Strategic Program Delivery Methods (2017)

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82 Figure B1. Group/section in which survey respondents work Figure B2 displays the result for authority to use alternative project delivery methods. Thirty-six agencies (88%) reported that they have authority to use alternative contracting methods [ACMs—i.e., design-build (D-B), construction manager/gen- eral contractor (CM/GC), or public-private partnership (P3)]. Five state DOTs do not have authority to use ACMs (Kansas, North Dakota, Wisconsin, Wyoming, and Oklahoma). Figure B2. Authority to use alternative project delivery methods. construction manager/general contractor Figure B3 displays the results for the alternative project delivery methods that the organization is allowed to use. The D-B delivery method with a value of 94% (33 of 41) is allowed most frequently. The CM/ GC delivery method accounts for 54% (19 of 41); the P3 delivery method accounts for 54% (19 of 41); and others including D-B-B, fixed price/variable scope, DBB–best value, prequalification, A+bx, and CMAR (6 of 41) account for 17%. Figure B3. Alternative project delivery methods that the organization is allowed to use.

83 Figure B4 displays the results for the estimated percentage of projects associated with each delivery method that the agency uses. It is estimated that 93% of projects are associated with the D-B-B delivery method; 7% of projects are associated with the D-B delivery method; 3% of projects are associated with the CM/GC delivery method; and 1% of projects are associated with the P3 delivery method. The values here are the average of the values for each delivery method as obtained in the response. Figure B4. Estimate of percentage of projects associated with each delivery method that the agency is allowed to use. SECTION II – PROGRAM INVENTORY Table B1 displays the rankings of methods relative to their appropriateness for grouping projects into a program. The ranks are given as follows: – Rank 0: Not applicable (NA) – Rank 1: Inappropriate – Rank 2: Slightly appropriate – Rank 3: Appropriate – Rank 4: Very appropriate – Rank 5: Extremely appropriate TABLE B1 RANK FOR METHODS RELATIVE TO THEIR APPROPRIATENESS FOR GROUPING PROJECTS INTO A PROGRAM Factors influencing program establishment NA 1 2 3 4 5 Weighted Average Project functionalities (bridges, maintenance, or pavement) 1 0 1 7 15 17 4.2 Project construction type (rehab, preservation, or new) 1 0 2 9 16 13 4.0 Funding issues 2 2 3 14 13 7 3.4 Demand and urgency 4 2 1 14 12 8 3.4 Stakeholders’ priority and expectation 4 2 5 13 11 6 3.1 Critical completion dates (schedule issues) 6 2 3 13 14 3 2.9 Project location 4 2 10 14 8 3 2.7 State or federal mandates/political influences 5 3 10 11 9 3 2.7 Financing issues/revenue generator (tolls, special taxes) 7 9 6 7 7 5 2.4 Agency personnel experience on similar past projects 6 10 7 9 2 7 2.4 Project complexity 5 6 10 12 6 2 2.3

84 Figure B5 displays the results for the agency currently implementing or considering program delivery: 63% (26 of 41 DOTs) are currently implementing program delivery, whereas 37% (15 of 41 DOTs) are not currently implementing program delivery. Figure B5. Agency currently implementing or considering program delivery. The questionnaire further asked for reasons for not implementing program delivery. Figure B6. Reasons for not implementing program delivery. Figure B6 shows the reasons given by the DOTs. Fourteen of 15 DOTs state that conventional and alternative project delivery methods are adequate; – Six of 15 DOTs state “not currently in use, but could be applied in the future.” – Three of 15 DOTs state “required organizational culture changes.” – Two of 15 DOTs state “others”; they do not currently have a need to outsource but can manage overall programs with in-house staff, and special funding drives this approach. – One of 15 DOTs states the following for each: – Agency expertise not available – Lack of staffing to oversee program delivery approaches – Lack of stakeholder confidence – Industry oppositions prevent its use

