Executive Summary

	The focus of our audit
	The Roads and Traffic Authority (RTA) is responsible for managing NSW’s arterial road network (State Roads). The State Road network is valued at $69 billion, including land underneath roads.
	This audit sought to determine how well the RTA is meeting the Government’s objective of maintaining roads and bridges at minimum whole of life cost to ensure reliability, safety and retained value. We wanted to find out what: § condition State Roads are in § condition State Roads should be in § the RTA is doing to address any gap.
	Audit opinion
	The RTA has improved the overall surface condition of State Roads in the last decade. Country road surfaces are now generally much better. Ride quality has improved and cracking has been reduced. The RTA has also achieved a substantial reduction in the number of structurally deficient bridges over the same period. Ride quality on Sydney roads, however, has been falling and is worse than it was ten years ago. And about 15 per cent of the network is very rough or very cracked, although the RTA advises that no State Road is closed or subject to load or speed restrictions due to its condition. While the RTA has standards for road maintenance, it has not specified appropriate condition standards. In the absence of these, it is difficult for the Government, Parliament and public to judge how well the RTA is maintaining road assets. Despite a significant increase in the State’s contribution to maintenance since 1999‑2000, the RTA has deferred road rebuilding projects. The RTA is rebuilding at less than half its long term target, and has not met this target at any time this decade. As a consequence, the structural condition and expected life of State Roads is declining. This presents a risk that roads may become unsafe or unreliable, and is likely to lead to higher repair costs. While the RTA says it has deferred rebuilding to manage more immediate risks to safety, it acknowledges the current rate of rebuilding is not sustainable in the long term and needs to increase. The RTA has not identified how it will address deferred rebuilding, although it advises it is developing a new road network management plan which will address this. We recognise that tension exists between the need to develop new roads while maintaining the existing network. Yet the Government’s priority is maintenance, including rebuilding. Despite the need to rebuild more existing roads, the RTA has been increasing its spending on new work. While it advises that Commonwealth funding arrangements reduce its capacity to redirect funds to rebuilding, it needs to do so. Otherwise it will continue to push the problem onto future generations.
	Recommendations
	We recommend that the RTA:
Determine the gap between actual and appropriate condition	§ complete by 2008 its work on specifying appropriate condition standards for roads, and by 2009 for bridges (p28)
	§ assess if a gap exists between the actual condition of roads and bridges and appropriate condition standards (p29)
	§ determine what it needs to do to lift the network to appropriate condition standards, and long term funding needs (p29)
Improve methods and systems	§ finalise its current research and develop by 2008 a more rigorous and reliable method to assess the expected remaining life of roads (p19)
	§ develop by 2009 a more rigorous and reliable method to assess the future structural condition of bridges (p22)
	§ ensure regions use a consistent approach to assess risks and determine maintenance priorities and treatments (p34)
	§ investigate and implement improved systems to help staff identify the best maintenance solutions (p36)
	§ prepare a submission to the Minister outlining the costs and benefits to the community of closing roads or lanes for an extended period to allow rebuilding, compared to the current approach of undertaking work in the middle of the night (p36)
Address deferred rebuilding	§ extend the planning horizon for asset management and maintenance to at least ten years (p37)
	§ investigate and implement potential models to quantify the risks to current and future road safety and reliability of travel, as well as the cost of repair, for various funding levels (p37)
	§ give higher priority to the rebuilding program to achieve long-term sustainability at minimum whole of life cost (p39)
Improve advice to Government, Parliament and the public	§ complete its new road network management plan, setting out the funding required to maintain the road network at minimum whole of life cost, including risks, any gap between appropriate and actual condition and rebuilding needs, and report this to the Minister and Treasury (p40)
	§ report in its Annual Report any gap between appropriate and actual condition, and how it plans to address it (p40)
	§ report in its Annual Report deferred rebuilding, the progress of its road rebuilding efforts, the proportion of the network past the end of its expected life, and the risks this represents (p40).
	Key audit findings
Chapter 1: What condition are State Roads in?	The RTA uses leading edge technology to collect road surface condition data. This data shows that the RTA has improved the overall ride quality on State Roads in the last decade, despite substantial increases in traffic levels and heavier vehicle loads. The ride quality on country roads is much better than ten years ago and is now similar to Victoria and Queensland, and country roads are also much less cracked. No bridges on State Roads were structurally deficient in 2005-06, compared to 34 in 1996-97.
