Highway Maintenance Performance WSDOT Audit 2008

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Washington Department of Transportation
Highway Maintenance and Construction Management
Performance Audit Report
January 10, 2008
Washington State Auditor Brian Sonntag, CGFM
Report No. 1000009
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Appendix B
A letter from State Auditor Brian Sonntag
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his report represents the final
performance audit we conducted
under the provisions of Engrossed
Substitute Senate Bill 6839, effective
July 2005 through June 2007. The
bill required our Office to conduct
performance audits of transportation-
related agencies using auditing standards
prescribed by the U.S. Government.
Our
Office
conducted
extensive
citizen outreach in 2006 and 2007, in
which they expressed concern about
administrative expenses across all areas
of government. Citizens overwhelmingly
cited transportation as one of their top
three priorities for performance audits,
along with education and health and social
services. Citizens’ main concerns about
transportation are congestion relief and
overall efficiency and effectiveness at the
Department of Transportation.
I would like to thank the Department for its
cooperation during the audit. I would also
like to thank Talbot, Korvola and Warwick
LLP, the firm that conducted the audit.
TKW specializes in performance auditing
and efficiency reviews, governmental
accounting and auditing, financial
reporting, internal control studies, and
financial and management consulting.
TKW has done other excellent work on
our behalf.
TKW hired subject-matter experts PlanB
Consultancy and TransTech Management
to assist with the audit. TransTech
specializes in management consulting
to the transportation industry and works
with clients in the public and private
sectors. PlanB’s team included experts in
cost engineering, and as such, identified
the most significant cost savings noted
during this audit.
The audit found that, overall, the
Department is a leader among state
transportation departments and is
already following several industry best
practices. The audit identified additional
opportunities for improved efficiency.
The most significant recommendations in
the audit are:
Designating construction project cost
•
engineers whose primary function
is to oversee and scrutinize project
costs, including change orders. The
estimated cost savings for future
planned construction projects is $36
million.
Replacing the Department’s current
•
consumable inventory management
system would result in $5.6 million in
improved efficiency, primarily through
increased inventory turnover.
Explore increasing allowable levels of
•
recycled asphalt pavement. A Texas
agency was able to save $1.5 million
per year by doing so.
Several of the recommendations in this
report complement the findings and
recommendations in our performance
audit reports on managing and reducing
congestion in the Puget Sound and
improving administrative and overhead
operations at the Department. The
recommendations in this report free up
nearly $42 million that the Department
could apply to achieving citizens’ priorities
in transportation.
Citizens have told us loud and clear that
they care about government accountability
and performance. The Legislature asked
us to review transportation efficiency
and effectiveness in Washington.
Now it is the Legislature’s and the
Department’s responsibility to act on
the recommendations contained in
this performance audit and our other
performance audits of the Department.
Brian Sonntag, CGFM
Washington State Auditor
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Audit Objectives and Scope
Objectives
The audit was designed to answer the following:
Is the Washington State Department of Transportation’s
1.
Consumable Inventory and
Supply Management system
meeting the operational
needs of the Department
efficiently and effectively?
If not, what is the effect and
what actions and solutions
can occur to correct these
deficiencies?
Is
the
Washington
2.
State
Department
of
Transportation’s current procurement strategy for
hot mix asphalt, used for road construction and
maintenance, as well as current state legislation,
effective in optimizing hot mix asphalt supply chain
costs? If not, what is the magnitude of the possible
cost savings for state and local governments and
what can be done to achieve them?
Are the Washington State Department of
3.
Transportation’s maintenance-operations as efficient
as possible based on best practices identified at other
state transportation agencies or the private sector?
If not, what is the magnitude of the opportunity lost
in terms of cost, and what can be done to correct it?
Are DOT revenue opportunities from advertising and
vending machines at rest areas maximized based on
best practices at other state transportation agencies?
If not, what is the magnitude of the opportunity lost in
terms of revenue, and what can be done to correct
it?
In the area of highway project delivery and project
4.
management, is the Washington State Department of
Transportation:
Effectively managing its highway projects in order
•
to minimize engineering costs, environmental and
permitting costs, other costs and unnecessary
change orders that result in extra costs? If not,
what is the magnitude of the opportunity lost in
terms of cost, and what can be done to correct it?
Effectively managing its highway projects in
•
order to minimize unnecessary delays in project
completion? If not, what is the magnitude of the
opportunity lost including cost, and what can be
done to correct it?
Accurately, completely and effectively tracking
•
costs by project, including but not limited to:
Engineering
•
Contractors
•
Land acquisitions
•
Archeological efforts
•
Environmental compliance and permitting
•
Any other direct project costs which should
•
be captured and tracked at the project level
If not, how does the absence of this information affect
WSDOT efficiency, effectiveness and decision making and
what can be done to better track costs?
Additionally, the audit followed the objectives contained
in Engrossed Substitute Senate Bill 6839 and Initiative
900.
Scope
This audit field work was conducted from June 2006
through March 2007.
Theauditdoesnotcoverconsumableinventoryormaintenance
operations related to Washington State Ferries.
Our audit authority
Washington voters approved Initiative 900 in November
2005, giving the State Auditor’s Office the authority to
conduct independent performance audits of state and local
government entities on behalf of citizens. The purpose
of conducting these performance audits is to promote
accountability and cost-effective uses of public resources.
Additionally, the Legislature passed Engrossed Substitute
Senate Bill 6839 in 2005. The legislation required the
Auditor’s Office to hire a contractor to conduct performance
audits of the transportation-related agencies.
The State Auditor’s Office and its contractor, Talbot,
Korvola & Warwick, LLP, conducted this performance
audit in accordance with Government Auditing Standards.
Those standards require that we plan and perform the audit
to obtain sufficient, appropriate evidence that provides a
reasonable basis for our findings and conclusions based
on our audit objectives. We believe that the evidence we
obtained provides a reasonable basis for our findings and
conclusions based on our audit objectives.
The complete list of
objectives in Initiative
900 and ESSB 6839
are available at
www.sao.wa.gov/
PerformanceAudit/
PDFDocuments/i900.pdf.
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Background about the Department
Cost savings
The audit identified $41.9 million in potential cost savings and unnecessary expenditures.
The audit contract cost was $438,130.
The Washington State Department of Transportation
manages:
State-owned highways, interstate highways and
•
other highways that are part of the national highway
system
Washington State Ferries
•
State-owned airports
•
The Department is responsible for:
More than 20,000 lane miles of state highways
•
More than 3,500 bridges
•
42 safety rest areas on highways and state routes
•
Planning and administrative activities that affect:
•
Public transportation
•
Freight rail
•
Intercity passenger rail
•
Marine ports
•
The Department’s budget for 2005-2007 was $4.8 billion.
Funding for highway activities comes from three primary
sources:
State gas tax: 17 cents of the current 28-cent gas tax
•
funds Department operations
Fees: New and annual vehicle registration fees, weight-
•
based truck license fees, vehicle inspection fees, title
fees and special permits.
Local and federal funds in excess of 785 million
•
The Department has more than 7,500 employees.
After the performance audit
T
he release of this audit report triggers
a series of actions by the Legislature.
The appropriate committee or committees
will take the following actions:
Hold at least one public hearing within
•
30 days of this report’s issuance to
receive public testimony on the report.
Consider
the
findings
and
•
recommendations contained in this
report during the state budgeting
process.
Issue an annual report by July 1
•
detailing the Legislature’s progress
in responding to the State Auditor’s
recommendations. The report must
justify any recommendations the
Legislature did not respond to and detail
additional corrective measures taken.
Follow-up performance audits of any state
or local government entity or program may
be conducted when determined necessary
by the State Auditor.
Notices of public
hearings are posted
with the report at
www.sao.wa.gov/
PerformanceAudit/
audit_reports.htm.
Legislative Recommendations
One recommendation in the report requires action from
the State Legislature. The recommendation deals with
low-bid restrictions on contract bids.
Recommendation 23:
We recommend the Department pursue legislative
•
authority to use a performance contracting strategy
for applicable projects.
We recommend the Washington State Legislature
•
modify current contracting requirements to allow
performance-based contracting as appropriate.
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Audit results
T
he audit reviewed four program areas in the
Department:
Consumable inventory and supply management: what
•
inventory is purchased, the method by which it is
purchased and stored
Hot-mix asphalt: Purchasing practices of the material
•
used for road repairs
Maintenance operations and revenue opportunities
•
Project delivery
•
The following are the results within each program.
Consumable Inventory and
Supply Management
The Department’s consumable inventory consists mostly
of highway-specific items such as liquid de-icer, paint,
signs, guardrails and controller devices. The Department
is the largest state purchaser for all of these items. The
audit reviewed the efficiency of the process for purchasing
and storing these items.
The audit identified five findings and recommendations
related to consumable inventory and supply management.
The most significant recommendation is to replace the
entire consumable inventory management system. Doing
so would result in $5.6 million in improved efficiency,
primarily through increased inventory turnover.
Hot-mix asphalt
The Department’s practices for purchasing hot-mix
asphalt follow best practices in place at other states’
transportation departments.
The audit did not make recommendations for substantial
changes in the way the Department procures hot-mix
asphalt. There are, however, a few opportunities for
improvement:
Reduce the potential for vendor risk by using and
•
applying price adjustment clauses for all hot-mix
asphalt contracts.
Encourage Washington cities and counties to use
•
recycled asphalt pavement, which is consistent with
the Department’s current practice.
Explore increasing allowable levels of recycled asphalt
•
pavement in non-critical mixes to save money. A large
Texas district similar in size to one Department region
saved up to $1.5 million per year by doing so.
Continue to monitor developments in warm-mix asphalt
•
technology as an option for increasing competition
and/or conserving natural resources.
Maintenance Operations and
Revenue Opportunities
The audit identified a number of opportunities to increase
the efficiency and effectiveness of maintenance and
operations of the state’s safety rest areas, maintenance
facilities and state-owned highways and interstates. The
Department has well-planned and well-defined service
levels for each of those areas and improvements are
routinely sought by workers and management.
The Department generally carries out maintenance and
operations in an innovative and effective manner. However,
the audit found:
The Department lacks the financial and technological
•
resourcestotrackwhichrestareas,maintenancefacilities
and highways need maintenance. There is a risk that
structures and roadways will fall into a state of disrepair
so extensive that they will require replacement.
The Department is facing a significant shortage of
•
engineers and project managers in its maintenance and
operations division. Department management estimates
the need for up to 450 new engineers and project
managers for planned highway construction. In addition,
405 maintenance and operations staff are eligible for
retirement between 2006 and 2016. More than 56
percent of those employees are eligible to retire now.
Project Delivery and Capital
Project Management
The Department has made a significant investment in
improving project delivery and following best practices.
Many state transportation organizations and the American
Association of State Highway and Transportation Officials
have identified the Department’s practices as innovative.
The Department uses a wide range of tools and formats to
manage projects. Some projects have been more successful
in controlling costs and schedules than others. Inconsistent
practices have resulted in variances in cost tracking, change
order management and documentation practices.
The most significant recommendation in this area is that
the Department designate cost engineers whose main
job is to track and scrutinize project costs and change
orders. We reviewed one project in which a cost engineer
would have saved the project $394,361. The auditors
conservatively estimated $36 million in potential cost
savings for all future planned construction projects.
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Appendix B
Audit Results at a Glance
Findings
Recommendations
Potential Outcome
Consumable Inventory Supply Management
1.
The consumable inventory
management system does not
support the use of automated
business processes, relying on
non-automated, burdensome
business processes to
perform routine tasks
We recommend WSDOT:
pursue the development of an integrated
•
purchasing-inventory management system
linked to the Department’s accounting
system.
consider the use of M4 as a short-term
•
solution.
Enhanced service delivery
•
Increased accountability
•
Improved public safety
•
and avoidance of liability
$5.6 million in tangible
•
benefits through increased
inventory turns
2.
Current practices in some
regions have prevented the
processing of inventory and
accounting transactions
to leverage its inventory
management system
We recommend WSDOT assure inventory
is managed only by appropriately trained
personnel.
Increased leverage
•
Improved effectiveness
•
and accuracy in inventory
processing
3.
Inventory records are
not consistently adjusted,
creating inaccuracies in the
consumable inventory system
and impeding efforts to more
effectively manage inventory
We recommend WSDOT:
adopt the inventory level recommendations
•
from the Cisco Systems report.
direct all field operations to maintain
•
accurate information in the consumable
inventory system.
redistribute high-value and/or critical-need
•
materials among regions.
Increased efficiency and
•
effectiveness
Reduced repair delays
•
Improved accuracy of
•
consumable inventory
4.
Timeliness of procurements
through the Department of
General Administration was
unable to be determined,
inhibiting the ability to
assess purchasing power
and future economics
We recommend WSDOT work directly with GA to:
obtain detailed information identifying
•
timeliness of service.
establish reasonable benchmarks.
•
monitor service levels.
•
Improved performance
•
Decreased time to award
•
contracts
Decreased vendor
•
complaints
5.
WSDOT regional purchasing
practices for quantity
contracts may be inconsistent
potentially reducing public
visibility, requiring additional
work for bidders, restricting
price adjustment provisions,
and inappropriately using
liquidated damage clauses
We recommend WSDOT:
increase department-level oversight of
•
regional “Q” contract practices to promote
more efficient bidding and contract
administration.
continue and expand its training and
•
certification program for procurement and
inventory management personnel.
revise the WSDOT Purchasing Manual to
•
provide specific guidance price adjustments
during the term of a contract and at the time
of contract renewal.
Increased consistency
•
Increased procurement
•
transparency
Decrease in bidder’s risk
•
Hot-mix Asphalt Procurement
6.
WSDOT does not use
price adjustment clauses for
all hot-mix asphalt, resulting
in increased vendor risk
We recommend WSDOT pursue the use of price
adjustment clauses for hot-mix asphalt to include
all future hot-mix asphalt-related contracts.
Decreased vendor risk
•
Improved product pricing
•
Increased competition
•
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Audit Results at a Glance
Findings
Recommendations
Potential Outcome
7.
WSDOT can educate and
encourage local agencies on
the use of reclaimed asphalt
pavement, potentially resulting
in cost-saving opportunities
We recommend WSDOT:
encourage local governments to allow
•
the use of reclaimed asphalt pavement,
consistent with WSDOT practices.
explore increasing allowable reclaimed
•
asphalt pavement levels in noncritical mixes.
Decreased costs
•
Reduced consumption of
•
natural resources
Increased use of recycled
•
materials
8.
Potential opportunities
exist to use warm-mix asphalt
technology to reduce the
cost of installed asphalt
We recommend WSDOT continue to monitor
warm-mix asphalt research and current U.S.
evaluations.
Reduced energy
•
requirements and
emissions
Lower costs and reduced
•
environmental impact
Increase haul times
•
Increased working time
•
9.
Although WSDOT does not
own hot-mix asphalt plants,
WSDOT direct ownership
may be appropriate given
specific conditions
We recommend WSDOT and other public entities
monitor hot-mix asphalt competition and service
levels to determine whether direct ownership is
appropriate.
Potential opportunity for
•
reduced costs
Potential for increased
•
availability
Maintenance Operations and Revenue Opportunities
10.
WSDOT has not
strategically considered safety
rest area use and operations
nor maintained historical
records regarding the number
of travelers served annually
We recommend WSDOT:
undertake a comprehensive strategic and
•
operational review of the safety rest area
program.
maintain historical records and develop
•
a trending log to assist in determining
budgetary requirements.
Improved ability to quantify
•
deficiencies
Improved assessment of
•
required resources
Improved efficiency and
•
effectiveness
Enhanced ability to identify
•
strategic investments
11.
Unclear WSDOT safety rest
area roles and responsibilities
and no single program-level
leader with full accountability
have resulted in non-collection
of contract amounts, capacity
issues and limited planning.
We recommend WSDOT:
conduct a comprehensive organizational
•
review of its safety rest area program.
establish milestones and key performance
•
indicators.
Improved decision making
•
Improved vendor invoicing:
•
$150,000 under-billed
over five years
Increased revenue flow
•
Improved communication
•
and operational efficiency
and effectiveness
12.
Essential WSDOT
maintenance and repair
of safety rest areas is not
consistently prioritized or
adequately funded, resulting in
a deteriorating infrastructure
We recommend WSDOT:
pursue statutory changes to allow safety
•
rest area revenues to be dedicated to their
maintenance activities.
prioritize preservation of the safety rest area
•
system and fund appropriately.
Increased level of
•
maintenance
Slowing in deterioration of
•
infrastructure
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Audit Results at a Glance
Findings
Recommendations
Potential Outcome
13.
WSDOT is facing
an engineer and project
manager labor shortage,
potentially resulting in
increased costs and the loss
of institutional knowledge
We recommend WSDOT:
determine the types of skills by timeframe
•
that the maintenance and operations
program will need to replace as experienced
personnel retire.
determine what types of work schedules —
•
project, part-time, job-sharing, job rotation —
could be offered in order to retain persons
eligible to retire or nearing retirement
eligibility.
adopt statewide successful recruiting and
•
educational initiatives being used within the
regions.
regularly schedule and conduct competitive
•
contracting analyses, including the process
improvement steps for improving the
efficiency and effectiveness of current
operations.
Enhanced recruitment
•
Enhanced ability to replace
•
experienced staff
14.
WSDOT does not
compile essential facility
maintenance and repair for all
activities, limiting the ability
to estimate the degree of
risk concerning the condition
of the infrastructure.
We recommend WSDOT:
determine from the respective maintenance
•
management systems the current backlogs
of essential maintenance and repair.
prepare a comprehensive listing of the
•
backlogs of essential maintenance and
repair and assess the risk that the backlogs
may pose, if any.
include the backlogs of essential
•
maintenance and repair as one element of
the maintenance and operations budget
justification.
Increased ability to
•
determine actual
maintenance need
Ability to determine impact
•
on workloads
Ability to estimate
•
degree of risk posed by
infrastructure condition
15.
WSDOT’s maintenance
management system does
not measure the backlog
of essential maintenance,
limiting the ability to determine
effectiveness of effort
We recommend WSDOT:
prioritize the development of a centralized
•
maintenance management system.
annually calculate an estimate of the current
•
replacement cost of the infrastructure.
establish a maintenance and operations
•
minimum.
include each measurement in its
•
performance measures program.
Ability to estimate extent
•
of essential maintenance
and repair backlog
Ability to determine
•
estimated cost of
maintenance and repair
backlog
16.
WSDOT does not
maintain summary information
concerning past and future
unfunded mandates, reducing
the ability to determine
budget requirements
We recommend WSDOT:
research, document and maintain summary
•
information concerning past and future
unfunded mandates.
record budget ramifications.
•
Ability to determine
•
capability to meet
maintenance requirements
Ability to identify and
•
communicate cumulative
effects of maintenance
requirements
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Audit Results at a Glance
Findings
Recommendations
Potential Outcome
17.
WSDOT is favorably
organized to respond
regionally or statewide to
emergencies or disasters
We recommend WSDOT:
identify safety rest area deficiencies in
•
acreage, motor vehicle parking capacity,
water supply and distribution, emergency
power, and the means for disposing of
sewage during the surge conditions of a
major emergency.
seek federal funding to support safety rest
•
area disaster preparedness upgrades and
the construction of additional sites for the
most likely risk scenarios.
Improved ability to respond to
statewide emergencies
18.
WSDOT can improve
safety rest area safety to
help deter illegal activities
We recommend WSDOT consider adding
cameras and monitoring equipment to the
broadband capabilities of current and future
safety rest area installations.
Improved rest area safety
19.
WSDOT sampling plans
can potentially be reduced
to help decrease costs
We recommend WSDOT determine if information
needs will permit the reduction of the size of the
required random samples for the Maintenance
Accountability Process.
Decrease in cost
20.
WSDOT Maintenance
Accountability Process
organizational review
level achievements do not
provide detailed indication
of accomplishments
We recommend WSDOT increase the detail
of Maintenance Accountability Process
organizational review level achievements to
provide additional indication of accomplishments.
Improved performance
•
measurement
Enhanced understanding
•
of variability
Project Delivery and Capital Project Management
21.
WSDOT implementation of
Statewide Project Management
Group recommendations will
eliminate many management
and reporting inconsistencies
We recommend WSDOT:
ensure Statewide Project Management Group
•
recommendations are followed and published
management practices are implemented.
follow up with activities to assure expected
•
outcomes are realized.
Successful delivery of
•
projects
Improved program
•
management, control, and
reporting systems
Enhanced workforce
•
improvements
22.
Many sampled
projects contained planning
inconsistencies and
deficiencies, resulting in
project inconsistencies
We recommend WSDOT:
ensure all aspects of the Project
•
Management On-Line Guide are applied
consistently to each project.
require consistent entry of “lessons learned”
•
into the agency’s centralized database.
Increased consistency in
•
project management
Decreased mistakes
•
Enhanced innovation
•
Increased accountability
•
23.
WSDOT’s primary
procurement strategy of
low bid can limit its ability
to receive best value.
We recommend
WSDOT pursue legislative authority to use
•
a performance contracting strategy for
applicable projects.
the Washington State Legislature modify
•
current contracting requirements to allow
performance-based contracting as appropriate.
Decreased project risk
•
Increased opportunities
•
for “best value”
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Audit Results at a Glance
Findings
Recommendations
Potential Outcome
24.
WSDOT has minimal
consistency in procedures and
schedules, limiting the ability
to effectively manage projects
We recommend WSDOT:
identify required scheduling software.
•
stipulate in its standard specifications, the
•
required scheduling software program to be
used by contractors.
Improved scheduling
•
Enhanced control of
•
contractor progress
Increased focus on critical
•
path
Increased ability to
•
manage scope changes
Enhance use of resources
•
Enhanced ability for on-
•
time project delivery
25.
WSDOT has had difficulty
in identifying trends in high-
risk quantity growth items,
resulting in unnecessary costs
We recommend WSDOT continuously review cost
changes and manage as appropriate.
Increased ability for
•
independent, objective
estimates
Improved cost
•
effectiveness
Decreased project
•
conflicts
Increased ability to identify
•
pricing trends
26.
WSDOT’s bid evaluation
and award approach does
not incorporate actual costs
and quantities, potentially
increasing costs
We recommend WSDOT incorporate actual
costs and quantities into EBASE to develop cost
benchmarks and cost metrics that can be used
for estimating future projects and determining
cost overrun trends.
Mitigation of premium
•
costs
Increased accountability
•
Enhanced ability to identify
•
potential overcharges
27.
WSDOT’s does not
participate in an electronic
bid evaluation and award
forum, potentially limiting
perspective vendors
We recommend WSDOT continue investigating
electronic bidding systems to streamline the
process, increase competition among vendors
and reduce paper use.
Increased competition
•
Potential for decreased
•
costs
28.
Sampled WSDOT projects
found no consistency of total
project cost forecasting,
decreasing the ability to
determine the volume of
change orders and other
categories of cost growth
We recommend WSDOT:
standardize cost reporting practices for all
•
project phases.
utilize cost engineers or business managers
•
who are responsible for projects on a
collective or regional basis.
Improved accuracy of
•
forecasts
Enhanced budgeting ability
•
Increased accountability
•
29.
WSDOT change order
logs varied extensively in
format and level of detail,
potentially increasing risk
of higher project cost
We recommend WSDOT standardize Change
Order Logs and integrate each into Project Cost
Reports.
Decrease in likelihood of
•
claims
Increase in timeliness of
•
claims processing
30.
WSDOT does not use rate
adjustments based upon a pro-
rata of bid contract unit rates,
resulting in increased costs
We recommend WSDOT use, where appropriate,
rate adjustments based upon a pro-rata of the
bid contract unit rates to assure the optimization
of the value of changes.
Potential cost savings:
$394,361 in opportunity lost
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Audit Results at a Glance
Findings
Recommendations
Potential Outcome
31.
WSDOT does not
aggressively manage
change orders, resulting in
increased project costs
We recommend WSDOT use, where appropriate,
cost engineers or quantity surveyors to
aggressively manage all change costs during
construction, and maximize the cost-benefit of
deployment through integrating activities such as
cost report management and budget estimating.
Decreased project costs
— $36 million in potential
savings for project reviewed
32.
WSDOT’s categorization of
change costs limits the ability
to effectively track and manage
We recommend WSDOT use change source
categories to provide a basis for understanding
changes on all projects.
Improved ability to effectively
track and manage costs
33.
WSDOT’s independent
engineer’s estimates do not
optimize value of change
orders, limiting the ability
to determine fairness and
reasonableness of prices
We recommend WSDOT require greater price
transparency from contractors for proposed
change costs.
Increased ability to
determine price fairness and
reasonableness
34.
WSDOT’s current
performance measures
could be enhanced
to provided additional
indicators of performance
We recommend WSDOT continue to develop and
maintain project performance indicators that can
be monitored at state and project levels.
Increased ability to
•
identify potential areas for
improvement
Enhanced ability to
•
mitigate crises
Enhanced identification of
•
trends
Total potential cost savings and unnecessary expenditures: $41,994,361
Initiative 900 cross-reference
Initiative 900 Elements
Audit Findings
1. Identification of cost savings.
1, 7, 11, 31, 32
2. Identification of services that can be reduced or eliminated.
4
3. Identification of programs or services that can be transferred to
the private sector.
13
4. Analysis of gaps or overlaps in programs or services and
recommendations to correct gaps or overlaps.
1, 3, 4, 5, 6, 7, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19,
22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34
5. Feasibility of pooling information technology systems.
1, 15, 26
6. Analysis of the roles and functions at the Department and
recommendations to change or eliminate roles or functions.