85 Figure B7 displays the results for the number of times the agency has used program delivery. Figure B7. Number of times the agency has used program delivery. Figure B7 shows the following: • Eleven states have used program delivery more than 10 times: California, Delaware, Florida, Georgia, Indiana, Maine, Massachusetts, Michigan, Missouri, New Jersey, and Utah. • Five states have used program delivery between five and 10 times: Iowa, Louisiana, Pennsylvania, Wisconsin, and Wyoming. • Fifteen states have used program delivery less than five times. • Ten states have not used program delivery. Figure B8 displays the results on whether the agency has enabling legislation for the use of program delivery: 56% (22 out of 39 DOTs) have enabling legislation, whereas 44% (17 of 39 DOTs) do not have enabling legislation. The total here is 39 because two DOTs did not give any response. Figure B8. Agency having enabling legislation for the use of program delivery. Figure B9 displays the results for project delivery methods that the agency is allowed to use for program delivery. Following are the count and percentage for project delivery methods the agency is allowed to use for program delivery: – 100% (41 of 41 DOTs) can use D-B-B. – 80% (33 of 41 DOTs) can use D-B. – 46% (19 of 41 DOTs) can use CM/GC. – 46% (19 of 41 DOTs) can use P3. – 15% (6 of 41 DOTs) can use a single contract that incorporates a combination of delivery methods.

86 – 12% (5 of 41 DOTs) use others, given as follows: – Fixed price/variable scope, ATC on D-B-B and D-B projects – Alternate bid – D-B-B best value, prequalification combined with D-B-B or D-B-B best value – A + bx Figure B9. Project delivery methods the agency is allowed to use for program delivery. Figure B10 displays the results for procurement methods that the agency is allowed to use for procuring contractors for a program: – 100% (41 of 41 DOTs) use low bid. – 71% (29 of 41 DOTs) use A+B (cost + time). – 71% (29 of 41 DOTs) use best value. – 42% (17 of 41 DOTs) use qualification-based. – 22% (9 of 41 DOTs) use a single contract that incorporates a combination of one or more. – 5% (2 of 41 DOTs) use others, given as follows: – Alternate bid – Best value for P3 Figure B10. Procurement methods the agency is allowed to use for procuring contractors for a program.

87 Figure B11 displays the results for payment methods that the agency uses for program delivery: – 80% ( 33 of 41 DOTs) use unit price. – 66% (27 of 41 DOTs) use lump sum. – 37% (15 of 41 DOTs) use cost reimbursable. – 22% (9 of 41 DOTs) use a single contract that incorporates a combination of one or more. – 7% (3 of 41 DOTs) use others, given as follows: – GMP – Milestone completion – Case by case Figure B11. Payment methods that are used for program delivery. Figure B12 displays the results for the consulting engineering industry in states that support the use of program delivery: 59% (24 of 41 DOTs) have a consulting engineering industry that supports the use of program delivery, whereas 42% (17 of 41 DOTs) do not know if they support the use of program delivery. Figure B12. Consulting engineering industry supporting the use of program delivery.

88 Figure B13 displays the results for other transportation-related agencies that use program delivery: 24% (10 of 41 DOTs) have other transportation-related agencies using program delivery; 61% (25 of 41 DOTs) do not know, and 15% (6 of 41 DOTs) said that no other transportation-related agencies use program delivery. Figure B13. Other transportation-related agencies using program delivery. Figure B14 shows the representation of the response for what types of agencies use program delivery. Of the 10 state DOTs that use program delivery, seven (70%) mentioned that program delivery methods are used in transit agencies; six (60%) reported that program delivery methods are used in local government agencies; and two (20%) stated that program delivery methods are used by airport authorities. Figure B14. Agencies using program delivery. Figure B15 displays the results for organizational barriers for implementing program delivery. The main organizational bar- riers include the following: – Cultural change required toward ACMs (27 responses); – Lack of prior expertise (19 responses); – Lack of training (14 responses); and – Lack of outsourcing capacity (7 responses).

89 Twelve state DOTs also mentioned additional organizational barriers including lack of contractor ability to handle large volumes of work, legislative authority, and funding issues. Figure B15. Organizational barriers for implementing program delivery. SECTION III – PROGRAM DELIVERY Figure B16 displays the results for agencies that choose project delivery methods in the context of program delivery: 44% (18 of 41 DOTs) choose project delivery methods in the context of program delivery, whereas 56% (23 of 41 DOTs) do not choose project delivery methods in the context of program delivery. Figure B16. Project delivery methods in the context of program delivery. Figure B17 displays the results for agencies that have guidelines/tools to determine delivery methods for a program: 32% (13 of 41 DOTs) have tools/guidelines to determine delivery methods for a program, whereas 68% (28 of 41 DOTs) do not have any tools/guidelines to determine delivery methods for a program. Figure B17. Agency has guidelines/tools to determine delivery methods for a program.

