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Managing Construction and Infrastructure in the 21st Century Bureau of Reclamation (2006)

Chapter: 3 Good Practice Tools and Techniques

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Suggested Citation:"3 Good Practice Tools and Techniques." National Research Council. 2006. Managing Construction and Infrastructure in the 21st Century Bureau of Reclamation. Washington, DC: The National Academies Press. doi: 10.17226/11519.
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3
Good Practice Tools and Techniques

INTRODUCTION

The committee was asked to identify good practice tools and techniques for Bureau of Reclamation efforts in facility and infrastructure management. This chapter addresses practice tools and techniques in asset management, acquisition, and contracting, human resources, project management, and planning and budgeting that could be usefully applied to meet Reclamation’s mission needs. The policies and procedures necessary for putting these good practices in place are also discussed. Tools and techniques for human resource management are reviewed in detail in Chapter 4.

Some of the committee’s observations regarding practice tools and procedures stem from a roundtable discussion held with senior representatives from organizations with missions similar to Reclamation’s, as well as current tools and techniques used at Reclamation that are viewed by the committee as representing good practices. Others reflect the committee’s knowledge of and experience with the project management, acquisition, and contracting practices of other agencies.

ROUNDTABLE OF ORGANIZATIONS WITH SIMILAR MISSIONS

On June 22, 2005, the committee convened a meeting to discuss organizational and operational models used by other federal agencies and other governmental organizations with mission responsibilities similar to Reclamation’s to identify good practice tools and techniques. Representa-

Suggested Citation:"3 Good Practice Tools and Techniques." National Research Council. 2006. Managing Construction and Infrastructure in the 21st Century Bureau of Reclamation. Washington, DC: The National Academies Press. doi: 10.17226/11519.
×

tives of the U.S. Army Corps of Engineers (USACE), the Tennessee Valley Authority (TVA), and the California Department of Water Resources (DWR) participated in the discussion. The focus of the discussion was the facility and resource development and management practices used by these organizations. Following is a brief summary of the discussion and the committee’s conclusions. Detailed notes are provided as Appendix C.

The committee observed that although the participating organizations had many similarities they also differed significantly in the size, scope, and focus of their missions. The three organizations also had differing cultures that support their unique methods of doing business. Although these differences inhibit the direct transplantation of policies, procedures, and organization, there are general lessons to be learned. Because of the relatively large size of the territory in which they operate, the operations of USACE seemed more analogous to those of Reclamation as a whole, while TVA and DWR can more readily be compared to Reclamation’s regions.

U.S. Army Corps of Engineers

USACE’s civil works mission is very similar to Reclamation’s. The main difference is that Reclamation’s operations are focused in the western states and USACE operates throughout the country. Reclamation focuses more on providing hydroelectric power and water for irrigation than USACE, which, while generating more hydropower than Reclamation, focuses more on flood control and navigation. Both organizations have had major construction programs to develop dams and waterways and are now responsible for the operation, maintenance, repair, and modernization of these facilities. All projects are undertaken with appropriated funds, but projects that require cost sharing are not implemented until sponsors secure their matching contributions.

USACE is composed of 41 districts, each having a fairly high degree of autonomy. The districts are organized into eight regions. Current mission requirements are driving USACE toward more uniform policies, procedures, and service to customers and are addressed by reducing autonomy and increasing central promulgation and local implementation of policies.

Tennessee Valley Authority

TVA’s overall mission is to generate prosperity for the Tennessee Valley. There are three goals. These goals encompass requirements for maintaining navigation and flood control, established in the initial TVA legis-

Suggested Citation:"3 Good Practice Tools and Techniques." National Research Council. 2006. Managing Construction and Infrastructure in the 21st Century Bureau of Reclamation. Washington, DC: The National Academies Press. doi: 10.17226/11519.
×

lation, as well as managing the Tennessee River system for aquatic habitat, water quality, water supply, and recreation. TVA’s power system comprises 11 fossil fuel plants, 3 nuclear plants, 29 hydro plants, 1 pumped-storage plant, 6 combustion turbine plants, 7 diesel units, 16 solar energy sites, and 1 wind energy site. TVA is both a power producer and power marketer, and it operates as a federal corporation.

TVA, the nation’s largest public power provider, serves 8.5 million residents and 650,000 businesses and industries. In addition to its ratepayers, TVA has many public and private stakeholders who are affected by how TVA manages the Tennessee River and TVA facilities and infrastructure.

California Department of Water Resources

DWR has about 2,500 employees, which is considerably fewer than either USACE or TVA. DWR has different constraints, but it also faces many of the same issues. DWR’s mission is “to manage the water resources of California in collaboration with others to benefit the state’s people and to protect, restore, and enhance the natural and human environment.” Over 50 percent of DWR’s personnel are assigned to the State Water Project (SWP), which covers much of the same geographic area as Reclamation’s Central Valley Project (CVP) but is smaller and serves more urban customers. SWP includes 17 pumping plants, 8 hydroelectric plants, 30 storage facilities, and 693 miles of canals and pipelines.

Implications of USACE, TVA, and DWR Practices for Reclamation

Mission

Fifty years ago water projects were about economic growth and development. In the last 20 years environmental issues have grown in importance. The result is mitigation projects resulting from past decisions that did not recognize environmental issues and the current incorporation of environmental concerns in all engineering endeavors. Addressing the environmental aspects of the mission becomes a question of costs and benefits, and who pays. The public wants environmental protection but is often not willing to pay for it. The beneficiaries of water systems and hydropower experience increasing costs due to environmental conservation even as they receive a constant or diminished level of benefits. The issue is whether environmental conservation is a broad public benefit to be paid for by all or an integral part of the cost of hydropower, water, and flood control. The cost of increased security presents a similar problem.

Suggested Citation:"3 Good Practice Tools and Techniques." National Research Council. 2006. Managing Construction and Infrastructure in the 21st Century Bureau of Reclamation. Washington, DC: The National Academies Press. doi: 10.17226/11519.
×
Funding

A large subsidy is provided to agricultural irrigators through Reclamation’s cost recovery limits. DWR passes on actual costs and provides no subsidy to its customers, but it provides assistance grants to local governments. These grants are used at the discretion of the local governments with few state requirements.

