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Executive SummaryThis report examines and evaluates Amtrak’s performance management and provides recommendations for improving performance and performance management at Amtrak. Specifically, the report analyzes Amtrak’s Northeast Corridor Infrastructure and Investment Development business line (NECIID) and its goal of Station and Connectivity Improvement.Amtrak has established a strong framework for strategic planning and reporting. Amtrak is operating under a five-year strategic plan that describes the Amtrak vision and outlines goals, key metrics, and strategies to achieve those goals. A clear logic model exists in this framework that guides Amtrak’s investments. In addition, Amtrak regularly reports on its performance and produces both an annual report and monthly performance reports. These two reports measure progress toward Amtrak’s corporate goals but not toward its newer business line goals. Despite this framework, Amtrak does not adequately measure progress toward business line goals. Investment in the Northeast Corridor (NEC) is essential for Amtrak’s future success and the railroad faces a formidable but achievable challenge of developing high-speed rail on the NEC. To achieve this vision, Amtrak must do a better job reporting on infrastructure investments and the development of partnerships to provide rail service for the 21st century.Most important, Amtrak must integrate better planning and reporting mechanisms and include interim targets for goals. Amtrak should appoint performance officers to measure progress and provide analysis for leaders to adjust infrastructure investments. Amtrak has outlined ambitious projects that it should continue. Its leaders must commit to the vision for the NEC and be transparent about progress. Anything less will result in failure. Jamie ScottPerformance Management consultantMcCourt School of Public PolicyAmtrak’s Current Performance Management System Amtrak is currently operating under a five-year strategic plan for FY2011-FY2015. The strategic plan states Amtrak’s corporate vision and identifies the corporate goals and strategies that support the realization of that vision. The Amtrak vision states:Amtrak is America’s first intercity travel choice for connections to and between the nation’s key metropolitan areas, providing customer-driven, safe, environmentally-sustainable, energy-efficient and inter-modally linked service to passengers, communities and partners. Through recognized organizational excellence, Amtrak’s diverse and talented team will lead the development and growth of the high-speed and intercity passenger rail system in North America. To achieve this vision, the corporate strategic plan defines five broad corporate goals, which are Safety and Security, Customer Focus, Mobility and Connectivity, Environment and Energy, and Fiscal and Organization Excellence. Each goal provides relevant metrics, including an FY10 baseline measure (the year before the strategic plan began), the target annual change, and an FY15 target (the end of the strategic plan period). The strategic plan further identifies seven corporate strategies that align with Amtrak’s corporate goals. Each strategy identifies the goal or goals that it supports. One of these corporate strategies is the creation of six separate business lines, which will allow Amtrak to “better respond to the wants, needs and expectations of customer segments and improve financial performance.” Amtrak is separating its main business areas to better manage performance in those areas. The six business lines are Northeast Corridor Infrastructure and Investment Development (NECIID), Northeast Corridor Operations, State Supported Services, Commuter Services, Long-Distance Services, and Corporate Asset Development. This report focuses specifically on the performance management system for the NECIID business line and the business line goal of Station and Connectivity Improvement.Each of the business lines has a strategic plan with a mission statement specific to that business line. The NECIID mission statement reads:Amtrak’s Northeast Corridor Infrastructure and Investment Development Business Line manages and develops Amtrak-owned railroad infrastructure to meet the growing high-speed rail needs of the 21st century. This includes managing station assets, infrastructure design, maintenance and construction services, asset capacity and utilization planning, and dispatching services in support of all railroad operations on the Northeast Corridor.Similar to the corporate strategic plan, the business line strategic plans identify business line goals, which include Safety, Superior Service, Financial Performance, Station and Connectivity Improvement, and Environmental Improvement. Each business line strategic plan identifies metrics that map to those goals, including an FY10 baseline, expected annual change, and an FY15 target. The business line plans also articulate five strategies to achieve the business line goals. The NECIID strategic plan states that the goal of Station and Connectivity Improvement is to “make travel easier and more attractive for train passengers by improving the appearance and operation of Amtrak-owned stations and increasing opportunities to connect with other travel modes in key markets.” This business line goal supports Amtrak’s corporate goal of Mobility and Connectivity. To measure the performance of this goal, the NECIID strategic plan identifies two key metrics: change in effective speed (mph) and the number of airport connections. The FY10 baseline measure for the change in effective speed is 0.0, the target annual change is +0.5mph and the FY15 target is +2.5mph. The FY10 baseline for the number of airport connections is 2 and the FY15 target is 5. There is not a target annual change for the airport connections metric. The NECIID strategic plan further describes two strategies to support the goal of Station and Connectivity Improvement: building new partnerships with key stakeholders and developing business and financial plans to build high-speed rail in the NEC. In addition to a five-year corporate vision and a more specific business line vision, Amtrak also produces an annual corporate budget and comprehensive business plan that identify capital and operating budget requests and business strategies for the coming fiscal year. The business plan cautions that the NECIID business line is new and does not yet have management and pricing strategies in place. However, the plan discusses key infrastructure investments that will support NECIID, though it does not provide additional detail. The plan does include budget requests and business strategies to support NEC fleet and infrastructure but does not identify the specific NECIID business line strategies and metrics that they support.One key target in the business plan is resolving Amtrak’s $5.8 billion State of Good Repair (SOGR) backlog of infrastructure investment over 15 years, which will help achieve NECIID business line goals. Amtrak’s goal is to invest $760 million annually: $380 million to replace existing infrastructure and $380 million to develop new infrastructure. Key metrics to measure progress toward resolving the SOGR backlog include rehabilitating 200 bridges, overhauling Baltimore’s B&P and Union Tunnels, rehabilitating rail crossovers and junctions, and repairing electric traction systems. For FY13, the business plan provides funding totals for specific groups of projects for the SOGR backlog, including bridges, tunnels, communications equipment, signaling, station improvements, and other projects. Amtrak plans to invest $627.8 million overall in infrastructure upgrades in FY13, including projects beyond the SOGR backlog. In addition to resolving the SOGR backlog, Amtrak’s FY13 business plan highlights key projects in the Gateway Program, a program for building new infrastructure on the NEC to support the development of high-speed rail. The FY13 business plan outlines major infrastructure investments in and through New York City, including new tunnels under the Hudson River, repairs to the existing Hudson River tunnel, two new bridges at Secaucus, NJ, additional tracks between Newark and Secaucus, and upgrades to Penn Station in New York City. Amtrak expects that it could complete these projects in twelve years at a cost of $15 billion, but establishes this timeline as a best-case scenario rather than a performance target. While the business plan outlines future investment, the Amtrak Annual Report reviews past performance. The FY12 annual report provides quantitative financial measures of specific engineering accomplishments. Many of these projects support the NECIID business line generally and help resolve the SOGR backlog, but Amtrak does not compare these results to targets for measuring performance. The accomplishments include new and upgraded bridges, tunnels, stations, and other structures ($187 million); track ($148 million); electric traction ($20 million); and communications and signaling equipment ($31 million). The annual report also provides performance metrics for corporate goals and the strategies to achieve each goal. Metrics for the corporate goal of Mobility and Connectivity, which the NECIID goal of Station and Connectivity supports, include the performance measure, unit of measurement, FY11 baseline, FY12 target, FY12 actual, variance from prior year, and variance from target. The specific measures are intermodal ticketing partnerships, change in effective speed, and train delays per 10,000 miles. Similar metrics do not exist for the NECIID business line strategic goals. Below is a summary of those measures:Performance MeasureUnit of MeasureFY11 baselineFY12 targetFY12 actualVariance from prior yearVariance from targetIntermodal ticketing partnershipsCount4347430-2Change in effective speedMPH00.50.60.60.1Delays per 10,000 train milesMinutes34725232720-75Although the annual report does not measure performance, the railroad does produce monthly performance reports that provide financial performance measures and other key performance indicators (KPIs) with comparisons to monthly and year-to-date (YTD) targets. The only KPI included in the monthly performance report with relevance for the NECIID business line is end-point station performance but is only a summary of all Amtrak stations, not NEC-specific stations. The performance report does provide NEC-specific on-time performance metrics in another section but only compares these metrics to the same month in the prior year and not to a monthly or annual target. In July 2013 NEC station on-time performance was 82.7% compared to 84.2% in July 2012. The year-to-date (YTD) on-time performance for NEC stations was 88.2%, compared to 89% YTD in July 2012. The report also includes a summary of engineering outputs, many of which support NECIID business line goals, but similar to the annual report do not include comparisons to identifiable targets. Assessing Amtrak’s