Strategic Program Delivery Methods (2017)

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59 CHAPTER SIX CASE EXAMPLE FINDINGS INTRODUCTION This chapter summarizes key findings on program delivery based on the information obtained from the case examples described in chapter five. The chapter discusses the benefits and challenges of using a strategic approach to program delivery, and then summarizes the common factors to consider in preparing to strategically deliver a program of projects. The key findings were synthesized from results of the case examples of California DOT (Caltrans), Florida DOT (FDOT), Missouri DOT (MoDOT), New York State DOT (NYSDOT), Oregon DOT (ODOT), Utah DOT (UDOT), and Washington State DOT (WSDOT). STRATEGIC PROGRAM DELIVERY BENEFITS In the case example interviews, most of the DOT representatives said they had experienced more benefits than challenges using a strategic approach to deliver a program of projects. Table 7 lists the major benefits mentioned and the state DOTs that expe- rienced each one. Benefits realized by more than three DOTs include flexibility in outsourcing, improved performance using bundling, increased innovation, and standardization of design. The following paragraphs discuss these four benefits in detail. TABLE 7 STRATEGIC PROGRAM DELIVERY BENEFITS Benefits State DOT Budget recovery process UDOT Corridor-level EIS WSDOT Documenting repeated issues MoDOT Flexibility in outsourcing MoDOT, ODOT Flexibility in scheduling of projects MoDOT, ODOT Improved performance using bundling MoDOT, NYSDOT, ODOT, WSDOT Improved relationships with contractors Caltrans, MoDOT Increased innovation FDOT, MoDOT, NYSDOT, ODOT, UDOT Less risk exposure FDOT Reduced administrative burden NYSDOT Fewer internal staff required ODOT Shortened delivery schedule MoDOT, NYSDOT Standardized design FDOT, MoDOT, NYSDOT, WSDOT Upper management support Caltrans Use of A+B bidding for D-B-B projects UDOT Use of stakeholder and industry input Caltrans, WSDOT Note: A+B = cost-plus-time; D-B-B = design-bid-build; EIS = environmental impact statement. Flexibility in outsourcing refers to the ability of a DOT to hire outside consultants to help coordinate and manage the pro- gram. MoDOT hired a consortium of design and construction firms to provide the design-build services for the D-B bridges in the program. This outsourcing made up for internal resources that MoDOT did not have. MoDOT also used the design-builder as a program manager on some D-B projects, but in most cases the department hired local consultants and contractors to perform

60 the actual design and construction work. In the OTIA III program, the state legislature required ODOT to hire a third-party firm to manage the program, although the department retained flexibility in its use of staff and outside resources. Like MoDOT, ODOT realized that to deliver hundreds of bridges across the state in a specified period of time, it would have to hire huge num- bers of personnel, which was not an option. The third-party program manager supplemented MoDOT’s own staff and resources. Bundling enabled state DOTs to combine several projects into one, which increased contractor competition and lessened the logistical and coordination burdens on the DOT. In the cases of MoDOT, NYSDOT, and ODOT, each had numerous bridges to repair and replace across the state. Some of the projects were small, while others were large. Each of these states used a bundling process to combine several projects into one larger project; the bundles were created in various sizes to allow small, medium, and large contractors to bid on work. Projects could also be bundled according to geographic location or delivery method. Bundling helped the state DOTs achieve better performance in their programs. Increased innovation was usually the result of using alternative contracting methods in a program. The ACMs included D-B, CM/GC, P3, the use of ATCs, and other innovative techniques, all of which required the early involvement of key participants. By hiring design and construction firms early in the project development process, DOTs saw more innovation and value engi- neering. ATCs provide more innovation across all delivery methods; for example, MoDOT uses ATCs for both D-B and D-B-B. Standardization of design elements helped several state DOTs streamline their design and material procurement processes. The projects included in a bundle could be designed to use similar materials and similar construction methods. MoDOT purposefully began designing similar bridges in the same manner so that similar materials and methods could be used. This approach allowed the department to streamline design, to procure materials in bulk (increasing cost savings), and to stage projects before the contractor commenced work. STRATEGIC PROGRAM DELIVERY CHALLENGES In addition to the benefits of strategic program delivery, the case example DOTs also encountered some challenges. Table 8 lists the challenges the seven state DOTs experienced during the delivery of their programs. The major challenges experienced by more than one state were lack of experienced personnel, need for extensive community outreach, required changes to orga- nizational roles and responsibilities, logistics of simultaneously coordinating multiple projects, and use of local contractors. The paragraphs below summarize these five challenges of strategic program delivery. TABLE 8 STRATEGIC PROGRAM DELIVERY CHALLENGES Challenges State DOT New processes and procedures to follow Caltrans Lack of experienced personnel Caltrans, FDOT Community outreach Caltrans, MoDOT, WSDOT Organizational changes to roles and responsibilities Caltrans, ODOT, UDOT Developing the RFP FDOT Lack of innovation in maintenance portions of a program FDOT Coordinating multiple projects simultaneously MoDOT, NYSDOT Use of local contractors MoDOT, NYSDOT Closing out a large program ODOT Turnover of important DOT resources ODOT Working with environmental issues ODOT Use of third-party program manager ODOT Quality issues with alternative contracting methods UDOT Strategizing funding for a very large program WSDOT Note: DOT = department of transportation; RFP = request for proposals. The use of alternative contracting methods plays an important role in the success of strategic program delivery. However, several DOTs from the case example states acknowledged that in-house personnel did not have extensive experience or train-