90 Figure B18 displays the result of whether the agency has a strategic approach to select delivery methods. Of the 41 state DOTs, 21 (51%) mentioned that they have a strategic approach to select delivery methods. Figure B18. Agency has a strategic approach to select delivery methods. Figure B19 displays the result for selection of delivery methods for program. Of the 41 state DOTs, 37 (90%) reported that they select delivery methods on a case-by-case basis; 11 (27%) mentioned that they select delivery methods based on a group of projects; five (12%) stated that they select delivery methods for a program based on funding availability or restrictions on the use of the D-B-B option; and two state DOTs (5%) (Florida and Indiana) mentioned that they select delivery methods based on a holistic approach to programming. Figure B19. Selection of delivery methods for program.

91 Table B2 lists the program factors considered in decisions and as motivation for program delivery methods. The numbers given in the columns are the numbers of DOTs. TABLE B2 PROGRAM FACTORS Program Factors Considered in Decision Motivation for Program Delivery Methods Project size (dollars) 26 9 Program budget control issues/priority projects 22 8 Need for nontraditional financing 8 8 Program cost savings 17 7 Generating revenue (tolls, special taxes, etc.) 8 2 Program schedule issues 24 12 Technical complexity of groups of projects 25 7 Streamlined processes/innovation 21 12 Location (urban vs. rural projects) 14 4 Program construction type (new construction vs. rehabilitation projects) 24 5 Program facility type (road vs. bridge projects) 18 7 Third-party issues (utilities, railroad, right-of-way) involved in a program/group of projects 25 4 Environmental issues required for a program/group of projects 23 3 Project and program risk management 23 11 Agency staff experience with delivery methods 15 3 Agency staff availability to oversee project development 17 5 Program performance 15 8 Reduced public impact 21 9 Enhance trust/improve agency image 14 8 Others 2 1 Figure B20 displays the results for program factors considered when making program delivery method decision. The 26 state DOTs that are currently implementing or considering the use of program delivery methods were asked to provide factors considered in the program delivery decision. The top 10 factors include the following: 1. Project size in dollars (26 responses) 2. Technical complexity of groups of projects (25 responses) 3. Third-party issues (utilities, right-of-way, railroad) involved (25 responses) 4. Program construction type (new construction vs. rehabilitation projects) (24 responses) 5. Program schedule issues (24 responses) 6. Project and program risk management (23 responses) 7. Environmental issues required for a program (23 responses) 8. Program budget control issues/priority projects (22 responses) 9. Streamlined processes/innovation (21 responses) 10. Reduced public impact (21 responses)

92 Figure B20. Program factors considered in decision. Figure B21 displays the result for program factors that are motivations for making program delivery method decisions. The top 10 factors include the following: 1. Schedule issues (12 responses) 2. Streamlined processes/innovation (12 responses) 3. Project and program risk management (11 responses) 4. Project size in dollars (9 responses) 5. Reduced public impact (9 responses) 6. Program budget control issues/priority projects (8 responses) 7. Program performance (8 responses) 8. Enhance trust/improve agency image (8 responses) 9. Need for nonconventional financing (8 responses) 10. Technical complexity of groups of projects/program facility type (road vs. bridge projects) or program cost savings (7 responses)

93 Figure B21. Program factors as motivation for program delivery methods. Figure B22 displays the result of whether the agency has a systematic process to measure the benefits of ACMs: 7% (3 of 41 DOTs) have a systematic process to measure the benefits of program delivery, whereas 93% (38 of 41 DOTs) do not have any systematic process. Figure B22. Process to measure benefits of ACMs. Figure B23 displays the result of whether the agency tracks the performance of projects selected for the program: 56% (23 of 41 DOTs) do track the performance of projects selected for the program, whereas 44% (18 of 41 DOTs) do not. Figure B23. Tracking of performance of projects for the program.

