Strategic Program Delivery Methods (2017)

Below is the uncorrected machine-read text of this chapter, intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text of each book. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.

8 INTRODUCTION This chapter documents important findings from the literature review of program delivery processes. The purpose of the chapter is to establish the background and context for the results and findings from this synthesis study. A discussion of project and program development phases provides a framework for understanding program delivery methods. A discussion of strategic planning correlates the strategic decision-making process to the determination of program delivery methods. The chapter concludes with a detailed discussion of the influence of organizational structure on project and program delivery processes. TRANSPORTATION PROJECT AND PROGRAM DEVELOPMENT PHASES Although the project development process varies from state to state, it typically includes five generic phases: (1) planning, (2) programming, (3) preliminary and final design, (4) advertising and bidding, and (5) construction (Anderson et al. 2009). A project often begins with a concept to meet an identified need, then moves into the planning phase to determine the purpose of and need for the project and whether it is an improvement project or a required project. After that, the project is programmed and moves through design to the construction phase. Table 1 summarizes typical activities associated with the planning, pro- gramming, and design phases that are most relevant to strategic program delivery methods. TABLE 1 TRANSPORTATION PROJECT DEVELOPMENT PHASES Development Phases Typical Activities Planning Purpose and need; improvement or requirement studies; environmental considerations; right-of-way consider- ations; public involvement/participation; interagency conditions Programming Environmental analysis; schematic development; public hearings; right-of-way impact; project economic feasi- bility and funding authorization Preliminary design Right-of-way development; environmental clearance; design criteria and parameters; surveys/utility locations/ drainage; preliminary plans such as alternative selections; geometric alignments; bridge layouts Final design Right-of-way acquisitions; Plan, Specifications & Estimate development; final pavement and bridge design; traffic control plans; utility drawings; hydraulics studies/drainage design; and final cost estimates Source: Anderson et al. (2009). Strategic Planning Phase In transportation projects, the timeline for the planning phase is significantly longer than for the other phases; in fact, planning often takes more than 20 years. The objective of planning is to determine which projects should and should not be advanced to the programming phase. Decisions are made on the basis of estimated costs and benefits, perceived need, and alignment with policies. The decision-making process in this phase often involves two main groups: a metropolitan planning organization (MPO) and a state DOT. The MPO develops both a long-range transportation plan (LRTP) and a transportation improvement program (TIP) for urban areas, while state DOTs develop LRTPs and TIPs at the state level. For local areas, the state DOT works with local planning agencies to incorporate their project needs into the state program according to state law and policy (FHWA 2012). Federal law requires that MPOs develop a regional transportation plan and that state DOTs develop a statewide transportation plan (Anderson et al. 2009). Most state transportation plans do not identify specific projects but focus on making strategic decisions for state investment in the transportation system (Anderson et al. 2009). CHAPTER TWO OVERVIEW OF STRATEGIC PROGRAM DELIVERY

9 Programming Phase The objective of the programming phase is to determine which transportation projects will receive funding through the pro- gramming process within the next 3–6 years (FHWA 2012). Project concepts are prioritized and selected for funding. For urban projects, federal law requires the TIP for a metropolitan area to become part of the statewide transportation improve- ment program (STIP). Each state and MPO develops its own process for selecting projects and allocating funds to program categories; thus, state DOTs and MPOs work closely to identify candidate projects from the TIP for inclusion in the STIP (FHWA 2012). The programming phase also involves environmental studies. Federal law requires environmental studies to be performed for any projects that use federal funding. Many states also require environmental studies for projects that receive state funding. The information collected in the programming phase is typically used during the preliminary design phase and may also be useful during the final design and construction phases. New Mexico DOT The Program Management Division is a multidisciplinary group of managers, engineers, technicians, and financial professionals with responsibility for managing, supporting, and delivering the DOT’s annual transportation program. The DOT’s overall program management and project delivery are accomplished through the following interdependent but distinct functional areas of the division: Statewide Transportation Improvement Program (STIP); Project Production and Scheduling Unit; Plans, Specifications, & Estimates Bureau, Professional Services Contracts Unit; and Value Engineering Program. http://dot.state.nm.us/en/Program_Management.html, accessed April 2016 Preliminary Design Phase This phase involves detailed planning and the beginning of the design process for individual projects in the program. During preliminary design, the general requirements and scope of individual projects are transformed into detailed physical com- ponents. Typically, functional designs are prepared for multiple alternatives to help evaluate the benefits and challenges of possible solutions. Transportation practitioners play an important role in this phase because they provide the technical input and analysis that largely drive the decision-making process. Collaboration among stakeholders is also a key element of this phase (FHWA 2012). Utah DOT Program Development supports UDOT’s overall efforts through four major business areas: (1) monitor transportation system conditions, (2) identify transportation needs, (3) establish transportation plans, and (4) determine program and project schedule. http://www.udot.utah.gov/main/f?p=100:pg:::::V,T:,53, accessed April 2016 Final Design Phase The final design provides detailed information to the construction phase. In this phase, plans and specifications typically are nearing completion. The right-of-way necessary for construction of the project is also acquired during this phase. This phase addresses technical issues, and the primary decision makers often include right-of-way agents, engineers/designers, and plan- ners at the implementing agency. High-level decisions involving policy are typically made prior to this phase (FHWA 2012). STRATEGIC PLANNING AND PROGRAM DELIVERY State DOTs face a number of challenges in administrating, budgeting, and managing transportation programs. These chal- lenges include the following: (1) delivering projects within a program on time and within budget; (2) distributing funding efficiently and equitably; (3) developing projects that protect the physical and social environment; (4) managing resources efficiently and effectively; and (5) coordinating with other agencies, interest groups, and the public to prioritize projects and make program funding decisions (Henkin 2009). In 2005, the Washington State Legislature provided a 16-year expenditure plan of $7.1 billion for a major capital construction program that included 274 projects (WSDOT 2006). The legislature required the state DOT (WSDOT) to submit a strategic plan

