Staffing for Alternative Contracting Methods (2018)

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9 Introduction This chapter documents the important findings from the literature review on organiza- tion and staffing needs for ACM projects. The purpose of this chapter is to establish the background and context for the findings from the survey and case examples presented in Chapters 3 and 4, respectively. A discussion of DOT organizational structures provides a framework for understanding staffing issues for implementation of ACMs. Staffing needs and skill sets for ACMs are then presented to determine critical staffing and teaming needs as well as unique staffing issues for primary ACMs, including D-B, CM/GC, and P3 delivery methods. Next, the chapter discusses the use of consultants in ACM projects and its influence on the state DOT workforce. The chapter concludes with a detailed discussion on the influ- ence of organizational structures and staffing needs for the development and implementation of ACMs. Organizational Structure In business, Deloitte (2008) showed that organizational structure is the vehicle through which business strategy and activities are executed to meet customers’ expectations. In state DOTs, the final report for NCHRP Project 20-24 (83), “Alternative DOT Organizational Models for Delivering Service,” indicated that a DOT organizational structure has a substantial impact on the ability to plan, build, operate, and maintain statewide transportation projects and programs (Secrest et al. 2012). The study also found that improving project delivery is a major driver for organizational change within many state agencies. There are many differ- ent types of organizational structures. However, ACM structures can be grouped into three main categories: • Centralized structure, • Decentralized structure, and • Combined structure. It is evident that there is no preferred structure used by state DOTs for implementing ACMs (Keck et al. 2010). Most DOTs prefer using a mix of centralized and decentralized structures (Secrest et al. 2012). A recent study on improving transportation project delivery performance conducted by the Connecticut Academy of Science and Engineering (CASE) found: . . . there is no favored organizational structure used by DOTs for implementing and integrating ACMs into their departments. It is recognized that a DOT’s overall organizational structure and existing responsibilities for project development, design, and construction may be considered in establishing the organizational structure for delivering projects using ACMs. (CASE 2016) C H A P T E R 2 Literature Review

10 Staffing for Alternative Contracting Methods NCHRP Report 662: Accelerating Transportation Project and Program Delivery also noted: 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. (Keck at al. 2010) The following sections discuss the three types of organizational structures used by DOTs in detail. Centralized Organizational Structure Under a centralized structure, all knowledge, skills, and resources for specific projects are consolidated. The headquarters or central office controls and performs most nonconstruction work, including roadway and bridge design, environmental analysis, and project planning and programming. Secrest et al. (2012) found that the centralized structure is most effective when in-depth expertise is critical to meeting a state DOT’s goals. Keck et al. (2010) highlighted that it is a trend for smaller DOTs to use the centralized organizational structure because it reduces duplication of responsibilities and improves program delivery. For example, the Arkansas Highway and Transportation Department (AHTD) uses a centralized organizational structure that consists of a director, a deputy director and chief operating officer, and a deputy director and chief engineer. There are three assistant chief engineers of planning, design, and operation, and an assistant chief administrator to support deputy directors. The alternative project delivery division works directly with the director and deputy directors. The AHTD has 10 districts, and the business conducted in each district is handled and monitored by the central office. The centralized organizational structure helps the AHTD maintain a clear understanding of the desired outcomes throughout the ACM (e.g., D-B) project development and procurement. The AHTD forms a Department Procurement Team (DPT) to administer, manage, and implement ACM projects. The composition of the personnel assigned to the DPT may vary widely from project to project, but in general, the DPT should be a multidiscipline group consisting of engineers and other technical/ professional staff with design, construction, materials, contract administration, and legal expertise. If significant project development is required, additional dedicated team members should be considered. All team members should agree early in the process on the project goals, quality expectations, risks, risk assignment, and other important issues. (AHTD 2015) The Georgia DOT (GDOT) has used the centralized structure to deliver almost all of its ACM projects. ACM projects are administered and managed through the Office of Innovative Deliv- ery. Detailed information on staffing for ACMs in GDOT can be found in the case example presented in Chapter 4. The Innovative Delivery Office specializes in managing innovative programs in transportation system delivery, through Public Private Partnerships, Design-Build, and other alternative delivery methods, handling major transportation projects, feasibility studies and special projects in conjunction with Georgia Department of Economic Development and Georgia Regional Transportation Authority (GRTA), including Bus Rapid Transit capital program support, and Park and Ride facilities. (GDOT 2017) Figure 1 shows a generic centralized organizational structure for state DOTs. This generic chart was developed based on a comprehensive review and analysis of multiple state DOT orga- nizational structures across the U.S. However, it is important to note that the organizational structure varies state by state, and this generic chart serves as an illustrative purpose only. In this model, the Director or Commissioner or Secretary is the central figure in the development and implementation of transportation policy. The Director is responsible for oversight of transpor- tation planning, design, construction, and maintenance, as well as operations of transportation modes under his/her jurisdiction.