	During the same period, however, ride quality on Sydney roads has fallen and is below other capital cities and country roads. And around 15 per cent or 2,800 kilometres of State Road is very rough or very cracked. The RTA advises these road segments are mainly in urban low-speed areas, are made of less moisture-sensitive materials, and no State Road is closed or subject to load or speed restrictions due to condition. More important in the long term, but less obvious than ride quality, is the underlying structural condition of State Roads. While more difficult to assess than surface condition, the RTA has done well to recognise the importance of measuring structural condition and progressively improve its methods to do so. In our opinion, however, the structural condition and expected life of State Roads is declining as a consequence of the RTA deferring road rebuilding works. While the level of rebuilding may fluctuate around the long term target, the RTA has not achieved its target at any time this decade. The average expected life of State Roads is 40 years, but the current rebuilding rate means the RTA will need to get 83 years out of them on average. While still in service, 16 per cent or 3,000 kilometres of the network has reached its expected life and its future performance is unpredictable.
Chapter 2: What condition should State Roads be in?	The RTA ranks State Roads according to function and use with the aim of keeping the more important roads and bridges in better condition. It also has intervention standards for maintenance, including minimum standards for the timely repair of potholes, edge breaks and other routine maintenance. Specifying appropriate condition standards is essential for good asset management, but the RTA has yet to do this for State Roads. It therefore cannot judge if a gap exists between actual and appropriate condition, nor can the Government, Parliament or the public. The absence of condition standards also makes it difficult for the public and the Government to judge if the condition the RTA is aiming for is adequate or how well the RTA is managing State Roads. The RTA has started work on developing appropriate condition standards, and should give priority to completing this work.
Chapter 3: What is the RTA doing to address any gap?	The RTA allocates its maintenance money on the basis of risk, giving priority to availability and safety of roads and bridges. Its approach balances head office control and local decision making. The RTA needs, however, to ensure all its regions adopt a consistent risk assessment method and to improve its systems to help staff identify the best maintenance solutions. The RTA has not identified how it will address deferred rebuilding, but advises it is developing a new road network management plan which will address this risk.
	The RTA’s 2003-2008 Infrastructure Maintenance Plan acknowledges that it is not doing enough rebuilding to ensure the long-term viability of the network, thereby presenting a risk to safety and reliability, and of higher repair costs. The RTA needs to examine and model the relationship between spending, safety and condition so that it can give its Minister and Treasury more detailed advice on the implications of funding decisions. The RTA should also report publicly on its progress in addressing deferred rebuilding.
	Total maintenance spending has grown by 20 per cent in real terms since 1995-96, but spending on developing the network has grown by more than 50 per cent. During this period, NSW’s contributions to maintenance and to development have each grown by about a third. The Commonwealth’s contribution to development more than doubled whereas its contribution to maintenance has fallen by a fifth.
	The RTA also faces a problem rebuilding very busy, worn State Roads. Traffic flow and congestion means crews can only work on them for a few hours at a time, usually in the middle of the night. The RTA advises this is not an optimal approach, but it assumes the disruptions caused by closing a road or lane for an extended period would be unacceptable to the community. The RTA should put these options and their respective costs and benefits to the Minister to decide.
	Response from the Roads and Traffic Authority
	I enclose the RTA’s response to the Final Report of the subject audit for consideration. The RTA appreciates the cooperative and constructive approach adopted by the Audit Office and its staff during the progress of the audit. This approach reflects well on the role of the Audit Office in contributing to improved delivery of services. In this respect the RTA is already moving to refocus on our core road maintenance task. This audit report provides significant assistance in progressing these reforms. (signed) Les Wielinga Chief Executive Dated: 4 August 2006
	Attachment The RTA thanks the Audit Office for the opportunity to comment on this report. The RTA regards the report as a useful contribution as we refocus on our core tasks of maintenance, construction and service. And we welcome the Audit Office’s acknowledgement of the RTA’s good practice in: § improving the overall surface condition of roads over the last decade; § risk management; § automated data collection; §   cost effective design guidelines and flexible management structures; and § keeping State Roads open and available to road users.
	We also welcome the Audit Office’s acknowledgment of the challenges faced by the RTA in maintaining the State Road network. Other major challenges include the facts that over the last decade: § An extra one million vehicles now use the 20,738 kilometres of roads in New South Wales; and § There are now 600,000 more licensed drivers in NSW. In recognition of the challenges facing the organisation the RTA is currently evaluating the most effective organisational structure and maintenance plan for maximising our maintenance effort.
	To date, planning has relied on trends in surface condition data, condition intervention standards, age and renewal considerations.
	Effective asset management, however, leading to the setting of appropriate condition standards, needs reliable forecasts of the structural condition of road pavements. This has not been available due to the absence of technology to assess the structural condition across a large road network.
