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8/20/2019 Mal Kerley handouts 6perpage.pdf
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1
Managing Change, Challenges &Other Things
Malcolm T. Kerley, P.E.Chief Engineer, Virginia Department of Transportation
Chair, AASHTO Subcommittee on Bridges & Structures
April 19, 20102
Topics
• VDOT
• Project Delivery Options
• Changing Roles
• A Few Other Things
• Questions
3
Woodrow Wilson Bridge
4
About VDOT
• VDOT maintains the 3rd largest
state-owned road system in the
country
• 57,867 miles of state maintained
roadway system
5
About VDOT
• 20,914 Structures (Bridges and Large Culverts)
- 19,380 (93%) Maintained by VDOT
- 1,534 (7%) Maintained by Localities• 4 Underwater Crossings
• 2 Mountain Tunnels
• 3 Toll Roads, 1 Toll Bridge
• 4 Ferry Services
• 41 Rest Areas, 107 Commuter Parking Lots
6
Fy 2010 Transportation Revenues
Sales & Use
16%
Other
Revenues
21%
VA Motor Fuels
24%
Federal Fuels
and Others
25%Motor Vehicle
Sales & Use
14%
Almo st 2/3s oftransportation
revenues are tiedto fuel purchasesand auto sales
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2010 Transportation Revenue
$0
$100,000,000
$200,000,000
$300,000,000
$400,000,000
$500,000,000
$600,000,000
$700,000,000
$800,000,000
$900,000,000
Motor Fuels
Tax
Vehicle Sales
and Use Tax
Vehicle
License Tax
Retail Sales
and Use Tax
Other
Sources
Federal
HMOF Construction
8
About VDOT
48.3%
19.8%
13.6%
10.7%
7.6%
Current FY2010 budget is $3.4 billion
• $1.63 B (48.3%) – Maintenance (includes city and county street payments)
• $669 M (19.8%) – Construction
• $459 M (13.6%) –Support other agencies, tolls, admin, other programs
• $362 M (10.7%) – Special financing and earmarks
• $257 M (7.6%) – Debit service
9
SalemLynchburg
Hampton Roads
Richmond
Fredericksburg
Staunton Culpeper
NorthernVirginia
Bristol
N
VDOT Construction Districts
10
VDOT’s Dashboard
11
Goshen Rehabilitation Project
12
Program Challenges
• Economic recovery requires efficient transportation network
• Infrastructure is aging
• DOT workforce aging and shrinking
• DOT budget shrinking
• VMT stagnant during current recession, but had grown significantly
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Transportation Revenue Reductions
Spring 2008 $1.11 billion
February 2009 $2.57 billion
Through FY 2009 $3.68 billion
August 2009 $0.88 billion
November 2009 $0.05 billion
FY 2010 Revisions $0.93 billion
Total $4.61 billion
14
Current Six-Year Improvement Program
$8.9 b
$2.9 b
$6.0 b
Revised
FY 2009-2014
Program
$7.5 b
$2.0 b
$5.5 b
Approved
FY 2010-2015
Program
$7.6 b
$2.1 b
$5.5 b
Revised
FY 2010-2015
Program
$10.6 b
$2.7 b
$7.9 b
Approved
FY 2009-2014
Program
$11.5 bTotal
$2.9 b
Rail & Public
Transportation
$8.6 b
Highway
Construction
Approved
FY 2008-2013
Program
15
Program Challenges - Bridges
• Aging infrastructure- 56% of VDOT’s bridge inventory is 40 years or older
• 20% of the inventory is at risk of becoming SD
• Shortfall in State and Federal revenues
• Estimated $1.9 billion in maintenance and rehabilitation needs
• Estimated $ 4.2 billion in replacement needs
• Approximately $ 3.5 billion reduction in the six-year plan
16
VDOT’s Bridge Program
NUMBER OF BRIDGES AND CULVERTS BY DECADE
1515
2323 2135
3482
4295
1726
865
3905
52099 35 20
0
1000
2000
3000
4000
5000
2000-
2009
1990-
1999
1980-
1989
1970-
1979
1960-
1969
1950-
1959
1940-
1949
1930-
1939
1920-
1929
1910-
1919
1900-
1909
pre-
1900
DECADE
N U M B E R
17
VDOT’s Bridge Program
CUMULATIVE PERCENT OF BRIDGES AND
CULVERTS
100.0%92.8%
81.7%71.4%
54.8%
34.3%26.0%
21.9%
3.2% 0.7% 0.3% 0.1%0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
120.0%
2000-
2009
1990-
1999
1980-
1989
1970-
1979
1960-
1969
1950-
1959
1940-
1949
1930-
1939
1920-
1929
1910-
1919
1900-
1909
pre-
1900
DECADE
P E R C E N T
55% of inventory is 40 years or older
18
Bridge Construction Unit Costs 1999-2009
$0
$50
$100
$150
$200
$250
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Year
D o l l a r s p e r S q .
