turn strategic goals into actions on the ground. A collaborative planning process is important to foster buy-in internally and externally to agency programming decisions.
B. External Collaboration and Coordination	Established processes to collaborate and coordinate with agency partners and stakeholders on planning/ visioning, target setting, programming, data sharing, and reporting.	Performance-based planning is a collaborative process through which strategies are jointly developed with external partners. Resulting planning documents reflect regional policies and priorities.
C. Data Management	Established processes to ensure data quality and accessibility, and to maximize efficiency of data acquisition and integration for transportation performance management.	High quality data must be gathered and made available for monitoring system conditions and evaluating the impacts of previous strategies in order to feed this information into the ongoing cycle of planning, which informs the prioritization of strategies.
D. Data Usability and Analysis	Existence of useful and valuable data sets and analysis capabilities, provided in usable, convenient forms to support TPM.	The usability of data and its place in developing quality analyses plays a significant role in the ability to determine strategies toward reaching agency targets.

Regulatory Resources

This Guidebook is intended to assist agencies with implementing transportation performance management in a general sense, and not to provide guidance on compliance and fulfillment of Federal regulations. However, it is important to consider legislative requirements and regulations when using the Guidebook. In many cases, use of this Guidebook will bring an agency in alignment with Federal requirements; however, the following sources should be considered the authority on such requirements:

Federal Highway Administration

Transportation Performance Management: http://www.fhwa.dot.gov/tpm/links_fhwa.cfm
Fact Sheets on Fixing America’s Surface Transportation (FAST) Act: https://www.fhwa.dot.gov/fastact/factsheets/
Fact Sheets on Moving Ahead for Progress in the 21st Century (MAP-21): https://www.fhwa.dot.gov/map21/factsheets/
Resources on MAP-21 Rulemaking: https://www.fhwa.dot.gov/tpm/rule.cfm

Federal Transit Administration

Fact Sheets on FAST Act: https://www.transit.dot.gov/funding/grants/fta-program-fact-sheets-under-fast-act
Resources on MAP-21: https://www.transit.dot.gov/regulations-and-guidance/legislation/map-21/map-21-program-fact-sheets

Assessing Risk

Risk refers to the positive or negative effects of uncertainty or variability of any influencing factor (both threats and opportunities) to achieving strategies, goals, and targets. Given that performance-based planning focuses on future outcomes, the inclusion of risk in the development of strategies and investment prioritization is crucial. Assessing and managing risk means determining the likelihood of influencing factors occurring, as well as understanding and planning for their associated impacts. This is a key consideration in any planning effort, as part of those plans must address impacts that could cause them to derail. Risks may be positive or negative and generally can be defined as hazard, financial, operational, or strategic risks as summarized in Table 3-4.³ Risk is discussed at length in NCHRP 806: Guide to Cross-Asset Resource Allocation and the Impact on Transportation System Performance (2015) and FHWA’s Risk-Based Transportation Asset Management: Evaluating Threats, Capitalizing on Opportunities (2012).

Table 3-4: Summary of Key Definitions of Risk Types
Source: Federal Highway Administration

Risk Type	Definition	Management
Hazard	The risk of uncertain performance due to condition and/or age of infrastructure or vulnerability to extreme events.	Addressed via contingency funding, specific strategies regarding improving condition, or reducing vulnerability to weather events. These may include prioritizing projects to achieve state of good repair (SGR), simulating deterioration probabilities, or constraining project list to the most critical.
Financial	The risk of a financial shift, such as a cut in revenues or a change in project cost.	Addressed via revenue source and trade-off understanding and simulation of various investment levels.
Operational	The risk that a prediction or strategy is incorrectly calibrated, leading to issues such as inaccurate forecasts or a lack of intended impact.	Addressed by a good feedback loop and review of forecasting abilities.
Strategic	The risk that management or specific programs have unforeseen weaknesses impacting the achievement of their intended purpose.	Addressed by understanding the sensitivity of performance preferences, targets, and resource allocation strategies. Strategy options may include silo versus integrated management, fixed versus flexible budget allocation, and worst first versus proactive preservation.

To guide the risk assessment and management piece of performance-based planning, consider the steps outlined as an International Organization for Standardization standard (ISO 31000)⁴ and used by the FHWA Risk-Based Transportation Asset Management guide (Figure 3-3). This can be a formal or informal process.

Establish the context: Understanding the social, legislative, economic, and environmental factors that may impact the agency or a particular goal, strategy, or target. This is an analogous step to the factor assessment that takes place for target setting.
Identify risk: Determine which type of risk is possible out of the options above.
Analyze risk: Understand the probability of the risk and its impact. This can be a basic understanding or rating, or it can be modeled for a more specific analysis.
Evaluate risk: Recognize the sensitivity of the agency to the impacts; interpret the severity of the impacts that the risk may cause.
Manage risk: “Treat, tolerate, terminate, transfer, or take advantage of the risk.”⁵ In the context of performance-based planning, this means incorporating these steps into the planning process and developing strategies with an understanding of the risks, moving forward into the programming stage with flexibility to accommodate the kind of risks described above.

Figure 3-3: Risk Management Complements Other Management Frameworks

Source: Risk-Based Transportation Asset Management: Evaluating Threats, Capitalizing on Opportunities⁶