US Army Corps

1. US Army Corps of Engineers Great Lakes & Ohio River Division Achieving Navigation Systems Acceptable Levels of Risk Business Management Approach Great Lakes & Ohio River Navigation Systems William Harder, P.E.

2. Topics • Management Model Improvements • Five Year Development Perspective • Budget Formulation • Budget Execution • Reliability - System Maintenance Approach • Efficiency – System Construction Outlook • Navigation Economic Investigations • Key Emphasis Points

3. Navigation Systems are Key to Economic Vitality Vital Economic Trade Systems Interface Systems Environmental Systems Reliability Systems Durability Systems Efficiency Systems Coverage

4. US Army Corps of Engineers Great Lakes & Ohio River Division Management Model Improvements • Past functional phases management only • Organized by phase-oriented management model • Clouded mission focus obscured success • Current business lines management • Based on Navigation business line + others • Integrates functional groups to accomplish mission • Aligns interests: • Governmental - National Economic Development • Stakeholders - conducive economic systems

5. US Army Corps of Engineers Great Lakes & Ohio River Division Navigation Management Model Improvements • Why care about Navigation business model? • Focuses on achieving goals • Facilitates stakeholders’ involvement • Creates & maintains reliable communications • Enables understanding of strategy for success • Gels economic sustainability & growth initiatives

6. US Army Corps of Engineers Great Lakes & Ohio River Division Navigation Management Model Improvements • Navigation program integrity characteristics • Contribute to National goals • Objective oriented • Solid technical foundation • Accountability • Transparency • Collaboration

7. US Army Corps of Engineers Great Lakes & Ohio River Division Navigation Management Model Improvements • Indicators of Success • Improved focus of Administration interests • Vertical team focal shift to accomplishing business goals • Success recognition by setting and meeting performance measures in reliability, efficiency, budget formulation, budget execution, communications

8. US Army Corps of Engineers Great Lakes & Ohio River Division Navigation Management Model Improvements • Navigation Success Indicators – National • USACE internal focal shift to Navigation performance • OMB interest to support Navigation reliability initiatives • Administration establishing Committee on Maritime Transportation System • Congressional emphasis on long term financial planning • House E&W Report FY07 “applauds” LRD’s FYDP

9. US Army Corps of Engineers Great Lakes & Ohio River Division Navigation Management Model Improvements • Navigation Success Indicators – Regional Systems • Stakeholders vision for performance reliability, efficiency • Cohesive Strategy – Five Year Development Perspective • Budget formulation – focus on reliability & efficiency • Budget execution – focus on appropriations as intended • Reliability – FYDP maintenance for system performance • Efficiency – FYDP construction strategic outlook Let’s look at each…..

10. Regional – National Vision EFFECTIVE Vision, Strategy, Goals, Priority Objectives, Advocacy CEO - VP LEVEL ENGAGEMENT IS CRUCIAL FOR SUCCESS OUTPUT Industrial Producers & Consumers Vessel Owners & Operators Regional & National Waterways Focus Construction & Engineering Port Authorities State and Local Economic Development Agencies Other Economic Interests Support Relationship

11. US Army Corps of Engineers Great Lakes & Ohio River Division – Cohesive Strategy – Five Year Development Perspective Provide cohesive Navigation System development needs • Presents cohesive $2.8 billion ORS & $0.9 billion GL optimum needs gelling the individual projects into system perspective Concisely describe system development rationale • Summarizes construction development sequence, maintenance, and investigations Reflect optimum system funding needs • Emphasizes risk & reliability as technical foundation for investments Facilitate stakeholders involvement & participation • Centralizes key system information and encourages meetings to promote understanding

12. US Army Corps of Engineers Great Lakes & Ohio River Division – Cohesive Strategy – Five Year Development Perspective Congressional commentary in FY07 House Report: …the Great Lakes and Ohio River Division …Ohio River and Tributaries Navigation System Five-Year Development Perspective is ...the most comprehensive and informative report that has come to the attention of the Committee. In it, the Corps attempts to assess the current status and ‘‘acceptable’’ level of performance for projects under its jurisdiction…. The Committee applauds the efforts of the Great Lakes and Ohio River Division and other interested parties in the development of this ‘‘perspective.’’ End result: $10,000,000 additional for regional maintenance