2, 4, 31
7. Recommendations for statutory or regulatory changes that may
be necessary for the Department to properly carry out its functions.
12, 23
8. Analysis of the Department’s performance data, performance
measures and self-assessment systems.
1, 2, 3, 4, 5, 6, 7, 10, 11, 12, 13, 14, 15, 17, 19, 20,
21, 22, 24, 25, 26, 34
9. Identification of best practices.
1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 18, 19,
20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33,
34
Page 12
Appendix B
Contacts
Americans with Disabilities
In accordance with the Americans with Disabilities Act,
this document will be made available in alternate formats.
Please call (360) 902-0370 for more information.
Washington State Auditor
Brian Sonntag, CGFM
sonntagb@sao.wa.gov
(360) 902-0360
Director of Performance Audit
Linda Long, CPA, CGFM
longl@sao.wa.gov
(360) 902-0367
Deputy Director of Performance Audit
Chris Cortines, CPA
cortinec@sao.wa.gov
(360) 725-5570
Deputy Director of Performance Audit
Theo Yu
yut@sao.wa.gov
(360) 725-5353
Communications Director
Mindy Chambers
chamberm@sao.wa.gov
(360) 902-0091
Performance Audit Communications
Kara Klotz
klotzk@sao.wa.gov
(360) 725-5569
Public Records Officer
Mary Leider
leiderm@sao.wa.gov
(360) 725-5617
Main phone number
(360) 902-0370
Toll-free hotline for reporting government waste, efficiency
(866) 902-3900
Web site
www.sao.wa.gov
Mission Statement
The State Auditor’s Office independently serves the citizens of Washington
by promoting accountability, fiscal integrity and openness in state and local
government. Working with these governments and with citizens, we strive to
ensure the efficient and effective use of public resources.
Page 13
Construction Management/Highway Maintenance
Performance Audit
December 2007
4800 SW Macadam, Suite 400
Portland, Oregon 97239-3973
(503) 274-2849
FAX (503) 274-2853
E-Mail: tkw@tkw.com
Page 14
A
N
I
NDEPENDENTLY
O
WNED
M
EMBER OF THE
RSM M
C
G
LADREY
N
ETWORK
4800 S.W. Macadam, Suite 400 Portland, Oregon 97239-3973
503/274-2849 Fax 503/274-2853
December 2007
Mr. Brian Sonntag
Washington State Auditor
Washington State Auditor’s Office
3200 Capitol Boulevard SW
Olympia, WA 98504-0031
We have completed our performance audit of the Washington State Department of
Transportation’s Construction Management/Highway Maintenance. This report contains our
detailed analysis and conclusions based on our review.
We wish to express our appreciation to WSDOT employees and managers and those persons from
other organizations we spoke with for their cooperation and assistance during this analysis.
Talbot, Korvola & Warwick,
LLP
Page 15
Talbot, Korvola & Warwick,
LLP
Page
Introduction
1
Audit Purpose and Objectives
1
Project Purpose
1
Objectives
3
Project Approach and Methodology
4
Evaluation Criteria and Standards
4
Public Accountability Criteria
5
Efficiency, Effectiveness, and Economy Criteria
6
gal Requirements
7
rs’ Performance
7
imilar Organizations
7
8
rspective
9
tions
10
Standards
11
Maintenance Operations/Revenue Opportunities
53
Project Delivery and Capital Project Management
128
Appendix
erations/Revenue Opportunities
A-1 Relevant Statutes and Regulations
A-2 MAP LOS Targets
B.
Project Delivery and Capital Project Management
B-1 Contracting Strategies
B-2 Traffic Control Hours
B-3 Sample Cost Report
B-4 Hood Canal Bridge Performance Indicators
C. I-900 Elements
D. Legislative Actions
E. Audit Response
Table of Contents
Le
Prior Yea
Performance of S
gy
Methodolo
e
Audit Team P
Scope Limita
Compliance
11
WSDOT
12
Consumable Inventory and Supply
15
Procurement Strategy for Hot Mix Asphalt
37
A.
Maintenance Op
Page 16
Introduction
Construction Management/Highway Maintenance Performance Audit
Page 17
Construction Management/Highway Maintenance Performance Audit
Introduction
Talbot, Korvola & Warwick,
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1
INTRODUCTION
On behalf of the Washington State Auditor’s Office (SAO),
Talbot, Korvola & Warwick,
LLP
(TKW) in conjunction
with TransTech Management and PlanB Consultancy,
conducted a
e Washington State
Department o
DOT) Construction
Management/Highway Maintenance. This report outlines
the analysis and conclusions based on our work.
UDIT PURPOSE AND OBJECTIVES
Project Purpose
The Washington State Legislature granted the Washington
State Auditor's Office with the authority to audit
transportation agencies through the passage of ESSB 6839.
The legislation states: "Citizens demand and deserve
accountability of transportation-related programs and
expenditures.
Transportation-related programs must
continuously improve in quality, efficiency, and
effectiveness in order to increase public trust." In addition,
the legislation states that each performance audit may
include the following 14 elements:
1. Identification of programs and services that can be
eliminated, reduced, consolidated, or enhanced;
2. Identification of funding sources to the
transportation-related agency, to programs, and to
services that can be eliminated, reduced,
consolidated, or enhanced;
3. Analysis of gaps and overlaps in programs and
services and recommendations for improving,
dropping, blending, or separating functions to
correct gaps or overlaps;
4. Analysis and recommendations for pooling
information technology systems used within the
transportation-related agency, and evaluation of
performance audit of th
f Transportation’s (WS
A
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2
information processing and telecommunications
policy, organization, and management;
those
functions vested in the agency by statute;
7. Verification of the reliability and validity of
transportation-related agency performance data,
gement personnel; and
ffice
the
. The Office contracted
nd
he
public surveys identified the Washington State Department
5. Analysis of the roles and functions of the
transportation- related agency, its programs, and its
services and their compliance with statutory
authority and recommendations for eliminating or
changing those roles and functions and ensuring
compliance with statutory authority;
6. Recommendations for eliminating or changing
statutes, rules, and policy directives as may be
necessary to ensure that the transportation-related
agency carry out reasonably and properly
self-assessments, and performance measurement
systems as required under RCW 43.88.090;
8. Identification of potential cost savings in the
transportation- related agency, its programs, and its
services;
9. Identification and recognition of best practices;
10. Evaluation of planning, budgeting, and program
evaluation policies and practices;
11. Evaluation of personnel systems operation and
management;
12. Evaluation of purchasing operations and
management policies and practices;
13. Evaluation of organizational structure and staffing
levels, particularly in terms of the ratio of managers
and supervisors to non-mana
14. Evaluation of transportation-related project costs,
including but not limited to environmental
s,
mitigation, competitive bidding practice
permitting processes, and capital project
management.
In response to its new authority, the Auditor's O
commissioned a series of citizen forums to shape
direction of performance audits
with Elway Research, Inc., to hold town hall meetings a
focus groups with Washington voters across the state. T
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Construction Management/Highway Maintenance Performance Audit
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Talbot, Korvola & Warwick,
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3
of Transportation's capital and maintenance operations as
e
his
pted
quire
t,
basis for
es.
a
sed on
ms
of
which are not subject to the
equired by
Objectives
ntent of
ton State Department of
Transportation’s Consumable Inventory and Supply
areas of interest for performance audits.
This performance audit was conducted on behalf of th
Washington State Auditor’s Office. We conducted t
performance audit in accordance with generally acce
Government Auditing Standards. Those standards re
that we plan and perform the audit to obtain sufficien
appropriate evidence that provides a reasonable
our findings and conclusions based on our audit objectiv
We believe that the evidence we obtained provides
reasonable basis for our findings and conclusions ba
our audit objectives.
The Washington State Legislature regularly perfor
studies of the Washington State Department
Transportation. These studies,
independence, evidence and planning standards r
Government Auditing Standards, were considered during
the planning of this audit.
The SAO commissioned this audit with the i
answering four specific questions:
1. Is the Washing
Management function meeting the operational
needs of the department efficiently and effectively?
If not, what is the effect and what actions and
solutions can be implemented to correct these
deficiencies?
2. Is the Washington State Department of
Transportation’s current procurement strategy for
hot mix asphalt, used for road construction and
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Construction Management/Highway Maintenance Performance Audit
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4
maintenance, as well as current state legislation,
effective in optimizing hot mix asp
costs? If not, what is the magnitud
halt supply chain
e of the possible
cost savings for state and local governments and
highway project delivery and project
management, is the Washington State Department
of Transportation:
ze unnecessary delays in project
completion? If not, what is the magnitude of the
and effectively tracking
ited to:
ng
uld
ject level
what can be done to achieve them?
3. Are the Washington State Department of
Transportation’s maintenance-operations as
efficient as possible based on best practices
identified at other state transportation agencies or
the private sector? If not, what is the magnitude of
the opportunity lost in terms of cost, and what can
be done to correct it? Are DOT revenue
opportunities from advertising and vending
machines at rest areas maximized based on best
practices at other state transportation agencies? If
not, what is the magnitude of the opportunity lost in
terms of revenue, and what can be done to correct
it?
4. In the area of
Effectively managing its highway projects in
order to minimize engineering costs,
environmental and permitting costs, other costs
and unnecessary change orders that result in
extra costs? If not, what is the magnitude of the
opportunity lost in terms of cost, and what can
be done to correct it?
Effectively managing its highway projects in
order to minimi
opportunity lost including cost, and what can be
done to correct it?
Accurately, completely
costs by project, including but not lim
- Engineering
- Contractors
- Land acquisitions
- Archeological efforts
- Environmental compliance and permitti
- Any other direct project costs which sho
be captured and tracked at the pro
If not, how does the absence of this information
affect WSDOT efficiency, effectiveness and
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5
decision making and what can be done to bett
track costs?
THODOLOGY
er
PROJECT APPROACH AND ME
iency and
s is to
s
However, for certain areas under review, no specific
standard
In
tho
sp
eff
Evaluation Criteria
and Standards
Conceptually, the best way to determine the effic
effectiveness of an organization and its function
compare actual practices with both agreed upon standard
and specific criteria.
Many sources of criteria were
available for the four areas reviewed including:
WSDOT policies and procedures
Revised Code of Washington (RCW)
Federal Highway Administration (FHWA) policy
Code of Federal Regulations (CFR)
WSDOT studies/reports - Condition Assessment
Program
WSDOT Competitive Contracting Manual
Relevant national studies
Other state DOTs
WSDOT Project Management web site
WSDOT Project Management online guide
Statewide Program Management Group (SPMG)
Final Report
SPMG Baseline Assessment Process
Construction manual
WSDOT Progress Report (JLARC Report
Response)
Base line budget information
WSDOT Measures, Markers and Mileposts
Association for Advancement of Cost Engineering
(AACE)
American Society of Professional Estimators
E
(ASP )
s exist to allow for meaningful comparison.
se situations, the performance audit team determines
ecific criteria on which to base efficiency and
ectiveness. Criteria that typically apply include:
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Construction Management/Highway Maintenance Performance Audit
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6
ity Criteria
criterion for the responsiveness of a
ow Book,"
ria familiar
uditors. This
f
ests on
l levels
employees who manage
to render an account of their
pecified by
in the
countability has caused a demand for
rograms and
s want
handled
lations.
whether government
ieving
* * *
Public officials and others entrusted with handling
Public Accountabil
A primary
governmental organization to its mission is public
accountability. This responsibility has been expressed
completely yet succinctly by the Comptroller General,
United States General Accountability Office, in the
Government Auditing Standards, the "Yell
which sets forth public sector evaluation crite
to all federal, state, and local government a
public accountability criterion, an underlying premise o
our study approach, states:
Our system of managing public programs today r
an elaborate structure of relationships among al
of government. Officials and
these programs need
activities to the public. While not always s
law, this accountability concept is inherent
governing process of this nation.
The need for ac
more information about government p
, legislators, and citizen
services. Public officials
and need to know whether government funds are
properly and in compliance with laws and regu
They also want and need to know
organizations, programs, and services are ach
their purposes and whether these organizations,
programs, and services are operating economically and
efficiently.
public resources:
...are responsible for applying those resources efficiently,
economically, and effectively to achieve the purposes for
which the resources were furnished. This responsibility
applies to all resources, whether entrusted to public
officials or others by their own constituencies or by other
levels of government.
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7
...are responsible for complying with applicable laws and
compasses identifying
tity and the official
d Economy Criteria
Th
go
th
"e
ho
pa
.
Ef
ef
,
re
m
f
mi imal input of resources for the achievable output.
Ec
appropriate quality and quantity at the lowest reasonable
co
regulations. That responsibility en
the requirements with which the en
must comply and implementing systems designed to
achieve that compliance.
...are responsible for establishing and maintaining
effective controls to ensure that appropriate goals and
objectives are met; resources are safeguarded; laws and
regulations are followed; and reliable data is obtained,
maintained, and fairly disclosed.
...are accountable both to the public and to other levels
and branches of government for the resources provided
to carry out government programs and services.
Consequently, they should provide appropriate reports to
those to whom they are accountable
.
Efficiency, Effectiveness, an
e efficiency, effectiveness, and economy of a
vernmental operation are inherent responsibilities of
ose charged with its management. The overall
ffectiveness" of an organization is the determination of
w well predetermined goals and objectives for a
rticular
activity or
program
are
achieved
fectiveness signifies the result of effort rather than the
fort itself. It is sometimes characterized as impact
sults, or outcome.
Efficiency focuses on the
aximization of output at minimal costs or the use o
n
onomy signifies the acquisition of resources of
st.
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8
L
Le
prescribed by law or regulation. Statutes, rules, and
ordinances establish a measure for evaluation.
Pr
H
pr
am with
a
m
e
ions
Methodology
To gain a comprehensive understanding of each of the
WSDOT program areas under review, we interviewed
various individuals in Engineering and Regional Operations
egal Requirements
gal requirements include any purpose or goals
ior Years’ Performance
istorical information on accomplishments, services
ovided, timeframes, etc. provide the audit te
basis to determine whether a program or activity is
eeting or exceeding expectations.
rformance of Similar Organizat
P
Information gathered on operations, service delivery
methods, results, etc. of similar organizations provide a
basis for comparison.
Although organizational
differences may prohibit direct comparisons,
information obtained can assist an audit team with
identifying other effective methods to provide services.
In the absence of specific, measurable, and realistic
criteria, a performance audit team may assess an
organization and its activities using these factors as a
baseline. In addition, a variety of criteria based on
team members’ extensive experience working with
governmental and private sector organizations and
professional literature are applied.
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Construction Management/Highway Maintenance Performance Audit
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Talbot, Korvola & Warwick,
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9
dep
resentatives from each of the
Age
The
gressed.
The
roduct of our initial study
orie
opp
hav
wor
Info
e one source
for
gain
sour
exp
reac
with
WSDOT personnel fell within the scope of this project.
Wh
mea
We
in
ope
orga
iptions, regional
information, project plans and specifications, national
vendors, suppliers, and contractors who serve WSDOT as
artments including rep
ncy’s six regions.
focus of our objectives evolved as the audit pro
final scope and focus is the p
ntation and the identification of significant issues and
ortunities not recognized or whose significance may not
e been fully appreciated prior to commencement of
k.
rmation provided during interviews becam
observations found within this report. The information
ed from these individuals and from other corroborative
ces provided insight into the issues, needs, and
ectations surrounding the study and was invaluable in
hing the conclusions and recommendations presented
in this report. However, not all of the issues raised by
ere possible, those issues have been addressed through
ns other than this report.
also evaluated numerous documents and files. Included
this review was information relevant to program
rations, specific goals, objectives, and expectations,
nizational charts,
job descr
publications, and other relevant documents.
Additionally, through interviews and surveys, we contacted
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Construction Management/Highway Maintenance Performance Audit
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10
well as other states to solicit information regarding currant
practices.
AUDIT TEAM PERSPECTIVE
ental excellence, a benchmark that all organizations
should have as a primary objective. Holding governmental
ion-based. That is, they are
oriented toward resolving problems or concerns. Although
SCOPE LIMITATIONS
contrast to the limited compliance review portion of this
Specific methodologies are described in further detail in the
following chapters.
Our team began this audit with an expectation of
governm
entities to the highest standards of efficiency and
effectiveness serves the best interests of both the citizen and
government. When those expectations are not met, we
attempt to identify opportunities to move toward an
organization’s own vision of excellence. However, this
vision must be recognized, accepted, and internalized before
significant organizational change can occur.
It is for this reason that many of the observations found
within this report are except
many aspects of operations are performed efficiently and
effectively, the greatest benefits to an organization are
typically derived from the identification of methods to
achieve excellence.
In
audit, audit team assessments of efficiency and effectiveness
contained within this report are qualitative in nature and rely
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11
on documented information. The criteria and standards
described above were used extensively throughout this study.
ikewise, quantitative and qualitative analyses were
This audit does not cover consumable inventory or
STANDARDS
COMPLIANCE
pliance with
applicable state statutes and department rules and
L
undertaken as appropriate to understand the particular issue
being addressed.
maintenance operations related to Washington State
Ferries.
This audit was conducted from June 2006 - March 2007
and was conducted in accordance with generally accepted
government performance auditing standards.
As part of our audit, we examined com
regulations as they pertained to the specific objectives of
the performance audit. We found WSDOT activities in
compliance with all specific areas reviewed. For those
items we did not specifically test for compliance, nothing
came to our attention that would indicate significant
instances of non-compliance.
Page 28
WSDOT
Construction Management/Highway Maintenance Performance Audit
Page 29
Construction Management/Highway Maintenance Performance Audit
WSDOT
WSDOT
The Washington Department of Transportation (WSDOT)
manages state-owned facilities including state highways,
interstates, and other highways that are part of the national
highway system, the Washington State Ferries, and state-
owned airport
esponsibilities also include
planning and
ctivities that affect public
transportation, freight rail, intercity passenger rail, and
marine ports.
IGHWAYS AND BRIDGES
Highways, roads, and bridges are an integral component of
the state’s transportation system. WSDOT is responsible
for over 20,000 lane miles of state highways and more than
3,500 bridges. The system of roads and bridges under the
responsibility of WSDOT carries over half of the state’s
traffic volume.
WSDOT also maintains 42 Safety Rest Areas - 27 on
interstate highways, 11 on U.S. highways, and four on state
routes. Safety Rest Areas provide a place for drivers to
leave the highway to stop and rest or relax. During the
1960s, the federal government provided significant funding
for the construction of Safety Rest Areas as an integral part
of the interstate system. Most of Washington State’s Safety
Rest Areas were built during this time.
UNDING
WSDOT’s $4.8 billion budget
1
allocates resources to the
programs and activities that operate, maintain, and support
Washington’s transportation system.
Highway
Talbot, Korvola & Warwick,
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12
s. WSDOT’s r
administrative a
H
F
1
2005
WSDOT Mission:
keep people and business
oving by operating and
proving the state’s
nsportation systems vital
to taxpayers and
communities
To
m
im
tra
-07
Type
WSDOT
Responsibility
Pedestrian
57
Railroad
84
Buildings
1
Structures under
20 feet
309
Culverts over
20 feet
84
Tunnels
38
Vehicular
Bridges over 20
feet
2,973
Total
3,546
Source: WSDOT
BRIDGES
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Construction Management/Highway Maintenance Performance Audit
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Talbot, Korvola & Warwick,
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13
maintenance and operations and capital improvements
account for over $3.2 billion of total funding.
Funding for highway activities comes from three primary
sources:
State gas tax
Approximately $.17 of Washington’s current $.28
gas tax goes to WSDOT operations.
License
New an
s, permits and fees
d annual vehicle registration fees, weight-
based truck license fees, vehicle inspection fees,
HIGHWAY CONSTUCTION
title fees, and special permits.
Local and federal funds
Over $785 million.
The Highway’s component of WSDOT’s Capital Program
includes improvements to, and preservation of, the state’s
highway system.
ORGANIZATION
WSDOT employs over 7,500 full and part-time employees
with over 60 percent focused on transportation.
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Construction Management/Highway Maintenance Performance Audit
WSDOT
Talbot, Korvola & Warwick,
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WSDOT 2005-2007 Organization
Source: WSDOT
Page 32
CONSUMABLE
INVENTORY and
SUPPLY
CONSUMABLE
INVENTORY and
SUPPLY
Washington State
Department of Transportation
Construction Management/Highway Maintenance Performance Audit
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Consumable Inventory
and Supply Management
CONSUMABLE INVENTORY SUPPLY MANAGEMENT
APPROACH
The Washing
sportation
(WSDOT) ma
any state agen
, those items purchased by
the Department for use as part of its ongoing operations,
are placed in warehouses, yards, or stockpile sites until
needed. These items are continuously consumed and
replaced throughout the year.
To determine how well WSDOT’s Consumable Inventory
and Supply Management function is meeting its operational
needs, an eight-step review process was followed:
1. Reviewed background materials, including prior
reports and other information related to this topic,
2. Performed an ABC analysis
2
of the WSDOT
consumable inventory,
3. Conducted field reviews of WSDOT’s supply chain
function and supporting business processes at
selected WSDOT locations,
4. Conducted telephone interviews and/or direct
meetings with key WSDOT vendors,
5. Reviewed the timeliness and value added of
purchasing performed by the Department of General
Administration (GA) on behalf of WSDOT,
6. Reviewed selected of “Q” contracts
3
issued by
WSDOT,
ton State Department of Tran
intains and manages the largest inventory of
cy. Consumables
2
ABC analysis is a management tool based on the tenets of Pareto Analysis and categorizes inventory by its highest
value and greatest volume.
3
WSDOT has specific authority to purchase
ials for which WSDOT is a primary
consumer. The WSDOT designatio
certain mission-critical mater
n for these contracts “Q” (as in “quantity”).
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Construction Management/Highway Maintenance Performance Audit
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Consumable Inventory
and Supply Management
y chain and related
functions against best practice, and
8. Identified performance gaps against best practice
and recommended changes.
Other Studies
the RFP for this project.
The WSDOT Purchasing and Materials
Management (PMM) business plan.
report
itial Results from DOT
SDOT
appropriate) and against other best practice supply chain
7. Benchmarked WSDOT suppl
WSDOT identified and provided a significant volume of
existing information related to efforts to improve its supply
chain function. Accordingly, the following material was
reviewed:
Background material on the WSDOT supply chain
function provided with
The State of Washington’s Roadmap Business
Initiative.
The
“Procure-to-Pay Value Proposition”
(Eclipse Report).
Previous reports on WSDOT’s supply chain,
including:
- “State of Washington Supply Chain
Optimization:
In
Assessment” (Cisco Report).
- “Consumable Inventory System Feasibility
Study” (Dye Report).
Our review included assessing the findings and
recommendations from these reports, comparing them to
our observations and analysis, and benchmarking W
progress towards meeting these recommendations (where
benchmarks.
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Consumable Inventory
and Supply Management
“Best Practices”
ition, inventory
information obtained was benchmarked against supply
chain “best practices” from information sources that
ply Chain Council
Administrative
nsulting team with the support of
Debt
Additional, direct contacts with other state DOTs.
DOT Survey
percent of total) provided responses:
Project efforts focused on identifying WSDOT’s supply
chain business processes including requis
management, purchasing, order receipt, and payment. The
included the following:
The Association for Operations Management
(APICS)
Sup
Procurement and Supply Chain Benchmarking
Association
Enterprise Business Process and Data Modeling for
the Roadmap for Financial and
Policies, Processes, Systems and Data, Procure-to-
Pay Value Proposition
Results from a survey of purchasing and supply
chain practices at state DOTs, prepared and
collected by the co
the National Institute of Governmental Purchasing
(NIGP)
Procurement service benchmarks identified by the
Administrative Resource Center, U.S. Department
of Treasury's Bureau of the Public
Institute of Supply Management and Arizona State
University (CAPS Research)
As part of our benchmarking efforts, we secured the
assistance of the National Institute of Governmental
Purchasing (NIGP) in conducting a survey of state DOT
purchasing and supply chain practices. The following 11
state DOTs (22
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Consumable Inventory
and Supply Management
vided limited data to support
nding
ashington and
e purchasing and materials
ed best practice for supply
Methodology
et a number of key WSDOT vendors.
e, the efficiency and
y
ariable in optimizing WSDOT’s supply chain.
1. Arizona
7. North Carolina
2. Kentucky
8. Oregon
3. Louisiana
9. Texas
4. Mississippi
10. Utah
5. New Mexico
11. Washington
6. New York
Survey responses pro
performance benchmarking. The most noteworthy fi
was that, of the survey respondents, only W
Texas DOTs have organized th
management functions in an integrated manner, an
approach typically consider
chain management.
Our project approach included a series of field visits and
interviews of WSDOT personnel at various WSDOT
locations across the state. Additionally, we surveyed,
interviewed, and m
Because procurements performed by the Department of
General Administration (GA) represent the majority of
WSDOT’s consumable inventory valu
effectiveness of the GA purchasing function is a ke
v
Accordingly, we also met with a representative of GA.
To guide our field work and project focus, we performed an
ABC analysis
4
of the data from the WSDOT Consumable
4
Analysis of inventory items according to the principle developed by Pareto commonly called the 80/20 rule, an
example of which is that 20% of inventory items account for 80% of the total value of the inventory.
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Consumable Inventory
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SDOT has specific delegated authority to procure items in this category.
3. With the exception of paper, WSDOT is the
dominant (or exclusive) buyer and/or establishes
known within WSDOT as “TEF” (the
Transportation Equipment Fund), maintains a
’s
Inventory System with results as identified in the following
illustration.