10 to manage and deliver this capital construction program. WSDOT realized that it would have to leverage its internal capabilities, use extensive outsourcing, and improve program management to deliver this program. Figure 1 provides an overview of the strategic planning process. The WSDOT strategic delivery approach focuses on the following seven main elements: • Developing and confirming program goals and objectives; • Assessing program delivery needs, including schedules/costs, project periodization, and risk; • Conducting gap analysis for successfully delivering a program (e.g., workforce, system, and processes); • Aligning goals with capabilities; • Recommending solutions/improvements to address the gaps; • Communicating transition strategies; and • Establishing an implementation plan. FIGURE 1 WSDOT strategic planning approach (adapted from WSDOT 2006). WSDOT emphasizes the following strategies to improve its program delivery: • Implementing staffing, change management, and reporting tools; • Changing stakeholders’ expectations with regard to many projects still in the early stages of project development; • Improving methods to create program-level contingencies for cost and schedule; • Incentivizing the contractors of major projects to emphasize efficient delivery and transparent accountability; • Implementing methods and processes to track and report on program delivery; and • Promoting accountability, transparency, and communication (WSDOT 2006).

11 In another example, the Illinois DOT developed strategic planning in 2000. One of the four quadrants of its strategic planning process focuses on program delivery (Poister 2004). Specifically, the Illinois DOT’s strategic program delivery emphasizes the following strategies: • Expediting the delivery of work and services to minimize public inconvenience; • Assessing and establishing levels of program delivery; • Designing and developing a mechanism to better integrate and coordinate the delivery of programs; and • Developing a program risk assessment process relating to external factors (e.g., special interest groups, resources, and components necessary for the completion of the program). The Missouri DOT (MoDOT) has used a quarterly publication called Tracker in its strategic planning approach to imple- menting program delivery. Tracker was developed to measure MoDOT’s performance both internally and externally, and has become a critical tool for delivering programs and projects (Keck et al. 2010). An important aspect of this approach is to focus on implementing actions rather than discussing plans. The strategic planning approach in MoDOT includes four main steps: • Strategic advance: After reviewing state and federal mandates and inputs from planning partners, employees, and oth- ers, MoDOT leadership conducts an analysis of its strengths, weaknesses, opportunities, and threats. • Teams and action plan: The senior management leader forms teams to investigate, research, and recommend innovative solutions to address the issue. • Approval and implementation: Teams present their findings and recommendations complete with costs, implementation plan, timeline, action plan, anticipated outcomes, impact on tangible results, and performance indications. • Monitoring results: Results are made available in Tracker, and the senior management team meets quarterly to discuss all Tracker measures. For each Tracker measure, strategies are listed for improvement. As Henkin (2009) commented, Effective program delivery is achieved through the establishment of sound policies and procedures that address the management of projects throughout the project and program delivery process. It is a state of practice that transcends individual project phases and provides a continuum of sound management throughout the life of a project—and a transportation program. ORGANIZATIONAL STRUCTURE The organizational structure in state DOTs has a significant impact on the ability to plan, build, operate, and maintain the statewide transportation program (Secrest et al. 2012). It also influences individual performance standards for people, teams, and units (Keck et al. 2010). Through interviews and surveys of state DOT leaders, Secrest et al. (2012) found five key drivers for organizational change: • Pressure for government efficiency gains; • Demands for performance accountability; • Need for improved project delivery capabilities; • Revenue shortfalls; and • Agency credibility. All five drivers for changing organizational structure are related to improved program delivery processes. As Keck et al. (2010) stated, Many state DOTs have reorganized both internally and externally to provide for a more efficient delivery of programs. The intent to reorganize was not always based on the need to deliver projects faster but rather on the realization that some forms of efficiencies could be attained if the DOT reorganized parts of its structure. Although many different types of organizational structures exist, most state DOTs can be classified into some combination of these three types: • Silo-based versus workflow-based DOTs; • Centralized versus decentralized DOTs; and • In-house versus outsourced DOTs.

