Considerations in Considerations in Implementing a Implementing a Performance-Based Performance-Based Federal-aid ProgramFederal-aid Program

Jeffrey F. PaniatiJeffrey F. PaniatiSecretary, Standing Committee Secretary, Standing Committee On Performance On Performance ManagementManagementFebruary 23, 2009February 23, 2009

FHWA PerspectiveFHWA Perspective

Time is right for performance-based Time is right for performance-based programprogram

SAFETEA-LU Commissions, GAO, SAFETEA-LU Commissions, GAO, Congressional Committees, AASHTO, Congressional Committees, AASHTO, USDOT all agree USDOT all agree

Must not only refocus Federal program, Must not only refocus Federal program, but also establish accountability for but also establish accountability for performanceperformance

Clear expectation that performance Clear expectation that performance approach will be implemented approach will be implemented aggressivelyaggressively

ConsiderationsConsiderations

Key performance areasKey performance areas Most appropriate performance Most appropriate performance

measuresmeasures National goalsNational goals State performance targetsState performance targets Accountability for performanceAccountability for performance

Goals of Performance-Goals of Performance-Based ProgramBased Program Improve performance in key Improve performance in key

areas of national interestareas of national interestShift emphasis of Federal Shift emphasis of Federal

oversight from process to oversight from process to performanceperformance

Improve decision making Improve decision making Improve accountabilityImprove accountability

Performance AreasPerformance Areas

What are the most appropriate areas What are the most appropriate areas to be managed for performance?to be managed for performance?

Want a relatively few performance Want a relatively few performance areas that broadly reflect national areas that broadly reflect national interestsinterests SafetySafety Pavement and bridge conditionPavement and bridge condition CongestionCongestion FreightFreight Environment (?)Environment (?) Other (?)Other (?)

Performance MeasuresPerformance Measures

Directly related to highway Directly related to highway investmentinvestment

Outcome orientedOutcome oriented Reflect most important aspects of Reflect most important aspects of

performanceperformance Not unduly burdensome to collectNot unduly burdensome to collect Understood by publicUnderstood by public Change within acceptable timeframeChange within acceptable timeframe

National Performance National Performance GoalsGoals Who sets national goals: Who sets national goals:

Congress? USDOT? States? Congress? USDOT? States? Collaborative process?Collaborative process?

My PerspectiveMy Perspective: National goals : National goals should be set by USDOT in should be set by USDOT in consultation with States and other consultation with States and other stakeholdersstakeholders

USDOT then shares accountability USDOT then shares accountability for meeting those goalsfor meeting those goals

Performance Goals, Performance Goals, TargetsTargets

Performance targets should be Performance targets should be aligned with available resourcesaligned with available resources

Targets should recognize Targets should recognize differences among Statesdifferences among States

Targets should have short enough Targets should have short enough timeframe to allow effective timeframe to allow effective oversightoversight

AccountabilityAccountability

Should influence decision makingShould influence decision making Should be based on reasonable Should be based on reasonable

targets and expectationstargets and expectations Should be consequences for Should be consequences for

failure to meet targetsfailure to meet targets Options include funding flexibility Options include funding flexibility

and level of oversightand level of oversight Loss of Federal funds generally Loss of Federal funds generally

not an effective optionnot an effective option

Phased Phased ImplementationImplementation Aggressive but realistic timeframeAggressive but realistic timeframe Improve States’ capabilities to link Improve States’ capabilities to link

investment to performance in key investment to performance in key areasareas

Improve data required to measure Improve data required to measure performanceperformance

Perhaps institute pilot programs for Perhaps institute pilot programs for more advanced Statesmore advanced States

Phase in measures to promote Phase in measures to promote improved performanceimproved performance

Federal-State Federal-State RelationshipsRelationships Could represent significant change Could represent significant change

in Federal-State relationshipsin Federal-State relationships FHWA traditionally has managed for FHWA traditionally has managed for

process, not performanceprocess, not performance Not necessarily more oversight, just Not necessarily more oversight, just

a different kind of oversighta different kind of oversight ““Performance Partnership” with both Performance Partnership” with both

FHWA and the States being FHWA and the States being accountableaccountable

On-Going FHWA EffortsOn-Going FHWA Efforts

Currently developing authorization Currently developing authorization proposal with underlying themes of proposal with underlying themes of performance and accountabilityperformance and accountability

Two major research projects Two major research projects One to provide support for developing One to provide support for developing

legislative proposallegislative proposal Another to provide technical basis for Another to provide technical basis for

regulations to implement performance-regulations to implement performance-based programbased program

Must get this right for it to be effectiveMust get this right for it to be effective