Rank
Desc
ription
Annual Usage
% of Total Value
1
Liquid De-icer
$6,037,093
39%
2
Traffic Paint & Related
$3,371,531
22%
3
Guardrail & Related
$928,073
6%
4
Herbicide
$582,325
4%
5
Sand & Aggregate*
$437,154
3%
6
Controller Devices
$383,995
2%
7
Signs/Signage
$244,102
2%
8
Paper
$89,315
1%
9
Diesel Fuel
$72,192
0%
10
Aerial Film
$59,586
0%
11
Light Posts and Poles
$57,931
0%
12
Highway Lighting
$25,676
0%
Balance of Consumable
Inventory Purchases
$3,095,178
20%
Total Annual Consumable
Inventory Purchases
$15,384,150 100%
*W
Source: WSDOT
Major observations from this analysis include the
following:
1. The 12 categories identified in the table represent
80 percent of the value of the WSDOT inventory.
2. The Department of General Administration (GA)
procures 11 of these 12 items.
statewide standards for the remainder of these
items.
4. WSDOT’s equipment management operations,
separate inventory that is not included in WSDOT
consumable inventory.
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Consumable Inventory
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ed on the 12 items indicated plus the TEF
ventory. Other areas targeted for examination included
e following:
The “quality
f WSDOT purchases made through
its delegated authority to purch
ansp
n-
b
s.
6
V
interactio
Logistics (including shipping and receiving
processes).
H
ation is inte
d
within the Consumable Inventory System
d
accounting systems to help WS
anage its
i
The current affect of having GA procure
t
ic
items
on
WSDOT’s
c
ntory levels, inc
e q
ty
a
rocurement services provided
to WSDOT by fee.
W
rocuremen
r
nt
the most efficient and effective use of WSDOT and
state resources.
The case for change and the likely affect of any
RESULTS
y
Based on the above factors, the consumable inventory
review focus
in
th
5
” o
ase tr
ortatio
ased material
endor management/
ns.
ow well inform
g
een
rated betw
an
an
DOT m
nventory.
ransportation-centr
onsumable inve
luding th
uali
nd value of the GA p
hether current p
t practices eprese
recommended change.
Best practice in the organization of public sector suppl
chain management involves combining the supply chain
and purchasing functions within a single group, staffed by
individuals with the appropriate professional certifications.
5
As benchmarked against compliance with st
Purchasing (NIGP) best practice guidelines
6
Products represented by the “Sand and Agg
contracts.
ate purchasing guidelines and National Institute of Governmental
.
regate” category and are commonly referred to as “Q” (as in quantity)
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Consumable Inventory
and Supply Management
Our audit of PMMO activities indicated its current efforts
tified several areas in which
be reduced while
jor areas identified for
system.
Previous studies have
c safety and avoidance of
e in business practices.
Place greater top management emphasis on supply
chain performance measures.
Increase efficiency in purchasing processes.
visits to WSDOT field locations:
This is a model that WSDOT has emulated within its
Purchasing and Materials Management Office (PMMO).
are focused on optimizing the WSDOT supply chain.
However, our review also iden
WSDOT’s supply chain investment could
simultaneously improving the ability of its supply chain to
support the organization. Ma
improvement include the following:
Replace the existing consumable inventory
management
indicated that substantial benefits would result
including:
- $5.6 million in tangible benefits (primarily
through the increase of inventory turns).
- Improved publi
liability.
- Enhanced service delivery.
- Improved accountability.
Require that all consumable inventories be managed
by personnel with the appropriate training.
Reduce regional varianc
Address vendor quality issues.
The following table summarizes observations regarding the
quality of inventory management practices noted during
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Consumable Inventory
and Supply Management
endations to address
ystem is more than 20
porting
nhancements by the PMMO group. However, it does not
support the use of automated business processes (such as
outine tasks such as
ceiving and issuing of materials. As such, the system
oes not support the effective collection and maintenance
of accurate consumable inventory information necessary to
Category Observations
Specific findings and detailed recomm
these issues are found in the sections below.
The WSDOT consumable inventory s
ye rs
gh various re
a old and has been leveraged throu
e
bar codes and/or other materials management
technologies), relying on non-automated, burdensome
business processes to perform r
re
d
In
ve
nt
or
y C
a
t
e
go
r
y
Ph
ysi
cal
I
nve
n
t
or
y
In
ve
nt
or
y
Ma
nage
ment
Processes
Aut
o
mated
ces
S
y
s
t
em
Regional Va
ria
n
Consumable
Inventory -
Stores
operations
Excellent
Excellent Excellent
Poor
Minimal
Signals
Inventory
Excellent
Excellent Excellent
Poor
Some
variance in
practices,
significantly
differing
levels of use
among
regions
Stockpiles
Good
Fair to Good Variable
Poor
High
Sign
Operations
Excellent
Excellent Excellent Excellent
Not
applicable
Source: Compiled by TKW
(single
location)
2. TEF
Excellent
Excellent Excellent Excellent
Low
WSDOT’s Consumable
Inventory Management
System does not Support
the use of Automated
Business Processes Relying
on Non-Automated,
Burdensome Business
Processes to Perform
Routine Tasks
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Consumable Inventory
and Supply Management
nsure efficient accou
ful service
eliv .
trast
the
OT
nsu
le in
ory
an
ment system, its TEF ope
ons
a com
cial
a
t
to m
ts
ation. This is considered a “best
f
a
anagement capabilities, support for bar coding,
el reporting, and is completely integrated with
ccounting system. The TEF inventory was consistently
ge
l
i
with
mal
ly new, PM-focused fleet.
WSDOT’s sign operations also exhibited excellent
anagement and business process practices,
for ordering
signs and processing these orders.
e
ntable and success
d
ery
con
age
In
to
WSD
co
rati
mab
use
vent
mer
m
off-the-shel
parts and inventory inform
f fleet m nagemen system (M4)
anage i
practice” leet man gement system with full inventory
automated
WSDOT’s
m
fu
a
well mana d at al location levels exam ned,
mini
inventories, reflecting a relative
inventory m
using a WSDOT-developed online system
The burdensome business processes associated with the
existing consumable inventory system have resulted in
WSDOT personnel directly charging consumable inventory
items to projects or activities to reduce their administrative
burden. The 2006 Cisco Report indicated that 46 percent
of WSDOT consumption was directly charged. Interviews
and field visits suggest this practice remains a problem at
some WSDOT locations - especially for items such as
deicing materials, which are high value and typically
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Consumable Inventory
and Supply Management
sults of this practice include a significant
nderstatement of actual inventory turns and a negative
effect on overall inventory management efforts. Additional
urchasing-inventory management system.
Previous
studies (Dye Management and Cisco Systems reports) have
d avoidance of liability
through the ability to provide detailed records of
chemical applications, including when applied and
ordered and consumed within a relatively short period of
time. Re
u
enhancement to the existing consumable inventory system
existing system is not practical and multiple reports support
the business need to replace this system and the potential to
achieve significant savings through better inventory
management and/or increased agency efficiency.
To assure WSDOT is managing consumable inventory in
the most efficient and cost-effective manner possible,
WSDOT should pursue the development of an integrated
p
indicated that substantial benefits would result:
$5.6 million in tangible benefits (primarily through
the increase of inventory turns).
Improved public safety an
age and quantity at application.
Enhanced service delivery by improving analytical
and strategic information required to support supply
decisions and efficient operations.
Improved ability to assure materials are properly
used and accounted for.
WSDOT should also consider adapting its existing M4 fleet
system to serve as its interim consumable inventory
management system until an integrated solution can be
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Consumable Inventory
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Recommendation #1:
We recommend WSDOT:
tegrated
purchasing-inventory
management
system
linked to the Department’s accounting system.
WSDOT Response:
implemented. However, it should be noted that while M4
provides a short-term option for improving consumable
inventory business processes, it is not designed to perform
governmental procurement. Accordingly, M4 cannot be
considered a replacement for the recommended
procurement/inventory system.
pursue the development of an in
consider the use of M4 as a short-term solution.
We agree. This recommendation supports a course of
action recommended to WSDOT in the Consumable
Inventory Feasibility Study (Dye Management Group, Inc.),
a report we commissioned in September 2004.
7
The study
estimated the cost of a new consumable inventor
be $4.5 million.
y system to
ted technology to
SDOT will
eantime, we have
signed more staff to train inventory system users and
managers to more consistently use the full capabilities of
WSDOT’s consumable inventory system is over 30 years
old. It is very labor intensive and uses da
account for $80 to $100 million in annual transactions.
WSDOT has taken a lead role with other state agencies to
develop solid business requirements for a replacement
system that will meet statewide needs. W
continue to work with the Office of Financial Management
(OFM), Department of Information Services (DIS), and
others to implement a modern inventory accountability
system within the “Roadmap” framework that has been
established to integrate policies, processes, information
tools and data for state agencies. In the m
as
the existing system. We also are using new data mart
7
http://wwwi.wsdot.wa.gov/fasc/adminservices/PandMM/feasibilitydye.pdf
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Consumable Inventory
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OFM Response:
as not one of these. Given
e funds, the consumable
ventory systems needs to be evaluated against the eleven
ore projects identified in the study.
technology to provide better and timelier access to
consumable inventory information.
Many of the department’s systems are out-of-date and need
to be replaced. In a recent study, Critical Applications
Modernization and Integration Strategy, December 30,
2005, eleven core systems were identified. The
consumable inventory system w
the competing demands for scarc
in
c
Action Steps and Timeframe:
• Provide user training in both the consumable inventory
system and data mart. Ongoing.
• Participate in the OFM Roadmap process to position
consumable inventory as an early implementation
module. Ongoing.
able
e
ective
ays
T
ntory
and accounting transactions when key individuals are
es compromise the ability of
Current Practices in Some
WSDOT Regions have
Prevented the Processing
of Inventory and
Accounting Transactions
to Leverage its Inventory
Management System
• Evaluate the fleet management system (M4) for
possible short-term application to meet consumable
inventory needs. Complete by June 30, 2008.
• Evaluate options for financing a new system. Complete
by June 30, 2008.
Regional Inventory Managers should have primary
responsibility for managing all field consum
inventories. These individuals should ensure consumabl
inventory is managed in the most efficient and eff
manner available.
Current practices in some regions/areas do not alw
ensure this occurs. A lack of trained personnel and/or the
preference of local management in some WSDO
regions/areas have prevented the processing of inve
unavailable. These practic
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Consumable Inventory
and Supply Management
agement
ory
ocess inventory.
Recommendation #2:
WSDOT Response:
d
staff earning their Certified
raining for
users is provided jointly by regional and
ment is constantly analyzing
e:
ction Steps and Timeframe:
WSDOT personnel to leverage the inventory man
system.
Providing staff with a clear understanding of invent
management will help assure the current system is
appropriately administered and all applicable staff have the
ability to effectively and accurately pr
We recommend WSDOT assure inventory is managed
only by appropriately trained personnel.
We agree, and have been working to establish more
functional oversight of regional inventory management
procedures. We have a professional certification an
training program in place for regional supply officers that
has resulted in eight regional
Professional Public Buyer (CPPB) credential. T
over 200 system
headquarters staff. The depart
information to identify more ways to eliminate regional
variations in supply processes.
OFM supports the training and certification program
WSDOT is deploying and encourages the idea of having at
least two individuals in each region with such certification.
OFM Respons
A
Support and encourage professional certification and
•
continuing education for both regional and headquarters
staff. Ongoing.
• Conduct a detailed analysis of the different procedures
used in each region to determine which practices
achieve the best results. Complete by March 15, 2008.
• Provide on-site training and technical assistance to
inventory system users. Ongoing.
•
Develop a professional certification and training
registrar at headquarters in order to track progress
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Consumable Inventory
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ertified supply officers per region. Complete by
2008.
ing
eld at one facility when they are needed at another,
vels were found to remain
s of
tment
is
just the item inventories to
l
accounting systems
his
WSDOT Inventory
Records are Not
Consistently Adjusted
Creating Inaccuracies in
the Consumable Inventory
System and Impeding
Efforts to More Effectively
Manage Inventory
towards the goal of at least two professionally trained
and c
July
The consumable inventory records are seldom updated to
reflect materials issued but not used and/or materials
salvaged during agency operations (e.g., used guardrails,
attenuators and light poles.) This results in materials be
h
delaying repairs and/or requiring additional purchases.
Sand and aggregate inventory le
in excess of current needs, consistent with the finding
the Cisco Report. Changes in snow and ice trea
practices have contributed to this problem but action
needed to adjust these inventories to sustainable levels. In
the interim, the items continue to absorb valuable agency
resources.
WSDOT should adopt inventory level recommendations
from the Cisco Systems report, including the one-time
and/or near-term steps to ad
appropriate levels.
In addition, certain business practices in some WSDOT
rtia
regions/areas strongly discourage processing a pa
receipt of goods into the inventory and
because of the additional accounting work required. T
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Consumable Inventory
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e
y
anage inventory.
tory
system. In addition, when appropriate, WSDOT should
distribute high-value and/or critical-need materials
Recommendation #3:
Cisco Systems report.
direct all field operations to maintain accurate
information in the consumable inventory system.
WSDOT Response:
is recommendation for strengthening
dit team, and supports its
plementation.
OFM Response:
practice has created inaccuracies in the consumabl
inventory system and impeded efforts to more effectivel
m
WSDOT should require all goods to be entered into the
consumable inventory system upon receipt. The practice of
charging consumable inventory items to projects and/or
activities should be discouraged. Used and/or salvaged
materials should be included in the consumable inven
re
between regions to minimize inventory investments while
ensuring the safe operation of the state’s transportation
system.
We recommend WSDOT:
adopt the inventory level recommendations from
the
redistribute high-value and/or critical-need
materials among regions.
WSDOT suggested th
our program to the au
im
We agree with the recommendations and all of the action
steps.
Action Steps and Timeframe:
• Implement the action steps associated with
recommendations 1 and 2.
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Consumable Inventory
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lan to balance recording of inventory
transactions with business requirements for the use of
inventory materials. Complete by September 2008.
•
contracts for items used by many state and local
government agencies. To perform these and other agency-
has a staff of 26 purchasers
ers, WSDOT uses more
rgest single
purchaser or has effectively established the statewide
h
highly specific quality, service, and delivery specifications
s.
Department of General
Administration
Purchasing
Timeliness of WSDOT
Procurements Through the
Department of General
Administration was Unable
to be Determined
Inh
Assess Purchasing Power
and Future Economics
• Require appropriate orders, receipts, and issues of
inventory to be entered into the consumable inventory
system in a timely manner. Complete an
implementation p
Encourage used material that is in serviceable condition
(e.g. guardrail, light poles) to be added to inventory so
it is visible for redistribution and reuse between
regions. Complete in FY09.
The Department of General Administration (GA) is the
Washington agency that has primary responsibility for
establishing purchase contracts for use by state agencies.
GA establishes and maintains approximately 333 master
statewide
specific procurements, GA
ibiting the Ability to
supported through fees charged to users at other agencies.
As one of the GA’s largest custom
than 200 GA contracts for its purchases. WSDOT will pay
approximately $1.5 million in fees to GA during the 07-09
iennium.
b
At the request of the audit team, WSDOT identified 48
specific contracts for which it is either the la
contract specifications. These include items in whic
must be included in the contract terms and condition
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Consumable Inventory
and Supply Management
rails,
ith
e and
ber of service and
elivery complaints were directed toward a single vendor
etter communications, more interactions between parties,
the average number of days it takes GA to
ulfill purchasing requests.
affect on operations. Receiving ordered supplies that meet
Such items include highway striping paint, guard
traffic signal equipment, de-icer, etc.
WSDOT has experienced product quality difficulties w
traffic signal controller cabinets purchased through
contracts established by GA, resulting in both tim
onetary expenses. A significant num
m
d
that holds a statewide contract for replacement guardrails
and related items. Based on our analysis and discussions
with vendors, these problems could be reduced through
b
and application of technology (for example, online product
ordering, e-mailed orders coupled with the use of digital
pictures and/or use of electronic product directories).
Monthly reports provided by GA to WSDOT were
reviewed to determine the average number of days GA took
to fulfill WSDOT purchasing requests. However, the
information was inaccurate and, as a result, we were unable
to ascertain
f
A major component of WSDOT’s consumable inventory
and supply management process is the ability to obtain
crucial items efficiently and effectively. Timeliness of the
procurement process is a key element and has an extensive
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Consumable Inventory
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m its job in the most
fficient and effective manner.
vice
om GA.
Recommendation #4:
We recommend WSDOT work directly with GA to:
the established quality, service and delivery standards is
also necessary for WSDOT to perfor
e
WSDOT believes it does not receive ordered goods in a
timely manner. However, actual timeliness is difficult to
determine. As mention previously, information obtained
from GA could not provide a basis for determination.
Additionaly, WSDOT is not measuring the number of days
between purchase requests and placing orders.
If WSDOT does not measure and monitor the service it
receives from GA, the Department cannot be assured that
necessary supplies are being received in a timely manner.
Currently, WSDOT cannot demonstrate insufficient ser
fr
WSDOT should work directly with GA to ascertain
timeliness of service, establish reasonable benchmarks, and
monitor service levels to ensure that the most efficient
methods possible are in place to procure the 48 items it
primarily uses.
obtain detailed information identifying timeliness of
service.
establish reasonable benchmarks.
monitor service levels.
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Consumable Inventory
and Supply Management
ensure efficient
procurement and supply chain management. The agencies
ill improve documentation of when purchase requests are
made, orders are placed, and goods are delivered.
vice and
nd GA.
We agree with the recommendation to review and improve
appropriate performance measures and benchmarks and to
monitor performance against them. The three agencies are
committed to working together to
w
However, it is important to recognize that WSDOT and GA
already regularly monitor service and meet together
quarterly to address performance questions and current
topics. Further, the purchasing services agreement
between both WSDOT and GA also identifies service level
expectations and protocols for both agencies. A quality and
timely procurement process is the goal for all of the parties.
Receiving ordered supplies that meet quality ser
delivery standards is a shared responsibility of WSDOT
a
Action Steps and Timeframe:
• WSDOT will continue to monitor critical contract
matters and work with GA to continually improve
service and resolve issues. Ongoing.
• To enhance current monitoring of service quality and
timeliness, GA and WSDOT will ensure appropriate
performance measures are in place to assess actual
performance against these measures. This work will
racts established to purchase these
items are referred to “Q” (“quantity”) contracts. The
ific
s.
ased on the review of the “Q” Contracts from the North
Central and Northwest Regions, it is neither possible nor
WSDOT Regional
Purchasing Practices for
Quantity “Q” Contracts May
be Inconsistent Potentially
Reducing Public Visibility,
Requiring Additional Work
for
rice
Adjustment Provisions, and
Inappropriately Using
Liquidated Damage Clauses
WSDOT/OFM/GA
Response:
commence immediately and be ongoing.
W
SDOT has specific authority to establish contracts for
certain transportation-specific products, such as sand and
gravel. WSDOT cont
Agency establishes terms and conditions to meet spec
Bidders, Restricting P
requirements of the U. S. Code, state laws, Department of
General Administration, or WSDOT rule
B
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Consumable Inventory
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onsistent
rom
sing officers at each region used inconsistent
nd Conditions, inappropriate
de a
tion and contract
a
rge annual
procurement requirements
Issuing invitations to bid at the commodity line-item
dity line-item
level forces bidders to submit a separate bid for each
prudent to infer that the other four regions operate under
similar policies and processes. However, the North Central
Region contracts reviewed tended to be more c
with standard procurement practices than the Northwest
Region contracts.
The contracts include asphalt, sand and rock contracts f
the Northwest Region, and gravel contracts from the North
Central Region. Areas for improvement are identified
below:
Procurement practices
Purcha
WSDOT General Terms a
contract renewal terms and processes, and ma
number of minor errors in the solicita
award that could have created problems in case of
dispute with the vendors.
Reduced public visibility on la
level reduces public visibility on procurements of basic
materials larger than $690,000 for rock contracts in one
region alone.
Inefficiencies for the bidders and contract
administration
Issuing invitations to bid at the commo
type of material instead of one bid that includes all
materials WSDOT needs. The resulting contract awards
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Consumable Inventory
and Supply Management
tion of bituminous mixes, the WSDOT
Purchasing Manual does not provide for points of
, are ambiguous and subject to individual
rtainty of the terms increases
r or contract. This practice is
ot allowed under National Institute of Governmental
Recommendation #5:
We
d contract administration.
continue and expand its training and
WSDOT Purchasing Manual to
are made individually at the line item level rather than
collectively to the vendor.
Ambiguous contract price adjustment provisions
With the excep
reference to allow price changes during the term of the
contracts or at the time of renewal. The terms used,
based on documented industry-wide raises in material
costs
interpretation. The unce
bidders’ risks in a changing market.
Inappropriate use of
liquidated damage clauses
Some WSDOT-issued “Q” contracts include clauses
that provide for liquidated damages as a percentage
value of the purchase orde
n
Purchasing (NIGP) standards, which limits damages to
demonstrated costs.
recommend WSDOT:
increase department-level oversight of regional
“Q” contract practices to promote more efficient
bidding an
certification program for procurement and
inventory management personnel.
revise the
provide specific guidance price adjustments
during the term of a contract and at the time of
contract renewal.
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Consumable Inventory
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WSDOT Response:
WS
“Q
e state. WSDOT supply
ma
ntracting tools and
techniques that they believe provide the best value to the
dep
be
con
OFM Response:
Ext
oth
are
pric
info
bud
Ac
DOT agrees, and will work to implement consistent
” contract practices across th
nagers apply competitive co
artment under specific market conditions. There may
some unique circumstances that result in some unique
tract provisions.
raordinary cost increases in steel, copper, asphalt, and
er resources has created a need to reconsider how risks
shared between the state and contractors. Contract
e adjustments should be closely tracked in order to
rm future contracting, project cost estimating, and
get development.
tion Steps and Timeframe:
WSDOT will evaluate additional over
•
sight measures
ented at the department-level.
•
•
•
s purchased
uthority in order to address the
question of changing prices for such commodities as
An annual assessment of cost
that can be implem
Complete by April 30, 2008.
Support and encourage professional certification and
continuing education for both regional and headquarters
staff. Ongoing.
The WSDOT Purchasing Manual 72-80, Para 1-23.3.d
already contains specific guidance about contract price
adjustments. Completed. We will continue to review
for additional guidance on price adjustments that will
be helpful for the Purchasing Manual. Ongoing.
WSDOT will track the cost of those item
under “Q” contract a
sand, gravel, asphalt, etc.
an
ch ges will be provided to the Office of Financial
Management when the agency request budget is
submitted.
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Procurement Strategy
for Hot Mix Asphalt
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Procurement Strategy for
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PROCUREMENT STRATEGY FOR HOT-MIX ASPHALT
APPROACH
Hot mix aspha
ads
with high traff
million
tons purchased annually, HMA is the major paving material
used by WSDOT.
To determine if WSDOT’s procurement process for hot-
mix asphalt is effective and to identify and assess
“innovative ways” to better control, predict, or reduce the
cost of provided asphalt to WSDOT and other
governmental entities, the following primary activities
occurred:
Review of literature. Although limited, information
concerning how states, localities, and foreign
governments procure hot-mix asphalt was obtained
and reviewed.
Discussions with WSDOT personnel regarding
current practices.
Interviews with asphalt and construction industry
representatives within Washington and elsewhere.
Questionnaire-based review of state DOT practices
regarding various aspects of asphalt and asphalt
product procurement and use.
Review of international practices, to the extent they
were available.
The latter two items above are focused on “best practices”
where available.
lt (HMA) is a flexible surface used on ro
ic volumes. With approximately 1.5
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Procurement Strategy for
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With minor variations, HMA purchasing practices vary
little among state transportation departments and other
mirror those of most states.
ential reduction in vendor risk through the use
application of price adjustment clauses for all
WSDOT practice.
r
petition and service
ach of these issues is explained in greater detail in the
pect to public ownership of HMA plants.
RESULTS
public sector entities. WSDOT practices for procuring
HMA generally follow standard practice and Agency
efforts to encourage competition and minimize vendor risk
premiums essentially
Although no substantial recommendations for change
regarding the procurement of hot mix asphalt in the state of
Washington are offered, specific opportunities to improve
current practices have been identified:
Pot
and
HMA contracts.
Encourage Washington cities and counties to allow
use of recycled asphalt pavement (RAP), which is
consistent with
Explore increasing allowable RAP levels in non-
critical mixes.
Continue to monitor developments in Warm Mix
Asphalt Technology as a possible option fo
increasing competition and/or conserving natural
resources.
Continue to monitor HMA com
levels.
E
following sections. Also included is a discussion of current
practices with res
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Procurement Strategy for
Hot Mix Asphalt
t Practices
The HMA “marketplace” is relatively local and effectively
ontracts
that identify specific needs and offer sufficient volume
racts performed by vendors on
ct.
a minimum of 16 HMA providers.
in Western Washington than
his approach is based on the three strategies: 1) fairness
Procuremen
constrained by the physical properties (components,
temperature requirements, etc,) that limit haul length and/or
make it difficult for vendors to compete beyond their local
areas - especially for the “on demand” contracts typically
used by transportation departments and local governments
for maintenance paving. Conversely, for HMA c
(typically construction cont
behalf of WSDOT), portable asphalt plants help ensure a
competitive marketplace. Both scenarios suggest that little
economic benefit is possible from attempting to purchase
HMA through a single, statewide contra
Currently, WSDOT has
In total, these providers operate 64 plants across the state.