61 ing in delivering programs using ACMs. This lack of experience—along with required changes in roles and responsibilities— was challenging in the initial stages of a program. As the program advanced, personnel gained experience that helped them understand their roles and responsibilities in the program delivery process. Transportation programs tend to be large and complex; they typically comprise high-profile work that captures the atten- tion of the general public and policymakers. Therefore, state DOTs have to implement extensive community outreach and public relations initiatives to continuously and consistently inform the public about the program and its progress. Although community outreach requires a significant amount of time and resources, several state DOT representatives stressed its importance in successful program delivery. Without public and political support and trust, a state DOT would have a hard time justifying the amount of time, effort, and money it spends on large programs. Maintaining transparency and open com- munication with the public is a critical task in developing a program of projects. The logistics of delivering multiple projects simultaneously in a program also proved to be a challenge, particularly when the projects spanned an entire state. A number of the case example DOTs use a decentralized organizational approach, in which individual regions deliver projects while the DOT headquarters provides administrative support. However, to over- come the challenge of managing multiple projects within a program, a state DOT might choose to operate the program from headquarters. Doing so can help with the coordination of projects, and it reduces the redundancy that would occur if individual regions handled the projects in their areas. Centralizing the program eliminates redundancy and frees resources needed to deliver the projects. This works best with small states. Another common challenge in program delivery is involving local contractors. The MoDOT, NYSDOT, and ODOT pro- grams all included provisions to stimulate the local and state economy. To accomplish this, a majority of the design and con- struction work would have to be completed by state consultants and contractors rather than by national or international firms. These state DOTs had to be creative in developing project packages of different sizes and complexity to spark competition and encourage local and state contractors of all sizes to bid for the work. UNDERLYING FACTORS TO CONSIDER IN PROGRAM DELIVERY When the research team synthesized the findings from the case examples, several underlying factors emerged. Table 9 sum- marizes the factors state DOTs need to consider and focus on in developing and delivering a program of projects. TABLE 9 UNDERLYING FACTORS TO CONSIDER IN PROGRAM DELIVERY Common Factors Caltrans FDOT MoDOT NYSDOT ODOT UDOT WSDOT Extensive community outreach and public relations √ √ √ √ Gaining political and public support √ √ √ Program goals tied to DOT strategic goals √ √ √ Standardization of design elements √ √ √ √ Use of alternative contracting methods √ √ √ √ √ √ √ Use of ATCs to increase innovation √ √ √ √ Use of bundling √ √ √ √ √ Note: ATC = alternative technical concept; DOT = department of transportation. Extensive community outreach and public relations are critical tasks that the program team must address to achieve a suc- cessful program. Programs tend to be large in terms of number of projects and total cost. The vast majority of projects will disrupt the flow of traffic, and the funds for the programs come from the public. Thus, the public wants to know when and where the work is occurring and how effectively the DOT is using state and federal funds. MoDOT used internal staff across the state to manage public concerns about the hundreds of bridge projects occurring in a relatively short period. This allowed each region to communicate details and time frames for its own projects. The awarded design-builder assisted MoDOT with public relations efforts, particularly for the D-B projects. Caltrans, MoDOT, ODOT, and WSDOT have established program websites to provide transparency to the public. MoDOT and ODOT use a color-coded map on the website to denote projects completed, those in progress, and those in development. ODOT and WSDOT also post monthly updates that detail the prog- ress of their programs. Keeping the public informed is a key factor in the success of program delivery.