As a federal corporation, TVA is self-funded through rates paid by its electric power customers that cover all operating expenses. TVA’s rates are also guided by its mission to generate prosperity. A cost recovery model is also used by the Reclamation units that operate large hydroelectric facilities off-budget. USACE, like most of Reclamation, relies on appropriated funds and cost sharing or reimbursement by the beneficiaries.

Finding funds to cover the costs of maintaining, repairing, and modernizing the nation’s water-related infrastructure (hydropower, irrigation, municipal and industrial (M&I) water, flood control, and related facilities) is a problem faced by the federal government as well as state and local governments. Many projects were built with federal funds but rely on local initiative for maintenance. The cost of recapitalizing facilities and infrastructure that have exceeded their service life is often beyond local means, and there is no clear resolution of who should pay. The state of California is considering a water resource investment fund with funds collected from all water users throughout the state. Some of the fund would be controlled locally, where it is collected, and some spent state-wide on broader needs.

Working with Sponsors and Stakeholders

Managing water systems requires a highly collaborative process. It requires coordination among government agencies at the federal, state, and local levels and coordination among water users and other stakeholders, and between government agencies and users and stakeholders. Water agencies need engineers who can collaborate with others. They are expected to work across disciplines and with the public. DWR does not specifically evaluate this capability in its personnel, but it is nonetheless a critical part of its success.

USACE finds that it increasingly plays the role of facilitator. As the group responsible for managing the water systems, it needs to bring the users and stakeholders together to identify issues of common concern, areas of agreement, and issues that need to be resolved. Planners are trained in facilitation skills and expected to take a leadership role in applying dispute resolution systems. The engineering solution is often secondary to the resolution of divergent public interests.

Suggested Citation:"3 Good Practice Tools and Techniques." National Research Council. 2006. Managing Construction and Infrastructure in the 21st Century Bureau of Reclamation. Washington, DC: The National Academies Press. doi: 10.17226/11519.
×

Performance reviews of managers and specialists at TVA are divided into two parts. Seventy percent is tied to measurable performance goals and 30 percent is tied to behaviors. The ability to collaborate is a desired behavior. In the past, TVA tried to take the responsibility for finding a fair solution by understanding and representing all interests. This placed TVA in a position where it was at odds with most stakeholders. The situation has been improved by stepping back and letting the interested parties resolve their differences and then acting on the consensus decisions. TVA did not need to be a facilitator. Direct communication among members of the community made the difference. TVA also works collaboratively with the local community when stakeholders are ready to collaborate.

The key to effective relationships with sponsors and stakeholders is open and honest communication. The more transparent the agency’s processes, the easier it is to get buy-in from sponsors and stakeholders. When sponsors and stakeholders do not agree, it is better for an agency to be neutral and allow them to arrive at an appropriate compromise.

Project Management

Completing construction projects within the original cost and schedule is a challenge for most organizations because of uncertainties in cost and schedule estimates. USACE addresses this challenge with a policy of adjusting designs to fit the budget unless the adjustments significantly alter the original scope. Cost estimating is particularly difficult in major rehabilitation projects when the nature and extent of existing conditions are not known until a portion of the project has been executed. Rehabilitation projects have a greater need for forensic engineers and institutional knowledge of how existing facilities are configured and operate.

Workforce Development

All organizations, especially those that rely on the technical competence of their workforce, are concerned with recruiting, developing, and retaining skilled personnel to maintain their core competencies. There are many tools and techniques used to achieve these objectives, all of which can be successful if used appropriately. USACE takes the long-term approach by addressing students in middle and high schools. TVA has found that retention is improved if they recruit from universities in their region. All three organizations have career development and training programs that include technical as well as managerial objectives. For Reclamation and the other organizations, maintaining the commitment and funding to implement their chosen programs can be a problem.

USACE has determined that an average new graduate engineer will

Suggested Citation:"3 Good Practice Tools and Techniques." National Research Council. 2006. Managing Construction and Infrastructure in the 21st Century Bureau of Reclamation. Washington, DC: The National Academies Press. doi: 10.17226/11519.
×

have eight jobs in his or her working career. In USACE this means about one-third of the workforce will have a tenure of 8 to 10 years. USACE believes that the federal benefit package makes it competitive with the private sector in attracting and keeping qualified personnel. The challenge, for any organization that is project driven, is dealing with the variations in demand. USACE also invests in its human resources by giving its engineers 40 to 80 hours of training per year. This includes technical as well as management training. It is important to select people who have the traits needed by a manager for management positions and to find other ways to reward people who are better suited to technical positions. In USACE this applies to all disciplines employed in the organization. In recent years USACE has also recognized project management as a discipline. DWR has a target of about 50 hours per year of training and also supports efforts by its employees to earn advanced degrees.

Another challenge is to retain the institutional knowledge possessed by people who are retiring. USACE does this by conducting extensive exit interviews with all retirees and recording the resulting information in a database. Downsizing over the last few years has reduced the opportunities for mentoring whereby senior personnel can pass their wisdom on to the new people in the field. Institutional mechanisms are needed to formalize this transfer of knowledge. USACE has a rotation program for new hires; DWR does not.

USACE is looking at bringing more senior engineers from outside the organization into leadership positions. There is some internal bias against this, but it can be overcome. USACE is applying some effort in middle and high schools to promote careers in engineering and in the corps. This same approach needs to be applied to the O&M crafts as well.

TVA is targeting its recruitment at the best and the brightest in the South. This geographic focus is reducing the pool of potential recruits but increasing the hiring success and retention rate.

Centralized versus Decentralized Engineering Services

The geographic area of responsibility for TVA and DWR is roughly equivalent to that of Reclamation regional offices. TVA and DWR both rely on centralized engineering design services and dispersed facility inspection and maintenance. Automation has also allowed centralization of many operation functions. Personnel in the field act as the owners, while central office personnel provide consulting services. As the owners, field personnel maintain control of the process.