However, the concentration of HMA plant locations in
Washington generally mirrors population centers, with a
significantly higher proportion
in Central and Eastern Washington. However, portable
asphalt plants and the availability of WSDOT-owned pits
and quarries provide alternative HMA sources and
supplement competition.
WSDOT’s approach for securing optimal vendor pricing is
to encourage a competitive bidding environment with a
goal of attracting as many responsible bidders as possible.
T
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Procurement Strategy for
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/or emergency
pairs, most WSDOT work involving significant amounts
it competition and/or work
volumes are inadequate to support options such as the use
of portable asphalt plants, vendors face less competitive
volume and duration of HMA needs, the proximity of raw
and efficiency; 2) communications with the contracting
industry; and 3) bid advertisement scheduling.
With respect to HMA, the level of competition on a given
procurement tends to be influenced by several factors. The
following discussion focuses on three of the more
important vendor considerations:
1. Proximity to the projected work
2. Viability of portable plant operations
3. Available capacity
Proximity to Projected Work
With the exception of natural disasters and
re
of HMA is planned in advance, is identified in publicly
available information, and is routinely communicated to the
WSDOT vendor community as part of its overall planning
process. Where a significant number of HMA providers
are within viable proximity to given WSDOT projects,
vendors will tend to adjust prices with respect to the
perceived competition, constrained by the direct cost of the
product. Conversely, when an HMA provider is in the
position where logistics lim
pressure.
Viability of Portable Plant Operations
The viability of this option is typically a function of the
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Procurement Strategy for
Hot Mix Asphalt
lant, mine the WSDOT-
uce the HMA. This
to bid on an
fixed plants that do not have
nearby competition.
e prompting business practices that are designed
encourage competition. This is generally considered a
tor procurement.
material sources, and the availability and the cost of HMA
from other vendors.
To encourage competition and control costs, WSDOT owns
a significant number of pits and quarries in many of the
more remote areas of the state and will allow HMA
contractors to set up a portable p
provided aggregate, process it, and prod
allows HMA contractors with portable plants
equal footing with those
Available Capacity
As a vendor approaches the capacity of the supply plant
location, the more likely the vendor is to increase prices
offered. Because weather conditions affect the ability of
contractors to install asphalt, demand also fluctuates by
season with appropriate impacts on short-term pricing.
WSDOT’s current procurement practices for hot-mix
asphalt do not vary appreciably from methods (and results)
used throughout the United States or internationally. By
effectively following a “free market” approach to HMA
purchasing, WSDOT allows the marketplace to establish
prices whil
to
best practice approach to public sec
According to WSDOT vendors, the state DOTs asphalt
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Procurement Strategy for
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ll competition.
gotiate the price with the buyer.
Reduce product quality – not tenable over time
Refuse to bid on such contracts – this option
etition, which tends to increase costs.
on
objective measures of component materials costs. Typical
standards and specifications are appropriate and bidding
practices encourage fu
Vendor options for bidding on HMA contracts that contain
no provision for increasing prices include the following:
Bid product pricing that includes a “risk premium”
(additional price margin) sufficient to allow for
most price fluctuations.
Provide the product at a loss. The approach is
untenable over time as it can result in the provider
going out of business.
Attempt to rene
reduces comp
Because none of the above represents positive, long-term
outcomes, the best option for most transportation
departments is to minimize vendor risk by including a
defined process for systematically adjusting costs based
processes for such price adjustments include contract
language that allows for proportional adjustments in HMA
prices based on changes in a relevant benchmark. One
such example is in use at the Texas Department of
Transportation (TxDOT), which allows vendors to request
price adjustments quarterly, based on changes in the
Producer Price Index (PPI)
8
.
Other transportation
departments - California, Ohio, Oregon, and New Jersey -
use similar processes with various benchmarks.
8
The US Bureau of Labor Statistics calculates the “Producer Price Index” for a variety of industries.
WSDOT Does Not Use Price
Adjustment Clauses for All
HMA Resulting in Increased
Vendor Risk
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Procurement Strategy for
Hot Mix Asphalt
fined, be included in
e procurement document, and the vendor community be
educated on the adjustment process in order to achieve the
or
er
halt
djustment calculations for Eastern and Western
ardless of
Regardless of the actual price adjustment benchmark, it is
important that the process be clearly de
th
desired goals of increased competition and/or improved
product pricing. This typically involves conducting vend
outreach meetings in conjunction with providing supporting
documentation, ideally posting this information on the
DOT Web site.
In August 2006, WSDOT established an “Asphalt Bind
Monthly Cost Index” for the purposes of calculating asp
cost price adjustments for contracts, with separate price
a
Washington. Currently, WSDOT has only included this
price adjustment clause for contracts of one year or longer
in duration. The Agency perceives that the administration
burden and associated costs for maintaining price
adjustment clauses during single-season contacts to exceed
its potential savings. In addition, because this price process
could result in falling HMA prices during periods of
asphalt cement price decline (as in recent periods),
Washington’s asphalt industry has not historically
supported price adjustment clauses.
In contrast with WSDOT, the New York State Department
of Transportation (NYSDOT) applies price adjustment
clauses to all HMA-related contracts, reg
duration. Additionally, the NYSDOT has contractors
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Procurement Strategy for
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of the base concept of mitigating vendor
sk and provides clear administrative advantages to both
the vendor and the DOT. Accordingly, we perceive this to
Recommendation #6:
WSDOT Response:
y, we do not agree
that using the price adjustment clause in projects of short
uration is cost effective due to administrative costs and
low risk. Contractors have the ability to negotiate with
OFM Response:
submit HMA-related invoices that simply identify the
quantity of HMA material used, the vendor’s bid price per
ton and the price index amount at the time of the bid. From
that invoice, NYSDOT directly calculates and applies its
price adjustment index to all vendor HMA invoices - for
both direct purchases and for payments provided as bid
items to contractors (based on the average posted price for
Performance Graded Binder). This approach represents a
logical extension
ri
be a “best practice” for using such indexes.
We recommend WSDOT pursue the use of price
adjustment clauses for HMA to include all future HMA-
related contracts.
WSDOT agrees that the use of a price adjustment for HMA
to shift cost escalation risk to the owner is an effective and
appropriate means to mitigate payment of a “risk premium”
on some HMA projects. Designers are directed to include
the Hot Mix Asphalt Price Adjustment Clause in our multi-
year HMA-related projects. We will continue to implement
this clause in our multi-year projects.
WSDOT disagrees that it is in the owner’s best interest to
assume this risk on all contracts. Based on results to date
and our communications with industr
d
suppliers and better manage HMA cost for the short term.
We agree with WSDOT that a price adjustment clause is
not needed for contracts of less than one year. There is no
clear demand from suppliers that this needs to be done.
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Procurement Strategy for
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Procurement Strategy for
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Action Steps and Timeframe:
• WSDOT will continue to monitor the effectiveness and
application of the HMA price adjustment provision by
reviewing the data annually in November and
communicating with industry, making adjustments to
our policies and provisions as needed.
Reclaimed asphalt pavement (RAP) is defined as salvaged,
milled, pulverized, broken, or crushed asphalt pavement. It
is removed or reprocessed from pavements undergoing
reconstruction or resurfacing. The components of this
material - primarily stone, sand, and asphalt - are
essentially identical to new HMA and can replace equal
mounts of corresponding materials with the potential for
binders. Conversely, WSDOT has found that use of RAP
is
0
ing
WSDOT Can Educate and
Encourage Local Agencies
on the Use of Reclaimed
Asphalt Pavement
Potentially Resulting in
Cost Saving Opportunities
a
reducing the cost of the HMA. Up to 20 percent RAP can
be included in HMA with no change in mixture or process.
In the 1970s, WSDOT built several roads using 100 percent
RAP as a demonstration effort. WSDOT was successful in
this initiative and the roads have proved durable. However,
to successfully pave with 100 percent RAP, WSDOT had to
engineer both the asphalt mix design and the chemical
at or below 20 percent requires no additional engineering.
WSDOT’s general approach to the use of RAP in HMA
based on using market economics to determine the most
efficient mix of materials. Accordingly, WSDOT has
chosen to allow (but not require) contractors to use up to 2
percent RAP in its HMA without any additional process
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Procurement Strategy for
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DOT has $5 m to spend on HMA
Assume:
- $400.00 Liquid Asphalt (64-22)
- $450.00 Liquid when using
Recycle
- 5.5% Liquid
- Processing Recycle Cost –
$3.00/ton
- Haul Cost – $3.00/ton
- Aggregate Cost – $10.00/ton
- Plant Processing Cost – $6.00/
If
M
0,627 tons
If
P
M
Lane miles paved with All Virgin Mix
162 miles
Lane miles paved with 50% RAP Mix
223 miles
Additional miles paved with Recycle
61 miles
Source: Recycling Asphalt, 1/22/07
ber of Washington cities
use of up to 30 percent RAP
maintenance cost increases identified the use of RAP and
rushed concrete at up to 50 percent of HMA volume for
SDOT should use its position as the primary
or engineering. However, a num
and counties do not allow the use of RAP in local roadway
paving.
The Illinois DOT allows the
on low-volume roads and up to 50 percent RAP for non-
critical mixes, such as shoulder, base, and sub-base. In
such instances, RAP usage clearly reduces the virgin
material required, providing environmental benefits
(through reduced consumption of natural resources and
recycling of previously used resources) while reducing the
amount, and therefore the cost, of the HMA used.
Similarly, a task force formed by the Texas DOT to
recommend practices for controlling construction and
ton
- Overhead and Profit – $4.00/ton
State D.O.T. purchases - All Virgin
ix
Tons of Virgin Mix = 12
State D.O.T. purchases 50% RA
ix - 2" Inlay - Contactor gets RAP
Tons of RAP Mix = 166,113 tons
c
use in driveways, crossovers, shoulders and other
miscellaneous areas. This practice was estimated to
potentially save up to $1.5 million per year in a large, urban
district (equivalent to a WSDOT region) but
implementation was left to the region to evaluate and use as
appropriate.
W
transportation agency in the state to continue to educate and
encourage Washington cities and counties to allow (but not
require) contractors to use up to 20 percent RAP to benefit
the state in the form of lower overall costs and/or more
roads paved for the same amount of money.
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Procurement Strategy for
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concrete in non-critical HMA applications. If
SDOT analysis supports this practice, considerable
savings could be possible.
ot without risk: we expect our “non-critical
mixes” on shoulders to last much longer than pavements
nder traffic. Decreasing pavement life, even on shoulders,
WSDOT should also evaluate the experiences of the Illinois
and Texas DOTs in using a higher level of RAP and
crushed
W
We recommend WSDOT:
encourage local governments to allow the use of
RAP consistent with WSDOT practices.
explore increasing allowable RAP levels in non-
critical mixes.
We agree that continuing our education effort with local
agencies may allow those same local governments to save
money through the use of Recycled Asphalt Pavement
(RAP). WSDOT has continued to educate local
governments, through conferences, research reports,
presentations and face-to-face meetings, on the value of
allowing the use of RAP up to 20% in new hot mix asphalt
pavement (HMA).
We also agree that WSDOT should continue to research
and explore using higher levels of RAP in HMA. WSDOT
has been a national leader in researching higher levels of
RAP in HMA since the late 1970s. We analyze our
pavement performance carefully through a world class
pavement management system. The Illinois and Texas
proposals are n
Recommendation #7:
WSDOT Response:
u
would adversely impact the Preservation Program and
result in higher lifecycle costs. Highway shoulders and
driveways are not exposed to large traffic loads, but they
are exposed to the environment. High RAP mixes tend to
be more oxidized and can be more susceptible to cracking
caused by environmental stresses, particularly those
brought about by high and low temperatures. We are
working on engineering all of our pavements for the lowest
life cycle cost.
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Procurement Strategy for
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OFM Response:
WSDOT is a national leader in researching and
implementing environmentally friendly transportation
projects. Enhancing the use of Recycled Asphalt Pavement
will also help to curtail the diminishment of the scarce
mineral resources used to make asphalt.
Action Steps and Timeframe:
• Continue to monitor research on using higher levels of
RAP, through the State Pavement Technology
Consortium (includes WSDOT, Texas DOT, Caltrans
, the ability to transport HMA to a
bsite is constrained by the need to keep the asphalt above
an
llow
atures.
ese efforts. These technologies have
alt
(lower
gh
ents
Potential Opportunities
Exist to Use WMA
Technology to Reduce the
Cost of Installed Asphalt
and Minnesota DOT).
As described previously
jo
a minimum specified temperature. However, Europe
countries are employing various technologies that both
reduce the heat needed to produce asphalt and/or a
asphalt to be satisfactorily installed at lower temper
Collectively, “Warm Mix Asphalt” (WMA) is the label
used to describe th
significant potential to reduce the cost of installed asph
for the following reasons:
Reduced energy requirements and emissions
costs and reduced environmental impact).
Increased haul times (encouraging greater
competition).
Increased product working time.
Potential to allow increased RAP levels (throu
improved asphalt binder viscosity).
WSDOT should continue to monitor the WMA research
and current U.S. evaluations. As these developm
warrant, WSDOT should consider applying WMA
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Procurement Strategy for
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and/or the
Recommendation #8:
WSDOT Response:
e agree. WSDOT continues to monitor Warm Mix
sphalt (WMA) and participates in national level work,
OFM Response:
technology to encourage increased competition
potential for using WMA technology to increase allowable
RAP requirements.
We recommend WSDOT continue to monitor WMA
research and current U.S. evaluations
W
A
including the Director of our State Materials Lab
participating in both a national-level State Pavement
Technology Consortium team studying WMA and as one of
three state representatives in the FHWA managed, national-
level Technical Working Group on WMA.
We agree and encourage WSDOT to evaluate and research
WMA technology.
Action Steps and Timeframe:
• Continue to monitor research on Warm Mix Asphalt
and continue to participate in national efforts to
investigate Warm Mix Asphalt.
y public
ly only North Carolina and Georgia
ocal governments
relatively rare. This appears to be due to geo-physical
Direct ownership of HMA plants is rare for an
Although WSDOT Does
Not Own HMA Plants
WSDOT, Direct
Ownership May be
Appropriate Given
Specific Conditions
sector entity and extremely rare for state transportation
departments - current
own plants. Ownership of plants by l
throughout the United States is more widespread but still
considerations, historic practices, and availability and/or
cost/performance of private providers.
Ten state
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Procurement Strategy for
Hot Mix Asphalt
ts for their own use.
ck
process. They
sually report favorable cost and/or service outcomes.
re the
ch
ature
fication; and/or
r or other factors. However, public
ining the option of owning
of
ample,
cPherson County, Kansas, indicates that a $420,000
vestment in a new plant provides asphalt at a lower cost
and on a readily available basis. This county also provides
sector. Accordingly, while we neither encourage nor
transportation departments
9
were aware of local
governments within their jurisdiction that owned and/or
operated asphalt plan
Public entities that own such plants tend to la
ocumentation of the decision-making
d
u
Such reporting is largely anecdotal and tends to igno
risks associated with direct HMA plant ownership. Su
risks include a lack of external recourse for prem
pavement failures;
the costs associated with
remanufacturing HMA that is out-of-speci
the costs of reprocessing HMA that is unable to be used
because of weathe
entities can benefit from reta
HMA plants should market conditions and/or a lack
vendor support warrant. In one documented ex
M
in
HMA to local contractors as well as performing all of its
own design and engineering, project inspection, and
construction management with in-house staff.
While public ownership of asphalts plants is rare, such
ownership may make sense when conditions do not provide
adequate market interest and/or support by the private
9
of our domestic sample of 35
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Procurement Strategy for
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a means of
ncouraging vendor responsiveness and competitive
pricing. However, any entities considering this option
Recommendation #9:
WSDOT Response:
mpetition is current agency practice. Results of its
onitoring both of prices and level of competition have
OFM Response:
discourages public ownership of asphalt plants, we urge
caution as this work has historically been performed by the
discourage WSDOT (and/or local public entities) from
owning and operating public asphalt plants, having the
option of public ownership provides
e
should consider the risks associated with this practice.
In the event that the state or localities consider owning and
operating asphalt plants, they should first review current
experiences in North Carolina and Georgia, as well as other
countries (specifically France and Sweden), where local
governments follow the practice today. Additionally, the
North Carolina DOT has recently decided to open a plant to
provide HMA in an area where the private sector has
chosen not to do so. This will provide a current example
that can help WSDOT and/or other entities make an
informed decision.
We recommend WSDOT and other public entities
monitor HMA competition and service levels to
determine whether direct ownership is appropriate.
WSDOT agrees and notes that monitoring HMA
co
m
been shared widely with the industry itself, with the public
through the Gray Notebook, and also through Governor
Gregoire’s Government Management Accountability and
Performance (GMAP) program.
Although the audit report neither encourages nor
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Procurement Strategy for
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private sector in Washington State. WSDOT has taken the
right approach by purchasing asphalt materials that the
private sector can access for production in remote areas, but
should not become a producer itself. Nevertheless,
WSDOT must remain vigilant and closely monitor
competition and the availability of supplies.
Action Steps and Timeframe:
• Continue to monitor HMA competition as documented
by the low bid system.
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Maintenance
Operations/Revenue
Opportunities
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Maintenance Operations/Revenue
Opportunities
MAINTENANCE OPERATIONS/REVENUE OPPORTUNITIES
APPROACH
Public organ
rcising
responsible ste
views
its facilities,
assets as key
components to the successful performance of its mission.
As such, this audit focused on reviewing the Agency’s
practices for assuring its assets are properly and effectively
maintained.
Our approach considered the adequacy of resources to
accomplish maintenance and operations activities, how
those resources are employed, and the results of that
employment. Within this general approach, our research
was directed towards the identification of issues, barriers,
and opportunities to:
Enhance the economy and efficiency of
maintenance and operations activities.
Improve utilization of limited resources.
Preserve the significant public investment in the
state roadways and related facilities and assets.
Six aspects of the Maintenance Operations/Revenue
Opportunities area were reviewed - two areas involving the
policies, support, operation, and service profile of safety
rest areas (SRAs); two areas addressing the issues, policies,
support, operation, and management of area-wide subjects;
and two areas, while specific to the Maintenance and
Operations (M&O) Program, integral to department-wide
initiatives and practices. Each of these areas is summarized
below:
izations are charged with exe
wardship of infrastructure. WSDOT
equipment, and other
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Maintenance Operations/Revenue
Opportunities
This area examined the following safety rest area
uge, and redefined commercial economic and
safety services.
Integration of technological capabilities with the
among parties involved in the
, planning, design, operation and
Examining opportunities to increase revenue
Safety Rest Areas
program elements:
Mission
Program mission and related strategic planning
activities and products.
Scope of potential current public service
mission requirements that have surfaced and/or
changed since the program was established
including public safety, disaster preparedness,
ref
potential for improving traveler safety, comfort
and travel-related information into the current
SRA mission and planning process.
Risks to the SRA Program asset base and the
ability to continue the delivery of reliable,
quality and safe public service.
Roles and responsibilities, including program
leadership,
evaluation
preservation of SRA facilities and services.
Organization, Revenues, Costs, and Requirements
Reviewing the suitability of the organization’s
structure to best support program activities.
from safety rest area enterprise activities.
Assessing operational costs and safety rest area
facilities maintenance backlog.
Determining barriers to directing revenues and
revenue increase to unmet facility needs.
Establishing the need to enhance program
support for preserving public investment and
sustaining service levels.
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Maintenance Operations/Revenue
Opportunities
Operations/Safety Rest Area
Pur
asing activities of the M&O and
rams included:
Maintenance and Operations Program Barriers and
Be
Assess the major Maintenance and Operations
Re
ies and disasters.
afety
WSDOT’s focus on and implementation of applicable
safety measures were assessed.
Maintenance and
chasing
The focus of purch
SRA prog
Determining the level and relevance of safety
rest area related purchases.
Determining the level and relevance of other
M&O purchases.
Identifying potential settings and conditions
regarding future purchase activity.
Opportunities
Principal barriers and opportunities affecting the
maintenance and operations program were identified
and reviewed.
st Practices
The focus of this area was to accomplish the following:
planning, work processes, and practices.
Identify potential improvements.
Highlight noteworthy practices.
gulatory Mandates
Identification of relevant regulatory mandates.
Emergency and Disaster Response Preparedness
Assess the current coordination and
preparedness for emergenc
S
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’s selection and use of Maintenance and
or the use of
individual performance measures.
Methodology
r audit objectives, we reviewed various
doc
ion and reporting mechanisms.
inancial management activities.
ent.
dies.
p
d their
regarding the
barriers, opportunities, practices and accomplishments of
nd the Maintenance and Operations
dual or
rogram, financial, information systems, technical, and
nal employees. Headquarters and regional staff of
all
the
e WSDOT Secretary to
Performance Measurement
WSDOT
Operations performance measures were assessed to
determine:
Whether all necessary performance measures
were in use.
The usefulness of adopted performance
measures.
Identification of potential improvements in the
performance measurement process
To achieve ou
uments including:
Relevant program and department policies and
practices.
Data collect
F
Headquarters, field planning, and managem
Prior stu
In addition, we observed management, supervisory, and
r t ns staff activities and practices and solicite
o e a io
experiences, opinions, and suggestions
the Agency in general a
Program in particular.
Approximately 80 people were interviewed in indivi
group settings. These included department managers;
p
operatio
six geographic regions were involved in meetings with
audit team and ranged from th
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nts. These interviews were
sup
stat
outs
to acquire available information.
the course of the audit were varied and numerous. The
exam
Plans and Applicable Goals, Objectives, and Strategies
and agency plans.
elivery
nd attendant service delivery and performance
ated into the audit when applicable.
Examples include the Truck Smart Park Study, FHWA
“Best Practices”/Other
Information Sources
local safety rest area attenda
plemented by visits to numerous facilities and sites
ewide. Interviews were also conducted with people
ide WSDOT
Best practices and other information sources used during
following is a summary of specific categories and
ples:
All identified WSDOT plans as well as relevant plans of
other state, federal,
Budgets and Related Performance and Service D
Commitments
s
Relevant material used include budgets, cost reports
a
information for the last six biennia and the fiscal years
2007-2009 budget submittal.
Relevant Studies and Reports
A large number and variety of studies and reports were
assessed and integr
Parking Study, WSDOT Truck Study and Strategic
Freight Transportation Analysis. Relevant items from
other organizations included disaster preparedness
documentation of the Washington State Emergency
Management Division and of the federal government,
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alyses
Relevant materials included a broad range of subjects
nd financial impact analysis; and materials of
Pro
rvice Delivery
Information, Proposals, Contracts, Reports and
Communications
aterials included items regarding subjects
vending contracts and
payment records, SRA wireless Internet and advertising
RA program roles and
Ma
prior audits and relevant studies of WSDOT and of
similar organizations and programs elsewhere.
Financial, Activity, and Services Reports and An
such as safety rest area expenditures; SRA and
Maintenance and Operations vendor and services
purchases; travel, accident, and related data; third-party
claims a
other state agencies.
gram Study, Activity, and Se
Significant m
such as WSDOT outsourcing, highway maintenance
outsourcing, citizen and staff safety rest area study
group minutes, findings, and recommendations; SRA
contracting correspondence,
proposals and contracts, S
responsibilities, and SRA reorganization and staff
assignment responsibilities.
nuals, Guides, Standards, and Related Materials
Manuals, guides, handbooks, and similar references
were reviewed and employed as appropriate.
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Per
and Maintenance Backlog Information and Reports
SDOT Maintenance Accountability Process (MAP)
,
These targets are established
rough the receipt of periodic satisfaction surveys
10
.
achievements against the targets are compiled and
Re
Or
f Federal Regulations, the
evised Code of Washington (RCW), Washington
ay
formance Standards, Service Delivery, Condition
W
targets, performance reports, user committee agenda
work papers, and change and enhancement
recommendations; selected analysis and summaries of
work load items; and facilities backlog levels.
The Department is focused on its MAP highway
maintenance targets.
th
The targets also factor in available maintenance funding
and become accepted standards of performance. Actual
published annually and the data used periodically for
evaluating manager performance. Achievements are
reviewed by the Office of Financial Management, the
Governor’s Office and legislative staff.
levant State, Federal, and Professional Agencies and
ganizations
Key statutory, administrative, and funding-related
materials including the Code o
R
Administrative Code (WAC), and Federal Highw
Administration information provide specific guidelines.
10
Input received from traveling public concerning their satisfaction with the state highway system.
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structural
ondition of bridges, traffic congestion, delays per
Inn
(Patented)
Winged Snow Plow
Living Snow Fence
al Positioning for Snow and Ice Control
RESULTS
WS
ma
ma tenance and operations practices have been designed
to assure that each functions at a level of service defined by
the Department’s overall goals. Although WSDOT is
ments as an
Performance Measures
olicy goals form the framework of the agency’s
P
performance management system. These goals, which
are included within the provisions of RCW 47.01.012,
are described as “the basis for establishing detailed and
measurable performance benchmarks.” The nine goals
refer to highway safety, highway condition,
c
driver, per capita miles driven, commuter trip reduction,
administrative costs, and transit cost per vehicle revenue
hour.
ovations and Best Practices
Some WSDOT practices have been recognized as “best
practices” by other state transportation departments and
federal organizations. Some significant innovations
include:
Bridge Suspender Cable Painting
Retro-reflectivity-Based Highway Striping
Glob
Energy Services Contract (ESC
Guidepost Driver
DOT currently maintains and manages safety rest areas,
intenance facilities, and roads throughout the state. Its
in
considered by some transportation depart
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of opportunities exist to increase
ove
WS
ma
changes have occurred during the 40 years since the
pro
com
req
sco
infrastructure should be revisited and appropriate
odification considered. As part of a comprehensive
imilar reassessment of the
SRA
app
The
ance and Operations processes and practices
ell
in
ith
ices” were found. This can
kely be attributed to the high experience levels and the
commitment of the current employees. However, WSDOT
industry leader, a number
rall efficiency and effectiveness.