Literature Review 11 The main benefits of centralization related to project and program delivery are as follows: • Program consistency—Centralization allows state DOTs to adopt a more consistent approach to delivering transportation programs and projects across their states; • Policy alignment—Under the centralized structure, field staff align their actions and decisions with the department policies; • Cost savings—Centralization may help better utilize staff and operate more efficiently; and • Improved external and internal communication—Centralization provides opportunities to convey a clearer and more consistent message across the department (Secrest et al. 2012). The main drawbacks of centralization related to project and program delivery are: • Potential delays—The Director and the top-level management are often overloaded by decision making, and this sometimes causes a delay to project and program delivery; • Less flexibility—Under the centralized structure, field staff have difficulty operating with changes in the work environment; and • Less employee empowerment—Employees in middle and lower-level management have limited opportunities to participate in decision making and planning (Secrest et al. 2012). Decentralized Organizational Structure The decentralized structure includes district offices that have greater autonomous decision- making power for design, procurement, construction, and public engagement decisions. Over the past several decades, state DOTs tended to decentralize functions to improve public involve- ment and customer satisfaction (Secrest et al. 2012). The decentralized structure is often based on geographic areas. For example, the organization structure of the Texas DOT (TxDOT) is decentralized to suit the state’s geography and mission. TxDOT includes 25 districts that oversee design, construction, and maintenance. The Texas Transportation Commission and TxDOT Administration set goals and direction for planning. District engineers and their staff are largely autonomous. They are responsible for bottom-up identification of needs, projects and Director Deputy Director & Chief Operating Officer Assistant Director Administration Chief Engineer Assistant Director ... Division of Engineering Districts Centralized Structure Transportation Commission Division of Construction Division of …. - District 1 - District 2 - District ... Figure 1. Generic centralized organizational structure.

12 Staffing for Alternative Contracting Methods priorities, project development, and project delivery. Districts perform most project devel- opment activities independently, with limited oversight from TxDOT headquarters staff (TxDOT 2010). Keck et al. (2010) found that the decentralized organization structure has proved to be successful at TxDOT. The decentralized organization structure is effective to deliver pro- grams and projects while addressing concerns of public involvement or 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 addition to districts, TxDOT has a new field support structure through a region approach. TxDOT is implementing four Regional Support Centers (RSCs) to consolidate support person- nel and resources among its 25 districts. The RSCs are intended to improve efficiency of support activities and help share workload across districts within the region. Depending on district size, each region supports four to eight districts and provides operational and project delivery sup- port (e.g., right-of-way, design coordination, environmental review, etc.). Each RSC is led by a Regional Director and two Assistant Regional Directors, one for Operations Support and one for Project Delivery Support. The regions report to the Assistant Executive Director for Field and District Operations (TxDOT 2010). The Missouri DOT (MoDOT) also has a dominant decentralized organization structure for project and program delivery. MoDOT divides the state into seven districts: Northwest, North- east, Kansas City, Central, St. Louis, Southwest, and Southeast. Because these districts are more locally focused, this arrangement has the great advantage of establishing and maintaining strong relationships with local and regional governments than a single central office. Keck et al. (2010) highlighted that when recognizing the benefits of using the decentralized structure to deliver programs and projects, MoDOT allows the district offices to make decisions that move projects forward. The central office provides oversight and support to the seven districts that are primar- ily responsible for delivery of ACM projects. About eighty percent (80%) of employees work in the seven districts, with the remainder working in the various divisions within the central office (MoDOT 2017). Similar to TxDOT, the district engineers work directly with the Office of Chief Engineer to administer and execute their ACM projects. The case example presented in Chapter 4 provides more detailed information on ACM organization and staffing needs in MoDOT. Figure 2 shows a generic decentralized organizational structure used in state DOTs. As men- tioned previously, the organizational structure varies among states; thus, this generic chart serves as illustration only. Different from the centralized organizational structure, the district offices typically have a direct relationship with the Director and an indirect relationship with Director Assistant Director Engineering & Operation Districts Decentralized Structure Assistant Director ... Transportation Commission - District 1 - District 2 - District ... Informational Report Direct Report Figure 2. Generic decentralized organizational structure.