Large agencies like USACE and Reclamation have a need for consistency throughout the organization. This can be achieved by centralized operations or the development and implementation of strong guidelines

Suggested Citation:"3 Good Practice Tools and Techniques." National Research Council. 2006. Managing Construction and Infrastructure in the 21st Century Bureau of Reclamation. Washington, DC: The National Academies Press. doi: 10.17226/11519.
×

and standards that are developed centrally but implemented locally. This does not preclude local participation in the development of policies and procedures.

In-House versus Contract Services

Since the 1990s, there has been a sustained effort in government to reduce the quantity of services performed by government employees and increase contractor-provided services. To function as a smart buyer, an organization that requires technical services often retains a minimum level of technical expertise in-house in order to select and manage outside contractors effectively. There is also general agreement on the necessity of undertaking technical activities in order to maintain the expertise needed to manage contractors. The problem is then determining the optimum mix of in-house and contract services.

The application of arbitrary targets for the quantity of contract services can be problematic. As noted by TVA, outsourcing decisions are based on availability and economic factors. It should be recognized by those who would increase reliance on contracting that it is often more difficult to regain core competencies after they are lost than to maintain them.

Impact of Environmental and Social Issues

Environmental and social issues are an integral part of all water projects. The development process should integrate these issues from the beginning, even if they increase the final cost. Addressing them as an add-on after the fact is even more expensive. Most current problems are the result of past failure to recognize their importance. The issue that remains to be resolved is whether the costs of mitigating the environmental and social consequences of water projects are to be paid by the direct beneficiaries of the water and power projects or by the general population.

POLICIES AND PROCEDURES

As noted in Chapter 2, the committee believes that existing policy, as promulgated in the Reclamation Manual, to guide Reclamation’s decisions and actions for the benefit of stakeholders, employees, and the public at large is inadequate. USACE reported that it is facing some of the same problems but is reacting as follows:1

1  

Donald Basham, U.S. Army Corps of Engineers, Remarks at roundtable discussion on June 22, 2005.

Suggested Citation:"3 Good Practice Tools and Techniques." National Research Council. 2006. Managing Construction and Infrastructure in the 21st Century Bureau of Reclamation. Washington, DC: The National Academies Press. doi: 10.17226/11519.
×
  • Driving toward more consistency nationwide.

  • Establishing more standard procedures and processes.

  • Focusing increasing responsibility on the regional organization as opposed to the Washington, D.C., headquarters or the geographically dispersed districts.

  • Centralizing selection of key senior employees to promote consistency.

  • Utilizing standard designs where possible.

  • Increasing involvement with project sponsors and stakeholders at all stages of project planning and design.

  • Using centralized guidance with local implementation.

The USACE chief of engineers, LTG Carl Strock, in a message to all corps employees dated April 13, 2005, said the following:2

There are four non-negotiable aspects to the USACE 2012 strategic plan,

  • We will act as one headquarters to streamline our processes. This is not a structural combination, but rather a unity of effort. By combining the efforts of the Washington D.C. headquarters with the division headquarters, we reduce a layer of review and therefore, improve the timeliness of actions.

  • We will have regional integration teams in Washington D.C. to focus on supporting Regional Business Centers.

  • We will have Regional Business Centers that share resources throughout the region and multiply our capabilities.

  • We will maintain active Communities of Practice to help us maintain technical competence and share knowledge. My intent is for us to achieve a level of national consistency so employees can move to any district and know the processes and procedures.

TVA also reported that it is moving toward standardizing more processes and procedures.

A key factor that appears to be driving agencies toward centralized policy promulgation and service support is budget pressure. All agencies report pressure to do more with less. The commissioner recognized this principle in the FY 1994 reorganization, but the absence of policy guidance and the decentralization of much authority have made the promised efficiencies harder to achieve.

2  

Message from LTG Carl Strock, chief of engineers, U.S. Army, to all corps employees, Subject: Keeping You Informed, dated April 13, 2005.

Suggested Citation:"3 Good Practice Tools and Techniques." National Research Council. 2006. Managing Construction and Infrastructure in the 21st Century Bureau of Reclamation. Washington, DC: The National Academies Press. doi: 10.17226/11519.
×

ACQUISITION AND CONTRACTING PRACTICES

The following sections address acquisition and contracting good practices, including ways to determine whether Reclamation activities should be undertaken by government or contractor personnel and ways to ensure that Reclamation staff can be made aware of innovative and effective contracting approaches.

Competitive Sourcing Policies and Practices and the Level of Outsourcing

The bureau relies on its own regional and area employees, TSC staff, and contractor support to meet mission needs. While the days of huge new dam construction projects appear to be over, there is still a strong need for solid technical and engineering expertise to deal with the many infrastructure issues associated with Reclamation’s aging facilities. However, responsibility for O&M for a number of these sites has been shifted from the bureau to the local water districts. As noted in Chapter 2, this is the case for 428 of Reclamation’s 673 facilities. A comment heard by the committee is that water customers believe the bureau charges considerably more for projects and for Reclamation-performed work than do the districts and private sector consulting and engineering firms.

There appears to be no set bureau policy about when to obtain contractor support and when to look to internal staff to do the work. Decisions of this sort are made at the region and area levels or at TSC, as opposed to by headquarters. Frequently these decisions appear to be based on the availability of in-house staff to conduct the work.

Most of the O&M-type work conducted by the bureau would by no means be considered inherently governmental. Therefore, virtually all of this work could be contracted out, using private sector capabilities and allowing the bureau to reduce staff and costs.

The Office of Management and Budget (OMB) Office of Procurement Policy (OPP) Policy Letter 92-1 of September 23, 1992, originally established the government-wide policy for addressing inherently governmental functions. The thrust of this policy can now be found in the Definitions section and subpart 7.5 of the Federal Acquisition Regulation. The basic definition of an inherently governmental function from Policy Letter 92-1 is as follows:

As a matter of policy, an ‘inherently governmental function’ is a function that is so intimately related to the public interest as to mandate performance by Government employees. These functions include those activities that require either the exercise of discretion in applying Government authority or the making of value judgments in making decisions for the Government.