DOT has an opportunity to improve the design and
nagement of the Safety Rest Area program. Significant
gram was envisioned. Traveler needs, both private and
mercial, have evolved and additional public
uirements have surfaced that are beyond the original
pe of the program. Technology and the aging program
m
review of the program design, a s
program organization and management concepts
ears to be appropriate.
Mainten
within headquarters and in the field appear to be w
planned and improvements are regularly sought by workers
and management.
Employees routinely engage
continuous improvement of the processes they work w
and examples of “best pract
li
faces a challenge to continue this level of achievement as
employee retirements reduce experience levels throughout
the state.
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and publication of
erformance measures. One set of performance measures,
blic investment is at risk for two
rincipal reasons. First, WSDOT, because of highway
uring the next few years. The following sections
etail our analysis.
One element of observed best practices within the
Department is the liberal use
p
those of the Maintenance Accountability Process (MAP),
are visible starting at the level of WSDOT front-line
employee up to the Office of the Governor and the
Legislature. Performance measures regarding the backlog
of essential maintenance and repair however, are not
documented and periodically reported.
While it appears from objective indicators such as MAP
performance measures and observed best practices that
maintenance and operations activities are being carried out
in an innovative and effective manner, it is equally clear
that the highway system pu
p
financial capacity limitations, has pursued a practice of de-
emphasizing maintenance relative to construction activities
and is embarking on a significant expansion program.
Without a comparable commitment to effectively maintain,
at the lowest life cycle cost, the existing asset base and
additions, their functionality will gradually decline,
ultimately resulting in extensive future investment.
Second, the ability of WSDOT to maintain the existing
system is heavily reliant on the experience and dedication
of current staff, a group that is going to be retiring in great
numbers d
d
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SAFETY REST AREAS
cation” and, being
artially funded through federal dollars, was developed to
Federal highway policy provides that the public roadside
shall provide safety rest areas (SRAs)
11
and encourages
development of information centers and systems. The
Washington Safety Rest Area program was established in
1967 when the Rest Area Master Plan was adopted by the
State Highway Commission. The Rest Area Master Plan
was part of the Commission’s “Policy on Roadside
Development and Highway Beautifi
p
be consistent with the federal requirements.
The state’s safety rest area program is governed by
extensive federal and state codes and regulations (See
Appendix A-1 for specific requirements). While more than
half of the state’s safety rest areas are located on the
interstate system, all facilities received federal funds for
one or more of the following:
Land or access control purchase,
Building construction,
Rehabilitation.
The SRA program is associated with three revenue flows:
Program budget funded by the Motor Vehicle Fund
SRA operations and maintenance activities are
supported by maintenance funds appropriated by the
Legislature. This places SRA needs in competition
A roadside facility that is removed from the roadway with parking and other facilities for rest, relaxation, comfort,
and information needs.
Current Program
Funding and Revenues
Generated
11
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with state roadway maintenance and operations
facilities. The
RV Fund is funded by an annual RV fee (presently $3).
rically generated at SRAs by
or advertising and
g machines. A third service
August 2006 and from which no
revenues have yet been realized, provides wireless
Wa
opp
safe
espe
on rest areas to provide a place to park and sleep.
SRA System
Characteristics
activities such as roadway related maintenance, snow
and ice removal, signage, etc. Capital activities are
funded from WSDOT’s preservation budget and must
compete with all other highway system preservation
needs for limited funds.
RV Sanitary Disposal Program budget funded by
the RV Fund
A dedicated fund was established in 1979 to construct,
improve, and replace RV dump station
Being restricted, these funds cannot be used for either
operations or improvement of SRA infrastructure
beyond that dedicated to RV use.
Revenues generated by SRA contracted services
Revenues have been histo
two service contracts - one allowing f
the second allowing vendin
contract, signed in
Internet services at selected SRAs.
shington’s safety rest areas provide travelers the
ortunity to rest and take breaks to promote alertness and
ty during long trips. Access to safety parking areas is
cially important for commercial truck drivers who rely
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The
non
acre
drin
pre-
site
d to have served 21.3 million
travelers during 2005, nearly 90 percent on the Interstate
syst
The
200
(pro
cost
Two
e impacted the SRA
program in recent years - Initiative 695 and WSDOT’s
resulting Safety Rest Area Study. An overview of each is
pres
Init
The
sign
fees
ut in the state’s
ansportation infrastructure funding. To manage this
wing:
Relevant Events
and Actions
current SRA system consists of 27 interstate and 15
-interstate sites. These 42 rest areas contain over 555
s. At these sites, WSDOT manages 83 buildings, 29
king water systems, 36 on-site sewage treatment and
treatment operations, and 19 RV dump stations. These
s and facilities are estimate
em.
cost of operating and preserving the system during the
3-2005 biennium (actual) and the 2005-2007 biennium
jected) averages $6.5 million per year. The average
per visit is approximately 31 cents.
primary events and actions hav
ented below.
iative 695
passage of Initiative 695 in November 1999
ificantly reduced Washington’s vehicle registration
.
The result was a severe c
tr
funding loss, WSDOT suggested the temporary closure of
almost one-half of the state’s SRAs. This idea was not
well-received by the public and led the Legislature to attach
a provision in the 2000 Supplemental Transportation
Budget (2SSB6499) that included, in part, the follo
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on the fact that SRAs were built with federal
ollars.
of December 2001
as commissioned to determine how this was to occur.
dations from the Study included:
Explore partnerships
n automobile fee
e
“The Department shall not close any highway rest area
but shall continue to operate and maintain all existing
rest areas. The Department shall convene a panel of
stakeholders to evaluate innovative financing options
and partnership opportunities at the safety rest areas on
state highways.”
The Federal Highway Administration also notified
WSDOT of its concerns regarding closing SRAs and
focused
d
As a result, WSDOT assumed responsibility to manage,
operate, and maintain the SRA system with reduced
funding. The Safety Rest Area Study
w
Safety Rest Area Study
The Safety Rest Area Study was released in December
2001. Recommen
Assess a
Privatiz
Continuous improvement
Brainstorm ideas
WSDOT has continued its commitment to continuous
improvement as recommended in the report.
This
commitment is a principal factor in sustaining a MAP level
of service given restricted funding and a growing backlog
of essential maintenance and repair.
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Alt
WS
unc
needs are now different. The scope of potential public
ervice mission capabilities including public safety, disaster
tors are typically focused upon strategically and
efined in a formalized strategic plan. However, the SRA
that
ppears well maintained and suitably current.
reliable,
ice or provide a suitable base
needs. A comprehensive
of the program and its
ld provide results to assist in the
s should
clude, but not necessarily be limited to, issues and
subjects including:
hough consistent with original federal requirements,
DOT’s scope and interpretation has remained basically
hanged for nearly 40 years. However, conditions and
WSDOT Has Not
Strategically Considered
SRA Use and Operations
nor Maintained Historical
Records Regarding the
Number of Travelers
Served Annually
s
preparedness, refuge, and commercial economic and safety
value has increased since the program was established.
These fac
d
Program does not have a strategic plan. This absence is
particularly noteworthy given the comprehensive manner in
which other areas of Department activities and programs
demonstrate a substantive planning commitment
a
The condition of the SRA Program asset base may be at
risk and may not be able to continue its delivery of
quality, and safe public serv
for a
w and growing
ddressing ne
strategic and operational review
setting and document cou
updating of its mission, organizational structure, roles and
responsibilities, enhanced decision criteria, enhanced
funding strategy and financial plan, and management and
communication mechanisms as appropriate. Specific
strategic and operational review scope item
in
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ere
ot broadly envisioned or considered when the program
considered
trategically in the context of total impact on the state’s
s included:
Possible New Service Capabilities
Significant and relevant trends and factors that can affect
future role, nature, and activities of the SRA System and its
mission should be reviewed and assessed.
A variety of items current affect the SRA System that w
n
was conceived and put in place. Among these items are:
Commercial traffic growth and congestion
Demand growth and traveler safety
Technology development and application
Revenue enhancements
Each has had a major effect on SRA use and operations.
However, they have not been evaluated and
s
highway system.
Commercial Traffic Growth and Congestion
The demand for commercial truck parking at SRAs has
exceeded available capacity. Currently, the state
provides 392 truck/RV spaces at SRAs statewide.
Most SRAs were constructed between 1966 and 1978
and were intended to meet a projected 20-year demand.
In 2002, the Federal Highway Administration (FHWA)
determined that Washington was one of 12 states with a
shortage of available truck parking, having had a 14
percent shortage of parking capacity.
FHWA
recommendation
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rest area
available spaces
Change parking enforcement rules
te
freight
he study
k parking shortages, safety
deral regulations regarding commercial
truck driving hours and rest requirements, parking
st areas
king
not maintained historical
arding the number of travelers served
Expand or improve public
Expand or improve commercial truck stops and
travel plazas
Encourage the formation of public-private
partnerships
Educate or inform drivers about
Conduct additional studies
In response to these recommendations, the Department
began a study to identify locations on the intersta
system with inadequate truck parking, future
trends, and means to manage the shortage. T
identified corridors with truc
rest areas that have truck parking demands that
consistently exceed their capacity, and commercial
truck stops that are at capacity. Furthermore, due to
changes in fe
demand at commercial truck stops and safety re
is expected to increase.
In response to the growing commercial vehicle par
problem, the WSDOT has committed to an initial
expansion of parking capacity of 15 to 25 additional
parking spaces at one SRA. However, this commitment
was decided independently of other SRA needs.
Demand Growth and Traveler Safety
The SRA Program has
records reg
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annual visitors had been
rate" - an
ted when the
nd the rest area sites
es. Using the number of driver
ileage traveled annually,
is also
presented.
annually. Rather, estimates of
made until 2005 using ADT and "pull
estimate of the number of persons pulling off the
highway into a SRA. Also, no historical records have
been identified that quantified estimates for the 20 Year
Service Level that was to have been targe
SRA Program was implemented a
and facilities were originally constructed.
In 2005, the Department attempted to accurately
estimate SRA visitors. Water use, measured annually,
has been correlated with persons visiting the rest area.
This method is determined to be more accurate than the
“pull rate” estimate. The results of that research and
analysis indicated 21.3 million people stopped at SRAS
that year. The development of past period estimates for
SRA visitors requires the use of available data that is
believed to have a logical relationship with SRA use -
proxy indicators or guid
licenses and vehicle m
estimates of SRA visitors during selected times since
the program was established were developed. Since
variations exist between the rate of changes during
interim time periods for the two indicators, an estimate
that averages the changes in the historical data
Based on the analysis in Exhibit 4, the estimated level
of traveler use has increased about 2.5 times since the
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S
Technological Capabilities
Technological capabilities
im
inform
SRA m
Title VI,
of the Inter-modal Surface
Transportation Efficiency Act of 1991 established the
nationa
program
Transportation Systems (ITS) and is designed to
system was established. This growth has occurred
without an increase in the number of sites or in the
general size and capacity of facilities within the SRA
system.
Estimated Safety Rest Area Visitors
Fiscal Years 1970 - 2005
Driver License Indicator Estimate
Vehicle Mileage Indicator
Estimate
Fi al
Yea
Driver
% of
2005
Estimated
Vehicle
% of
2005
Estimated
Average
of Visitor
sc
r
Licenses
Level
Visitors
Mileage
Level
Visitors
Estimates
1970
1,920,000
44%
9,384,121
20,371,000
36%
7,627,710
8,505,916
1975
2,177,000
50%
10,640,225
23,106,000
41%
8,651,803
9,646,014
1980
2,663,000
61%
13,015,581
26,686,000
47%
9,992,297
11,503,939
1985
2,981,000
68%
14,569,826
34,260,000
60%
12,828,303
13,699,064
1990
3,377,000
77%
16,505,301
43,934,000
77%
16,450,632
16,477,966
1995
3,765,000
86%
18,401,675
48,430,000
85%
18,134,113
18,267,894
2000
4,190,000
96%
20,478,889
53,248,000
94%
19,938,163
20,208,526
2005
4,358,000
100%
21,300,000
56,885,000
100%
21,300,000
21,300,000
ources: 1. Analysis based on data in WSDOT Forecast of Fuel,
Vehicles, and Related Data Through 2013
2. Gray Book #21 of March 31, 2006: Fiscal Year 2005
estimate of SRA visitors
have the potential for
proving traveler safety, comfort and travel related
ation, but are not presently integrated into the
ission and planning mechanism.
Part B
l Intelligent Vehicle-Highway Systems (IVHS)
. This program is now known as the Intelligent
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the safety and efficiency of the surface
transportation system.
Key ITS elements i
ude:
Communications Backbone
WSDOT
erates a commun
ion system
radio, m
p
th
h
sections of the road network.
T
C e
T
W
r
e
e
o
c
c
te
s
o
st
c
io
d
n
o
o
o
c
r
d
V
le
s
S)
A
c
c
n
a
traffic
es, travel
time
highwa
os (HAR)
dio stations installed
d road surface
condition observations.
promote the use of advanced technologies - sensor,
computer, electronics and communications and
management strategies - in an integrated manner to
increase
n Washington incl
op
icrow
icat
tics
of
es all
ave and fiber o
at touc
raffic am ras (CC V)
SDOT ope ates an xtensiv netw rk of losed-
ircuit levi ion acr ss the ate to help detect
ongest n an accide ts and t be c nstantly aware
f traffi and oad con itions.
ariab Me sage Signs (VM
n ele troni traffic sign used o roadw ys to
provide motorist with important information about
congestion, incidents, roadwork zon
s, special events, or speed limits on a specific
y segment.
Highway Advisory Radi
Licensed low-power AM ra
along the roadway to provide alerts and general
information regarding traffic and travel.
Road/Weather Information Systems (RWIS)
Instruments and equipment installed along the
roadway that provide weather an
Ramp Meters
Traffic signals on freeway on-ramps that alternate
between red and green to control the flow of
vehicles entering the freeway mainline.
Traffic Data Collectors
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nd enhanced
nce should increase
SR
the next year and five-year periods includes:
Tools used to keep track of what is happening on
the roadways including induction loops, infrared,
radar, sound, and video imaging.
Traffic Management Centers
Seven centers that collect real-time information 24
hours a day, seven days a week.
Revenue Enhancements
Current program management initiatives a
program management performa
A-related revenue flows. Likely revenue flow for
Service/Action
1st year estimate
5-year Total
iF
New
Ven
Ven
New
TBD
mated total
$226,000
$530,000
Ad
enh
agency funding for commercial vehicle parking,
rtation
Sys
cap
opportunities should be strategically assessed and
c
WSDOT has dem
a commitment to the
a
other a
and ma
W i contract
$10,000
$50,000
advertising contract
$ 36,000
$180,000
ding contract
$ 30,000
$150,000
ding payments due
12
$150,000
$150,000
tech-based opportunities
TBD
Esti
ditional potential sources of SRA system
ancements may include federal grants and inter-
piloting/installation of Intelligent Transpo
tem concepts, and disaster/emergency preparedness
acity and capabilities funding. These potential
fo used upon as appropriate.
onstrated
prepar tion and maintenance of relevant strategic plans,
ttendant documents and manuals, and operational
nagement criteria. This commitment should be
12
Vending payments of $150,000 for 2002-06 not billed
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extende
compre
uld be documented
and imp
plan, revitalized organizational structure, updated roles and
responsibilities, updated and enhanced decision criteria,
enh
man
app
scop
ited
to, i
cts discu
parking
c
ands
Organizational structure
Recommendation #10:
We
determining budgetary
WSDOT Response:
including members of Washington Trucking Association;
ty, Trade, and Economic
d to the SRA Program through the undertaking of a
hensive strategic and operational review of the
program and its setting. The results sho
lemented in an updated mission statement, strategic
anced funding strategy and financial plan, and
agement
and communication mechanisms as
ropriate. Specific strategic and operational review
e items should include, but not necessarily be lim
ssues and subje
ssed above such as:
Mission
Commercial
Information technology systems use
Disasters
ies
Growth in dem
and emergen
Decision-making criteria and mechanisms
System operation, maintenance and development
Priorities
Funding strategy
recommend WSDOT:
undertake a comprehensive strategic and
operational review of the SRA Program.
maintain historical records and develop a
trending log to assist in
requirements.
We agree, and have developed a SRA stakeholder advisory
team to develop a comprehensive strategic plan to capture
what we believe our rest areas will need to look like in the
future. This team includes numerous interested parties,
Department of Communi
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d possibly
mbers of
ation in WSDOT’s
tinue to track and report this
ill be used to develop and
port
OFM Response:
ledgment in the audit report that
e maintenance and operations division at WSDOT is
xemplary and the acknowledgment that maintenance
their work through the use of
ing,
ent in maintenance.
udget justifications could include information about the
type of traffic and the traffic trends at rest areas over time.
t
Development; Washington State Patrol; Federal Highway
Administration; various HQ programs and representatives
from the WSDOT regions. The team is charged with the
following:
• Clearly identified roles and responsibilities – SRA
Program Organization
• Recommendations and strategy on funding
opportunities to enhance maintenance and preservation
• Recommendations and strategy on traveler and tourism
information
• Recommendations and strategy on other amenities of
safety rest areas
• Strategy on public-private partnerships
• Program vision and priorities
• Program measurements
• 10-year plan to operate, manage, maintain an
develop new facilities
Additionally, WSDOT currently tracks the nu
SRA visitors and reports this inform
Gray Notebook. We will con
information. This information w
maintain historical records and trending logs to sup
budget analysis in the future.
We appreciate the acknow
th
e
employees regularly improve
best practices. As noted in the audit report, the
maintenance division is a leader in planning, budget
and evaluating their work through the use of performance
measures. We share the auditor’s concerns about the aging
workforce and the lack of investm
B
The strategic planning effort currently underway will help
shape a vision of SRA for the future, including the use of
technology at these facilities, the kinds of amenities that
should be offered, the improvements needed, staff resource
requirements and training required, etc. We would suppor
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s
s and Timeframe:
WSDOT developing a backlog of unmet maintenance need
for the 2009-11 budget.
Action Step
rent and
ty Rest Area organization, revenues,
n the following
m activities.
Current and potential Safety Rest Area-generated
tain
jor
ally
tions
ement has
ive
be
generated from increased SRA revenues alone. To
s,
s
ORGANIZATION,
REVENUES, COSTS,
AND REQUIREMENTS
• A final strategic plan is expected to be completed by
March 2008.
• Track and report SRA visitor numbers. Cur
ongoing.
Our review of Safe
costs, and program requirements focused o
items:
Reviewing the organizational structure to determine
if it supports progra
revenues.
Costs to operate safety rest areas and to main
system assets.
Condition and needs to preserve system assets.
The assessment of each of these areas identified two ma
issues:
1. The responsibility for the SRA Program has been
divided, with operational responsibilities princip
located with the Environmental and Opera
function and planning and facilities-related
activities with Facilities. This arrang
adversely affected the efficient and effect
operation of the program.
2. The unmet requirement for SRA operation and
capital funding is greater than what can
meet system operation and preservation need
alternative funding sources and/or enhanced real
budget support is needed to supplement money
generated by SRA initiatives.
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s affecting the organization
nt
ber
was operated from WSDOT
from regional personnel. A
was shifted from the Highway and Local Program
Environmental and
and
times unclear and are
mend a
management structure that exemplifies the vision of the
department: accountability, transparency and program
delivery.”
A number of actions and issue
Unclear WSDOT SRA
Roles and Responsibilities
and No Single Program
Level Leader With Full
Accountability Have
Resulted in Non-Collection
of Contract Amounts,
Capacity Issues, and
and operation of the SRA program have occurred in rece
years to address the efficiency of SRAs. Prior to Decem
2002, the SRA Program
headquarters with little input
subsequent reorganization occurred to more closely align
the SRA functional areas with the program operators. The
program
Limited Planning.
to Maintenance and Operations (M&O). The ensuing result
was a division of responsibilities where
Operations undertook operational responsibility working
through the regional maintenance function and Facilities
assumed responsibility for SRA infrastructure
preventive maintenance systems.
Although intended to more closely align the functional
areas with program operators and users, this has not
occurred. The roles and responsibilities among parties
involved in the evaluation, planning, design, operation and
preservation of SRA are some
allocated among numerous individuals. There is presently
no single program level leader with full accountability.
In 2004, a Safety Rest Area Committee was established to:
“Determine the alternatives for managing the
operational component of SRA’s and recom
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he results of the Committee’s work were published in
Review of the Operations and Maintenance of the
ontract Management
at
all SRAs, only 20 were selected. The contract provides
T
“
Washington State Safety Rest Area” in 2004. The results
included the following:
Sixty-seven significant issues organized into nine
categories were identified and documented.
No helpful information was identified from a large
selection of information regarding other state SRAs.
Five alternative SRA operational plans were
developed and assessed with a recommended option
for development of policy.
Limited action has been taken regarding report findings and
recommendations. As a result, various ineffective and
inefficient actions have occurred including:
Inter-agency contract management
M&O/SRA roles and responsibilities
Commercial vehicle parking
Establishment of new SRA sites.
C
Vending Machines
Under state law, state agencies that allow vending
machines must use the Department of Services for the
Blind to install them and collect a certain percentage of
receipts. The Services for the Blind vending machine
agreement was signed in January 1995. Although the
agreement allows the Department to install machines
for a payment of to WSDOT of $125 per location per
month, paid on a quarterly basis. The annual payment
amounts to $30,000. The contract calls for an annual
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es associated with the vending
contract management
ervices for the
payment was
Advertising
vertising agreement has been in
er 1999. It has been extended
solicit, negotiate, and administer the agreement benefit
review of the agreement and adjustment of the fee to
ensure all WSDOT costs are covered.
Management practic
contract have been inadequate. Annual reviews have
not been performed and no bills have been sent to the
Department of Services for the Blind for five years.
Subsequent to identification of this condition, WSDOT
has reviewed and clarified
practices, and staff roles and responsibilities. A
financial reconciliation was accomplished, a $150,000
bill was delivered to the Department of S
Blind for collection of fees due, and
received.
WSDOT’s current ad
place since Novemb
twice, most recently on October 31, 2006. The
extension was granted to provide uninterrupted service
until a competitive selection is made regarding a new
vendor.
Net payments to WSDOT during the life of the contract
total $270,850 - yielding an average of about $1,963 per
month or an annual average of $23,550. Under the
provisions of RCW 47.12.125, neither the SRAs nor the
Maintenance and Operations Program whose staff
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cently reviewed
nd confirmed by the Attorney General.
Commercial Vehicle Parking
rowing commercial vehicle parking
, no detailed analysis occurred to evaluate the
ve sites to determine which would be the most
from these payments. All money goes to the Right-of-
Way Fund. This requirement was re
a
The advertising and vending machine agreements would
collectively generate an average revenue flow of about
$53,550, if administered as written.
M&O/SRA Program Roles and Responsibilities
M&O roles and responsibilities regarding the SRA
Program were developed in 2002. Although changes
have occurred since then, they have not been formalized
or otherwise documented in an update of the original
statement of roles and responsibilities.
The state has a g
problem. Specific needs were identified in WSDOT’s
2005 Truck Parking Study. Five sites were identified as
places where average truck parking demands
consistently exceed capacity and a commitment to
expand the parking capacity of one site occurred.
However
fi
important or appropriate one to invest public resources.
Establishment of new SRAs
WSDOT is planning or otherwise considering an
expansion of the SRA System. Four sites and attendant
facilities are in various stages of planning, design, and
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rocedures, and
how to determine
ited capital and operational resources should
Wh
nee
fou
res
ot necessarily
anslated into specific changes. A review of the SRA
Pro
nd personnel roles and
res
und
and
effe
and
can
The
dis
external to the Program. Position descriptions for affected
staff should be updated to reflect assignment of roles and
resp
Recommendation #11:
We
conduct a comprehensive organizational review
funding. The WSDOT Roadside Manual provides a
comprehensive presentation of relevant policy, service
objectives and goals, location and site p
conditions for infrastructure, buildings and operations
for Safety Rest Areas and Traveler Services. However,
WSDOT has no criteria regarding
where lim
be deployed for the public benefit.
ile it appears that WSDOT management recognize the
d for improvements in the organization structure, policy
ndation, and identification and assignment of roles and
ponsibilities, this recognition has n
tr
gram organizational structure a
ponsibilities will provide WSDOT with a thorough
erstanding of the particular makeup, communication,
operations requirements to assure the efficient and
ctive delivery of service. Key performance indicators
benchmarks should be developed to assure WSDOT
measure efficiency and effectiveness.
result of the review should be clearly documented and
seminated among all affected parties, both internal and
onsibilities
recommend WSDOT:
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WSDOT Response:
Wh
imp
imp
prob
Serv
noti
competing
prio
tation of the
lements of the strategic plan will also result in more
OFM Response:
of its SRA Program.
establish milestones and key performance
indicators.
ile we agree that current efforts in this area could be
roved, the organizational arrangement has not adversely
acted the overall operation of this program. The only
lem created by “unclear roles” was failure to invoice
ices for the Blind which was done immediately upon
fication. Other issues were results of
rities and lack of staffing. Implemen
e
clearly defined SRA program roles and responsibilities.