94 Figure B24 displays the result of whether the agency has a process to measure the performance of program delivery: 42% (17 of 41 DOTs) measure the performance of program delivery, whereas 59% (24 of 41 DOTs) do not. Figure B24. Measure of performance of program delivery. Table B3 lists the benefits of program delivery and the number of responses received. TABLE B3 BENEFITS OF PROGRAM DELIVERY Benefits Number of Responses Accelerated project delivery 31 Flexibility in delivery scheduling 22 More choices in funding and delivery methods 16 Cost savings 16 Greater and/or earlier cost certainty 18 Distributed funding efficiently and equitably 11 Managing and leveraging resources 18 Enhanced workforce management 13 Flexibility in innovation 19 Better managing risk and uncertainty/flexibility in reassessing and reassigning risk 22 Effectively managing changes 15 Improved trust and agency reputation 13 Fostered relationships among agencies (local, regional, and department) 10 Greater partnership between the public and private sectors 10 Reduced public impact 18 Enhanced safety attributes 11 Improved quality parameters of simultaneous projects 10 Increased control of scope, schedule, and cost 19 Ability to select multiple firms under a single contract 6 More sustainable and livable communities 4 Others 1 Figure B25 displays the results on the benefits of program delivery in percentages. The benefits with maximum counts observed are the following: 1. 31 of 41 DOTs chose accelerated project delivery. 2. 22 of 41 DOTs chose flexibility in delivery scheduling and better managing risk and uncertainty. 3. 19 of 41 DOTs chose flexibility in innovation and increased control of scope, schedule, and cost. 4. 18 of 41 DOTs chose greater cost certainty, managing and leveraging resources, and reduced public impact. 5. 16 of 41 DOTs chose more choices in funding and delivery methods and cost savings.

95 Figure B25. Benefits of program delivery. Table B4 lists the benefits of programmatic decisions associated with each delivery method—i.e., D-B-B, D-B, CM/GC, and P3. The values given in the column are the numbers of DOTs claiming each benefit associated with each delivery method listed. TABLE B4 BENEFITS OF PROGRAMMATIC DECISION ASSOCIATED WITH EACH DELIVERY METHOD Benefits D-B-B D-B CM/GC P3 Accelerated project delivery 1 29 5 7 Flexibility in delivery scheduling 11 14 6 7 More choices in funding and delivery methods 8 3 1 8 Cost savings 6 12 8 3 Greater and/or earlier cost certainty 17 12 8 1 Distributed funding efficiently and equitably 8 0 1 3 Managing and leveraging resources 11 6 4 4 Enhanced workforce management 8 3 2 1 Flexibility in innovation 2 19 14 6 Better managing risk and uncertainty/flexibility in reassessing and reas- signing risk 10 11 12 4 Effectively managing changes 13 3 4 1 Improved trust and agency reputation 8 2 3 1 Fostered relationships among agencies (local, regional, and department) 8 2 3 0 Greater partnership between the public and private sectors 5 9 11 9 Reduced public impact 7 10 6 1 Enhanced safety attributes 4 1 1 0 Improved quality parameters of simultaneous projects 4 2 1 1 Increased control of scope, schedule, and cost 18 1 8 1 Ability to select multiple firms under a single contract 3 5 1 1 More sustainable and livable communities 1 1 0 0 Others 1 0 0 0 Figure B26 displays the result for the top five benefits of D-B-B to programmatic decisions, including the following: 1. Increased control of scope, schedule, and cost (18 responses) 2. Greater and/or earlier cost certainty (17 responses)

96 3. Effectively managing changes (13 responses) 4. Managing and leveraging resources (11 responses) 5. Flexibility in delivery scheduling (11 responses) Figure B26. Benefits of D-B-B delivery method to programmatic decisions. Figure B27 shows the top five benefits of the D-B delivery method to programmatic decisions. It is important to note that only 30 state DOTs that reported that they can use D-B in their program delivery responded to this question. Specifically, these factors include the following: 1. Accelerated project delivery (29 responses) 2. Flexibility in innovation (19 responses) 3. Flexibility in delivery scheduling (14 responses) 4. Greater and/or earlier cost certainty (12 responses) 5. Cost savings (12 responses) Figure B27. Benefits of D-B delivery method to programmatic decisions.

