Overview of WSDOT Capital Project Management Preliminary Report Keenan Konopaski, JLARC Analyst Dan Estrada and Roberta Manshel, Gannett Fleming December 17, 2004

2 JLARC Review of WSDOT Capital Project Mgmt Scope of Review A pre-audit (overview of issues) Focused on management methods/structures used to deliver capital projects Limited to highway and ferry projects The beginning of the audit process, to help TPAB consider future audit steps Some initial management recommendations to WSDOT, when practical and supportable

3December 17, 2004JLARC Review of WSDOT Capital Project Mgmt Objectives of Review 1.Describe procedures/processes 2.Describe organizational structures 3.Review reporting/information systems 4.Review critical path management 5.Review risk management 6.Identify options for future TPAB audits and/or evaluations

4December 17, 2004JLARC Review of WSDOT Capital Project Mgmt Background on Capital Program  10 year cost of approximately $10 billion  About 1,300 projects in 10 year plan  Wide range in project sizes ($100K to $500M)  Multiple types of projects (highways, structures, vessels, ferry terminals, etc.)  Several programmatic purposes (mobility, safety, preservation, etc.)  New gas tax (Nickel fund) is designated by Legislature on line-item basis for specific projects

5December 17, 2004JLARC Review of WSDOT Capital Project Mgmt Challenge for Methodology How do we get substantive insight into specific project management techniques for this large, diverse capital program? Approach: Select projects for detailed reviews with diversity in mind, and highlight differences between stronger and weaker practices Result: Identify existing strengths and gaps for opportunities to extend practices or review more  Caveat: Findings from example projects represent diversity of practices in place

6December 17, 2004JLARC Review of WSDOT Capital Project Mgmt Criteria for Selecting Projects  Half of selected projects faced challenges  Projects past design and into construction  Representation from multiple regions  Diversity in size  Diversity in type (interchange, ferry terminal, etc.)  Diversity in project management tools and systems used  Diversity in design approach (consultants vs staff)

7December 17, 2004JLARC Review of WSDOT Capital Project Mgmt Projects Reviewed by Consultant 1.Shaw Island Slip Reconstruction 2.SR 527 Widening th to 132 nd St SE 3.I th (SR 524) Interchange 4.Southworth/Fauntleroy Slip Reconstructions 5.SR 16 HOV - Olympic Dr to Union Ave 6.SR th to 204 th St E 7.SR NE 112 th Interchange 8.I-90 Build Lanes from Argonne to Sullivan

8December 17, 2004JLARC Review of WSDOT Capital Project Mgmt Projects Reviewed (cont’d) Northwest Region Southwest Region Central Region Olympic Region Eastern Region South Central Region

9December 17, 2004JLARC Review of WSDOT Capital Project Mgmt Conclusions WSDOT has diversity in its project delivery practices. WSDOT is continuing to improve its practices with initiatives focused on project management principles and tools. While WSDOT encourages local innovation to help improve project delivery, some additional standardization of successful minimum requirements can provide benefits.

10December 17, 2004JLARC Review of WSDOT Capital Project Mgmt Conclusions (cont’d) Examples of exemplary practices are in place, but aren’t universally adopted because: they are relatively new, they are relatively new, implementation is slow due to the size and decentralization of WSDOT organization, or implementation is slow due to the size and decentralization of WSDOT organization, or there are resource constraints. there are resource constraints.

11December 17, 2004JLARC Review of WSDOT Capital Project Mgmt Conclusions (cont’d) WSDOT has initiated efforts to shift its capital delivery orientation from a program-focused to a project-focused perspective. A lack of standardized definitions poses challenges to project reporting, communication, and clear expectations for accountability. Constraints in automated systems limit analysis and flexible reporting.

12December 17, 2004JLARC Review of WSDOT Capital Project Mgmt 1. Describe Procedures/Process Capital program involves three inter-related processes Planning and Program Developmen t Authorizatio n and Funding Project Delivery

13December 17, 2004JLARC Review of WSDOT Capital Project Mgmt All Projects Have Common Tasks Prepare environmental documentation and submit applications Begin coordination with utilities/local government Determine right of way requirements and make offers Construction Open to traffic/user Advertise PS&E completed Finalize design work Permits approved Settlement/ adjudication reached Agreement/ plans secured Project definition complete Begin design

14December 17, 2004JLARC Review of WSDOT Capital Project Mgmt 2. Describe Organizational Structures Decentralized approach to project delivery: HQ units provide standards, tools, technical assistance, oversight HQ units provide standards, tools, technical assistance, oversight Regions/modes have responsibility for day-to- day management of individual projects Regions/modes have responsibility for day-to- day management of individual projects Organizational approaches vary by region/mode Organizational approaches vary by region/mode Project teams use varieties of “matrix” management structures Project teams use varieties of “matrix” management structures

15December 17, 2004JLARC Review of WSDOT Capital Project Mgmt Example of matrix structure REGIONAL MANAGERS PROJECT ENGINEER PROJECT ENGINEERING OFFICE RESOURCES INSPECTORS DESIGNERS ADMINISTRATIVE SUPPORT PROJECT ENGINEERING OFFICE RESOURCES INSPECTORS DESIGNERS ADMINISTRATIVE SUPPORT REGIONAL RESOURCES REAL ESTATE ENVIRONMENTAL DOCUMENTATION ENGINEER REGIONAL RESOURCES REAL ESTATE ENVIRONMENTAL DOCUMENTATION ENGINEER