Literature Review 13 the Engineering and Operation Chief/Assistant Director. The district offices have greater auto- nomous decision-making power over functions like design, communications, fleet manage- ment, and public engagement. The main benefits of decentralization related to project and program delivery are listed as follows: • Employee empowerment—Decentralization provides employees with opportunities to innovate and make judgment calls to save time and cost for project delivery. • Suitable for large states with different geographical areas—Decentralized structures allow dis- trict offices to effectively deal with large states varying in topography, climate, and socio- cultural issues. • Improved relationships with publics and local governments—Under the decentralized structure, the districts are able to maintain stronger relationships with local and regional governments than a single central office (Secrest et al. 2012, Keck et al. 2010). The main drawbacks of decentralization related to project and program delivery are as follows: • Redundancies—Decentralized structures tend to create redundancy functions, resources, and processes across all district offices or decentralized units. • Inconsistency—Under the decentralized structure, field activities are sometimes not aligned with central office policies, priorities, and strategic direction (Secrest et al. 2012). Combined Organizational Structure Previous studies found that most state DOTs favor a mix of centralization and decentraliza- tion to accommodate ACMs (Secrest et al. 2012; CASE 2016). Many agencies are selectively centralizing policy, command, administrative, and communication functions/controls while decentralizing project delivery. Secrest et al. (2012) pointed out that the anticipated benefits of this approach include better program consistency, reduced costs, enhanced policy alignment, and improved communications. CASE (2016) highlighted that the overall organizational struc- tures of state DOTs and their existing staff responsibilities can be considered in establishing the organizational structure for delivering ACM projects. For example, the combined organiza- tional structure in the Colorado DOT (CDOT) has two main components: central offices and regional offices. The central offices have responsibilities to provide resources and expertise for the regional offices to deliver ACM projects. The central offices also participate in the selec- tion committee, track the ACM procurement progress, and share information among regional offices. The chief engineer (central office) plays a critical role in ACM projects. The regional offices have responsibilities to administer and execute ACM projects. Typically, the procure- ment activities of ACM projects are conducted at the regional offices in coordination with the chief engineer. The Virginia DOT (VDOT) also employs a combined organizational structure to deliver ACM projects. The chief engineer provides leadership to the nine districts, and the deputy chief engineer provides leadership to engineering and operations divisions. The districts determine candidate projects for ACMs and send the list of projects to the Alternative Project Delivery division. The Office of Alternative Project Delivery works with other central offices to identify good candidates for ACM projects and is responsible for pre-award activities, procurement, and awarding the ACM projects. Once the project is awarded, it is handed to the district office for contract administration and execution (VDOT 2017). VDOT also has the Office of Public-Private Partnerships (P3 Office) to develop, administer, and manage P3 projects. The case example presented in Chapter 4 provides more detailed information on ACM organization and staffing needs in VDOT.

