D. Promote an efficient and transparent project delivery system
Transportation finance resources will remain scarce into the foreseeable future, demanding that the MPO and other state agencies use those resources efficiently. Costs can be controlled by adopting transportation programs that are appropriately scaled to the level of expected revenue, utilizing innovative project delivery methods, and implementing dispute resolution mechanisms that keep projects progressing. Project delivery must also be constantly assessed to enable continuing improvement and demonstrate the accountability necessary to restore public confidence.
The existing inefficiencies in the project delivery system are crippling the region’s ability to make improvements. Every dollar that is lost due to delays, conflicts, or inefficient construction practices is a dollar that cannot be spent to built the infrastructure this region needs. Inefficient project delivery also creates a vicious cycle, as delays and cost overruns have a ripple effect on projects further down the pipeline, driving up their costs. Even worse, the general public sees a process in which money is being spent inefficiently, and is less willing to support new revenue options such as tolls and taxes, in turn delaying future construction projects.
Efforts to improve project delivery must begin with realistic and fiscally-constrained transportation programs that are structured to minimize the ripple effect of delays and overruns. Projects should be evaluated earlier in the process and those that are either not ready or inconsistent with sustainable land use objectives should be rejected with recommendations for improvements. Project design funding can help to improve the readiness of programmed projects, as can improvements to state-level bidding and procurement process. The state should also apply project delivery innovations that are commonplace in other states, such as design-build contracts and the use of a dispute review board to resolve conflicts between agencies and contractors. All of these improvements should be documented through a detailed, publicly accessible, and dynamic performance measurement system that can document which projects are being delivered on time and under budget, and which are not.
23) Adopt a realistic and financially constrained regional and state Transportation Improvement Programs
In order to use limited funds wisely, the MPO and the state must develop Transportation Improvement Program (TIP) priorities that accurately reflect the availability of funds. A realistic transportation program will ensure that state and federal funds can be fully accessed, fewer projects will be delayed, and cost overruns will have a minimal ripple effect on other projects.
The TIP is the mechanism by which the MPO programs funding for improvements over a four-year period. It programs federal-aid funds for transit projects, and state and federal-aid funds for roadway projects. The TIP is financially constrained: the MPO can only include projects for which funds are expected to be available. However, actual cost of construction routinely exceeds the programmed cost, due to delays, extensions, and redesigns. The TIP is revised numerous times each year to account for these overruns, which occur due to the inclusion of:
- projects that are not ready for construction;
- more projects than available funding can support; or
- more projects than MassHighway has the capacity to plan and construct.
The inclusion of borderline projects in the program’s “out years” is also costly and undermines the effectiveness of the transportation planning process. Inclusion of poorly ranked projects encourages unrealistic expectations and unnecessary spending by municipal proponents, who often base their planning and MPO advocacy efforts on the belief that projects will eventually be funded.
The statewide TIP (STIP) prepared by the Executive Office of Transportation, is a compilation of all the regional priorities. However, the Federal Highway Administration recently disapproved the STIP based on a determination that that the plan was not financially constrained. As a result, the disbursement of federal transportation funding to the state was held up and dozens of projects were delayed, leading to even higher costs.
A more accurate assessment of project readiness will help the MPO to program money for construction only to projects that are mature. A pre-approval process accompanied by access to design funding would improve the quality and readiness of projects reviewed by the MPO. This process should be structured to reject projects that do not meet a basic criteria threshold. Approved projects would be eligible for funding for design, and rejected projects would receive recommendations on how they could be revised to improve consideration. Such a process would limit the number of inappropriate projects reaching the MPO and would improve the readiness of those that do advance.
In the long term, the MPO should consider adopting controls to reduce “over-programming” of future years. Such controls might state that projects programmed for the out years should consist of no more than a certain percentage of expected funding levels for those years. As a result, the programming process would be less vulnerable to cost overruns or funding constraints.
23.a The MPO should develop a pre-approval process that is a condition for further consideration in the TIP process
23.b The MPO should develop a program to provide design funding for approved projects and technical assistance for rejected projects
23.c The MPO should regularly and publicly evaluate the TIP to identify the number of projects that have been delayed and the costs of delay
24) Utilize public-private partnerships and other alternative project delivery methods where appropriate
Around the country, state transportation agencies are exploring various types of innovative project delivery, including partnerships with private construction or asset management firms to promote cost savings and efficiencies, reduce risk, and/or leverage expertise and experience. One example of these Public-Private-Partnerships (PPP) is the State of Indiana’s leasing an interstate highway to a private firm to toll, maintain, and operate in exchange for funding directed towards other state transportation activities. A smaller and more common example of PPPs is the consolidation of design-bid-build process to one construction firm. The Federal Highway Administration is increasingly promoting these partnerships through pilot programs and new guidance.