16December 17, 2004JLARC Review of WSDOT Capital Project Mgmt 3. Review Reporting/IT Systems Numerous “silo” information systems support project delivery and house project data Systems are not well integrated or flexible Review identified examples of inconsistent information across reports Several reporting processes require significant manual intervention by staff Opportunities exist to improve efficiency and reliability of information with system linkages, though costs and benefits should be examined Opportunities exist to improve efficiency and reliability of information with system linkages, though costs and benefits should be examined

17December 17, 2004JLARC Review of WSDOT Capital Project Mgmt 4. Critical Path Management Consultant found varied application of scheduling practices for the example projects Project Feature ComprehensiveIntegrated Continuous Critical Path MeasurableScalable SR 16 √√√√ SR161 √ SR500 √√ I-90 √√√√ I-5 SR 527 √ Shaw √√√√√ Southworth/Fauntleroy √√√√ Project Feature ComprehensiveIntegrated Continuous Critical Path MeasurableScalable SR 16 √√√√ SR161 √ SR500 √√ I-90 √√√√ I-5 SR 527 √ Shaw √√√√√ Southworth/Fauntleroy √√√√

18December 17, 2004JLARC Review of WSDOT Capital Project Mgmt 5. Risk Management Consultant found varied application of risk management practices for the example projects Project Feature IdentifiedFormal Assessment Conducted Quantified Response Strategy Developed Tracked in Register SR 16 √√√√√ SR161 SR500 √√ I-90 √ I-5 √ SR 527 √√√ Shaw √√√√√ Southworth/Fauntleroy √√ Project Feature IdentifiedFormal Assessment Conducted Quantified Response Strategy Developed Tracked in Register SR 16 √√√√√ SR161 SR500 √√ I-90 √ I-5 √ SR 527 √√√ Shaw √√√√√ Southworth/Fauntleroy √√

19December 17, 2004JLARC Review of WSDOT Capital Project Mgmt Cost/Schedule Performance Review focused on management methods, and not actual performance outcomes for project delivery However, JLARC revisited highway cost/schedule data analyzed in a 1998 performance audit Recent cost overruns on construction contracts decreased from prior audit (from 10% to 6%) Recent cost overruns on construction contracts decreased from prior audit (from 10% to 6%) Proportion of contract change orders that were “avoidable” and “no value add” decreased (from 38% to 29%) Proportion of contract change orders that were “avoidable” and “no value add” decreased (from 38% to 29%) Recent time overruns on construction contracts compared to initial awards increased (from 3% to 8%) Recent time overruns on construction contracts compared to initial awards increased (from 3% to 8%)

20December 17, 2004JLARC Review of WSDOT Capital Project Mgmt Cost/Schedule Performance (cont’d) Construction cost and time overruns are inevitable on capital projects Project budgets include contingency estimates, and historically these have covered overruns at WSDOT JLARC did not examine how WSDOT overruns currently compare to other jurisdictions

21December 17, 2004JLARC Review of WSDOT Capital Project Mgmt Management Recommendations Rec. 1: WSDOT should extend the application of existing principles and tools, and put management steps in place to confirm their adoption: Managing Project Delivery (MPD) Managing Project Delivery (MPD) Project Delivery Information System (PDIS) Project Delivery Information System (PDIS) Primavera Project Planner for the Enterprise (P3e) Primavera Project Planner for the Enterprise (P3e)

22December 17, 2004JLARC Review of WSDOT Capital Project Mgmt Management Recommendations (cont’d) Rec. 2: WSDOT should develop a plan and timeline for implementing consultant recommendations, focused primarily on: Using existing exemplary practices to develop minimum standards/templates for critical path and risk management techniques; Using existing exemplary practices to develop minimum standards/templates for critical path and risk management techniques; Improving project communication by documenting terms and definitions; and Improving project communication by documenting terms and definitions; and Confirming the consistency and currency of reporting information. Confirming the consistency and currency of reporting information.

23December 17, 2004JLARC Review of WSDOT Capital Project Mgmt Management Recommendations (cont’d) Rec. 3: WSDOT should conduct an assessment of the effectiveness of current information systems and options for addressing any deficiencies.

24December 17, 2004JLARC Review of WSDOT Capital Project Mgmt Management Recommendations (cont’d) Rec. 4: WSDOT should develop criteria for extending Cost Risk Estimating and Management (CREM) analyses to a wider universe of projects.

25December 17, 2004JLARC Review of WSDOT Capital Project Mgmt 6. Options for Future Audits/Reviews A.Audit the effectiveness of Managing Project Delivery (MPD) and the Project Delivery Information System (PDIS) in improving project delivery (with delayed audit start time). B.Conduct an assessment of project delivery performance measures, comparing WSDOT results to similar programs at other states. C.Audit the practice of determining construction contractor pay estimates. D.Conduct an assessment of alternative contracting methods, such as alliance contracting.