We agree with the audit finding that there is no single
authority with full accountability for state rest areas. It
would have been helpful if the audit report had
recommended an approach for resolving this. Rest area
facilities cross multiple program areas including the
facilities, maintenance, environmental, freight, and
economic-partnerships programs. Although safety rest area
functions are diverse, the problems identified in the audit
seem to be principally around vending and advertisement
contract management. We support WSDOT’s contract
experts providing more assistance and oversight on rest
area-related contracts.
Action Steps and Timeframe:
• This issue will be addressed in the organization review
referenced earlier that will be completed in March
2008.
WSDOT’s contract experts will provide ongoing
•
assistance and oversight of state rest area contracts.
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acing a growing backlog of
urrent proposed expenditures are not sufficient to
is
r,
nmet
ng is
A
ation
real
y
an
assessing the effective commitment
get levels.
MAINTENANCE
BACKLOG
The State of Washington is f
SRA deferred maintenance and general operations needs.
C
adequately support these requirements.
Although certain SRA activities provide revenue, th
money is directed to the Right of Way Fund. Howeve
even with a redirection of these funds, the u
requirement for SRA operation and capital fundi
greater than what can be generated from current SR
revenues alone. To meet system operation and preserv
needs, alternative funding sources and/or enhanced
budget support is needed for the SRA program.
Operations
The following presents a summary of operational
expenditures for the last six biennia. This summar
includes “current level” and “real level” dollar levels,
important distinction in
and capacity of more recent bud
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SRA Program Planned Operational Expenditures
SRA
Biennium Change
Cumulative
Change In
Effective
Period
Expenditures Expenditure
%
Inflation
Budget Value
Budget Value
FY 1996
$0
$3,472,628
$3,472,628
0
FY 1997
$121,928
$3,361,718
$3,483,646
0.035
95-97
Biennium
$6,956,274
0.0175
$121,928
$6,834,346
FY 1998
$3,589,102
0.0640
$229,703
$3,359,399
FY 1999
$3,647,345
0.0940
$342,850
$3,304,495
97-99
Biennium
$7,236,447
$280,173
4.03%
0.0791
$572,553
$6,663,894
FY 2000
$3,675,749
0.1310
$481,523
$3,194,226
FY 2001
$4,126,095
0.1670
$689,058
$3,437,037
99-01
Biennium
$7,801,844
$565,397
7.81%
0.1500
$1,170,581
$6,631,263
FY 2002
$4,141,522
0.1870
$774,465
$3,367,057
FY 2003
$4,393,929
0.2030
$891,968
$3,501,961
01-03
Biennium
$8,535,451
$733,607
9.40%
0.1952
$1,66,432
$6,869,019
FY 2004
$4,590,533
0.2150
$986,965
$3,603,568
FY 2005
$5,253,570
0.2430
$1,276,618
$3,976,952
03-05
Biennium
$7,580,521
$9,844,103
$1,308,652 15.33%
0.2299
$2,263,582
FY 2006
$4,995,058
0.2760
$1,378,636
$3,616,422
FY 2007
0.3000
$1,534,975
$3581,607
$5,116,582
05-07
Biennium
537
2.72%
0.2881
$2,913,611
$7,198,029
$10,111,640
$267,
Totals
Current
Dollars
$50,485,759
Lost Value
$8,708,686
Effective
Dollars
$41,777,073
Sources:
F
Inflation Factor
Note: FY 2006
During our audit timeframe, operational expenditures
totaled nearly $50.5 million in “current year dollars.” Due
to inflation, the effective purchasing power of this $50.5
million was about $41.8 million in terms of fiscal year 1996
value. The real value of funding commitments remained
basically stable from fiscal year 1995 through fiscal year
2001. Starting in fiscal year 2002, the real level of funding
committed to operations has increased. This increase has
been important in mitigating the deterioration of the SRA
inancial Information (FIRS) WSDOT Financial Information Retrieval System - 10/27/06
: Washington Economic and Revenue Forecast - September 2006, Volume XXIX, No. 3,
Table A4.1 (Seattle CPI)
and FY2007 inflation factors are forecasts
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ystem, but has been inadequate to stabilize system’s
con
The current MAP condition ratin
the
a
is “B,” on a scale from high to
f A
D,
The system rating h been at
or a
of
b
na
ss
re m
ng a
dif
of
n g this level is inc
du
e a
re
tat
e
astru
an
ing
T
atin
ns
wit
rva
de
audit team members. Five auditors ma
sits
different sites. Although obser
s
ng
p
facilities was specific
tifi
n
for the last six biennia. As with operations costs, capital
osts are presented in both “current level” and “real level”
s
dition.
g for
rest are system
low o
, B, C,
and F.
’s
as
“B” f
number
years,
ut mainte nce pre ures a
ounti
nd the ficulty
maintai in
reasing
e to ag nd the
sulting s e of syst m infr
cture d increas
costs.
he “B” r
g is co istent
h obse tions ma by the
de 33 vi
to 19
vation and findi s were
ositive, the age of
ally iden ed and
oted.
Capital Expenditures
The following is a summary of SRA capital expenditures
c
dollar level formats.
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SRA Program Capital Expenditures
SRA
Biennium Change
Cumulative
Change In
Effective
Period
Expenditures
Expenditure
%
Inflation
Budget
Value
Budget
Value
FY 1996
$396,168
0.009
$3,566
$392,602
FY 1997
$1,818,914
0.056
$101,859
$1,717,055
95-97
Biennium
$2,215,082
0.0476
$105,425
$2,109,657
FY 1998
$3,007,790
0.0640
$192,499
$2,815,291
FY 1999
$1,861,031
0.1020
$189,825
$1,671,206
97-99
Biennium
$4,868,821
$2,653,739
119.80
0.0785
$382,324
$4,486,497
FY 200
$1,409,465
0.1720
$242,428
$1,167,037
0
FY 2001
$1,487,116
0.1910
$284,039
$1,203,077
99-01
Biennium
$2,896,581 ($1,972,240)
(40.51)
0.1818
$526,467
$2,370,114
FY 2002
$1,955,322
0.2050
$400,841
$1,554,481
FY 2003
$105,842
0.2230
$23,603
$82,239
01-03
Biennium
$2,061,164
($835,417)
(28.84)
0.2059
$424,444
$1,636,720
FY 200
6,913
0.2510
$619,195
$1,847,718
4
$2,46
FY 2005
614
0.4080
$651,011
$944,603
$1,595,
03-05
Bienniu
$4,062,527
$2,001,363
97.10
0.3127 $1,270,206
$2,792,321
m
FY 200
0.5720
$519,752
$388,906
6
$908,658
FY 2007
$1,009,467
0.6620
$668,267
$341,200
05-07
Biennium
$1,918,125 ($2,144,402)
(52.78)
0.6194 $1,188,020
$730,105
Totals
Curren
Dollars
t
$18,022,300
Lost
Value
$3,896,885
Effective
Dollars
$14,125,415
Sources: Compiled by TKW from TRAINS, CPMS, and WSDOT Construction Cost Index.
During the audit period, capital expenditures totaled
approximately $18 million in “current year dollars.” Due
to inflation, the effective purchasing power of this amount
was $14.1 million in terms of fiscal year value. A
significant change in the level and value of capital
commitments has occurred in recent years. During the first
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alf of the audit period (fiscal years 1995-2001), current
ollar capital expenditures were almost $10 million with a
1995 value
ring the second
half
l ye
07
n
xp
f
oximately $8 mil o
20 e
du
ommitm t.
In
ec
r real alue of
en
pe
f l to $5.2 illion, a
tio
l
commitment of about 42 percent. This reduction appears to
slippag
d t
h n SRA b klog.
gin
i
d
ea
t SR
te
st
ter
5 non-int state site
he
es
contain a total of 555.45 acres, 83 buildings, 29 public
s, 36 on-site sewage trea
re-t
erations nd 19 R
m
ns.
41 4 million. The age of the 83
is presented
below. The age of the buildings is contributing to the
o ing costs d difficu y of maintaining them.
Average age
27 years
h
d
of approximately $9 million. Du
(fisca
ars 2002-20 ), curre t dollar capital
e enditures ell to appr
li n, a
p rcent
re ction in c
en
terms of expenditure
eff tiveness o
v
exp ditures, capital
ex nditures el
m
reduc n in rea capital
be contributing to both the
e in SRA MAP rating
an he growt i
ac
A
g Facilit es
As iscussed rlier, the curren
A sys m consi s of 27
in state and 1
er
s. T se 42 r t areas
drinking water system
tment and
p
reatment op
, a
V du p statio
The
replacement value of these sites and improvements exceeds
$ .
buildings
gr w
an
lt
Essential WSDOT
Maintenance and Repair
of SRAs is not Consistently
Prioritized or Adequately
Funded Resulting in a
Deteriorating
Infrastructure
Oldest building
68 years
Median age
33 years
Mode age
39 years
Deficiency Backlog and Trend
The M&O Facilities unit operates a Condition Assessment
Program that evaluates the condition of every WSDOT
facility every two years. Based on the assessment, facility
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ler demand.”
tion of a growing backlog, even in the
to
anagement’s
and de
lows thr
anagement of
xisting sources, changes are required in rules that were
hen the SRA Program and
deficiencies are identified and categorized. Based on
August 2006 information, the SRA Systems facilities
deficiencies backlog is estimated at $14.1 million.
In 2004, WSDOT internally recognized the growing
backlog:
“The 2004 Condition Assessment identified an
estimated backlog of $11.5 million in building and site
renovations.
Each biennium, approximately $2.5
million is allocated to address site and building
renovation needs. The renovation backlog is expected
to grow, because of the age of the safety rest area
facilities and increasing trave
The 2004 recogni
face of a continuing capital improvements program, has
been realized. Specifically, SRA System aging and
increasing use has caused the backlog to grow $2.6 million
or 22.6 percent in two years. This pattern can be expected
to continue with a growing need for financial resources to
sustain the current system. WSDOT prioritization and
funding is required to stem the growth in the SRA facility
maintenance backlog.
For the SRA Program
benefit from m
initiative to identify
velop new revenue sources and
to n
e f
i crease revenu
ough enhanced m
e
established four decades ago. W
its facilities were new, the state was actively acquiring
property to expand the roadway and SRA systems. The
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onditions however, have changed. The SRA system is
system at a reasonable MAP service level,
add
redi
faci
ded
incr
tial sources
f SRA system enhancements may include federal grants
Recommendation #12:
tely.
WSDOT Response:
need for SRA facility rehabilitation, maintenance, and
repair was neither a high priority nor an urgent need.
C
aging and the infrastructure is deteriorating. To preserve
the SRA
itional resources will be required. Although limited, the
rection of money generated by the SRA Program to
lity maintenance can help. To achieve this end, a
ication of SRA initiative revenues must result in a net
ease in program resources. Additional poten
o
and interagency funding for commercial vehicle parking,
piloting/installation of Intelligent Transportation System
concepts, and disaster/emergency preparedness capacity
and capabilities funding.
We recommend WSDOT:
pursue statutory changes to allow SRA revenues
to be dedicated to SRA maintenance activities.
prioritize preservation of the SRA System and
fund appropria
WSDOT defers to the Legislature on this recommendation.
Statutory changes allowing SRA revenues to be dedicated
to the SRA program would have to be completed at both
state and federal levels. Regarding priorities, WSDOT’s
Facilities Computer Maintenance Management Systems
(CMMS) is the primary tool used to prioritize SRA
preservation needs. WSDOT is working towards full
implementation of the CMMS so this information can be
used in budget requests.
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OFM Response:
vities
rther decline of these aging facilities. Yet overall, the
e:
As noted in the audit, sufficient inflationary increases have
not been provided to meet current safety rest area acti
and the persistence of underfunding may result in the
fu
rest areas currently sustain a level of service rating of B,
which is to the credit of those who manage and operate the
safety rest areas within scarce resources. Rest areas will
always compete with ferries, highways, rail, and other
transportation needs. Much of the transportation system is
aging and in need of additional resources. It is incumbent
upon the department to establish lowest lifecycle cost
methodologies are in place to help ensure preservation,
maintenance, and replacement of safety rest area needs
occur at the right time and price. We are curious why the
audit did not recommend further exploration of public-
private partnerships at rest areas. There may be state and
federal barriers to this, but public-private partnerships at
rest areas would seem to provide opportunities for
generating additional revenues and help meet the changing
needs and expectations of the traveling public, truckers,
safety officers, and others.
Action Steps and Timefram
CMMS is projected to be
complete by December 2009.
ervation funding will be made
MAINTENANCE AND OPERATIONS
h
st
of
rams
d
ng future purchases.
Current
relevant areas include:
• Full implementation of
• Funding requests for pres
a
on n as-needed basis within the biennial WSDOT
budget process.
Safety Rest Areas and Maintenance and Operations
purchase diverse products and labor to help accomplis
various activities. Although WSDOT considers the mo
appropriate method to deliver services, a review
purchasing activities of the M&O and SRA prog
should continuously identify potential settings an
conditions for increasi
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ctivity
ing
nt
ime
taff,
n
ck-
up, and garbage collection and disposal - account for over
ogram
ries
ized above.
ontracted services, a sub-set of vendor purchases, totaled
78 or 9.9 percent of all vendor purchases and 4.9
SRA Attendant Duties
SRA Purchasing A
The SRA Program purchases a variety of goods and
services including cutting, thinning, and pruning; mowing;
litter pick-up; garbage collection; general build
maintenance; and janitorial services. Expenditures for
these purchases are more than $5.11 million and accou
for 49.33 percent or nearly one-half of all program
expenditures. The remaining $5.25 million in program
expenditures is for labor-related costs that include full-t
and part-time SRA attendants, selected M&O skilled s
selected facilities staff, and overtime required to maintai
sites and facilities.
The largest program expense categories - janitorial
services, general building maintenance, utilities, litter pi
Safety Rest Area Expenditures and
FTEs by Functional Categories
(2003 - 2005 Biennium)
Work Category
Total
Expenditures
% of
Total
Weed Control
$82,294
0.79%
Winter Activities
$30,377
0.29%
Cutting/Thinning/
Pruning
$185,578
1.79%
Seed/Plant/etc.
$63,803
0.62%
Mowing Lawns
$525,752
5.07%
Irrigation
Systems Ops &
Maint.
$232,833
2.25%
Litter Pick-up
$995,253
9.61%
Garbage
Collection &
Disposal
$397,136
3.83%
Gen'l Building
Maintenance
$1,693,673
16.35%
Janitorial
Services
$3,065,059
29.58%
Electrical
Maintenance
$274,001
2.64%
67 ercent of vendor purchases and 71 percent of pr
labor costs. On average, the remaining program catego
Water System
Maintenance
$347,921
3.36%
p
Sewage Sysem
Maintenance
$292,160
2.82%
RV Dump
Maintenance
$314,242
3.
generally require a higher level of skill, experience, training
or licensure than the categories item
03%
Utilities
$1,012,175
9.77%
Other Rest Area
Maintenance
$848,510
8.19%
C
Total
Expenditures
$10,360,767 100.00%
Source:
WSDOT Financial Information &
Retrieval System
$507,9
percent of total program expenditures. Contracted services
included janitorial services, garbage and waste disposal,
and selected cleaning and maintenance services.
SRA locations are widely distributed across WSDOT’s six
regions and few share common characteristics such as
traveler volume, natural settings, weather patterns, sewer
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0 sites and the full range of other
ork categories presented above are provided for all 42
, training,
kills and/or licensure. Specific activities include:
Snow and ice treatments
Snow and ice removal
Medical emergencies
and water systems, structure conditions and needs,
landscaping, and related items.
The most common
characteristic of the SRA system is its diversity, which
affects the needs and duties of attendants and requirements
for other personnel and material resources.
SRAs have approximately 40 full-time and 10 part-time
staff that is generally committed principally to operations
and secondarily to maintenance. Janitorial services are
provided at two sites through a service contract. Janitorial
services for the other 4
w
sites by an array of attendants, regional operations, and
special skill personnel and local vendors. Approximately
15 full- and part-time employees are required to accomplish
the remaining operational and maintenance activities
The roles and responsibilities for a SRA attendant are
extensive and require appropriate experience
s
“Ambassador”
Security
Site maintenance/landscaping
Machines operation
Janitorial services
Trash and litter management
Vegetation control/management
Water/sewer systems maintenance
Preventive maintenance
RV dump maintenance
Emergency repairs
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ach of these items is relevant to one or more SRAs and
iversity in traveler demand, physical setting,
ired for
enance is broad in scope and
an an individual to
A attendant is the most visible
single contribution to
ut the attendant
hroughout the system nor
ment in site and
tinuing flow of service.
Traffic control
Visitor auto repair
Visitor communications services
Maintaining maintenance equipment
Small engine repair
Snake control
E
each is performed by one or more attendants, though no one
attendant is performing all of the above. A few attendants
provide only limited services such as janitorial, litter
control, and garbage while most provide these and a
selection of additional routine buildings and grounds
maintenance and operational services. A limited group of
more experienced and skilled attendants participate in
preventive maintenance activities and maintain and repair
sanitary systems and maintenance equipment.
D
infrastructure condition and composition, geographical
location, and other needs of SRA sites is extensive. The
resulting demand for skills and capabilities requ
operations and maint
reasonably requires a team rather th
satisfy requirements. The SR
par itcipant and makes the biggest
SRA operations and maintenance b
contr
t
ibution is neither uniform
adequate to properly protect public invest
inf a
n
r structure and to ensure a co
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with the demand for suitable and
al for cost-savings
be approached
y potential saving is limited to
e labor component of the SRA Program. As a result, only
M&O Purchasing Activity
early $116
illion and accounts for 39.57 percent of all program
ng
nd equipment rentals; and road patching materials and
This diversity, coupled
available labor and skills, shows a potenti
through purchasing of additional services to
on a
. An
site by site basis
th
one-half of total program funding (approximately $5.24
million) is available as a source of possible savings. Given
that WSDOT is increasingly unable to attract personnel in
urban areas, in general, and skilled staff in selected rural
areas at current pay scales, it appears increasingly unlikely
that a private firm could provide a suitable quality and
skilled workforce capable of sustaining the current level of
services, operations, and maintenance.
Expenditures for purchases from vendors is n
m
expenditures. The remaining $176.65 million in program
expenditures is principally for labor-related costs. These
labor costs and associated indirect charges are estimated at
about $170 million or over 96 percent of non-vendor
expenditures and include M&O operation and support staff,
full-time and part-time SRA attendants, and selected
facilities and other staff required to accomplish M&O
activities and maintain sites and facilities.
The largest program vendor expense categories - equipment
charges and fees; winter snow and ice removal; vegetation
control materials; utilities; maintenance supplies; buildi
a
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services account for $92,574,748 of vendor purchases or
approximately 83 percent of all vendor purchases and 32
percent of total M&O program costs.
Contracted services, a sub-set of vendor purchases, totaled
over $10.1 million or 8.75 percent of all vendor purchases
and 3.46 percent of total M&O program expenditures.
Contracted services include items such as:
Private Contracted Services
Public Contracted Services
Winter Operations
Traffic Signal Maintenance
Traffic Control Maintenance
Litter Pickup
Third Party Damage & Disasters
Road Sweeping
Bridge and Tunnel Maintenance
Landscape Maintenance
Employee Training & Testing
Noxious Weed Control
Rest Area Maintenance
Bridge
M&O: Materials and Services
Purchased from Vendors
2003-2005 Biennium
Category of Materials and
Services
Vendor
Purchases
M2 Maintenance
Equipment: Trucks, Loaders,
Plows,
$38,607,552
Winter & Vegetation Control
Materials
$26,239,919
Utilities: Electricity
$9,120,917
Maintenance Supplies: Shovels,
Pencils, Hard Hats
$8,056,554
Rental: Equipment and
Buildings
$3,683,154
Road Patching Materials:
Asphalt, Concrete
$3,586,569
Services: Printing, Hazardous
Disposal, Moving
$3,280,083
Highway Improvements and
Enhancements
$2,316,326
Utilities: Water, Sewer,
Garbage, Natural Gas
$2,180,675
Equipment Repairs: Vehicles,
Office Equipment
$1,887,817
/Structure Maintenance
oadside & Landscape Maintenance
Sidewalks/Curbs/Gutter Maint.
avement and Shoulder Maintenance
Transient Cleanup
get is labor. To
alize a savings in the labor component of the M&O
R
P
Office Furnishing and
Equipment
$1,163,388
Travel: Motels, Hotels, Meals
$842,666
Drainage and Slope Repair
Pigeons and Animal Control
Contracted services and other vendor purchase decisions
are generally made on a case-by-case basis at the regional
level. A project or activity will generally be contracted or
purchased when WSDOT staff is not available, a desired or
more appropriate skill and experience level is found outside
the Department, or the provider offers a better cost and
service capability.
Approximately 50 percent of the M&O bud
Utilities: Data Lines
$689,139
Technolo
Telephones, Copiers
$667,843
gy: Palm Pilots,
Small Projects: Construction,
Maintenance, Repair
$614,405
Utilities: Telephone
$584,710
Small Expenditures: (< .5% )
$5,625,673
Total M2 Maintenance
$109,147,390
Total M1 Maintenance:
Vendor Purchases
$1,839,102
Total M5 Maintenance:
Vendor Purchases
$781,111
Total Private Sector Vendors
$111,767,603
Public Sector Purchases
$3,929,132
Total M&S Purchases
$115,696,735
Total M&O Expenditures
$292,349,962
Source:
WSDOT Work Outsourced and Direct
Purchases, 2003-2005 Biennium.
WSDOT is Facing an
Engineer and Project
Manger Labor Shortage
Potentially Resulting in
Increased costs and the
Loss of Institutional
Knowledge
re
program through purchase of services, potential providers
must be inherently more productive or cost less than
program staff while providing acceptable levels of service.
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ness. The effect on
aintenance and operational activities includes:
vel managers,
paredness,
Competitive
contracting
opportunities
and
ately
includi
e and
ily increased. These have
v
e
e introduction of innovative practices by WSDOT.
eers and project managers for a
ubstantially enlarged capital program
13
. Furthermore, in
Over the next 16 years, WSDOT will face circumstances
that will significantly affect its workloads, required
staffing, and potentially its effective
m
An expanded highway construction program,
Departmental workload increase,
Under-funding of maintenance activities,
A maturing workforce,
A reduction in the number of mid-le
An increase in disaster response pre
difficulties.
Over the last decade M&O funding declined approxim
8.5 percent. Workloads,
ng new infrastructur
unfunded mandates, have stead
cut substantially into th
eness of programs, despit
e effecti
th
Current industry trends indicate WSDOT will become more
and more affected by skill shortages over the next few
years. The steady retirement of the “baby boomers” will
cause an increasing difficulty in hiring qualified
replacements. In addition, the Department will need to hire
up to 450 engin
s
response to the Governor’s request, WSDOT and other
agencies are reducing the numbers of its mid-management
positions.
13
Per WSDOT management
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is present
l jobs
iven the
etitive position, it is likely
r
low-salary employer with unfilled
casts
garding shortages of qualified personnel.
Recent
14
tion of the risk that WSDOT faces of losing its
stitutional knowledge and experience is the number of
employees who are eligible for or are nearing retirement.
All regions of the Department are experiencing, to some
degree, staff shortages and the inability to recruit skilled
and trained personnel. While this situation is generally
most pronounced in major urban areas, it
throughout the state. WSDOT is training staff to fil
th have historically been directly recruited. G
at
Department’s often weak comp
th these trainees will be the target of private se
at
cto
recruiting when fully skilled. Increasingly, the Department
finding itself the
is
positions, hiring trainees in lieu of journey-level
employees. Protracted recruitments are becoming common.
WSDOT has begun to experience recruiting difficulties that
are consistent with national and international fore
re
independent research forecasts a major loss by 2010 of
critical U.S. institutional knowledge among both private
and public sector organizations caused by retirement of the
“baby boomers.” The research concludes that by 2010
worldwide demographic and economic trends will greatly
reduce the numbers of persons in the hiring pool who are
capable of accomplishing work requiring any level of
technical or mathematical knowledge, skills, and abilities.
One indica
in
14
Edward E. Gordon, The 2010 Meltdown: Solving the Impending Jobs Crisis. Westport Connecticut: Praeger,
2005, pp. 12-18.
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he M&O program will need to hire contractors to
Of the 405 M&O Division staff eligible for retirement from
2006 through 2016, more than 56 percent of those
individuals could retire now
15
.
Most of WSDOT’s M&O supervisors and superintendents
report difficulty hiring staff with desired qualifications in
both urban areas and rural areas, despite intense recruiting
efforts. Supervisors report that lengthy searches for new
hires often result in a pool of under qualified candidates
who would not be hired under better circumstances. In
addition, the salaries of many M&O staff are significantly
lower than equivalent private sector jobs.
This recruitment and retention trend will be affected by the
impending retirement of large numbers of highly skilled
and experienced staff. The loss of those individuals will
have an effect on the possible future ability to contract
M&O activities now performed by department staff. If
WSDOT’s competitive position continues to deteriorate,
recruitment and retention difficulties continue, and large
numbers of skilled and experienced staff retire, WSDOT
will not have the means to assure required M&O program
duties and activities occur.
T
accomplish work that staff no longer will be available to
do. Contractors, because of higher labor costs and market
conditions, will likely provide services at a higher cost to
15
Source: WSDOT HR
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f the public’s transportation system investment.
unity college to
stablish a vocational training program tailored to topics
increasing contractual efforts
r M&O. The state’s competitive contracting statute
the Department. The anticipated result will be necessary
maintenance not being accomplished, a faster-growing
backlog of maintenance needs and the general deterioration
o
The WSDOT Human Resources office and some of its
regional managers have taken aggressive steps to enhance
recruitment. One region, for example, has begun talking to
college students who could be job candidates one full year
earlier than in the past. Recognizing that job candidates
and new employees need vocational and remedial training,
one region has convinced a local comm
e
directly relevant to WSDOT jobs.