F t .
On-System Cost per SF Off-System Cost per SF
VDOT’s Bridge Program
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Bridge Management Needs/Goals
• Needs
- Preventive Maintenance and Preservation
- Restoration & Rehabilitation
- Replacement
• Goals
- Identify and prioritize statewide needs
- Provide adequate processes to plan, budget, implement and monitor
work efforts
- Use a life-cycle approach
20
The Blueprint
• 3 Parts to Blueprint
– Six-Year Program
• Reduce by $4.6B
– Organization/Staffing
• Reduce employees by 1,000
– Services/Programs
• Centerline out
72%
15%
13%
Construction Program
Admin & Sup port Pro gram
Maintenance Program
Reductions by Program Over 6 years
(FY 2009 – 2014)
21
Public Policy Questions
• Who should pay for Roads and Bridges?
– What type of user fee makes the most sense?
• Fuel tax?
• Tol ls?
• VMT?
• Other?
• Who should maintain and operate the transportation network?
22
Route 5 Bridge over Chickahominy River
23
VDOT Past, Present and Future
• 100 years of tradition 1906-2006:
– Virginia policy mirrors federal policy
– Motor fuels user tax [$0.17 per gallon since 1986], and local taxes
are predominant funding source
– Most VDOT project delivery is by traditional design-bid-build - paid
with public funds
– VDOT’s current budget is approximately $3.4 billion [US]
24
VDOT Past, Present and Future
• Present Challenges Mirror Rest of US
– Highway system is aging
– Maintenance requires increasingly larger share of budget
– Population and economy are growing
– Current needs exceed available funds
– Strong economy requires efficient transportation
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VDOT Past, Present and Future - Options
• Determine and maintain core competencies
• Develop new delivery methods
• Develop internal systems that accommodate new delivery methods
26
Project Delivery Options
DesignBid
Build
Private
ContractFee
Services
DesignBuild
DesignBuild
OperateMaintain(DBOM)
Long
TermLease
Agreement
DesignBuild
FinanceOperate(DBFO)
DesignBuild
OwnOperate(BOO)
Public Agency Controlled Concessions / PrivatizationsMore Private Sector Control
Public Pays
Tax Exempt Financing
Public Control
Public Equity
User Pays
Taxable Financing
Private Control
Private Equity
Public Private Partnerships
Borrowed from C. Kane, formerly of Washington Group
27
Scoping - Influence Curve
28
VDOT’s Project Delivery Options
• Design-Bid-Build
– Remains primary delivery method
– Suitable for many types of projects
• Alternative delivery methods:
– Public Private Transportation Act (PPTA)
– Design-Build
29
Virginia’s Public-Private Transportation Act of 1995 [thePPTA]
Policy
• §56-558 A.
- A public need for timely transportation development
- Existing methods may not be adequate
- Private development or operation may be more timely or more efficient or
less costly – thereby serving the public interest
• §56-558 C.
– Intent is to encourage private investment in transportation facilities
• § 5 6-559.