62 Another important factor for program delivery is gaining and maintaining political and public support and trust, which goes hand-in-hand with community outreach and public relations. For a state DOT to gain support for a large program of projects, it must engage the public and policymakers. In several of the case example states, DOT programs are reviewed by the state transportation commission or the state legislature, or both. If a program is not developed in a manner that state policymakers can understand and support, the DOT will have a difficult time procuring funds for it. And once a DOT gains political support, it must also gain public support through community outreach. Most people do not like the hassle of road construction, but if the DOT can make the public understand that a program will benefit them, they will support it. The more difficult part then is to keep that support and turn it into trust. If the DOT makes a promise or statement about a program, it must adhere to that promise. Breaking promises or not delivering on statements can create an atmosphere of skepticism. The UDOT representative said that his department completes programs according to the schedule rather than finishing a program when it can. Adhering to the schedule enables the DOT to build public trust—people know that the DOT will be working in a specific area only for the specified amount of time. This practice has eliminated delays in completing projects and helped increase public and political support for UDOT. The development of program goals is a much more intensive process than the development of individual project goals. Four of the case example state DOTs noted that they develop program goals based on their strategic goals. Caltrans develops specific program goals that are designed to provide transparency to stakeholders. The specific goals must be aligned with the overall department goals, which enables Caltrans to ensure that it gets the maximum value for the available funds. FDOT follows a set of strategic goals focused on cost-effectiveness, preservation, capacity improvements, disadvantaged business enterprise involvement, and safety. Each of the program goals is based on the strategic goals, which helps FDOT develop specific performance measures for a program. UDOT ties program goals to the department’s strategic goals of zero crashes, injuries, or fatalities; preserving infrastructure; and optimizing mobility. The ability to standardize design elements helps streamline the design process and improve the procurement process. MoDOT realized that many of the bridge projects in its S&S program included similar design elements and that the construc- tion would be performed by the same contractors. The department further realized that some of the design elements, such as beams and pilings, could be standardized for multiple bridge projects. Standardizing elements reduced the design time to develop a bridge project and helped MoDOT save money by procuring materials in bulk rather than on a project-by-project basis. Standardized elements also allowed for interchangeable parts, which helped MoDOT change a bridge schedule. Further- more, the ability to purchase components in bulk allowed the department to stage projects before construction began, which helped eliminate delays caused by waiting for materials and components to arrive on the construction site. Strategically delivering a program of projects encourages the use of alternative contracting methods. All the case example DOTs used ACMs to some extent in their programs. Caltrans piloted the use of D-B and CM/GC on state transportation proj- ects so the department could learn how to use the methods effectively and show state policymakers that ACMs can benefit the state’s transportation projects. Caltrans also gained support from state contractors to use ACMs for transportation projects. FDOT has extensive experience with ACMs, particularly D-B and P3. In the case of ODOT, OTIA III was the first large- scale experience for the department of using ACMs. The OTIA III bridge program used D-B, CM/GC, and even a form of A+B bidding that ODOT called A+C+D (cost-plus-qualifications-plus-work plan). NYSDOT used D-B for the first time with the NY Works program and developed a sophisticated process for using it in the future. MoDOT, NYSDOT, and ODOT all bundled projects in their programs to use a specific delivery method. MoDOT had a set of D-B-B projects and a set of D-B projects in the S&S program. NYSDOT used phases of bundled projects, which were either D-B-B (Phase 1A) or D-B (Phase 1B). ODOT bundled D-B-B and D-B projects and used CM/GC for one of the largest projects in the program and A+C+D for one of the more complicated projects. Using ATCs in a program can increase innovation. NYSDOT did not use ATCs in the NY Works program but the repre- sentative said that if they had, they would probably have experienced even more innovative ideas and processes than they did. NYSDOT now requires ATCs on all D-B projects. A word of caution: FDOT realized that ATCs must be carefully reviewed so the changes that occur as a result of their use do not cause additional issues or work. For example, FDOT received an ATC to change the configuration of a braided interchange. Although it was a good idea, the reconfiguration would also have changed the structural and paving requirements, which would have offset the savings gained from implementing the ATC. The bundling technique used by MoDOT, NYSDOT, and ODOT enabled those state DOTs to create project packages of different size, complexity, and location. The bundling of corridor projects by FDOT and WSDOT enabled multiple projects in a highly congested interstate corridor to be combined into larger projects that would deliver the work faster. When projects are bundled, a state DOT has fewer projects to manage and coordinate. State DOTs can also bundle projects according to

63 geographic location or type of work. This allows contractors to work in one area and to perform similar work on the bundled projects. Bundling also encourages contractors of all sizes to bid on work within a program. SUMMARY This chapter synthesizes the findings from the seven case examples described in chapter five. The benefits, challenges, and underlying factors summarized in this chapter advance state DOTs’ understanding of a strategic approach to program deliv- ery. State DOTs can use this information to help plan their own programs. This information is combined with the findings from the literature review and the national survey to provide conclusions and suggestions for future research in chapter seven.