14 Staffing for Alternative Contracting Methods Figure 3 shows a generic combination of centralized and decentral- ized organizational structures of state DOTs. As mentioned previ- ously, this generic chart serves as illustrative only. The organizational structure varies state by state. In the combined structure, districts and field staff have more opportunities to be innovative and involved in the decision-making processes, while the central offices focus on establishing policy making, standard setting, and command roles to improve consistency and eliminate redundancies. The purpose of combined structures is to enhance benefits and mitigate drawbacks between centralized and decentralized structures. In summary, organizational structures very among states. There is no one-size-fits-all solution. There is no favored organizational struc- ture used by DOTs for delivering their transportation projects and programs. ACM Staffing Staffing levels play an important role in the success of delivering ACM projects. However, as mentioned previously, the research literature on ACM staffing utilization and implementa- tion in state DOTs is very limited. Most state DOTs provide staff for their ACM projects on a project-by-project basis. The numbers of staff assigned to ACMs vary from state to state. The use of consultants in conjunction with in-house staff is a typical model for implementing ACMs. The following sections discuss briefly skill sets and experience levels required for each primary ACM delivery method. D-B Staffing Needs and Skill Sets D-B projects are typically large projects that involve many agencies and stakeholders. Dif- ferent from traditional D-B-B projects, D-B often demands different skill sets, processes, and management efforts to be successful for implementation. Through interviewing 11 mature D-B Many models exist across the country for how a state DOT can be organized. In fact, we have done study after study that show the mission is the same but the way the states are set up to deliver on that mission can vary widely. No model is perfect nor considered the “answer key” to the org chart question. They all work; people make them work. (Tom Warne, former Utah DOT chief, 2009) Deputy Director & Chief Operating OfficerChief Engineer Districts Combined Structure Director Assistant Director ... Assistant Director Administration - District 1 - District 2 - District ... Division of Engineering Division of Construction Division of …. Informational Report Direct Report Transportation Commission Figure 3. Generic combined organizational structure.

Literature Review 15 agencies, Scott et al. (2016) identified the following practices in organizational structure and staffing for implementing D-B projects and programs: • Establishment of an organizational unit dedicated to administering and coordi- nating the D-B program in recognition of D-B projects requiring different skills and management and coordination efforts for implementation to be successful, and that some staff may have difficulty transitioning to the D-B process; • Selection of project teams based in part on their education and experience in the implementation of D-B practices, as well on having personalities well- suited to the leadership and collaborative skills needed to align the often disparate interests of D-B project participants; • Avoidance of cyclic hiring and downsizing plans (which can act to erode morale and deplete institutional knowledge) in favor of nurturing a stable workforce that has the skills and leadership ability to deliver both small and large projects; • Support of attractive career development paths, which emphasize education, training, and continuing personal and professional development, to attract and retain key personnel and ensure a sustainable core workforce; • Training of personnel on fundamental D-B principles, supplemented by peer- to-peer information exchanges to transfer project management knowledge to targeted audiences; • Commitment of senior leaders to the success of the D-B program by: – Recognizing the need for key personnel to be trained and educated in D-B practices; – Empowering project engineers with appropriate decision-making authority to help ensure timely resolution of any issues encountered; and – Championing D-B benefits both to internal staff and to other stakeholders. • Alignment of functional support areas and other project partners to ensure the organizational structure supports the effective planning, design, procurement, execution, and closeout of projects (to this end, train and develop subject matter experts capable of effectively carrying out supporting activities such as proposal evaluations and design reviews in a manner that supports the D-B process); and • Active involvement of key personnel for the duration of the project to: – Help ensure that valuable information is not lost between project phases (thereby reducing or eliminating project learning curves); – Foster consistent and timely communication, collaboration, and issue resolution with the design–builder; and – Hold the project team accountable for decision making. (Scott et al. 2016) Scott et al. (2016) also identified the number of dedicated full-time staff for D-B implementa- tion across the 11 state DOTs. As shown in Table 1, all state DOTs have at least one full-time staff in the headquarters or the central office acting as an organizational unit dedicated to admin- istering, coordinating, and championing the D-B program. For D-B staff experience and skill sets, state DOTs often demand staff assigned to D-B project teams be well versed in D-B concepts and processes and have a strong commitment to the project. For example, CDOT requires that all staff working on D-B projects must be familiar with the