Suggested Citation:"3 Good Practice Tools and Techniques." National Research Council. 2006. Managing Construction and Infrastructure in the 21st Century Bureau of Reclamation. Washington, DC: The National Academies Press. doi: 10.17226/11519.
×

The policy explicitly noted building maintenance as a function that could be performed by contractors. Although the committee recognizes the difference between O&M of buildings and the O&M of Reclamation facilities, one could easily construe the definition in Policy Letter 92-1 to cover other types of maintenance and support work as well.

The committee believes that the National Research Council report Outsourcing Management Functions for the Acquisition of Federal Facilities offers a good model for Reclamation to follow as it makes its determination of inherently governmental functions related to its infrastructure activities. The following section from the Executive Summary of that report describes the approach:

Although design and construction activities are commercial and may be outsourced, management functions cannot be clearly categorized. In the facility acquisition process, an owner’s role is to establish objectives and to make decisions on important issues. Management functions, in contrast, include the ministerial tasks necessary to accomplish the task. Based on a review of federal regulations, the committee concluded that inherently governmental functions related to facility acquisitions include making a decision (or casting a vote) pertaining to policy, prime contracts, or the commitment of government funds. None of these can be construed as ministerial functions. The distinction between activities that are inherently governmental and those that are commercial, therefore, is essentially the same as the distinction between ownership and management functions.


Using Section 7.5 of the Federal Acquisition Regulations as a basis, the committee developed a two-step threshold test to help federal agencies determine which management functions related to facility acquisitions should be performed by in-house staff and which may be considered for outsourcing to external organizations. The first step is to determine whether the function involves decision making on important issues (ownership) or ministerial or information-related services (management). In the committee’s opinion, ownership functions should be performed by in-house staff and should not be outsourced.


For activities deemed to be management functions, the second step of the analysis is to consider whether outsourcing the management function might unduly compromise one or more of the agency’s ownership functions. If outsourcing of a management function would unduly compromise the agency’s ownership role, then it should be considered a “quasi”-inherently governmental function and should not be outsourced. (NRC, 2000, pp. 3-4)

Policy Letter 92-1 cautions that other factors also may play a role in that decision. It states as follows: “Determining whether a function is an inherently governmental function often is difficult and depends upon an

Suggested Citation:"3 Good Practice Tools and Techniques." National Research Council. 2006. Managing Construction and Infrastructure in the 21st Century Bureau of Reclamation. Washington, DC: The National Academies Press. doi: 10.17226/11519.
×

analysis of the factors of the case.” Along these lines, it points out the need for agencies to maintain a core capability in key disciplines whether commercial or not to ensure that the government remains a knowledgeable and informed buyer of contracted services. The policy states as follows:

Agencies must, however, have a sufficient number of trained and experienced staff to manage Government programs properly. The greater the degree of reliance on contractors the greater the need for oversight by agencies. What number of Government officials is needed to oversee a particular contract is a management decision to be made after analysis of a number of factors. These include, among others, the scope of the activity in question; the technical complexity of the project or its components; the technical capability, numbers, and workload of Federal oversight officials; the inspection techniques available; and the importance of the activity. (OPP, 1992, p. 7)

In other words, an agency may well need to maintain proficiency in what otherwise would be commercial activities to ensure it remains an informed buyer of such services. Area, regional, and Denver PMTS staff have pointed out that maintaining an internal capability allows them to address precisely this issue. In this connection, Reclamation should train its contracting officer’s technical representatives (COTRs) to ensure that they possess the skill sets necessary to oversee that contracted work.

Effectiveness of Contracting Techniques and Methods

Although Reclamation uses a variety of procurement methods for construction, the bulk of construction work is procured by firm fixed-price contracts through sealed bidding or negotiation. In the case of source selection, awards are made on a best-value basis. Design-build contracting is being considered but has not yet been used to any great extent. Most invitation for bids and request for proposal procurements are set aside for small businesses, businesses owned by minorities, females, and other disadvantaged persons, and historically underutilized business zones (HubZones) unless it is determined that the capabilities or the competition is inadequate. In that case, full and open competition is used.

Over the last decade federal agencies have adopted a variety of acquisition techniques to streamline and improve contracting performance. These practices have relied on new contracting vehicles such as the General Services Administration (GSA) schedules, tasks under multiyear indefinite delivery/indefinite quantity (IDIQ) contracts, or simplified acquisition of basic engineering requirements (SABER) to streamline procurements while still addressing agency mission needs and inspiring adequate competition. Reclamation has used these techniques to meet a va-

Suggested Citation:"3 Good Practice Tools and Techniques." National Research Council. 2006. Managing Construction and Infrastructure in the 21st Century Bureau of Reclamation. Washington, DC: The National Academies Press. doi: 10.17226/11519.
×

riety of contracting needs. For example, the Lower Colorado region is obtaining good results with IDIQ contracts for its maintenance and repair work. Under an IDIQ, a contractor bids on tasks associated with a particular contract since it has already gone through a full and open competitive process and has been issued an award. This technique greatly speeds up and simplifies the contracting process.

In addition, the region is now developing contracting approaches to be used in its new Multi-Species Conservation Program, which is a 50-year effort totaling over $600 million. There will be a 50 percent nonfederal cost share for this effort and 40 nonfederal permittees. For this project a 35-member steering committee involving three states will be established, and five chairs will be rotated among 40 customer representatives. Since a number of Reclamation projects require both cost sharing and nonfederal-stakeholder participation, the committee believes that the bureau should develop a series of contracting templates so that all regions can take advantage of the approaches followed and lessons learned by various regional and area offices.

A contracting technique that is now enjoying widespread use across the government is performance-based services acquisition (PBSA), which requires an agency to identify desired business outcomes but allows the contractor to use its own methods to obtain these results. Staff at some of the regions have described using this approach for acquiring relatively low-level services—for example, janitorial support for Hoover Dam. However, Reclamation staff should explore further the use of this technique to focus contractor-provided maintenance support more on the bureau’s desired business outcomes. Moreover, PBSA approaches can be applied to many different types of service contracts, including those for high-level professional and technical services. Clear performance measures are a means of monitoring whether the contractor is performing successfully.