Performance Management SystemAmtrak has a robust planning and reporting process but fails to connect performance measures to stated goals. The performance management system is particularly weak because the annual and monthly reports mechanisms do not measure progress toward the business line goals identified in the business line strategic plan.Amtrak’s performance management system focuses primarily on financial performance and changes in ridership. In many of its documents, particularly in the introduction letters from Amtrak CEO Joe Boardman, the railroad highlights improving financial performance and growing ridership. In some ways this is a necessary first step for Amtrak—the railroad has a short history as an organization and has struggled with financial underperformance, relying heavily on Congressional appropriations over the years. Given this history of underperformance, Amtrak focuses on reporting positive outcomes, rather than challenges to achieve financial and operational goals. Amtrak’s infrastructure needs are enormous and its vision for high-speed rail is ambitious. To build support for these investments, Amtrak must convince key stakeholders that the vision is achievable. Perception is critical to Amtrak’s success. The five year corporate strategic plan clearly links strategies to goals, and the creation of individual business lines allows Amtrak to better manage the performance of its various operations. Amtrak’s annual business plan further explains some of the NECIID business line strategies that the corporate strategic plan does not, including NEC station and route planning. In 2012, Amtrak released the Union Station Master Plan, which envisions the redevelopment of Union Station in Washington, DC, the southern anchor of the NEC. The master plan envisions new capacity at Union Station and new rail service along the NEC. Investing in Union Station is a significant project for achieving the NECIID business line goal of station improvement and is a key part of Amtrak’s NEC investment strategy. Given the complexity of that project, a master plan separate from the business line strategic plan is appropriate. While the structure of the NECIID business line strategic plan is strong, it lacks a robust set of metrics, providing only two metrics for the Station and Connectivity goal and offering no indication of other key metrics. The railroad need not provide every single metric for the business line in the strategic plan but it could provide an appendix with an expanded list or information about developing additional metrics. If Amtrak indeed only created two metrics for improving station connectivity, it cannot possibly achieve that goal. Similarly, the business line strategic plan fails to indicate actions to implement the business line strategies or make progress toward the specific metrics. For example, the NECIID strategic plan identifies a strategy to build new partnerships with stakeholders for long-term business development. However, the strategy does not indicate any tactical steps to build those partnerships or the types of partners necessary to create new airport connections, a key metric for the business line goal of Station and Connectivity Improvement. Certainly new partnerships will help create those connections but the strategic plan does not provide details on the nature of this relationship. This lack of detail leaves Amtrak’s ability to create airport connections uncertain.Achievement of business lines goals is further complicated because progress toward the key metrics for each goal are not readily measureable. For example, the strategic plan lacks any metrics or qualitative evidence to document ongoing progress toward the development of new airport connections. Certainly there are interim steps to add airport connections to Northeast Corridor rail service, but Amtrak provides no way to determine whether it can successfully achieve the FY15 goal of five total airport connections. The lack of interim steps means it is unclear whether NECIID’s goals are stretch goals. Since the airport connections metric does not provide a target for annual change (the interim steps), it is impossible to know if the goal is a stretch goal for Amtrak.Amtrak does not appear to use regular performance data to effectively manage its infrastructure improvements. The railroad is realistic about its infrastructure challenges on the NEC and has set some timelines for upgrading existing infrastructure and investing in new infrastructure. Measurement of the progress of those projects remains unclear, as do any adjustments to investment priorities based on those data. Since Amtrak’s recent annual report does not measure engineering accomplishments in relation to targets, it is difficult to identify areas of underperformance and the contribution of those engineering accomplishments toward the resolution of the deferred maintenance backlog. These reports are reporting activity (outputs) but not performance (outcomes). Similar reporting issues exist in Amtrak’s monthly performance reports. These reports include a wealth of financial performance data and route performance data. Amtrak is honest about both positive and negative results, including negative budget performance and negative route performance. These operational performance reports are lengthy—almost 100 pages—and include numerous detailed tables and measures of monthly performance compared to the prior month, year-to-date, and the same time last year. The data in these