16 Staffing for Alternative Contracting Methods fundamentals and principles of D-B contracting and versed in the preparation of prescriptive and performance provisions (CDOT 2016). Similarly, the AHTD states that D-B staff must have an understanding of the tasks and steps leading to the selection of the design–builder and the process to administer and execute D-B projects (AHTD 2015). Scott et al. (2016) indi- cated that the successful implementation of D-B requires D-B agency staff to have experience in reviewing submittals for compliance to contract requirements and to be open to solutions that are not aligned with their own preferences. The study also found that: The fast-paced and collaborative nature of D-B projects requires higher level management and decision- making skills, which can accelerate the career development of DOT engineering staff by placing them in leadership positions earlier in their career trajectories. [Italics added] (Scott et al. 2016) The composition of a D-B project team may vary widely from project to project, region by region, and state by state. However, an example of D-B team, adapted from CDOT (2016), includes the following staff: • Project Director: This staff acts as the single point of authority responsible for the administra- tion and implementation of the project. The Project Director is the only person on the project team that has approval authority. All approvals by the Project Director are required to be documented in writing. The Project Director has the authority to remove any team member for failure to comply with the confidentiality requirements of the project. • Project Manager: This staff directly supports the Project Director in leading the project and assumes specific leadership responsibilities at the direction of the Project Director. The Proj- ect Manager often leads the development of the design and the Request for Proposal (RFP) development and is involved in more of the intimate details of the project. • Executive Oversight Committee: This committee provides overall policy guidance for the project and the D-B procurement process. The main roles of the committee are to: – Confirm the project goals, – Confirm the release of the Letters of Interest (LOIs), – Confirm the release of the Request for Qualifications (RFQ), – Confirm the Statement of Qualifications (SOQ) Evaluation Plan, – Confirm the short-listed firms, – Confirm the Proposal Evaluation Plan, – Approve the release of the RFP, and – Present the recommended apparent successful proposer to the Chief Engineer, who will ultimately make the final selection. State DOT Internal Staff Dedicated Full-Time Part-Time Support Colorado 1 2 Florida 3 - Maryland 1 - Minnesota 3 - Missouri 1 - North Carolina* 15 - Ohio 1 3 Oregon 1 Texas** 86 Utah*** 1 1 Virginia 8 *Staff are dedicated to both D-B and P3. **This is an outlier as TxDOT only implements D-B for very large or mega projects. ***One full-time manager overseeing D-B and CM/GC programs, supported by one part-time staff focused on D-B and one part-time staff focused on CM/GC. Table 1. Dedicated D-B staff positions (adapted from Scott et al. 2016)

Literature Review 17 • Project Leadership Team: This staff is responsible for the day-to-day management, coordina- tion, and development of the project and the D-B procurement process. This team often comprises members of CDOT, the consultant team, local agency funding partners, and public involvement representatives. • Project Management Team: This staff includes key members from the Project Leadership Team and is supplemented by representatives of key stakeholders, FHWA, and critical technical disciplines. The Project Management Team provides recommendations to the Executive Oversight Committee. • Project Technical Team: This staff comprises the discipline leads that may be staff from CDOT or from consultants, depending on the availability of CDOT technical staff. Team members may be assigned specific sections of the contract for oversight, such as roadway, structures, hydraulics, pavement design, right-of-way, environmental compliance, public relations, management of traffic, or quality. CM/GC Staffing Needs and Skill Sets Selecting the right team members is critical for the success of implementing CM/GC projects. Smith (2005) indicated that the team selection for CM/GC projects typically includes qualifica- tion and experience. It is noted that the administration of CM/GC projects is ultimately not much different than D-B-B projects. However, state DOTs demand different skill sets to be successful in implementation of CM/GC projects. The final report for NCHRP Project 10-85, A Guidebook for Construction Manager-at-Risk Contracting for Highway Projects (Gransberg et al. 2013b), identified the following important skill sets for CM/GC: • The executive staff in the agency play a pivotal role in implementing CM/GC. • A DOT project manager is required to have strong negotiation skills because the project man- ager plays a vital role in making critical decisions during the negotiation of the project price/ guaranteed maximum price (GMP). • It is important