Some of Reclamation’s acquisition staff have used innovative contracting methods. For example, staff in the Pacific Northwest are using a reverse auction approach to achieve significant financial savings. Under a reverse auction, vendors bid to lower the prices for the commodities to be purchased. This is a technique that has been widely used by the commercial sector but less so by government. The committee encourages such innovative contracting approaches as a way to get the lowest prices and the best value for the bureau.

In addition to Reclamation contracting under federal acquisitions regulations (FAR), some contracts are executed by water districts or by American Indian tribes under P.L. 93-638 authority. P.L. 93-638, the Indian Self-Determination and Education Assistance Act, was signed by President Ford in 1975. While initially directed at allowing tribes as sovereign nations to take over control of their own health-care programs from

Suggested Citation:"3 Good Practice Tools and Techniques." National Research Council. 2006. Managing Construction and Infrastructure in the 21st Century Bureau of Reclamation. Washington, DC: The National Academies Press. doi: 10.17226/11519.
×

the Indian Health Service, the law has come to be used for a variety of purposes—among others, allowing a tribe to control delivery of services to its community, including contracting services. Various tribal contractors have made use of this authority in providing community construction and support services. In these cases, the selected entity executes the design and construction work under Reclamation oversight. The use of P.L. 93-638 authority is relatively new to design and construction, and results have been mixed. For example, the Animas–La Plata project in southwestern Colorado and northwestern New Mexico is being executed by Reclamation (design and construction management) and the Ute Mountain Ute tribe (construction contracting). This project now appears to be under control and headed for successful completion, but it experienced significant cost and schedule problems in its early stages.

The committee sees the benefit of this approach as the enhancement of tribal opportunities and American Indian self-determination. However, given concerns about the limited success of some projects employing this approach, the committee believes that significant up-front planning and sound project management and risk management analyses need to be performed to ensure that effective capacity and expertise are available. This is another area where best practices and lessons learned might be shared among bureau regions through some type of central contracting office Web site or repository.

PROJECT CONCEPTION, DEVELOPMENT, AND EXECUTION PRACTICES

Management of large construction projects is what Reclamation was all about at its inception and for much of the twentieth century. Accordingly, the Reclamation Instructions included a comprehensive set of policies and directives for planning and executing projects. As discussed above, action was taken in 1993 to sunset all such directives. Work has been under way since that time to redevelop a comprehensive set of procedures to provide consistency in project management throughout Reclamation.

Project Management Policies, Directives, and Guidelines

A Reclamation design and construction coordination team (RDCCT) was established in December 1996 to identify good practices for design and construction within Reclamation. The team comprises two members from each region and the Technical Service Center (TSC), one specializing in design and the other specializing in construction, plus two additional members from TSC. Among other things, they have developed the fol-

Suggested Citation:"3 Good Practice Tools and Techniques." National Research Council. 2006. Managing Construction and Infrastructure in the 21st Century Bureau of Reclamation. Washington, DC: The National Academies Press. doi: 10.17226/11519.
×

lowing policies, directives, and guidelines. The policies and directives are published as part of the continually updated, Web-based Reclamation Manual (USBR, 2005a):

Policy
  • Performing Design and Construction Activities, February 11, 2000 (FAC PO3) and

  • Cost Estimating Policy Document (under development) (FAC PO x).

Directives
  • Maintenance of Design and Construction Capabilities, September 29, 2000 (FAC 03-01),

  • Construction Activities, September 29, 2003 (FAC 03-02),

  • Design Activities, July 9, 2004 (FAC 03-03),

  • Professional Registration for Engineers and Architects, May 17, 2002 (FIRM 05-01), developed in conjunction with Human Resources (HR) and issued by HR,

  • Cost Estimating (under development) (FAC 0X-01), and

  • Project Cost Estimate (under development) (FAC 0X-02).

Guidelines
  • Final Design Process (USBR, 2005a),

  • Design data guidelines (about 80 percent complete as of May 2005),

  • Drawing management portion of Information Management Handbook, Volume III, Drawing Management and Drafting Standards (USBR, 2000), and

  • Other design standards in various stages of development.

In addition, some Reclamation Instructions that were cancelled by the sunset process are still being used as guidelines until replacements are in place. While technically not binding, they are used as a matter of good practice.

Project Management Practices

The referenced policies, directives, and guidelines establish the following as good practices for design and construction:

Suggested Citation:"3 Good Practice Tools and Techniques." National Research Council. 2006. Managing Construction and Infrastructure in the 21st Century Bureau of Reclamation. Washington, DC: The National Academies Press. doi: 10.17226/11519.
×
Responsibility

The regional director is given responsibility for accomplishing all project activities from initial appraisal planning through construction project closeout within his or her region (FAC PO3). The regional director, in turn, may delegate area managers or project managers to manage individual projects. The assignment of responsibility shapes the decision-making process and has a major impact on the ability to manage projects well. As indicated above, this process is under review to clarify lines of responsibility and accountability.

Programming

Annual work plans are developed for the majority of Reclamation projects as part of the annual Reclamation budget process. Project programming information includes project description, target schedule, and funding requirements by year, combined with funding justification (FAC 03-01). The Reclamation Budget Review Committee (BRC) reviews an annual zero-based budget to establish overall priorities. However, Hoover, Parker, Davis, Grand Coulee, and Glen Canyon dams are off-budget operations because all funding requirements are paid by power customers, and their projects are not prioritized by the BRC. The committee found that the procedures to develop and prioritize these projects are rigorous and well accepted by power customers and believes they should be used in other off-budget operations.

Project Planning, Authorization, and Cost Estimating

Procedures for preconstruction activities are contained in FAC 03-02 and FAC 03-03 and in TSC’s project management guidelines. The TSC guidelines apply to TSC employees, but the principles can be used by any regional office. Requirements for establishing a project management team (PMT) and developing a project management plan (PMP) and descriptions and examples of components of a PMP are given in the manual.