Although the Human Resources office has undertaken
innovative recruiting and training initiatives, there is no
indication that the Department or the state, through training
offered by the Department of Personnel, has the capacity to
cope with these changes.
WSDOT is aware that reductions of staff, voluntary and
otherwise, may well require
fo
provides opportunities for outsourcing many activities that
previously were reserved for state employees.
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t have
been customarily and historically provided by
employees in the classified services…”
dicate the reasons for not
aving used the process are generally identical with those
contracting were pursued.
ceed without first observing the
outcomes of another agency’s experience with
he competitive contracting process provides WSDOT
with an additional measure to improve efficiency and
effectiveness. The process can assist in streamlining work
processes before soliciting bids and could result in
In 2002, the Washington State Legislature passed into law
The Personnel System Reform Act, an Act that allows
agencies to:
“. . . purchase services, including services tha
Classified employees can opt to compete against
contractors for their jobs should an agency choose to
outsource the work those employees perform.
Although WSDOT engages in a great deal of contracting
for services, it has not used the competitive contracting law
for outsourcing services. Informal discussions on this
subject with WSDOT managers in
h
reported by the Joint Legislative Audit Review Committee
performance audit of competitive contracting, referred to
earlier:
A concern that labor strife and litigation would
ensue if competitive
A hesitancy to pro
competitive contracting.
Lack of familiarity with the statute and the rules.
A perception that the Employee Business Unit
concept is untested.
A perception that the competitive contracting
process is too complex.
T
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WS
by
tim
o
replace each. Consideration should be given to flexible
tors to help
rovide needed services, certain job classifications, by law,
ore efficiently or effectively be accomplished by
s
tensively. However, any
ecision to increase the scope or level of contracted
competition among vendors and between employees and
vendors for specific work.
DOT should immediately identify potential retirees
eframe and the types of skills and experience needed t
work schedules - project, part-time, job-sharing, job
rotation - available to individuals considering retiring.
Although WSDOT has regularly sought contrac
p
could not be contracted.
The state’s competitive
contracting law now provides the opportunity for
outsourcing difficult-to-fill positions and those activities for
which long-term career advancement within the agency is
not feasible. Moreover, the analytical process required for
competitive contracting, if applied on a regular basis
throughout WSDOT, can identify work activities that
would m
contract.
WSDOT also purchases a substantial amount of goods and
services from private vendors - over 49 percent for SRA
and almost 40 percent for M&O. Although the Department
considers outsourcing a viable option for service delivery, it
does not appear to use it ex
d
services should be based on a methodologically sound
evaluation that is consistent with relevant state law and
rules; considers all appropriate costs; and is applied on a
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Washington State Competitive
ontracting Manual are consistent with and supportive of
Recommendation #13:
e M&O program will need to replace as
experienced personnel retire.
determine what types of work schedules -
local “case-by-case basis.” It appears that current rules and
guidance in the form of the
C
these conditions.
Within the above context, WSDOT, when contemplating a
competitive contracting evaluation, should be guided by the
following elements:
Provide an evaluation setting that is fair and
equitable to employees and potential contractors.
Provide for employee assistance to re-engineer
and/or revise current methods and processes.
Properly define the functional, and perhaps
geographic, scope of the evaluation with a single
function per evaluation being preferred.
Provide adequate funding to insure a competent and
reliable evaluation is accomplished.
Plan ahead and ensure adequate time is available to
accomplish the evaluation.
We recommend WSDOT:
determine the types of skills by timeframe that
th
project, part-time, job-sharing, job rotation -
could be offered in order to retain persons
eligible to retire or nearing retirement eligibility.
adopt statewide successful recruiting and
educational initiatives being used within the
regions.
regularly schedule and conduct competitive
contracting analyses, including the process
improvement steps for improving the efficiency
and effectiveness of current operations
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WSDOT Response:
rce personnel to use innovative ways to
personnel and recruit new talent, such as
arly recruitment of college and vocation school students.
evaluated, based on cost-
arise. Evaluations of highway
olumbia, June
1994, generally referred to as the “Burton Report.”
t Always Get What You Pay
tive methods to
OFM Response:
the adverse recruitment and
ations
at support the rest area functions and identify career track
pportunities for individuals within these different
lassifications. Training would also need to be thoughtfully
eer opportunities. It is
We agree on the importance of continuity of leadership in
management positions in the Maintenance organization. As
the report acknowledges, WSDOT has been aggressive and
innovative in its recruiting. We will continue to work with
our Human Resou
retain experienced
e
WSDOT will continue to contract for certain maintenance
activities where it is cost-effective to do so. New
opportunities will be
effectiveness, as they
maintenance contracting implemented in other states have
not shown advantages in cost-effectiveness. References
supporting this include:
• The Massachusetts State Auditor’s Report on the
Privatization of the Maintenance of State Roads in
Essex County, October 7, 1992 to October 6, 1993,
issue on July 19, 1995.
• The Operational, Human Resource, and Financial
Implications of the Privatized Highway Maintenance
Program of the Province of British C
• Elliot D. Sklar, You Don’
For: The Economics of Privatization
Therefore, we will proceed carefully in this area to ensure
we use both the most efficient and effec
address staffing needs and provide our maintenance
services. Any consideration of outsourcing must respect
the Department’s collective bargaining agreements and
applicable state law, including the competitive contracting
requirements of the Personnel System Reform Act.
We are concerned about
retention trends the department is experiencing. Not only
are aging baby boomers retiring, it is difficult to attract new
recruits with the right training and skill sets. It may be
beneficial for WSDOT to evaluate the job classific
th
o
c
evaluated to support such car
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,
possible that individuals could have a fulfilling career with
ample advancement opportunities as they trained for
different facets of maintenance and operations. For
example, a focus on rest area management could include
training and work experience in contracting, facility design
environmental mitigation, etc.
Action Steps and Timeframe:
• WSDOT’s human resource department, in conjunction
with DOP and the different program areas that
maintenance and operation responsibilities, will
evaluate career development opportunities to identify
career paths and training opportunities within this field.
Evaluation to begin by July 1, 2008 and conclude by
August 31, 2009.
have
MAINTENANCE AND OPER
ES
he
ures
se
of inflation, the effective purchasing power of this $10.76
have
n
use of
alue
ATIONS PROGRAM BARRIERS AND OPPORTUNITI
The M&O program faces a number of challenges over t
near-term. Over the past six biennia, capital expendit
Capital Improvement
and Preservation
Program Funding
totaled over $10.76 billion in “then-year” dollars. Becau
billion was about $7.433 billion, a loss of $3.327 billion in
purchasing power. Current dollar expenditures
increased markedly as a result of an extensive constructio
inflationary rate. There was an 18-fold increase in inflation
from the 1995-1997 to the 2005-2007 biennia. Beca
this increase, the level of effective construction activity has
fallen. Specifically, current dollar capital expenditures
more than doubled during this period, while the real v
of construction activity declined just under 1 percent.
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ion of
on
ther revenue-generating packages:
gallon tax increase (“nickel
s a
effect
se
the level of highway construction through the 2019-2021
iennia. The work will include major rehabilitation of the
ignificance of this construction work to the M&O program
otor
ehicle accidents; and complaints or damage claims from
owners of property adjacent to the highway system. The
The public and the Legislature have supported funding for
major highway rehabilitation work and further expans
capacity through two improvement and preservati
packages funded by increases in the state gasoline tax and
o
The 2003 five-cent-per-
tax”) will expire in the 2013-2015 biennium.
The 2005 Transportation Partnership Account i
9.5-cent-per-gallon tax increase. It is in
through the 2019-2021 biennia.
These funding sources will result in a substantial increa
in
b
highway system and an increase in capacity. The
s
is two-fold: First, the work will require hiring up to 450
new engineers and technicians to manage the design and
construction oversight of the projects. Those requirements
undoubtedly have the most immediate and highest priority
for the funding of new hires, no matter how urgent the
needs of the M&O program. Secondly, those projects that
involve the expansion of highway capacity will create
additional workloads for the M&O program. In addition to
its daily operational requirements, the M&O program
responsibilities include a substantial and growing amount
of other required work such as compliance with
environmental regulations and the documentation of that
compliance; response to an increasing number of m
v
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erienced over the
new highway component must also be incorporated into a
recurring inspection process to ensure its continuing safety
for the driving public.
Increases in the funding of the capital construction program
WSDOT Does Not
Compile Essential Facility
Maintenance and Repair
for all Activities Limiting
the Ability to Estimate the
Degree of Risk Concerning
the Condition of the
Infrastructure.
have resulted in additional infrastructure responsibilities for
Maintenance and Operations. Although those amounts do
ot match the funding levels to be exp
n
next 16 years, cumulatively they represent a considerable
increase in M&O workloads.
WSDOT regional employees indicate increases in workload
levels have gradually forced them to discontinue or scale
back work that had been traditionally performed. Regional
maintenance managers, superintendents, supervisors, and
lead workers expressed concern that a maintenance crisis
has been building for several years.
A successful measure of how well a maintenance program
is achieving its goals is the degree to which a
comprehensive maintenance management system is being
used. Such a system can provide the percentage of
maintenance actions or the dollar amounts that could not be
accomplished because of resource limitations. An
additional result - a backlog of essential maintenance and
repair listings - is one of the best measures of the
effectiveness of the maintenance program.
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hting, intelligent highway system
mponents, tunnels, and moving bridges. M&O personnel
e operating maintenance management systems when they
g.
increased regulatory
quirements, definitive data was not available to confirm
cause objective
formation is not yet available concerning the extent of the
WDOT has several distinct maintenance management
systems, among them facilities (primarily buildings and
their components), lig
co
ar
have found that level of data to be useful. However,
because some M&O maintenance management systems are
not sufficiently mature to allow the compilation of a
comprehensive backlogged essential maintenance and
repair, it was not possible to objectively assess to what
extent backlogs may be growin
Our review found it difficult to ascertain detailed
information regarding how actual workloads affect the
ability of WSDOT to meet its M&O mission. Although it
appears that M&O staffing levels have not kept pace with
system deterioration, workload increases resulting from
past network expansions, and
re
that.
Information concerning workloads that can no longer be
accomplished effectively or have become backlogged needs
to be carefully documented for budgetary reasons and for
tracking the effects of discontinuing or deferring work.
The projected growth of the highway system will place
extreme demands on the M&O program. Be
in
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Recommendation #14:
determine from the respective maintenance
management systems the current backlogs of
WSDOT Response:
enance is an important element for program budget
stifications. While some operational activities (i.e., Snow
d Ice Control) cannot be put in terms of a “maintenance
is
ocument the extent and costs of essential maintenance
OFM Response:
backlog of essential maintenance and repair, it is not
possible to estimate the degree of risk that this represents
concerning the condition of the infrastructure. The
condition of safety rest area utilities systems was noted
earlier within this report as one example of failing systems.
A good estimate of the total backlog is needed annually for
budgetary purposes and to gain a better understanding of
the condition of the infrastructure at a finer level of detail
than MAP provides.
We recommend WSDOT:
essential maintenance and repair.
prepare a comprehensive listing of the backlogs
of essential maintenance and repair and assess
the risk that the backlogs may pose, if any.
include the backlogs of essential maintenance
and repair as one element of the M&O budget
justification.
We agree that defining a measurable backlog of essential
maint
ju
an
backlog,” many other activities can be measured as such.
In 2006, WSDOT began determining current backlogs of
essential maintenance for those highway features that are
managed with the help of computerized maintenance
management systems. A team of maintenance personnel
currently developing strategies to expand our abilities to
d
backlogs.
There is a pressing need for the department to identify the
maintenance and operation costs associated with the major
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highway expansions underway as a result of the 2003 and
2005 revenue packages.
Action Steps and Timeframe:
• Strategy development projected to be complete in
spring 2008. Implementation is dependent on the
strategy that is developed.
• We will estimate operations and maintenance costs
needed to support the highway expansions underway as
a result of the 2003 and 2005 revenue packages and
submit this information with the 2009-11 budget
request.
From 1997-1999 to 2005-2007, maintenance and
f inflation, the
ts fell
average approximately another one
ercent from the 1997-1999 through the 2005-2007
7
s
rop of
ady
r example, during the 1999-2001
WS
Management System Does
Not Measure the Backlog
of Essential Maintenance
Limiting the Ability to
Determine Effectiveness of
Effort
DOT’s Maintenance
operational commitments totaled nearly $1.7 billion in
“current” or “then year” dollars. Because o
effective purchasing power of this $1.7 billion was about
$1.415 billion. The real value of funding commitmen
about 13 percent from the 1995-1997 to the 1997-1999
biennium, and fell on
p
biennium.
Our analysis indicated that current program funding is
approximately 82.6 percent of that during the 1995-199
biennium. Over the last decade, M&O funding ha
declined in real terms at a rate six times that of the d
capital program funding. Due to inflation, unexpected
budget reductions have had a greater effect than the ste
erosion of real dollars. Fo
biennium, the M&O program experienced an $18.5 million
(15 percent) reduction. The M&O program funding, and
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g
695, a measure rescinding the
ose vehicle licensing fees
work
ot being accomplished because of M&O program funding
mitations. Both MAP scores and the scope of the
s maintain this information in a single
aintenance management system. However, the M&O
that of the Department as a whole, were cut followin
pproval of Initiative
a
authority of the state to imp
exceeding $30.
Many experienced superintendents and supervisors within
the regions expressed concern with the condition of the
state’s highway system. They perceive maintenance
n
li
approved preservation projects in the capital improvement
program also indicate that the level of maintenance
activities is not adequate. Based on MAP priorities, lower-
priority work is deliberately left untouched or only selected
parts are completed. However, we found little objective
evidence indicating the severity of the problem. The
backlog of essential maintenance and repair could provide a
measure of how effective the efforts of WSDOT are. Most
organization
m
program has several independent systems in various stages
of implementation.
Because a comprehensive maintenance management system
is not yet fully functional, it is not possible at this point in
time to estimate the extent of the backlog of essential
maintenance and repair.
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ture replacement cost, or 4-8 percent per
iennium. The current replacement value of the WSDOT
e of the current replacement cost of the
frastructure should be calculated so that the ratio of the
The National Research Council (NRC) has published
research findings indicating that a reasonable rule-of-thumb
for annual maintenance funding would be 2-4 percent of the
current infrastruc
b
infrastructure is not known. The infrastructure value stated
in the state’s comprehensive annual financial report, $14.2
billion, is the sum of original costs. Applying the formula
from the NRC report to this amount, the result is $355
million per year. M&O funding is roughly one-half this
amount.
Knowledge of the infrastructure replacement cost would
permit program management to test the NRC target or to
set some other benchmark of funding adequacy. WSDOT
should establish a maintenance funding minimum that is
sufficient for preserving the state’s large financial
investment in the highway system infrastructure. This
minimum should establish the level below which the
Department acknowledges that significant deterioration or
other specified undesirable outcomes would likely occur.
Annually, an estimat
in
M&O budget to this statistic can be monitored and reported
during the budget preparation process.
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Recommendation #15:
WSDOT Response:
transportation systems, movable bridges, urban
d traffic signs. We also have databases that
ocument work accomplishments for various other
uch a system. This
e best for us to use to measure a maintenance backlog. An
ption that might be preferred is the expansion of the
rrent, de-centralized maintenance management system.
dditionally, we currently have no funding to pursue any
pes of maintenance management system development and
We recommend WSDOT:
prioritize the development of a centralized
maintenance management system.
annually calculate an estimate of the current
replacement cost of the infrastructure.
establish an M&O minimum.
include each measurement in its performance
measures program.
WSDOT has implemented many databases that could be
considered components of such a system. We currently
have activity-specific maintenance management systems
used to help maintain traffic signals, highway lighting,
intelligent
tunnels, an
d
activities and a feature inventory is currently under
development. We are evaluating options for a centralized
maintenance management system and other comparable
options.
The establishment of an M&O minimum budget and the
viability of basing this on a percentage of the replacement
cost of existing infrastructure will be included in the
evaluation of a centralized maintenance management
system.
Starting in 2008, measures of the amounts of essential work
not being completed will be incorporated into the budget
process, where this information is available. We agree that
a centralized maintenance management system is one of
several types of tools that can help a maintenance
organization meet an objective of measuring a backlog of
essential maintenance. At this point, we are not ready to
prioritize and fund the development of s
issue is being considered as we determine which tool will
b
o
cu
A
ty
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lement would also need to be
OFM Response:
much should be
s comprehensive annual
nancial report is $14.2 billion, the sum of original costs.
ccording to the audit report, maintenance and operation
t
sult
ps and Timeframe:
implementation so a budget e
included in the strategy for moving forward.
The National Research Council uses a rule of thumb of 2
percent to 4 percent of the current infrastructure
replacement cost as an indicator for how
spent on maintenance and operations. The value of the
infrastructure in Washington’
fi
A
budgets should total about $355 million per year when, in
fact, they are about half of this amount. The 2007-09
budget allocates $347 million for the biennium. The audi
report recommends prioritizing the development of a
centralized maintenance management system, but we
believe an even higher priority is identification of short,
medium and long-term risks to our infrastructure as a re
of not fully funding maintenance work. We need to
identify and address the risks to determine where the most
cost-effective maintenance investments should be made.
Action Ste
ment consequences of not funding their most
y
M&O is the National Pollutant Discharge Elimination
• Develop strategy to address how to measure a
maintenance backlog. Complete in spring 2008.
Implementation is dependent on the strategy that is
developed.
• Rail, highways, and ferry program managers will
docu
critical maintenance and operation activities and submit
that information with each biennial budget request.
This information should be submitted with the 2009-11
agency request budget.
M&O is less able to meet maintenance requirements now
than it was 10 years ago. This can be attributed to a variet
of causes, many regulatory in nature.
A recent example of a major unfunded regulatory impact on
WSDOT Does Not
Maintain Summary
Information Concerning
Past and Future
Unfunded Mandates
Reducing the Ability to
Determine Budget
Requirements
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anaged on
of
te
The
s
is
Act,
ion
rs
is anticipated that current
DOT
ally
e to
lecting and analyzing pertinent
ation for two reasons. The first is to assure M&O
System (NPDES), a new federal program for reducing
damage caused by pollution. This program, m
behalf of the federal government by the state Department
Ecology, contains substantial financial penalties for sta
government for noncompliance with its provisions.
M&O program managers estimated that 40 employee
would be needed to satisfy the requirements of th
mandate. No staffing increases have been approved.
Another earlier mandate of the Federal Clean Water
also imposed requirements that were not funded. Miss
changes such as these, while incremental over time, have
had an effect on the funding and workload of the M&O
Division. Although the magnitude of this over many yea
is not known with certainty, it
deficiencies will only be compounded. While WS
personnel accept these changes as environment
sirable, the re
de
sult over time has been a gradual shift in
some of the Division’s focus from maintenanc
compliance with these and similar laws.
SDOT should begin col
W
inform
has the capability to meet maintenance requirements. The
second is so M&O staff understand the cumulative effects
are and be able to communicate those effects during each
budget cycle,
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Recommendation #16:
WSDOT Response:
andates are typically generated during the budget
evelopment process of each biennium. A formal,
OFM Response:
We recommend WSDOT:
research, document, and maintain summary
information concerning past and future
unfunded mandates.
record budget ramifications.
WSDOT agrees that summary information may be helpful
in clearly communicating budget needs and is planning on
implementing these recommendations. Summary
information regarding budgetary impacts of unfunded
m
d
continuous record of this information has not been
traditionally compiled and maintained in a single
document.
It seems prudent to identify new requirements and related
estimated costs on an annual basis in order to keep the
executive and legislative branches apprised of emerging
issues and potential budget shortfalls.
Action Steps and Timeframe:
• Identify budget impacts from new unfunded mandates
and compile this information into a single document
that can be updated and maintained into the future.
Complete by June 30, 2008.
WSDOT is Favorably
Organized to Respond
Regionally or Statewide to
Emergencies or Disasters
WSDOT is responsible for state assets that could play a
rtment. Other state agencies, including
SDOT, assist in this planning and help staff the state’s
mergency operations centers during exercises and
vital role in responding to natural or man-made disasters.
The potential risks in this region are many, including
earthquakes, volcanic eruptions, tsunamis, and floods. The
state coordinates contingency planning for these risks
through the Emergency Management Division of the
Military Depa
W
e
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low, other jurisdictions have
SDOT is favorably organized to respond regionally or
l
y by
ors who
er. This
encies or
disasters easier.
ny
ous from a disaster
ctive.
WSDOT executive
.
e in
in simulated or actual
mergencies. Should the Department’s leaders not be
emergencies. As noted be
significant emergency planning and operations
responsibilities.
W
statewide to emergencies or disasters. Agency personne
are assigned to six regions throughout the state. Within
each region, employees are distributed geographicall
work requirements and work under section supervis
are responsible to another supervisor or lead work
distribution makes the mobilization for emerg
The decentralization and regionalization of ma
Department employees is advantage
command-and-control perspe
management is situated in the Olympia headquarters
Program management and headquarters staff participat
isaster response planning or
d
e
available other senior headquarters management staff
would likely be available to assume responsibility for
disaster recovery operations. Moreover, the management
team of a given region would have the ability to assume
responsibility for disaster response within another region or
for the headquarters should a major disaster disrupt or
prevent operations there. With respect to emergency and
disaster response actions, these decentralized personnel are
a resource at least as important as the physical assets for
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s from the highway cameras (located
rimarily in urban areas and mountain passes that are open
which the Department is custodian. They represent
available reserves capable of mobilizing for a variety of
potential risks.
Emergency planning is a collaborative process among the
state, counties, and other local jurisdictions. WSDOT plays
a major role given that its physical assets are spread
geographically throughout the state. The Department
operates seven traffic management centers (TMCs) that
monitor road conditions and dispatch personnel. Each
TMC has radio and land-line communications capabilities
and video feed
p
during the winter). They also receive other highway data
from the Intelligent Transportation System.
Other system components would likely be heavily relied on
by the public and by emergency response teams during
disasters or major emergencies. Safety Rest Areas provide
an extensive level of potential use during disasters.
However, specific limitations exist.
The SRAs have drinking water, restroom facilities, and
other limited amenities. Because of their direct link to a
highway, a major emergency or disaster in which a
voluntary or directed evacuation of an urban area occurs
would likely place unsupportable demands on SRAs. Most
safety rest areas lack the required size, motor vehicle
parking, water supply and distribution capacity, emergency
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on heavily traveled sections of highway are
arginally capable of satisfying driver requirements during
Recommendation #17:
d the means
for disposing of sewage during the surge
conditions of a major emergency.
WSDOT Response:
links between TMCs
nd EOCs are important. As such, direct communication
power, and the means for disposing of sewage during the
surge conditions of a major emergency. Some SRAs near
urban areas and
m
normal driving conditions.
By establishing a strong correlation to disaster response
capabilities, federal funding of SRA projects for increasing
capacity or restoring failing infrastructure may be available.
This potential needs to be aggressively explored with the
federal government.
We recommend WSDOT:
identify SRA deficiencies in acreage, motor
vehicle parking capacity, water supply and
distribution, emergency power, an
seek federal funding to support safety rest area
disaster preparedness upgrades and the
construction of additional sites for the most
likely risk scenarios.
We agree that direct communication
a
links including telephone, e-mail, and satellite telephones
are maintained. These are used on a regular basis during
times of EOC activation. In addition to this, video feeds
have been established between TMCs and EOCs so
personnel in EOCs can now view real-time road conditions
via traffic cameras through the TMCs.
A specific program to ready SRAs for disaster roles by, for
example, large and costly expansion of water supply and
sanitary systems, may not be appropriate. The capabilities
of SRAs to fit into the larger disaster readiness picture
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OFM Response:
should be linked to disaster response planning now
generally being conducted by the counties.
We defer to the Military Department to guide us on how
best to use safety rest areas during emergencies.
Action Steps and Timeframe:
The alternative uses for SRAs referenced in these
findings will be considered during the SRA strategic
panded within the state, additional
emands have been placed on the highway system and on
concern to the
enforcement demands cause
ese visits to be cursory and infrequent.
y
al
ity
priately equipped
ent,
•
plan development to be completed by March 2008.
As highway traffic density has increased and urban
boundaries have ex
WSDOT Can Improve
SRA Safety to Help
Deter Illegal Activities
d
SRA . s These demands have been accompanied by
increases in criminal activities near some urban population
concentrations. Consequently, unlawful behavior and the
physical security of SRAs are of increasing
public, WSDOT and law enforcement officials. Although
the Washington State Patrol does occasionally check
ecurity at rest areas, other law
s
th
A recent safety rest area technological investment b
WSDOT has provided an opportunity for deterring illeg
activities and for monitoring circumstances in the vicin
of rest areas during major emergencies. Wireless Internet,
or Wi-Fi, gives travelers with appro
devices the ability to connect to the Internet. Wi-Fi systems
are installed at several rest areas. This capability makes it
feasible, with a modest investment in additional equipm
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traffic
State Patrol
ck
ecked and
o truck drivers approaching
ng
be
onitored by state emergency operations centers. This
ould permit visual checks on the status of urban
Recommendation #18:
WSDOT Response:
OFM Response:
to monitor SRA conditions from WSDOT
management centers and Washington
communication centers. For example, the density of tru
parking at a specific rest area could be ch
communicated automatically t
that location who may be nearing their maximum drivi
time. During major emergencies, camera images could
m
w
evacuations at sequential locations and on potential safety
risks to people who have exited to a rest area.