that a DOT project manager has estimating expertise and background to suc- cessfully manage CM/GC projects. This enables the project manager to better understand all assumptions made by the contractor in putting together the project price/GMP estimate and facilitate the negotiation process. In CM/GC, a DOT project manager must act as facilitator, negotiator, decision maker, collab- orator, manager, and leader and must be an active participant in every step of the preconstruc- tion and construction phases (CDOT 2015). A DOT project manager also must have technical expertise and background to be able to question the design, estimates, and construction deci- sions. The roles and responsibilities of CM/GC staff during the preconstruction phase are sum- marized below (adapted from CDOT 2015). DOT Project Manager: Facilitating the collaborative effort between the Design Consultant and Contractor through active communication and project team meetings that include a Part- nering Workshop, Project Scoping Workshop, Value Engineering (VE) Workshop, Design Review Meetings, and Cost Model Review meetings. The project manager also leads the Cost Model and Estimate Review process, questioning both the Contractor and Independent Cost Estimator (ICE) estimates. Design Consultant: Taking direction from the DOT Project Manager in development of the design, the Design Consultant must keep the DOT Project Manager informed and involved in all design reviews and risk decisions. The Design Consultant is also required to work with the Contractor to manage the iterative design process. Independent Cost Estimator (ICE): The ICE has the responsibility to question the Contrac- tor’s prices, quotes, methods, and estimate to ensure that the price is fair and open from the

18 Staffing for Alternative Contracting Methods Contractor. The ICE is required to bring on subject-matter expertise if they lack in-house knowledge of a major work item. Construction Manager/General Contractor: A Contractor has the responsibility to provide input on schedule, phasing, constructability, material availability, and cost throughout the design phase of the project. The Contractor is also responsible for identifying project risks and providing guidance for establishing project risk pools. The roles and responsibilities of CM/GC staff during the construction phase are summarized below (adapted from CDOT 2015). DOT Project Manager: Having a significant role and responsibility for administering the Risk Pools developed during the Preconstruction Phase with the support from the state construc- tion Project Engineer. Construction Project Engineer: It is expected that the Construction Project Engineer be actively involved in the Preconstruction Phase so that they are familiar with the details of the Contrac- tor’s Risk Management Plan, the Risk Pools, and the construction methods discussed during design development. The Construction Project Engineer can be state DOT personnel or a consultant. Design Consultant: It is expected the Design Consultant be retained during the construction phase and respond in a timely and cooperative manner to inquiries from the DOT Project Manager and the Contractor. Construction Manager/General Contractor: The role of the Contractor changes to a General Con- tractor during construction and is responsible for ensuring all environmental, safety, and permit commitments, which are specified in the Plans, Specifications, and Contract Docu- ments, are implemented during construction. The Contractor is also responsible for tracking the performance, cost, and time savings of the innovative construction methods. P3 Staffing Needs and Skill Sets Gibson et al. (2015) found that most P3 models are relatively new to state DOTs, and state agen- cies often lack the requisite in-house experience or expertise to manage P3 contractual issues and to monitor P3 project progress. FHWA (2012a) stated that skilled staff to develop, evaluate, manage, and oversee P3 projects is a critical component to the success of establishing a P3 program. Transportation agencies seeking to explore and develop a P3 program face a number of organizational capacity challenges. The primary challenges are acquiring or developing new skills, managing organiza- tional and cultural changes, coordination, and education of stakeholders, and conserving institutional knowledge. (FHWA 2012a) In P3 projects, the agency staff has less responsibility for design and construction, but more for contract management and oversight of the private partner (FHWA 2012a). In addition, P3 staff is often required to establish performance standards rather than construction speci- fications. This change in roles may lead to a shift in technical skills or development of new skills because there may be less need for hands-on design, and more need for setting of broader performance standards along with project management and oversight (FHWA 2012a). Gibson et al. (2015) summarized several concerns related to P3 staffing issues when state DOTs decide to privatize specific functions, described as follows: • Loss of skills and expertise to conduct essential functions in-house, or to effectively check, evaluate, or approve the work of external sources; • Conflict with in-house workforce; • Need for new employees with different expertise and management skills; and • Less capacity to serve a traditional role for hiring entry-level engineers to gain competent experience.