– Allows for solicited or unsolicited proposals
Such partnerships are for carefully selected projects 30
VDOT’s Procurement Process - PPTA
Phase 2Independent Review Panel
IRP Meetings
Phase 1Quality Control
•Receipt of Localities comments•Concessionaire presentation
•VDOT presentations
•Public Comments
Phase 3CTB Action
Phase 4Detailed Proposal
Phase 5Negotiations
Phase 6Interim or
Comprehensive Agreement
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3P Projects in Virginia
32
The Route 895 PPTA Project
• Phase 1 – Virginia’s First PPTA Toll Road
– The PPTA allows unsolicited proposals
– FD/MK proposal in 1995
– VDOT did not have construction funds
– FD/MK proposed debt financing for DBF
– VDOT would operate toll road upon completion
– Road was constructed 1998 - 2002
33
The Route 895 PPTA Project
• Phase 2 – Refinancing the debt, and
• Virginia’s first PPTA concession agreement
– Traffic revenue did not meet forecasts
– Economic growth forecast a better long-term return
– Transurban, LLC
• 2006 - 2105
• Finance, operations and maintenance
• Valued at +$500 million [US]
• Revenue sharing provisions34
Route 895 – James River Crossing
Route 895 PPTADBF 1998 - 2002, FOM 2006 - 2105
35
Route 895 PPTADBF 1998 - 2002, FOM 2006 - 2105
36
Downtown Tunnel/Midtown Tunnel/MLK Extension
• Midtown Tunnel- New Construction,
Approaches and
Improvements
• Downtown Tunnel- Improvements
• Southern Extension
of MLK Freeway
(Route 58)
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Midtown Tunnel
38
P3s … it’s not just tolling
• Coalfields Expressway
– Coal synergy
• Route 28
– Special tax district
• I-495 Hot Lanes
– Dynamic tolling
– HOV/HOT lanes
39
Coalfields ExpresswayHawks Nest
40
Route 28 Corridor Improvements
41
I495 - Capital Beltway HOT Lanes
42
Design-Build
• § 33.1-12 of the Code of Virginia, enacted in 2001
- Authorizes the Commonwealth Transportation Board
(CTB) to award Design-Build contracts
- Requires Objective Criteria for project selection
- Finding of Public Interest
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Design-Build
CTB Objective Criteria• Project shall include one or more of the following:
- Expedited Schedule
- Established Budget
- Well Defined Scope
- Favorable Risk Analysis
- Prequalification of Design-Build Firms
- Competitive Bidding Process
44
DB Bridge Contracts
• Large and small projects
• Route 460 Bridge - $90 million
• Regional Bridge and Culvert Repair
– Bundled structures by geographic area
– Contracts ~$1 million to $10 million
• Route 609 ~$1 million
• Route 713 ~$2 million
45
609 Bridge – 1st Single Phase
46
Giles Co. BridgePosted: 3 tons Maximum Load
47
Battlefield Parkway - Leesburg
48
Pacific Boulevard
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Changing Roles
50
Design and Construction OversightOwner’s Role
• P3 & DB delivery not simply a philosophical change
• Different contractual arrangements require different policies
and procedures
• Act based on lifecycle risks
• Executive Management must direct changes to traditional
procedures
51
Risk Based Approach to Contract Administration
• Quality Assurance and Quality Control
• Plan Review
• Construction Authorization and Oversight
• Dispute Resolution
52
Observations
• DOTs have 100 years of tradition
• Conflicting Priorities (profit v public service)
• Fundamentally different organizations can successfully coexist
• Government must establish a business process
• Private sector must perceive investment opportunities
• Private companies can succeed or fail, and they do both equally
well
• Engineering is the easy part …
53
Owner’s Recommendation’s
• Read the contract documents
• Develop procedures based on your risks
• Understand and enforce the contract
• Direct your program
• Communicate – to ensure support
• P3 is not a panacea
54
Current Status
• Traditional design-bid-build contracts
– 84 Construction Contracts for $1 billon
– 140 Maintenance Contracts for $300 million
• More than $2 billion under construction and $3 billion work under
development for PPTA & DB projects
– Four active PPTA contracts under construction for +$1,900 million
– 17 active DB contracts under construction for +$250 million
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Smart Bridge - Blacksburg
56
… a few Other Things
• How does a bridge engineer consider those policy and
changing program and project delivery methods in the
context of traditional design-bid-build contracting?
• Is design-bid-build contracting still relevant?
57
Rapid Renewal ApproachesInnovative Contracting Options
• Why use innovative contracting options?