97 Figure B28 shows the top five benefits of the CM/GC delivery method to programmatic decisions. Only 18 state DOTs that stated in their responses that they have the ability to use CM/GC in their program delivery responded to this question. Spe- cifically, these factors include the following: 1. Flexibility in innovation (14 responses) 2. Flexibility in reassessing and reassigning risk/better managing risk (12 responses) 3. Greater partnership between the public and private sectors (11 responses) 4. Greater and/or earlier cost certainty (eight responses) 5. Cost savings (eight responses) Figure B28. Benefits of CM/GC delivery method to programmatic decisions. Figure B29 shows the top five benefits of the P3 delivery method to programmatic decisions. In the case of P3, only 16 state DOTs which reported that they can use P3 in their program delivery responded to this question. Specifically, these factors include the following: 1. Greater partnership between the public and private sectors (nine responses) 2. More choices in funding and delivery methods (eight responses) 3. Flexibility in delivery scheduling (seven responses) 4. Accelerated project delivery (seven responses) 5. Flexibility in innovation (six responses)

98 Figure B29. Benefits of P3 delivery method to programmatic decisions. Table B5 enlists all challenges that were given by the respondents in the implementation of program delivery. TABLE B5 CHALLENGES WITH IMPLEMENTING PROGRAM DELIVERY Program Challenges Funding for the program Type of projects to deliver (expansion vs. preservation) We have used program delivery in our agency for years. However, we have only recently had ACMs available for use in delivery our programs. The biggest challenge to date is having these tools available concurrently and at the right time to make the best use of these processes programmatically. Establishing trust between regions and HQ. Understanding benefits and applicability based upon our funding and scheduling criteria Will discuss in interview. Time in analyzing the entire program We do very little of this and have limited experience. We have not implemented. Contract size and contractors. Coordination and collaboration among various parts of the organization at greater levels than typically required. Cultural change and the education of staff, industry, legislature, and public. N/A Identifying the right group of projects. Funding for a program vs. specific projects. Having sustainable funding going forward. Have not yet implemented. Staff to administer alternative delivery programs. Obtaining buy-in from stakeholders. Associated acceleration and resource demands. Change to the way we have done business. Available funding. Knowledge and training. Unstable state funding and no state program. We do it with small programs such as safety and preservation. Have not done it with complex programs. Developing and maintaining strong ties for consistency between the program and the rest of the agency. Cultural shift required support from highest level of the agency. Battling conventional points of view as it is a change in approach. Developing the process and growing experienced employees We have only utilized a program management firm during a bond program.

99 The survey asked the respondents to list the lessons learned. The responses received are given below: – Educating the agency on the process of choosing program delivery methods – Requiring a great deal of training to ensure that agencies can take advantage of the ACMs in a programmatic way – A need to be flexible and take a step back to ensure that the path is the correct one – Having skilled, trained, and effective program managers within the agency is essential to coordinate the whole process with both internal and external stakeholders – Complete transparency and strong communication of the statewide goals to the regions – Managing consultants’ contracts and managing program costs – Setting clear and consistent policies and procedures for how programs need to be delivered – Consulting with the industry and contractors to optimize a program – Involving the stakeholders in the process when developing and implementing program delivery – Intensive time and resources required to choose program delivery methods

100 The goal of this synthesis is to provide a summary of the state-of-practice related to processes for choosing project delivery methods. The objectives of the case examples are to: (1) supplement and validate the findings from the survey; (2) obtain specific process examples of program delivery approaches; (3) identify examples of success factors on developing program delivery; and (4) identify common barriers and benefits of each delivery method in the context of the programmatic decisions. A. General Information and Program Inventory 1. How does your agency develop a program of projects? 2. What are general goals/objectives for delivering a program of projects? 3. How does your agency prepare for and implement the delivery of a program of projects? 4. How successful do you feel is program delivery at your agency? 5. How is decision making and problems solving affected by program delivery? B. ACMs (Alternative Contracting Methods) 6. Does your agency use multiple delivery methods to deliver a program of projects? If yes, what delivery methods are used? If no, what delivery method is used? Please explain. 7. When strategically planning a program, does your agency use multiple delivery methods or just one delivery method for each project in the program? a. If yes, how does your agency decide what delivery method to use for each project in the program? b. If no, how does your agency decide what delivery method to use for all projects in the program? 8. Does your agency prepare a program based on the delivery method to be used? Please explain. 9. How does your department’s approach differ when determining delivery methods for a program of projects compared with determining a delivery method for a single project? C. Program Delivery Performance 10. How is performance measured for a program of projects? Do you measure performance for each project, for the entire pro- gram, or for both? Please explain. 11. How does delivering a program of project affect: A) Safety? B) Quality? C) Innovation? D) Risk and risk management? APPENDIX C Case Example Questionnaire