Literature Review 19 Developing P3 projects requires forming and managing multidisciplinary teams that under- stand the interactions of various technical, financial, and legal factors. Typically, staff in state DOTs with existing D-B programs or toll facilities often have some of the skills and structures in place to facilitate P3 project development rather than state DOTs without D-B programs or toll facilities (FHWA 2012a). To manage organizational and culture changes, champions at all levels are needed. In some cases, the champion may be the governor; in others it may be a legislator, agency director, or community or busi- ness leader. A P3 champion can communicate the business case and public good from P3s (both within public agencies and among stakeholders), gather support for the concept, facilitate the streamlining of processes and organizational change, set and manage expectations, and provide assurance to the private sector of the public sector’s commitment to the P3 model. (FHWA 2012a) The three common approaches to establishing new staff capabilities for P3 projects and program are hiring consultant advisors, developing internal capacity, and establishing new P3 units. Table 2 summarizes strengths and constraints for each approach. Hiring consultant advisors effectively provides the needed skill sets, knowledge, and techni- cal and financial perspective that is not easy to cultivate in house for state DOTs that are new to a P3. However, state DOTs still need sufficient expertise in house to keep consultants on track and ensure that their advice is consistent with agency goals (FHWA 2012a). Training existing and new staff is a common practice to implementation of P3, whether or not state DOTs use external advisors. FHWA (2012a) indicated that “developing the skills to manage the P3 process can be done through training existing staff as well as hiring new staff. In some cases, external advisors hired to assist on a P3 project for their technical, legal, or financial expertise can also be used to conduct training of internal staff.” Establishing specialized P3 units is a model increasingly used to address P3 staffing needs and organizational capacity. The P3 units are typically staffed with transportation sector– specific and other sector experts, as well as experts in economics and finance, regulation, pro- curement, communications, and training (FHWA 2012a). The roles and responsibilities of a P3 unit often include the following: • Providing technical assistance and training on P3 project development and procurement; • Helping to identify and prioritize potential P3 projects; Table 2. The approach to establishing staff capabilities for P3 (FHWA 2012a).

20 Staffing for Alternative Contracting Methods • Providing regulatory oversight of P3 projects; and • Promoting the P3 program by soliciting projects, attracting potential partners and investors, and educating the public. (FHWA 2012a) Only a few state DOTs currently have an established P3 program with a dedicated P3 staff. For example, VDOT has established the Office of Public-Private Partnerships (P3 Office). This office has responsibilities to identify, evaluate, develop, and deliver Virginia’s P3 transportation projects in a consistent, transparent, timely, and cost-effective manner. The main roles and responsibilities of key staff of P3 projects at VDOT are summarized as follows [adapted from The Commonwealth of Virginia, 2014]: • Director: The Director is responsible for overseeing all aspects of the P3 program within VDOT. This includes outreach and stakeholder coordination and reporting all program and project activities to the Secretary of Transportation and Agency Administrators. The Director is also responsible for working collaboratively with other public agencies and the industry regarding the Virginia P3 program and P3 projects, complying with applicable statutes, regulations, and policies. • Agency Administrators: The Agency Administrators have the responsibility and legal author- ity to make decisions on commercial and contractual terms related to P3 projects within the transportation agency. • P3 Steering Committee: The Committee evaluates and reviews financing options for the develop- ment and/or operation of transportation facilities considered under the PPTA. The Commit- tee consists of the following members: two member of the Commonwealth Transportation Board; staff director of the House Committee on Appropriations or designee, and the staff director of the Senate Committee on Finance, or designee; a Deputy Secretary of Transporta- tion who serves as the chairperson; the chief financial officer of either the DOT or the Depart- ment of Rail and Public Transportation, as appropriate; and a nonagency public financial expert, as selected by the Secretary of Transportation. The Committee will meet on an as-needed basis and will be briefed by the Commissioner of Highways and/or Director of Rail and Public Transportation, and the Director. • Oversight Board: The Commonwealth Transportation Board oversee P3 projects and works collaboratively with the Commissioner of Highways and the Director of Rail and Public Transportation regarding the status of P3 projects at major milestones. Use of Consultants in ACMs Two national studies [NCHRP Synthesis 246: Outsourcing of State Highway Facilities and Ser- vices (Witheford 1997) and NCHRP Synthesis 313: State DOT Outsourcing and Private-Sector Utilization (Warne 2003)] found that two main factors influencing the use of consultants by transportation agencies are staff constraints and the requirement of specialty skill sets. The use of consultants plays an important role in absorbing the peaks and filling in the gaps when staff are leaving or retiring (CASE 2016). Many state DOTs use consultants in conjunction with their staff to deliver ACM projects. The level of outsourcing varies from state to state. Some state DOTs selectively use consultants where specialized expertise is required to implement ACM projects. Other state DOTs use consultants to cover a full range of activities including, but not limited to, the following: • Developing ACM practices and documents; • RFP/RFQ development; • Contract development; • Environmental reviews and document preparation;