Reclamation projects have three status categories: (1) planning (including appraisal, feasibility, and preliminary design studies), (2) construction (including final design), and (3) operations and maintenance. Within these categories there are two project stages for planning and four stages for construction. Cost estimates developed for each stage are prepared in increasing detail. Appraisal cost estimates are used to help Congress determine whether more detailed investigations of a potential project are justified. Appraisal estimates are not intended for requesting project authorization or construction funds from Congress. Feasibility cost estimates are based on information and data obtained during investiga-

Suggested Citation:"3 Good Practice Tools and Techniques." National Research Council. 2006. Managing Construction and Infrastructure in the 21st Century Bureau of Reclamation. Washington, DC: The National Academies Press. doi: 10.17226/11519.
×

tions for predesign and preliminary activity. The estimated costs of feasibility studies are part of the annual budget and must be authorized by Congress before the investigations begin. The construction cost estimate (CCE) and summarized project cost estimate (PCE) are normally prepared as part of the feasibility study. They complete the planning stage and are used to form the basis of the initial request for construction funds.

Reclamation’s cost estimating procedures have been drafted but not yet published. The manual should include detailed procedures for establishing and controlling contingencies, and the certainty of the estimates needs to be linked to risk management procedures (FAC 0X-01).

The committee examined the Animas–La Plata (ALP) project to determine if there were any underlying flaws in the process that caused the problems encountered by the project. In 2003 the construction cost estimate increased from the 1999 level of $337.9 million to $500 million. A report to the secretary of the interior (USBR, 2003) concluded that while no single reason for the increase was found, there were several contributing factors, including reliance on inapplicable or incomplete data, inexperience with the cost impact of P.L. 93-638 contracting, and a decade of turmoil in defining the scope and deciding whether the project would be built. A Reclamation review of the original construction cost estimate found that it was not reliable, but the focus at the time was on completing environmental compliance and supporting efforts to reach internal agreement on a plan for the project, and the finding of unreliability was not followed up. Accordingly, the incomplete 1999 estimate was used by Congress to authorize the project in December 2000. The committee notes that a rigorous project management process, including extensive preproject planning and detailed cost estimating procedures, is usually the most effective means of developing reasonable cost estimates. Such a process did not appear to have been part of ALP. However, it appears that given the circumstances surrounding the Animas–La Plata project, the committee cannot be sure that an effective project management system could have prevented the problems encountered by ALP.

Design

Design work undertaken during the appraisal and feasibility stages is classified as planning. Final design begins at the start of construction status, following initial appropriation of project funds. The guideline, Final Design Process (USBR, 2005a), lays out a comprehensive set of criteria for design activities from the period before design data collection through construction to full operation of the facility. Its introduction notes that activities described therein may not be necessary for projects of limited scope. The guideline appears to cover the design process thoroughly and permits tailoring to meet the specific needs of the project.

Suggested Citation:"3 Good Practice Tools and Techniques." National Research Council. 2006. Managing Construction and Infrastructure in the 21st Century Bureau of Reclamation. Washington, DC: The National Academies Press. doi: 10.17226/11519.
×
Quality Assurance and Quality Control

Quality assurance and quality control (QA/QC) during the planning and design process are addressed in FAC 03-02 and FAC 03-03. They take the form of checking procedures, technical reviews, peer reviews, constructability reviews, and value engineering studies. The TSC Operating Guidelines (USBR, 2005c) outline these functions for TSC design work.

Quality control during the construction process is frequently part of a construction contract, but Reclamation maintains a cadre of construction inspectors in each region to assure quality construction. Some regions have used contractors for portions of construction inspection, contract administration, and materials testing work. The Mid-Pacific Construction Office, for example, has done so since 1994. FAC 03-02 outlines requirements for determining the extent of contractor quality control and bureau-independent quality assurance inspection and materials testing.

Project Closeout and Follow-up

Requirements for project closeout are listed in FAC 03-02 as post-construction activities. Included are contract closeout, preparation of asbuilt drawings, preparation of a technical report on construction, and design summary, designers’ operating criteria, and O&M manuals. Transfer of project works from construction to O&M status is a formal process governed by FAC 01-05.

The technical report on construction and the design summary are the vehicles for documenting and passing on lessons learned throughout the acquisition process. Other lessons learned are promulgated by distribution of reports such as the Animas–La Plata cost estimate report mentioned above.

Reclamation’s Role as Owner

The basic role of Reclamation as the owner of construction projects is to ensure that the bureau undertakes the right projects and executes them effectively and efficiently. However, creating and maintaining an organizational process that does this consistently is complex. In 2001, the Department of Energy (DOE) sponsored and NRC conducted a government/industry forum on the owner’s role in project management and preproject planning (NRC, 2002). The forum presented case studies of how large organizations develop a project management culture and the steps they take to ensure that they undertake the right projects and execute them effectively. The forum examined the processes and procedures for developing buildings and industrial facilities, which are also applicable for develop-

Suggested Citation:"3 Good Practice Tools and Techniques." National Research Council. 2006. Managing Construction and Infrastructure in the 21st Century Bureau of Reclamation. Washington, DC: The National Academies Press. doi: 10.17226/11519.
×

ing and sustaining facilities for delivering water and power. The characteristics of owners of successful projects were described by the forum’s organizing committee:

  • Successful project management requires the institution of a project management discipline that encompasses all projects. It is not sufficient to do some projects well; what is needed is consistency. All the firms represented in the forum have well-defined, disciplined project processes, with buy-in and active participation by senior management.

  • There is an absolute requirement for emphasis on project justification and identification of business or (in the case of DOE) mission need early in every project, even before a project is formalized. Senior corporate (agency) management must be closely involved in this process, as it is their responsibility to identify and interpret business or mission needs.

  • Decision points with options for project approval, go-ahead, change, rework, or termination must be clearly identified. These decisions must be made by appropriate senior managers. The view that the need for senior management decisions slows down good projects is explicitly rejected. A good decision process actually expedites projects, in that it assures that they have the necessary resources, support, and direction to go to successful completion and operation—not merely to the next phase.

  • Accountability and responsibility for project performance must be made clear and well defined across the enterprise. For the enterprise to succeed, all elements must succeed.

  • A corporate organizational structure for project management must be established and maintained.

  • There must be continual, formal project reviews by responsible management. Expectations, products, and metrics must be clearly defined for the entire process.