We recommend WSDOT consider adding cameras and
monitoring equipment to the broadband capabilities of
current and future SRA installations.
We agree. However, funding for such actions depends on
legislative appropriation.
We agree, but the cost for providing the necessary
technology needs to be evaluated.
Action Steps and Timeframe:
• The Military Department, Washington State Patrol,
WSDOT, and local safety officers will collaboratively
evaluate potential solutions related to illegal activities.
Cost-sharing between these entities will be part of this
analysis. Meetings will occur in the spring and summer
of 2008 with a budget request submitted for the 2009-
11 biennial budget.
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PERFORMANCE MEASUREME
during the
udgeting process. The assessments and the maintenance
e directed. Actual achievements against MAP targets are
mpiled and published annually and the data is used
d
managers.
Achievements are reviewed by M&O
ll as the
Office of Financial Management, the Governor’s Office,
al
aintenance work has not been accomplished. Without
is information, including an assessment of how serious
is backlog may be, it is difficult to identify resources
quired to reduce/eliminate the backlog.
NT
WSDOT uses the Maintenance Accountability Process as
its primary means to measure performance. The MAP
scoring system incorporates into one system stated
transportation system goals and legislative and public
expectations. The condition of the highway system is
assessed twice yearly and those results are reported to
program management, executive management, and elected
officials. The condition assessments provide an objective,
verifiable set of priorities for consideration
b
priorities assigned to specific highway components provide
clear guidance regarding where maintenance effort needs to
b
co
periodically for evaluating performance of work units an
supervision and management at all levels as we
an by legislative staff.
In reviewing MAP, we found that although it provides
valuable information about the condition of the highway
system, it does not reflect the degree to which essenti
d
m
th
th
re
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The Framework
egislatively prescribed policy goals form the framework
SDOT’s performance management system. These
ing the performance of the state’s
ansportation system.
These are published in the
ment.
L
of W
goals, which are included within the provisions of Revised
Code of Washington, establish the basis for detailed and
measurable performance benchmarks.
Nine policy goals refer to highway safety, highway
condition, the structural condition of bridges, traffic
congestion, delays per driver, per capita miles driven,
commuter trip reduction, administrative costs, and transit
cost per vehicle revenue hour. Each of these goals has
assigned to it either a minimum condition (e.g., poor) or a
benchmark that WSDOT shall achieve. For example, for
“delays per driver,” the benchmark is “delay per driver
shall be significantly reduced and be no worse than the
national mean.”
State law requires the Transportation Commission to
establish performance measures. The Commission worked
with WSDOT staff and others and in August 2003 adopted
benchmarks for measur
tr
“Transportation Benchmarks Implementation Report.”
The Governor’s Office also has incorporated transportation
system performance requirements into the state’s Priorities
of Government (POG) described as “a strategic framework
for investment decisions.” The POG process begins with
10 key results citizens expect from govern
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and report the
ffectiveness of the services they provide. The GMAP
Department Systems
SDOT’s strategic plan for 2007 through 2011, “Business
vice
elivery mandates.
ions and
State transportation system results are also linked to
another Governor’s Office initiative, the Government
Management Accountability and Performance (GMAP)
approach. GMAP requires state agencies under direction of
the Governor to regularly measure
e
transportation system key result area focuses on delivering
highway construction projects on time and within budget,
maintain transportation assets to maximize benefit-to-cost,
and design the transportation system of the future. A
GMAP Operations Committee consisting of the deputies of
all agencies meets monthly to discuss results achieved and
issues that need to be resolved. Quarterly, the Governor
holds a public meeting during which agency directors
present performance results on a rotating basis.
W
Directions,” is the primary planning document for the
Department. The plan is a summary of WSDOT’s work
plan based on the programs and budgets authorized by the
state Legislature and the policies adopted by the Governor.
The plan describes the strategic directions and initiatives
that are part of the Department’s program and ser
d
Although the strategic plan does not address every activity,
project, program or function, it does focus on specific
strategies seen as key for the next two to six years. Six
Strategic Initiative areas support policy direct
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aintenance
ccountability Process highway maintenance targets.
he LOS target, in effect, reports the condition code of the
address key external and internal driving forces that affect
impact delivery mandates.
The Department’s main performance assessment, reporting,
and communication tool is a comprehensive quarterly
publication, “Measures, Markers, and Mileposts” - the
“Gray Notebook.” This publication contains a broad range
of data and information concerning performance. The
narrative and quantitative materials in the write-ups are
easily followed. Each gray notebook is available on the
WSDOT Web site. Topics within each edition are
thoroughly indexed and cross-referenced to similar topics
in previous issues.
The Department is focused on its M
The Maintenance
Accountability Process
A
These 33 targets are established taking into consideration
periodic surveys of the traveling public concerning their
level of satisfaction with the state highway system. These
targets become the accepted standards of performance
stated as levels of service (LOS). The allocated funding for
each activity is shown on the MAP score card with the LOS
targets ranging from “A” through “F”.
T
highway segment or system. Priorities are set for each
activity using a weighting scale driven by the importance of
results or outcomes (policy objectives) that the Department
wishes to achieve. For example, the safety of the traveling
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a weighting of 2, is comfort,
esthetics or convenience. A total priority score is
he MAP information is collected and reported at work
considerable amount of effort has gone into the design of
public and employees has the highest weighting, 10. At the
low end of the scale, with
LEVELS OF SERVICE
LOS is reported on a scale of “A” through
“F”. The general definition of each LOS
is as follows:
LOS “A” – This is a very high service
level in which the roadway and associated
features are in excellent condition. All
systems are operational and users
experience no delays.
LOS “B” – This is a high maintenance
service level in which the roadway and
associated features are in good condition.
All systems are operational. Users may
experience occasional delays.
LOS “C” – This is a medium maintenance
service level in which the roadway and
associated features are in fair condition.
Systems may occasionally be inoperable
and not available to users. Short term
delays may be experienced when repairs
are being made, but would not be
excessi
LOS “
e
service l
associated features are kept in generally
poor condition. Systems failures occur
because it is impossible to react in a
timely
manner to all problems.
Occasionally delays may be significant.
LOS “F” – This is a very low service
level in which the roadway and associated
features are kept in poor and failing
condition. A backlog of systems failures
would occur because it is impossible to
react in a timely manner to all problems.
Significant delays occur on a regular
basis.
a
calculated from these weightings and other factors.
The condition codes are determined through a random
sampling by maintenance employees of highway segments
or systems in the spring and fall of each year. Validation
by others also occurs as a safeguard against errors. For the
2005-2007 biennium no activity has an assigned target less
than “D;” none received a score lower than “D” for fiscal
year 2005.
T
ve.
D” – This is a low maintenanc
evel in which the roadway and
areas within a region and at the level of each region and is
summarized at the Department level. All of the subsidiary
data for regions and areas can be quickly accessed.
LOS targets for the 2005-2007 biennium, LOS delivered
during fiscal year 2005, dollars allocated (in millions) for
2005-2007, weightings, total priority, and the identification
of each activity can be found in Appendix A-2.
A
the MAP system. It contains extensive information that is
useful to M&O program management, Department
management, the Governor’s Office, and the Legislature.
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orker
ours than necessary for making informed decisions about
ded purpose.
nsures
recision. For a specified sample size, accuracy is
ase in the
umber of M&O employee hours required to sample is
Recommendation #19:
eeds will permit the reduction of the size of the
equired random samples for the Maintenance
Accountability Process.
The twice-yearly inspections for the MAP scoring process
provide valuable information about the condition of the
highway system. Despite automation, the complete process
requires more inspections and a higher number of w
h
maintenance needs and accomplishments. It may be
feasible to reduce the number of required samples and to
redirect these hours to maintenance work. The sampling
plan design specifies a sufficient number of samples to
achieve a 95 percent confidence level for each of 33
activities. The resulting sample size is larger than needed
for the inten
One use of the MAP scores is performance evaluation and
the scores therefore need to be accurate. Specifying a
relatively high confidence level or confidence interval, such
as 95 percent, does not achieve accuracy but e
p
improved by ensuring that the sampling design provides a
sufficiently representative selection from the range of all
possible circumstances. Based on that, the Department
should determine whether the potential decre
n
justified by using a confidence level of 90 percent and
reducing the size of the samples.
We recommend WSDOT determine if information
n
r
WSDOT Samplin
Can Potentially be Reduced
g Plans
to Help Decrease Costs
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OFM Response:
igilant to ensure the same
ossible using smaller or less
equent sample sizes.
WSDOT Response:
We agree, and are already taking steps to streamline the
sampling/field survey process to provide valid performance
data at minimized costs. Recent reductions in MAP survey
efforts include use of Pavement Management System data
(instead of conducting our own MAP survey) to determine
pavement maintenance Levels of Service (LOS). We also
use Region Traffic Survey data (instead of conducting our
own MAP survey) to determine sign LOS. Not only does
this reduce survey costs to the maintenance program, these
are examples of larger and more accurate data sets that
improve the accuracy of the MAP LOS ratings.
We support the reduction of sampling efforts in order to
control costs, but also urge caution. The maintenance
division is a leader in providing data driven decision-
making. There is a cost associated with collecting and using
such data. We need to be v
quality decision making is p
fr
Action Steps and Timeframe:
• MAP field surveys will be conducted annually instead
of twice per year, significantly reducing the effort and
costs to obtain LOS data while still maintaining
adequate confidence levels. This will begin in the 2008
survey. We also will evaluate the effect of changing
from biennial to annual data collection.
MAP targets and achievements are expressed as a single
letter a plus or minus signifying better or worse. Each
measure is an average of the random samples taken for that
activity.
This is standard practice for reporting
performance measurement metri
WSDOT MAP
Organizational Review
Level Achievements Do
Not Provide Detailed
Indication of
Accomplishments
cs. However, it is not
ossible from this single measure to gain a complete picture
chievement of “C” for “Maintain
p
of actual performance, because no indication of the
variability of the measurements is provided. For example,
within a given region an a
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Maintenance Operations/Revenue
Opportunities
hat
s
onal
Recommendation #20:
AP
WSDOT Response:
We agree that MAP information should be reviewed at all
ization. In addition to the
ow the lower-
vel organizational ratings comprise the statewide ratings.
his was an improvement recently identified through the
overnor’s GMAP process.
Culverts” could result from half of the sections in t
region achieving a relatively high score and half receiving a
lower score. Awareness of the range of the achievement
among the sections provides a better understanding of the
condition of the culverts rather than just that the average
was “C.” A suitable indication of the variability of each
achievement should be reported for each organizati
review level.
We recommend WSDOT increase the detail of M
organizational review level achievements to provide
additional indication of accomplishments.
levels of the maintenance organ
statewide reporting and review level, this should include
regions and areas as well. MAP reports are currently
developed and reviewed at area, region, and statewide
levels. In addition to this, the method of compiling area
and region LOS reports into a single statewide report has
been revised to more clearly communicate h
le
T
G
OFM Response:
The department deserves the national recognition it has
received for its maintenance accountability process which
includes level of service standards for 33 different
maintenance activities. We agree that the “score” assigned
to an activity does not capture the range of the
achievement. The scores should be accompanied by text to
capture more detail about the accomplishments.
Action Steps and Timeframe:
• MAP reporting will include narrative summaries as well
as numeric or alpha summaries as appropriate.
Ongoing.
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Project Management
PROJECT DELIVERY AND CAPITAL PROJECT MANAGEMENT
APPROACH
Successful pro
ny activities and
ent each other. To
rstanding of how WSDOT
DOT regions was initially
projects, designed in the 1990s
truction phase or had
The review of selected projects included attention to
specific areas of cost management and project controls:
Project management planning
Estimating, budget development, and award
Cost management and tracking
Change cost control
Schedule development and control
Performance measures and indicators
Other Studies
WSDOT has done or has had done a number of studies and
reviews to assist it in identifying opportunities to improve
operations and efficiencies that result in cost savings.
Many of the recommendations made have been accepted
and acted upon by WSDOT. To determine the extent to
which WSDOT has implemented those recommendations,
six additional projects were selected for review.
As part of this audit, the State of Washington’s Joint
Legislative Audit and Review Committee (JLARC) Report
05-03 “Overview of Washington State Department of
ject delivery is a result of ma
egrate with and complem
events that int
gain a representative unde
approaches project planning and design, a sample of 18
capital projects throughout WS
selected for review. These
or earlier, were either still in the cons
recently been completed.
Talbot, Korvola & Warwick,
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128
Cost
Management
and Tracking
Estimating and
Budget Development
& Award
Change Cost
Control
Schedule
Development
and Control
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Project Delivery and Capital
Project Management
6
” was
reviewed. The report contained a number of
“Best Practices”
. Based on analysis of the data
athered and interviews with WSDOT personnel,
ose
anagement that are
e most
s for delivery of large capital
WSDOT
ay be prevalent in sectors outside transportation and/or be
eyors
State and federal transportation organizations
Transportation Capital Project Management
1
recommendations, including some that were relevant to the
scope of this audit. We examined topics that would
provide specifics as to how WSDOT can maximize
opportunities to manage costs, achieve dollar savings, and
reduce surprises during project delivery.
To achieve our audit objectives, we reviewed the WSDOT
projects summarized below
g
recommendations were formulated that identify solutions
centered on “best practices.” These practices are th
techniques in cost and schedule m
considered the best known methods to achieve th
efficient and effective result
construction projects. Examples applicable to
m
recognized nationally and globally.
Applicable sources of “best practices” include:
AASHTO – American Association of State
Highway and Transportation Officials
AACE - Association for the Advancement of Cost
Engineering
ASPE - American Society of Professional
Estimators
RICS - Royal Institution of Chartered Surv
(including WSDOT)
Other Governmental Entities (including the FHWA
– Federal Highway Administration)
16
January 21, 2005
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Project Delivery and Capital
Project Management
SAMPLE SELECTION
sh River Bridge project
was included. Additionally, because of previous reviews
the latter
Private Industry
Other Associations
Many United States transportation sources and publications
(FHWA, AASHTO, etc.) reference WSDOT practices,
reports, and cost data and are considered by some agencies
as best practices.
The following projects were selected to provide a
representative sample of WSDOT project types. Projects
were selected to represent a cross-section of project scope,
capital value and geographical location. In addition, to
ensure all aspects of project delivery relating to cost and
schedule could be adequately reviewed, 40 percent of
projects selected were either completed or in the process of
completion.
At the request of the State Auditor’s Office, the State Route
522 Paradise Lake Road to Snohomi
conducted on the Hood Canal Project, only
portion of the project was included for review.
#
Project Title/Description
Contract
Region
Status
Funding
1
SR 240, I-182 to
Columbia Center I/C
6895
South
Central
Under
construction
$59.5m
2
US 12, SR 124 to McNary
Pool – additional lanes
6860
South
Central
Under
construction
$104.1m
3
SR 24, I-82 to Keys Road
- additional lanes
6933
South
Central
Under
construction
$50.2m
4
US 2, Cashmere East
Paving
7059
North
Central
Completion
7/06
$3.25m
5
I-90, Moses Lake Area –
Bridge Clearance
7071
North
Central
Under
construction
$3.25m
6
I-90, I-90 Sunset I/C
Modifications Stage 2
6010
Northwest
Physically
complete 5/05
$42.2m
7
SR522, Paradise Lake Rd.
to Snohomish River
6726
Northwest
Under
construction
$36.9m
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Project Delivery and Capital
Project Management
8
SR161, Jovita Blvd to
S360th St - widen
6858
Northwest
Under
construction
$30.1m
9
I-5, 2nd Street Bridge
Replacement
6793
Northwest
Completion
10/05
$14.3m
10
SR 18 Maple Valley to
Issaquah Hobart Road
6611
Northwest
Under
construction
$108.2m
11
SR 5, Burnt Creek to NE
78th Ave
5661
Southwest
Completion
7/03
$37.9m
12
I-5, Widen I-5 each
direction from Salmon
Creek to I-205
6610
Southwest
Completion
10/06
$35.4m
13
SR500, 112
th
Ave/Gher
Rd Interchange
6625
Southwest
Completion
4/05
$21.3m
14
I-90, Argonne to Sullivan,
2 additional lanes
6620
Eastern
Completion
11/05
$36.3m
15
SR270, Pullman to Idaho
St Line - additional lanes
7120
Eastern
Under
construction
$30.6m
16
I-5, HOV Improvements -
South 48th Street to
Pacific Avenue
6958
Olympic
Under
construction
$103.7m
17
SR16, New Tacoma
Narrows Bridge
6441
Olympic
Under
construction
$771m
18
SR104, Hood Canal
Bridge E. half
replacement and W. half
retrofit
6525
Olympic
Under
construction
$470.9m
Source: Compiled by TKW
Seven of these projects have been completed or were
forecasted to be completed by end of 2006.
Six additional projects were selected to gain an
understanding of how WSDOT approaches project
planning and design:
#
Project Title/Description
Contract
Region
Status
Funding
A
Project 9 – Westbound
Nalley Valley I/C
Reconstruction
OL3460
Olympic
Design
$181.6m
B
SR 14, 2.2 & 2.3 Miles East
of Bergen - Rockfall
XL2395,
XL2397
South
West
Design
$644k
C
SR 9, 176
th
Street SE to
Marsh Road Intersection
Vicinity
XL2262
North
West
Design
$35m
D
US 12, Attalia Vicinity –
additional lanes
7082
South
Central
Construction
$17m
E
SR 518, Sea-Tac Airport to
I-5/I-405 Interchange
MS5185
North
West
Design
$30.8m
F
I90, Sullivan Road
Interchange PCCP
Rehabilitation
XL2799
Eastern
Design
$3m
S rce
W
ou : Compiled by TK
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Project Management
Methodology
an
iv
proj
ntr
ivel
view
it
t fi
a
rov
a ra
ro
e, t
e
pp
o
con
i
r eac
le
owe
dete
of
g
p
t p
g,
, a
iv
i
erm
, m
ct
je
t and
ery
d c
er ion.
The following identifies topics reviewed:
ate files
Have estimating best practices been used?
t costs” (non-
contractor payments such as permitting,
licenses, taxes, etc.) been applied to the project
magnitude of allowances or costs
for undefined scope?
2.
e
on costs
h
?
t
ng
g an
g
hat controls have
plan. Is i
rated with all
proje
l
3
and su
ents
sound are commercial provisions within
What are the incentives for performance/
delivery?
To evaluate project delivery d effect eness of
ect
co ols, we extens
y re
ed cap al projec
les.
Bec use our sample p ided
nge of p ject valu ype,
and complexity, the lev l of a lication f project
trol
techniques required and/or expected was d fferent fo
h.
The review of project fi s all
d the
rmination
the
inte rated nature of rojec
lannin
execution
nd
del ery. To make th s det
ination
any aspe s of
pro ct managemen
deliv
require onsid at
1. Project budget and estim
How have escalation, inflation, and market
conditions been addressed?
How have contingencies and “sof
estimate (including relationships with the
estimated project cost of work and other
benchmarks)?
What is the
Project managem nt plan
Land acquisition process. How has this had an
effect
Perm
and sc eduling
itting. How has this had an effect on cos
and scheduli ?
Engineerin
been used to m
d desi
anage change, use of Requests
n. W
for Information (RFI’s), etc?
g
Procurement
stages of
t inte
opment and execution
ct deve
?
. Contractor
How
pplier proposals and agreem
contracts?
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Project Delivery and Capital
Project Management
Have the contract terms and conditions been
adhered to during the course of the project?
Do costs and prices reflect fair market value?
ts compare with
how do labor
projects?
lier
port
s, timecards?
ing
schedule baselined at the start of
tones?
e extensive resources?
monthly basis?
r change orders?
t
f
hat actually took
ce of schedule compression/
Bid evaluation procedures and practices. Do
evaluations include cost modeling to understand
the potential effect of proposed change rates on
the potential contract award?
Have all bidder clarifications and exclusions
been addressed during the evaluation phase?
Benchmark award costs to final contract values.
4. Review of approved and proposed change orders
Have the terms of the base contract been
applied?
Are there potential conflicts with the basis of
remuneration? Not sure what this means
Have quantities been verified?
For example, how do labor cos
other industries in the state and
costs compare across WSDOT
Has supporting documentation such as supp
quotes, timecards, etc., been provided to sup
costs such as. supplier quote
Have change orders been identified as having an
effect on scheduling?
Is the change order a valid change to the base
scope?
5. Schedule development and performance track
Was the master
the project, and periodically throughout after
achieving major miles
Did the schedule includ
If so, how does that compare to actual field
labor loading on a daily/weekly/
Was the resource loading evaluated and adjusted
to compensate fo
Was earned value or some other type of projec
forecasting tool used throughout the project? I
so, how does that compare to w
place? How accurate was the forecasting?
How has the critical path been managed?
How often is the schedule updated?
What has been the basis of schedule updates?
Any eviden
acceleration to mitigate delays?
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Project Delivery and Capital
Project Management
recasting
n
n
blished procedures been followed on
aints
risk?
rred
An i
ertake
d
W
to
that m
RESULTS
W
de
de a
es and
5
f a $15
billion construction program and established a statewide
Are cost impacts identified to unplanned
changes in schedule?
6. Project cost management
Project cost reports and cost fo
techniques.
Budget performance. Have reconciliations bee
carried out to assess performance of the cost
estimate versus actual scope?
How have contingencies and allowances bee
tracked and managed?
7. WSDOT capital project procedures
Have esta
the selected projects?
Do existing procedures present any constr
to maximize value and manage
8. Project close-out files, if applicable
Have there been any issues which have hindered
the timely close-out of projects?
Claims. If applicable, why have they occu
and what could have been done to avoid them?
mportant component of this audit was to und
interviews with WSDOT project management staff
responsible for project delivery. These interviews provide
important insight to individual project characteristics.
e also conducted a review of project correspondence
determine whether any contractual or project issues arose
ay have affected project costs, scheduling, and risk.
SDOT has taken significant steps to improve project
livery and implement best practices. It has ma
significant investment in the development of practic
procedures to strive for continuous improvement. In 200
WSDOT recognized the need to ensure delivery o
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Project Delivery and Capital
Project Management
n and
mphasis and the agency’s
helped
org
OT
e
pro
ts have had more success
r their efforts,
l
diff rences
,
with
thers.
s
capital program, either directly or indirectly. The 10-year
program occurs during a time of increasing competition in
group to develop a strategic plan. Communicatio
transparency have been a major e
Web site, reports and other publications have
accomplish this goal.
Many state transportation
anizations as well as AASHTO have identified WSD
practices as being innovative.
A wide range of tools and formats are used to manag
jects. However, some projec
with controlling costs and schedule than others. While
project teams should be commended fo
inconsistencies in practices have resulted in variances in
cost tracking and change order management. Regiona
e
continue to occur. Document layouts, content
and nomenclature – specifically in relation to project
scheduling – were noted. Reports and data are often
meaningful only at the project level and are not easily
communicable to senior management and comparable
o
These issues should be considered in context of the
increasing challenges that WSDOT faces in staffing it
the marketplace for experienced, skilled craft and
construction professionals - made more acute by retiring
“baby boomers” who are leaving industry; global mega-
projects; and the Chinese construction boom.
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Project Delivery and Capital
Project Management
PROJECT MANAGEMENT PLA
eport on projects and programs.
nnounced its
test change to management of capital projects in the form
WSDOT has opportunities to continue to improve project
delivery and management. The following provides our
detailed analysis of each of the areas of cost management
and project control.
NNING
WSDOT has taken significant steps to improve project
delivery and implement best practices. In 2005, the
Agency created the Statewide Program Management Group
(SPMG), a consortium of leading consulting firms in the
transportation industry to assist in delivering over $15
billion in capital construction.
The SPMG was charged with assisting the development of
WSDOT's strategic plan. Specific planning objectives
included:
Identification of actions that promote successful
delivery of projects
R
WSDOT Implementation
of SPMG
Recommendations Will
Eliminate Many
Management and
Reporting Inconsistencies
“A Strategic Delivery Plan for the Washington State
Department of Transportation’s Capital Construction
Program – Phase 1 Final Report
17
”, produced by the
SPMG, proposes solutions for program management,
workforce improvements and project management
processes, including control and reporting systems.
In addition, in September 2006, WSDOT a
la
17
June 30, 2006
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Project Delivery and Capital
Project Management
and data across WSDOT.
G Strategic Plan, released shortly before this audit
began, contains many key topics that integrate with the
.
rojects to be reviewed for budget, scope, and
to those posed
uring this audit. For example:
of the Project Management Reporting System (PMRS).
PMRS is a “collection of integrated tools”, created to
address the current inconsistencies in application of
management practices
The SPM
audit scope. While it is premature to expect SPMG’s
recommendations to be fully applied to all the projects
selected for review, we remain aware of solutions proposed
in the report. We expect that full integration of PMRS will
eliminate many of the management and reporting
inconsistencies this audit found
Source: PMRS
Additionally, during the course of this audit, SPMG
commenced Phase 2 of its study, which includes 90
targeted p
schedule. The SPMG “Baseline Assessment Checklist”
asks specific questions that are similar
d
Has a project management plan been approved?
Is the project estimated to be completed within
budget?
Is the project estimated to be completed within
schedule?
Has the project completed the Cost Estimate
Validation Process
®
(CEVP
®)
/ Cost Risk
Assessment (CRA) process?
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