12 The following sections discuss the influence of these three organizational structures on efficient program delivery. Silo-Based Versus Workflow-Based DOTs The silo-based organizational structure is based on the functional departments in a state DOT, such as design, right-of-way, environment, and planning. This structure focuses on top-down management control over functional responsibilities related to elements of a product (Secrest et al. 2012). Under the silo-based organizational structure, people in each functional depart- ment communicate primarily with others in the same department to coordinate their work and accomplish tasks, with little communication between people in different functional departments. Keck et al. (2010) listed several drawbacks of the silo- based organizational structure when it comes to accelerating transportation program delivery: • Employees tend to focus on meeting unit-specific goals instead of organization goals because of a lack of coordination and communication among business units; • Best practices may not be sufficiently shared across the department; • Accountability for successful project delivery is often unclear, resulting in slow and inefficient project delivery; • Coordination may be inconsistent across the program delivery process; and • Occasionally, bureaucratic decision-making processes across the organization lead to extended and inefficient decision making and contribute to a reduction in the department’s productivity. The workflow-based organizational structure (a team-based approach) is based on the diverse skill sets of agency employ- ees. This structure focuses on teams that are held accountable for final product delivery. The workflow-based organizational structure allows state DOTs to be more flexible, with a high degree of coordination across functional departments. This struc- ture is a suitable approach for implementing transportation program delivery. The main benefits are (1) encouraging efficiency and innovation, (2) enabling nimble responsiveness, and (3) promoting collaboration and culture shift (Secrest et al. 2012). On the basis of a national survey, Secrest et al. (2012) concluded that at least four state DOTs—Maine, Mississippi, Missouri, and Vermont— use the workflow-based organizational structure to manage their transportation projects and programs. Maine DOT has found that a team approach has significantly helped accelerate programs: Maine DOT moved from a silo-based “assembly line” operation to a more inclusive team approach, accelerating programs through greater communication and clearer assignment of responsibilities. Teams have helped Maine DOT to establish real deadlines and achieve greater transparency and efficiency. This positive environment creates team spirit, cross-functional cooperation, and unified approaches so there is a greater tolerance for ambiguity, risk, and conflict, which give rise to innovations in behavior and approach. (Keck et al. 2010) Centralized Versus Decentralized DOTs State DOTs use both centralized and decentralized structures to conduct their business. Each configuration has its advantages and disadvantages, and research has shown that neither structure is better than the other with regard to accelerating program delivery (Keck et al. 2010). Some state DOTs operate optimally with a centralized structure, whereas other states prefer a decentralized structure. Most DOTs use a mix of centralized and decentralized structures (Secrest et al. 2012). Under a centralized organizational structure, the DOT’s central office controls and performs most nonconstruction maintenance work, including design, environmental analysis, and project programming. Secrest et al. (2012) noted that a centralized structure is most effective when in-depth expertise is critical to meeting state DOT goals. Keck et al. (2010) found that small DOTs tend to use a centralized organizational structure because it reduces duplication of responsibili- ties and improves program delivery. For example, New Jersey DOT uses a centralized structure that includes the deputy commissioner, assistant commissioners, directors, and program managers. The three main areas under the deputy com- missioner that contribute to program delivery are planning and development, capital program management (the heart of program delivery), and operations (Keck et al. 2010). Similarly, a centralized organizational structure helped Missouri DOT improve its program delivery: The creation of a central system delivery team is widely acknowledged as being critical to the successful acceleration and delivery of projects at MoDOT. Furthermore, creating the position of director of program delivery in the central office has been especially important, making that individual responsible for directing the transportation planning, design, right-of-way, construction and materials, and bridge groups (Keck et al. 2010). Secrest et al. (2012) summarized the main benefits of centralization related to project and program delivery as follows:

13 • Program consistency: Centralization allows state DOTs to adopt a more consistent approach to delivering transportation programs and projects across their states. • Policy alignment: Under a centralized structure, field staff must align their actions and decisions with department policies. • Cost savings: Centralization may help utilize staff better and operate more efficiently. • Improved external and internal communication: Centralization provides opportunities to convey a clearer and more consistent message across the department. In a decentralized structure, district offices have greater autonomous decision-making power for design, communication, and public engagement. Over the past several decades, state DOTs have had a tendency to decentralize functions to improve public involvement and customer satisfaction (Secrest et al. 2012). This type of structure is often based on geographic areas; for example, MoDOT divides the state into seven districts: Northwest, Northeast, Kansas City, Central, St. Louis, Southwest, and Southeast. Because the districts are focused, they can establish and maintain stronger relationships with local and regional governments than would be possible with a single central office. MoDOT allows the district offices to make decisions that move projects forward. Keck et al. (2010) highlighted this advantage as one of the benefits of using a decentralized structure to deliver programs and projects. The California DOT (Caltrans) has a dominant decentralized organization structure for project and program delivery because the state is so large and varies substantially in terms of topography and sociocultural issues. Caltrans has 12 districts and eight key programs. One of these programs is Project Delivery, which includes the Construction, Design, Engineering Services, Environmental Analysis, Project Management, and Right-of-Way and Land Surveys Divisions. The organization structure of Texas DOT (TxDOT) is similarly decentralized to accommodate the state’s geography and mission. TxDOT includes 25 districts that oversee design, construction, and maintenance. Keck et al. (2010) found that the decentralized organization structure has proved to be successful for TxDOT, effectively delivering programs and projects while addressing concerns of public involvement and environmental issues: In many regards, the decentralization of decision-making authority has proven to be a success. There is general agreement internally at TxDOT that the districts are well suited to identify and respond to the unique demands of each of their respective areas. With the allocation of limited funds, the districts are motivated to prioritize projects critically and explore creative solutions. (Keck et al. 2010) In-House Versus Outsourced DOT Structures The in-house state DOT structure relies on internal staff to perform most department business tasks and functions, including design, construction engineering and inspection (CEI), right-of-way, planning, maintenance, and other admin- istrative tasks. The outsourced state DOT structure uses external resources (i.e., private contractors or other public agencies) to perform department business tasks and functions. Secrest et al. (2012) emphasized that most state DOTs have outsourced some parts of their business functions but still primarily rely on in-house resources to deliver many core services. Staffing levels play an essential role in deciding which projects are performed by in-house staff and which are outsourced. Some state DOTs have managed to retain their staffing levels from year to year and meet their annual program delivery goals. Other states have undergone significant attrition and have resorted to routinely procuring professional services consultants as a means of helping them deliver their programs. The challenge is in finding the most cost-effective balance between what and how much to outsource. (Keck et al. 2010) A recent study of program management in the Colorado DOT (CDOT) indicated that to deliver the entire capital program with existing staff, decision makers had to understand CDOT’s role in project delivery (CDOT 2014). The following organi- zational structure strategies were recommended to improve program delivery: • Optimizing the use of existing CDOT resources; • Creating an environment of “one CDOT” rather than many individual organizations under the CDOT umbrella, which is easier with centralization; • Improving trust between headquarters and the regions of the state; • Improving succession planning and knowledge of transfer opportunities; • Establishing authority at the appropriate organizational levels and promoting the empowerment of employees; • Increasing overall flexibility and agility to facilitate project delivery; and • Relieving project delivery bottlenecks (CDOT 2014).

14 SUMMARY The literature review results presented in this chapter provide key information on the state of practice for program delivery in the transportation industry and summarize the most relevant topics relating to strategic delivery methods. The key concepts of program development phases, strategic planning, and organizational structure were discussed in detail—these concepts establish the context for the survey and case example protocols applied in the synthesis. This chapter found that effective program delivery depends on sound policies and procedures that address the management of projects throughout the program delivery process. Many state DOTs have reorganized both internally and externally to be more effective and efficient in deliv- ering their transportation programs. A contracting strategy is based on three components: (1) the delivery method, (2) the procurement procedure, and (3) the payment method. The three most common delivery methods are D-B-B, D-B, and CM/GC. Other less common delivery methods include P3, multiprime, and design sequencing. Likewise, a wide range of procurement procedures are used in trans- portation projects and programs. The most common procedures are low-bid, best-value, qualification-based, and cost-plus- time (A+B). Less common procurement procedures include sole source, job order contracting, alternative technical concepts (ATCs), and alternate design. The two most common payment methods used in the transportation construction industry are lump sum and unit price. Less common methods include cost reimbursable, guaranteed maximum price, and contract force account. State DOTs have developed and implemented a number of contracting strategies to reduce the cost and duration of program delivery and to provide needed expertise more efficiently. Discussions in the following chapters will focus on the delivery of programs rather than projects.