  • There is no substitute for thorough front-end planning. This is true even better, especially for first-of-a-kind and one-of-a-kind projects. A successful project-management improvement process requires a cultural change, and cultural change is driven from the top. (NRC, 2002, p.viii)

All of the case studies emphasized the role of the owner in ensuring effective front-end planning activities. These activities include organizing the project team, evaluating and selecting options, defining the project in terms of quantity and quality, and establishing baseline budgets and schedules. The resulting product is called the project scope of work or project definition (NRC, 2003). The Federal Facilities Council (FFC) study found that “although preproject planning appears to be done thoroughly on some federal projects, the overall planning effort is inconsistent. Most of the agencies interviewed limit their preproject planning efforts, especially relatively costly activities, to major projects” (NRC, 2003, p. 2).

The Construction Industry Institute has collected data that link the

Suggested Citation:"3 Good Practice Tools and Techniques." National Research Council. 2006. Managing Construction and Infrastructure in the 21st Century Bureau of Reclamation. Washington, DC: The National Academies Press. doi: 10.17226/11519.
×

quality of front-end planning to the success of projects. It has used these data to develop a process—the Project Definition Rating Index—for evaluating project planning to determine if a project is ready to proceed to final design and construction (CII, 1999). The tool was developed for buildings and industrial projects and has been adapted by DOE for environmental remediation projects. The committee believes that it could also be adapted for use on water and power projects.

Reclamation has recognized the need for high-level oversight of decisions and construction project management. As discussed in Chapter 2, the central Design, Estimating, and Construction Office (DEC) has been created within the Operations Office for this purpose. It will review projects costing more than $10 million, projects deemed to pose a substantial risk for the bureau, and other projects designated by the commissioner. The committee believes that DEC’s oversight should also include front-end planning activities to ensure the accuracy and completeness of project scopes, risk management plans, and execution plans before projects proceed to design, because some of the problems of project schedules and cost estimates may be caused by deficiencies in the planning process. The committee also believes that Reclamation should establish criteria for the direct participation of the commissioner or his or her designated representative in project reviews. The level of review should be consistent with the cost and inherent risk of the project. The review procedures, processes, documentation, and expectations at each phase of the project need to be developed and applied to all projects, including those approved at the regional level.

CUSTOMER AND STAKEHOLDER RELATIONS

Since the establishment of Reclamation, the influence of customer and stakeholder input has evolved to the point that it has a significant impact on Reclamation’s design and construction projects. Water districts, power customers, and Indian tribes have acquired expertise and experience and, in many cases, the ability and desire to do design and construction with their own contractors and consultants. For example, the Northern Colorado Water Conservancy District (NCWCD) held discussions with the Great Plains region about design and construction management services for a new Carter Lake Outlet, which is a part of the Colorado–Big Thompson (CBT) project. In this case the district wanted to undertake the design and construction with Reclamation oversight, but Reclamation determined that it was a high-risk project that should be under Reclamation control. The district is providing the funds for the project, but the facility is federally owned and Reclamation is liable for unforeseen consequences. Reclamation’s approach is estimated to cost more, but the district’s is more

Suggested Citation:"3 Good Practice Tools and Techniques." National Research Council. 2006. Managing Construction and Infrastructure in the 21st Century Bureau of Reclamation. Washington, DC: The National Academies Press. doi: 10.17226/11519.
×

uncertain. The committee was impressed by the level and detail of communications on this controversy. Reclamation retained control of the project, but there appeared to an open exchange of ideas.

Another case involving the CBT and NCWCD concerned a Safety of Dams (SOD) project on the Horsetooth Dam, where conditions discovered during the course of the project allowed Reclamation to complete the project at considerable savings. While the total cost of the project was much less than expected, the costs of overhead and administration, as a percentage of the total costs, were higher than normal. Reclamation’s cost reporting systems provided insufficient detail to explain the components of these expenses and why they were a significant part of the project costs. In this case Reclamation’s project management procedures and communication with the district were not adequate.

An example of excellent stakeholder communications was observed by the committee at the Lower Colorado Dams Office. In the Lower Colorado region, power customers fund operation, maintenance, repair, and rehabilitation projects through their rates and have an oversight committee to review proposed O&M and rehabilitation plans. Reclamation develops 10-year O&M plans, which are reviewed by the oversight committee and become the basis for determining budgets and power rates. The Parker Dam generators’ overhaul and upgrade is an example of how good stakeholder communications can work for the benefit of all parties. The power customers’ oversight committee was concerned that an asset evaluation study by Reclamation would result in an overly conservative and therefore expensive program. The power customers requested that the study be performed by an independent contractor. The firm Montgomery Watson Harza performed a study that recommended turbine runner repair and generator rewinding projects, which are actually more extensive than originally proposed by Reclamation (MWH, 2002). The projects were approved by the oversight committee and were under way and appeared headed for successful completion at the time of the committee’s site visit.

Research has shown that relational trust, which comes from a fair process and customers being treated with dignity and respect, is more important for the acceptance of policy decisions than instrumental, or calculus-based, trust3 (Tyler and DeGoey, 1996). This research also supports the idea that “trust is a social commodity” that “gives authorities a ‘cushion of support’ during difficult times” and that it cannot necessarily be built

3  

Relational trust, also known as knowledge-based trust, is derived from interpersonal relationships. Instrumental trust, or calculus-based trust, is derived from a fear of the consequences of broken trust.

Suggested Citation:"3 Good Practice Tools and Techniques." National Research Council. 2006. Managing Construction and Infrastructure in the 21st Century Bureau of Reclamation. Washington, DC: The National Academies Press. doi: 10.17226/11519.
×

in the short term but needs to be nurtured and maintained (Tyler and DeGoey, 1996, p. 345). In other words, trust can be significantly enhanced by paying attention to how customers, stakeholders, and others are included in the process.

Reclamation works with a very broad range of customers and stakeholders, some of which have opposing objectives. While the committee has heard complaints about particular project issues and the decisionmaking process, in the end most Reclamation customers have a favorable view of Reclamation as a business partner. In situations where customers and stakeholders hold Reclamation in high regard, their positive feelings are based on trust developed with key Reclamation personnel. Extra care must be taken in selecting their successors to ensure that the quality of communications and level of trust are maintained.