13. US Army Corps of Engineers Great Lakes & Ohio River Division - Budget Formulation -Achieving Acceptable Risk Level Ideal No-Risk Level High Low ROI Acceptable Risk Level Risk & Reliability Investment Levels Acceptable System Reliability Reliability Level Current Risk Level Below Acceptable Justified ROI Low Time Target Date Today

14. US Army Corps of Engineers Great Lakes & Ohio River Division - Budget Formulation -Uniform Performance Metrics Relative Return on Investment:Risk & Reliability Index

15. US Army Corps of Engineers Great Lakes & Ohio River Division - Budget Formulation -Uniform Performance Metrics Ranking Priorities for Navigation ProgramO&M Risk and Reliability Index #1 projectsGI Risk and Reliability Index #1 projects vital to system sustainabilityCG Risk and Reliability Index #1 projectsO&M Risk and Reliability Index #2 projectsGI Risk and Reliability Index #2 projects partial-system benefits CG Risk and Reliability Index #2 projectsO&M Risk and Reliability Index #3 projectsGI Risk and Reliability Index #3 projects single location system benefits CG Risk and Reliability Index #3O&M Risk and Reliability Index #4 projectsO&M Risk and Reliability Index #5 projects

16. US Army Corps of Engineers Great Lakes & Ohio River Division - Budget Formulation -Uniform performance metrics • Commander’s Regional Strategic Objectives • Total cost of the work package • Probability of reduced performance: Increments #1 through #5 • Five-year average tonnage • Facility Protection/CISP • Public Ferry Transportation • Critical Harbor of Refuge

17. US Army Corps of Engineers Great Lakes & Ohio River Division - Budget Formulation -Uniform Performance Metrics • National Security • Subsistence Harbor • Safety - Search & Rescue, USCG Station • Import/export cargo values • Project condition surveys: channels and infrastructure • Dam safety • Personnel Safety

18. US Army Corps of Engineers Great Lakes & Ohio River Division - Budget Formulation - Ohio River & Tributaries $550 M average optimum funding next 5 years Ohio River & TributariesTotal Navigation Program Optimum Level Actual to date FY07 President’s Budget Updated 2/25/06

19. US Army Corps of Engineers Great Lakes & Ohio River Division - Budget Formulation - Great Lakes $178 M average optimum funding next 5 years Optimum Level Actual to date FY07 President’s Budget

20. US Army Corps of Engineers Great Lakes & Ohio River Division – Budget Execution – Redefining Success Programming Execution • House E&W Approps Bill (May 2005) new expectations • USACE Programming guidance • Appropriations use on projects per Congressional direction • Execution success redefined reprogramming • Transparency, obligated carryover to continue construction • Discuss execution regularly with stakeholders

21. US Army Corps of Engineers Great Lakes & Ohio River Division Reliability – System Maintenance Approach • Goal: Achieve Acceptable Levels of Reliability • Establish Reliability Performance Standards definitions • Apply reliability standard to each project site • Assess current reliability status • Plan systems reliability strategy • Schedule best projects sequence for system reliability • Discuss reliability plans with Navigation stakeholders • Execute the reliability improvement projects

22. US Army Corps of Engineers Great Lakes & Ohio River Division Acceptable Reliability Performance Standards A Virtually no compromise to authorized Federal project features accepted. Minimal compromise to authorized Federal project features accepted. There is a small probability that degraded conditions may result in inefficient operations i.e., slower and/or more costly navigation operations. B Moderate compromise to authorized Federal project features accepted. There is a high probability that degraded conditions may result in inefficient operations, i.e., slower and/or more costly navigation operations. C Significant compromise to authorized Federal project features accepted. Closures of seven or more days are scheduled annually. D Extreme compromise to authorized Federal project features accepted. Closures of at least two weeks are scheduled annually. F