Literature Review 21 • Preliminary engineering design; • Project management; • ACM method assessment and selection; and • Technical proposal assessments, but not decision making (CASE 2016). State DOTs with large ACM programs (e.g., Florida, Texas, and Virginia) tend to have a high level of outsourcing with consultants used for multiple aspects of ACM project develop- ment and management, including preliminary engineering, design, oversight, and construction engineering and inspection (Scott et al. 2016). Table 3 summarizes the typical activities that consultants often provide in implementing ACMs. CASE (2016) provides the following suggestions related to use of consultants for the Connecticut DOT (CTDOT) to implement ACM projects: • It is important for CTDOT to engage a general engineering consultant with ACM expertise to help accelerate the effectiveness of the ACM office and project success. • Engaging consultants in ACM training is important to train agency staff from little experi- ence to operational experience. When transitioning from use of a consultant to the use of in-house staff for ACM projects, it is important to take into consideration the volume of projects and preparedness of staff to fulfill ACM project’s requirements. • To institutionalize ACMs, junior-level staff is encouraged to be trained and be involved in over-the-shoulder reviews with any general engineering consultants to gain experience in RFQ and RFP preparation, contractor selection, and management of ACMs. State DOTs have several concerns of outsourcing related to their staffing needs, including (1) losing the skills and expertise, (2) conflicting with DOT workforce and possible legal restric- tions, (3) different expertise and skill sets needed for new employees, and (4) having less capacity to serve a traditional role for hiring entry-level engineers (Witheford 1997). Scott et al. (2016) found that overreliance on consultants can stunt the growth and development of the DOT’s own staff, creating a void of sufficient ACM experience and qualifications to provide meaning- ful project-level decision making. As a result, some state DOTs noted that they relied heavily on consultants during the early development and expansion of a DOT’s ACM program to pre- pare standard templates and assist with training. However, as agency staff gained more experi- ence with ACMs, the need for the use of consultants becomes less critical (Scott et al. 2016). For example, CTDOT indicates that “it does not serve the department’s long-term interests or capacity to rely on consultants for certain recurring tasks and needed skill sets” (CASE 2016). State DOT Outsourcing Activities Development of Solicitation Documents Project Development and/or Preliminary Engineering Design Oversight Construction Engineering and Inspection Colorado X Florida X X Maryland X Minnesota X X X Missouri X X Ohio X X Oregon X X X Texas X X Utah X Virginia X X X X Washington X X X Table 3. Use of consultants in ACMs (adapted from Scott et al. 2016).

22 Staffing for Alternative Contracting Methods Similarly, through interviews with three agencies [the Minnesota Department of Transportation (MnDOT), MoDOT, and the Oregon DOT] that have mature ACM programs, Scott et al. (2016) highlighted that these state DOTs view outsourcing to be a “good startup model,” but currently seek to internalize more ACM functions. Summary The literature review results presented in this chapter document the most relevant topics to staffing for ACMs. The review provides key information for understanding the state of practice for ACM staffing and human resources in the transportation industry. The key concepts of orga- nizational structures, staffing needs and skill sets, and the use of consultants for ACM projects were discussed in detail. The concepts in this chapter set the basis for the survey and case example protocols applied in this synthesis. This chapter found that a variety of organizational structures have been used successfully by state DOTs for implementing and integrating ACMs in their department, including decentral- ized, centralized, and combined structures. There is no favored organizational structure for ACMs. State DOTs consider their existing structure, the volume of ACM projects, and their staff experience and skill sets. ACMs often demand different skill sets, processes, management strate- gies, and coordination efforts from state DOT staff. The need for a departmental champion, staff familiarity, and a culture of adaptability and flexibility are typical staffing strategy components to ensure the success of implementing ACM projects and programs. Additionally, it is critical for state DOTs to select staff with diverse backgrounds, collaborative skills, and an attitude of innovative problem solving for ACM teams. The use of consultants for ACMs was found to be much-needed assistance, particularly during the early phase of development of ACM programs. However, state DOTs consider the transition from use of consultants to use of in-house staff for the sustainable development of ACM projects and programs. Training plays an important role to both build in-house staff capabilities and promote culture change.