APPLICATION OF METRICS, AUDITS, AND REVIEWS

In the case of the larger hydroelectric generating facilities, Reclamation uses an independent benchmarking process to determine how its facilities compare to others in terms of costs, reliability, efficiency, and overall maintenance. Such reviews are conducted on an annual basis, and the reports provide useful information to facility managers. Similar efforts should be made to establish metrics and measure the performance of Reclamation’s water management assets. Reclamation regional offices reported the use of some review tools, including annual, periodic, and comprehensive facility reviews, value engineering reviews, and peer review of endangered species recovery programs. However, there seem to be wide differences in the application of such tools across the bureau.

The committee was informed that there are several forums within Reclamation to identify best practices for asset management, but the committee did not observe an effective dissemination of these practices. For example, in one region the issue of encroachment on Reclamation facilities by urban development and recreational uses was discussed, but no solution was suggested nor did any impact assessment information appear to be available.

PLANNING AND BUDGETING

The last two sections address the use of out-year budget planning documents by some parts of Reclamation to ensure stakeholder support for asset O&M or refurbishment needs and point out a problem with O&M funding that will likely increase unless steps are taken to deal with it.

Suggested Citation:"3 Good Practice Tools and Techniques." National Research Council. 2006. Managing Construction and Infrastructure in the 21st Century Bureau of Reclamation. Washington, DC: The National Academies Press. doi: 10.17226/11519.
×

5- and 10-Year Plans

The committee has observed effective systems for planning and executing O&M for facilities of various types and conditions. The core of the process consists of the 5- and 10-year plans developed in various regions to identify out-year funding requirements and to ensure that stakeholders are informed well in advance of future funding requirements, especially for refurbishment. However, the committee recognizes that the O&M burden for an aging infrastructure will increase and that the resources available to Reclamation, its customers, and contractors may not be able to shoulder the increased burden. This will challenge Reclamation to be more innovative and more efficient in order to get the job done. Given the success of the planning process in the Lower Colorado region, the committee believes that all regions should develop and use such plans as a stakeholder communications tool and as a roadmap for meeting future requirements. The committee believes that effective planning is the key to O&M of Reclamation facilities. In addition, Reclamation should identify the best practices for inspections and developing O&M plans and use them throughout the organization.

Funding for O&M Needs

A number of stakeholders pointed out to the committee the difficulties resulting from the requirement to reimburse expenditures for O&M activities within the fiscal year in which they were expended. This is a particular difficulty for some water districts that do not have enough control over cash flow and other factors to do this when O&M costs increase. Better long-term planning should allow these districts to anticipate such needs. However, if there are large spikes in required funding, it will still be difficult to meet this requirement in the limited time frame available. This problem will only become more severe as demand for O&M funding continues to grow.

REFERENCES

Construction Industry Institute (CII). 1999. Project Definition Rating Index—Buildings. Austin, Tex.: CII.


Montgomery Watson Harza (MWH). 2002. U.S. Department of the Interior Bureau of Reclamation Parker Hydroelectric Powerplant Asset Evaluation Report. Broomfield, Colo.: MWH.


National Research Council (NRC). 2000. Outsourcing Management Functions for the Acquisition of Federal Facilities. Washington, D.C.: National Academy Press.

NRC. 2002. The Owner’s Role in Project Management and Preproject Planning. Washington, D.C.: National Academy Press.

Suggested Citation:"3 Good Practice Tools and Techniques." National Research Council. 2006. Managing Construction and Infrastructure in the 21st Century Bureau of Reclamation. Washington, DC: The National Academies Press. doi: 10.17226/11519.
×

NRC. 2003. Starting Smart: Key Practices for Developing Scopes of Work for Facility Projects. Washington, D.C.: The National Academies Press.

NRC. 2004. Adaptive Management for Water Resources: Project Planning. Washington, D.C.: The National Academies Press.


Office of Procurement Policy (OPP). 1992. Policy Letter 92-1 to the Heads of Executive Agencies and Departments, Subject: Inherently Governmental Functions. Washington, D.C.: Office of Management and Budget.


Tyler, T., and P. Degoey. 1996. “Trust in organizational authorities: The influence of motive attributions on willingness to accept decisions.” In Trust in Organizations: Frontiers of Theory and Research. R. Kramer and T. Tyler, eds. Thousand Oaks, Calif.: Sage.


U.S. Bureau of Reclamation (USBR). 2000. Information Management Handbook, Volume III, Drawing Management and Drafting Standards. Denver, Colo.: U.S. Bureau of Reclamation.

USBR. 2003. Animas-La Plata Project Construction Cost Estimates: Report to the Secretary. Washington, D.C.: U.S. Department of the Interior.

USBR. 2005a. Final Design Process. Denver, Colo.: U.S. Bureau of Reclamation.

USBR. 2005b. Reclamation Manual. Available at http://www.usbr.gov/recman/. Accessed August 18, 2005.

USBR. 2005c. Technical Service Center Project Management Guidelines. Denver, Colo.: U.S. Bureau of Reclamation.

USBR. 2005d. Technical Service Center Operating Guidelines. Denver, Colo.: U.S. Bureau of Reclamation.

Suggested Citation:"3 Good Practice Tools and Techniques." National Research Council. 2006. Managing Construction and Infrastructure in the 21st Century Bureau of Reclamation. Washington, DC: The National Academies Press. doi: 10.17226/11519.
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In the more than 100 years since its formation, the U.S. Bureau of Reclamation of the Department of Interior (DOI), through its construction program, has brought water, electric power, and recreation facilities to millions of people in the Western United States. With major water and power systems in place, the Bureau's attention has now turned to operation, maintenance, repair, and modernization of those facilities in an environmentally and economically sound manner. To help with this effort, DOI asked the NRC to advise the Bureau on "appropriate organizational, management, and resource configurations to meet its construction, maintenance, and infrastructure requirements for its missions of the 21st century." This report presents an assessment of the requirements facing the Bureau in the 21st century, an analysis of good practices and techniques for addressing those challenges, and a review of workforce and human resource needs. The report also provides alternative scenarios that describe possible future organizations for infrastructure management.

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