monthly performance reports more clearly indicate operational areas in which the railroad is struggling. Amtrak appears to use these data to correct operational performance but does not compare operational performance to the goals, strategies, and metrics from the business lines strategic plans. Similar to the corporate annual report, the monthly performance reports provide data on engineering outputs but do not measure performance toward engineering outcomes. Much of the financial and engineering data allow Amtrak to demonstrate if it is performing better than last year in a given category but not whether that performance is as good, better, or worse than expected. Finally, Amtrak’s strategic plan and comprehensive business plan do not indicate individuals responsible for managing performance. The strategic plan states the importance of managers who regularly review tactical plans to execute business strategies, but does not specifically identify performance managers. Amtrak has done a good job creating the structure for executing corporate and business line goals but the business line plans do not indicate the data that managers use to adjust tactics or to whom managers report.Improving Performance Management at AmtrakThe first step toward improving performance management and performance at Amtrak is to better integrate planning and reporting mechanisms. To accomplish this, Amtrak must further develop its strategies for the NECIID business line. Without a clear vision to achieve business line goals of upgrading NEC infrastructure and developing high-speed rail, Amtrak cannot manage its performance effectively. The two main reporting tools—the annual report and the monthly reports—do not explicitly report on progress toward the NECIID goals. While the business lines are new, neither the annual report nor the monthly performance report indicate whether Amtrak will report on progress toward business line goals in the future. Instead, future annual reports should include specific sections for each business line, with aggregated data and progress toward annual goals. Monthly performance reports for each business line may be unnecessary, given the slow pace of infrastructure investment. However, Amtrak would benefit from regular reports of infrastructure progress with disaggregated data on specific projects, which could inform content for the annual report. Amtrak has created a strong performance management foundation in its strategic plan, with a clear hierarchy of goals and strategies. The railroad should strengthen its performance management system with integrated reporting. An operational plan specific to the business lines would also clarify Amtrak’s annual goals and strategies. The annual budget and business plan provide information about Amtrak’s corporate budget and corporate strategies. A large part of this plan concerns the NEC but much of it concerns Amtrak’s other business lines. In such a format it is easy to lose sight of the NEC investments and to assess the annual goals for that business line. The corporate strategic plan includes the business line strategic plans; the budget and business plan should do the same. Amtrak should also clearly identify a chief performance officer or team of performance officers, which it should include as part of the business line strategic plan. The recent reorganization to create business lines means that a performance officer will likely have greater influence on performance at the business line level with a report to a corporate performance officer. A chief performance officer could help establish additional metrics for the business lines and assist the reporting process to ensure reported data adequately inform the business line goals. The performance officer for the NECIID should not be a new position, but a senior manager with responsibility for business line operations. If a performance officer is not integrated into the work of the business line, and serves merely to measure and report progress, he or she may not have support from the business line Amtrak employees. Amtrak has an adequate plan for resolving its SOGR backlog and it should continue to upgrade current infrastructure while investing in new infrastructure. Amtrak will never develop high-speed rail on the NEC if it waits to address its infrastructure backlog before making new investments. Amtrak should also continue its efforts to redevelop stations along the NEC, beginning with Washington, DC’s Union Station. Key to improving station and connectivity improvement will be increasing capacity at core stations along the NEC. The Gateway program in the New York area is another project Amtrak should continue to prioritize. Unfortunately there is no quick fix for Amtrak. The maintenance backlog and necessary investments in high-speed rail are substantial enough that a long-term commitment to investment is essential. Commitment to the vision, honesty about challenges, transparency about progress, and continued fiscal stability are necessary for Amtrak to successfully upgrade the NEC. As it commits financial and engineering resources to improving the NEC, Amtrak will become a safer, more reliable, and more attractive travel option. As ridership increases, so will revenue and Amtrak’s ability to provide high-quality rail service. Amtrak has developed the vision for the NEC. Now it must commit the energy and resources to ensure it is on track to realize that vision. ................
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