Massachusetts’ experience with Public-Private-Partnerships has been mixed. PPP’s have been utilized by the MBTA for operation and management of the commuter rail system. The operator, Mass Bay Commuter Railroad Co. (MBCR), has been more successful than the MBTA in addressing capital planning and expenditure issues on the commuter rail. However, MBCR has also been criticized for poor service quality; and the MBTA finds itself with limited alternatives now that MBCR is in place and running the service. Modern Continental was contracted to reconstruct and operate Route 3 north of Route 128, but the operation portion of the contract was never executed because of Modern Continental’s liquidity issues.
These examples and experiences in other states demonstrate that the advantages of PPPs are also accompanied by considerable risk. Successful application of PPPs for complex, expensive, and high-profile projects requires considerable institutional capacity to plan, negotiate, and manage these arrangements. The Commonwealth’s transportation agencies should build this capacity through a series of smaller, standardized pilot projects where contracting and operational models can be tested. The experience and practices developed through these pilot projects can then be applied to efforts of increasing scale and complexity.
24.a EOTPW should convene a reform committee to review the bid, design, and construction process for transportation projects with a mandate to implement time and cost saving reforms.
24.b EOTPW should develop a pilot program to use design-build contracts on common projects (such as footprint-bridge and roadways)
25) Increase transportation agency capacity to design and construct high-quality projects
The region needs transportation agencies with the professional capacity to plan, design, and construct state-of¬-the-art transportation improvements. Staff at MassHighway, the MBTA, EOTPW, and other state agencies should be experts in and advocates for innovative, multi-modal transportation projects. A culture of problem-solving will help to create more responsive solutions to transportation challenges and will build public confidence in transportation agencies.
Over recent years, the professional capacity of many transportation agencies have been depleted by staff cuts. For example, MassHighway staff declined by 45% from 1990 to 2006. Outsourcing has shifted some of the responsibilities and costs of project planning and design to private firms. Staff reductions in and of themselves are not necessarily bad, but the overall capacity of the agency appears to have declined. A 2003 Federal Highway Administration report found that staffing levels in 2001 were “well below the minimum needed to fulfill the necessary construction and materials testing functions of the statewide construction program,” and that “there are a significant number of personnel who lack the necessary training and qualifications to perform inspection, sampling, and testing of construction materials.”
Furthermore, the cost of contracting for technical and professional services may exceed cost of in-house staff, especially considering the time and staff costs associated with procurement and contracting. Private engineering firms are also more likely to bring an engineering-driven, mode-specific focus to project design, with less consideration for the community context and broader public policy principles. Through persistent outsourcing, agencies lose their ability to sustain a creative, solution-oriented professional culture.
26) Implement dispute avoidance and resolution systems for transportation projects
Massachusetts’ transportation agencies should adopt a Dispute Review Board (DRB) process that reduces costly and time consuming conflicts between agencies and contractors.
26.a EOTPW should require the use of dispute review boards for all state funded projects over a certain size
27) Implement comprehensive transportation performance analysis and reporting
Massachusetts transportation agencies must develop comprehensive systems to assess project delivery and operation. Such a system will have both internal and external purposes: internally, it will help create a “feedback loop” to help transportation agencies improve project delivery and public policy; externally, it will demonstrate accountability and pursuit of efficiency necessary to restore public confidence in the transportation system. Only with detailed reporting and demonstration of increasing efficiency will the public be willing to provide the revenue necessary to maintain and expand the transportation system.
Massachusetts’ 2008 Transportation Bond Bill was an important first step in establishing performance measurements and reporting requirements. The resulting MassHighway Scorecard is a valuable document but does not provide a detailed and comprehensive accounting of agency activities. It presents aggregate spending figures and descriptions of selected projects, but does not include project-specific spending and progress information or explanations for delays and overruns
The Executive Office of Transportation should establish a more comprehensive and detailed reporting system to assess the performance of individual departments, divisions, and projects.
27.a The EOTPW should establish quarterly, project-level reporting requirements for all transportation agencies
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