23. US Army Corps of Engineers Great Lakes & Ohio River Division Acceptable and Current Performance ReliabilityOhio River & Tributaries Navigation System 74% of the Navigation system is currently below the Acceptable Level of Performance Reliability Assessments effective 11/2005

24. US Army Corps of Engineers Great Lakes & Ohio River Division Acceptable and Current Performance Reliability Great Lakes Navigation System 33% of the Navigation system is currently below the Acceptable Level of Performance Reliability Assessments effective 11/2005

25. US Army Corps of Engineers Great Lakes & Ohio River Division Maintenance Reliability Ohio River & Tributaries • Miter gates at Markland, Meldahl, Greenup, McAlpine, and Pike Island • Navigation dams erosion repair • Locks wall armor • Submerged emergency gates repair • Dam emergency bulkheads repair • Tainter gates and hoist machinery • Deteriorated concrete repair • Implement regional maintenance standards

26. US Army Corps of Engineers Great Lakes & Ohio River Division Maintenance Reliability Great Lakes • Channel depths & widths maintenance dredging • Breakwaters, jetties need repairs / replacement • Soo & Chicago lock repairs • Implement regional maintenance standards

27. US Army Corps of Engineers Great Lakes & Ohio River Division Operations & MaintenanceOhio River & Tributaries $180 M average optimum funding next 5 years FY07 delta $25.2M on 9 projects Optimum Level Actual to date FY07 President’s Budget Updated 2/25/06

28. US Army Corps of Engineers Great Lakes & Ohio River Division Operations & MaintenanceGreat Lakes $106 M average optimum funding next 5 years Actual to date Optimum Level FY07 President’s Budget

29. US Army Corps of Engineers Great Lakes & Ohio River Division Construction Completion Ohio River & Tributaries • Complete Robert C. Byrd lock construction in FY08 • Start JT Myers Lock Extension effectively in FY08 • Start Greenup Lock Extension effectively in FY08 • Complete Winfield lock construction in FY08 • Complete McAlpine lock construction in FY08 • Complete Marmet lock construction in FY09 • Start JT Myers Dam major rehabilitation effectively in FY09 • Complete Emsworth rehabilitation in FY11 • Complete Kentucky lock addition in FY12 • Complete Chickamauga Replacement Lock construction in FY12 • Complete Olmsted Lock and Dam construction in FY13 • Complete Lower Mon 2, 3, and 4 construction in FY16

30. US Army Corps of Engineers Great Lakes & Ohio River Division Optimum InvestigationsOhio River & Tributaries $5 M average optimum funding level next 5 years • Complete Ohio River Mainstem Study (ORMSS) in FY06. • Implement Waterways Valuation and Risk Assessment in FY07 • Continue Greenup Extension Preliminary Engineering Design for completion FY07. • Effectively start Upper Ohio Navigation Study (Emsworth, Dashields, and Montgomery) in FY07 for completion in FY10. • Start Tennessee-Cumberland River Systems Study in FY07. • Start Kentucky River Locks 1-4 Disposition Study in FY08.

31. US Army Corps of Engineers Great Lakes & Ohio River Division Optimum InvestigationsGreat Lakes $1.7 M average optimum funding level next 5 years • Continue Great Lakes & St Lawrence Seaway Study • Implement Waterways Valuation and Risk Assessment in FY07

32. Key Emphasis • Five Year Development Perspective • Emphasis on reliability & efficiency • Investments for the system not projects • Budgeting success by business line / mission • Uniformity in rigorous budgeting process • Rigorous valuation & risk assessment programs • Equating the optimum needs with achieving acceptable levels of risk • STAKEHOLDERS COMMON VISION

33. St. Marys River Dredging Upper St. Marys River (Vidal Shoals) Lower St. Marys River (Little Rapids) Contact: William Harder, P.E. (513) 684-6525