	In this respect, the Report notes that the RTA has “done well to recognise the importance of measuring structural condition and progressively improve its methods to do so” (page 4). The Report also notes that the RTA: § “in conjunction with the CSIRO, developed and patented new mobile technology (‘RoadCrack’) to assess pavement cracking” (page 23) to “help plan maintenance” and “identify where a visual inspection by RTA staff is needed to determine the appropriate maintenance treatment;” (page 22) § integrates road rebuilding with maintenance, measuring and reporting its rate of rebuilding against its long term target; (page 20) and § is already improving its modelling capabilities by “leading research into the latest models” to improve asset management and maintenance planning (page 18). The Report recognises the need for a long term perspective when examining the maintenance of road infrastructure. Many road pavements last longer than 50 years and bridges even longer. The Report acknowledges that “the level of rebuilding may fluctuate around the long term target” (pages 4 and 12). Short term variations in the rate of rebuilding can be accommodated provided all State Roads are kept open without constraints on road users due to their condition, and provided that the rate of rebuilding increases in the longer term. Variations may occur from time to time due to other priorities such as re-opening Lawrence Hargrave Drive following its closure from rockfalls, infrastructure security upgrades and natural disaster repairs. The Report notes that the RTA receives $2 billion pa for maintaining and developing the major arterial network. However, a significant part of this funding is from the Commonwealth and is tied to specific development projects. One of the constraints facing the RTA is the reduction in Commonwealth funding for maintenance (page 5, 32 and 38). Indeed under the Auslink agreement the State must contribute funds to many Commonwealth projects. The overall effect is that the untied part of the State development program is only about $420 million pa. Despite these limitations, the State has increased its funding of maintenance in real terms by one third since 1995-96 (pages 5, 32, 37 and 38).
	The Report acknowledges as good practice, the RTA’s ranking of its State Roads by function and use (page 26), with the aim of keeping the higher ranked roads in a better condition. For best use of public funds, it is important that those roads classified as State Roads continue to fulfil arterial road functions, and a panel of Local Government and RTA representatives is currently finalising a review to ensure that roads are appropriately classified.
	In summary then, the RTA will use this report in developing our maintenance plans and most appropriate organisational structures. More specifically, in addition to the above remarks the following table details the RTA’s response to the Audit Office’s individual recommendations

	Recommendations and RTA Comments
Determine the gap between actual and appropriate condition	§ Complete by 2008 its work on specifying appropriate condition standards for roads, and by 2009 for bridges (p28)
	§ Assess if a gap exists between the actual condition of roads and bridges and appropriate condition standards (p29)
	§ Determine what it needs to do to lift the network to appropriate condition standards, and long term funding needs (p29)
	Agreed. The RTA has commenced this process. It must be noted that implementation is linked to improvements in methods and systems recommended below.
Improve methods and systems	§ Finalise its current research and develop by 2008 a more rigorous and reliable method to assess the expected remaining life of roads (p19)
	§ Develop by 2009 a more rigorous and reliable method to assess the future structural condition of bridges (p22)
	Agreed. The RTA will continue its work on structural assessment methods. This is necessary to achieve the above recommendations.
	§ Ensure regions use a consistent approach to assess risks and determine maintenance priorities and treatments (p34)
	§ Investigate and implement improved systems to help staff identify the best maintenance solutions (p36)
	Agreed.
	§ Prepare a submission to the Minister outlining the costs and benefits to the community of closing roads or lanes for an extended period to allow rebuilding, compared to the current approach of undertaking work in the middle of the night (p36)
	Agreed.
Address deferred rebuilding	§ Extend the planning horizon for asset management and maintenance to at least ten years (p37)
	Agreed.
	§ Investigate and implement potential models to quantify the risks to current and future road safety and reliability of travel, as well as the cost of repair, for various funding levels (p37)
	Agreed. The RTA will investigate potential models of this type.
	§ Give higher priority to the rebuilding program to achieve long-term sustainability at minimum whole of life cost (p39)
	Agreed. Rebuilding of pavements will need to be increased for long term sustainability.
Improve advice to Government, Parliament and the public	§ Complete its new road network management plan, setting out the funding required to maintain the road network at minimum whole of life cost, including risks, any gap between appropriate and actual condition and rebuilding needs, and report this to the Minister and Treasury (p40)
	Agreed.
	§ Report in its Annual Report any gap between appropriate and actual condition, and how it plans to address it (p40)
	§ Report in its Annual Report deferred rebuilding, the progress of its road rebuilding efforts, the proportion of the network past the end of its expected life, and the risks this represents (p40).
	Agreed. The reports are linked to improvements in methods and systems and the implementation of appropriate standards and models recommended above.