– Accelerate Delivery, Minimize Road User Impacts
– Recover Road User Costs - not considered in traditional contracts
– Risk Allocation
• What are the types used by VDOT?
– Incentives/Disincentives
– A+B Bidding
– Cost plus time bidding
– No-Excuse Bonus
– Fixed Date/Adjustable Schedule – Design-Build 58
Basis for Rapid Renewal Approaches
Simplified calculations for Road User Cost (RUC)
• Vehicle Operating costs: ADT x Delay t ime x Vehi cle Oper ating Cost /mile
-OR-
• Lost Productivity costs: ADT x Av g pass enger p er vehi cle x Del ay x mi n. hou rly wage
59
Incentives/Disincentives
Definition:
Contract provision that compensates the Contractor for
accelerating completion.
Determination:• Apply to Critical Projects, Minimize RU impacts and costs• Incentive/Disincentive Phase – should complete in less than one
construction season
• Based on justifiable Road User Costs (not liquidated damages)
• I/D $$ Sufficient to encourage acceleration (not exceed 5% of totalcontract)
• Incentive/Disincentive $$ should match
• Requires CPM schedule specification, accurate baseline, frequentupdates 60
Incentives/DisincentivesPros And Cons
Pros
• Reduce Construction time
• Reduce contractadministration costs
• Improve public relations
• Increase Contractors’interest
Cons
• Increase construction
costs• Negotiating contract
changes is difficult
• Contractors submit moreTIA’s and claims.
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Incentives/DisincentivesProject Selection
62
Incentives/DisincentivesRoute 340- Bridge Replacement At Jeremy’s Run
63
A + B Bidding
Definition: What is the “A” and the “B”?
• “A” = Traditional dollar amount for contract items
• “B” = Calendar days bid to complete the work multiplied by daily RUC
» B converts to new Contractor determined fixed completion date
Determine the $$ Amount:
• (A) + (B x [Road User Cost/Day]) = Total Bid
• Lowest Bid for Award
• Award $$ amount is limited to the “A” portion of the bid after Award
• Can be coupled with Incentive/Disincentive based upon length of timebid to complete (I/D based around new fixed date)
» Cap placed for budgeting project on incentive64
A + B BiddingCriteria
• High RUC, Safety/Emergency, community impacts
• High Traffic Control costs
• Relatively free of third party conflicts
• Public interest expressed to expedite project
• “B” portion should be sufficient to influence bids
65
A+B Bidding
Pros
• Increases bidders’interest
• Encourages acceleration
• Promotes efficiencies
• Reduce RU impacts
• Reduces pollution,environmental impacts
Cons
• Contract changes,delays, nullify advantages
• Increases inspection andadministration costs
• Negotiating contractchanges, TIA’s is difficult
• Not to be used routinely
66
A + B BiddingProject Selection
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No-Excuse BonusDefinition:
Bonus to accelerate completion. Contractor assumes all risks for
completion and waives all right to claims.
Criteria:• Unique/Complex Project, High Traffic Volumes/RUC’s
Determine the $$ Amount:• Road User Cost
• Cost of all known and potential risks
• Must be sufficient to encourage acceleration and interest
• Thorough pre-Award contract time analysis to determine majormilestones
• Detailed construction inspection and administration estimate 68
No-Excuse Bonus
Pros
• Reduced construction time
• Increased Bidders interest
• Better coordination between
Primes and Sub-contractors
• More innovative techniques
Cons
• Impacts quality of work
• Increase construction costs
and inspection costs
• Waive all rights to claim
• Negotiating contract changes,
TIA’s is difficult
• Requires detailed CPM
Schedule specification,
baseline, frequent updates.
69
ACCA Yard Project
70
Fixed Date / Adjustable Schedule
• Advertise project with dual dates
• Contractor selects work period within larger contractwindow
• Contractor’s selection converts to fixed date
• Usually reserved for smaller contracts
Ex: Work requires 60 days to perform, but VDOT provides 180 day window.Contractor selects early or late period to optimize his schedule work.
Benefit to VDOT: Increased competition
71
Rapid Renewal - Summary
• Why use innovative contracting options?
– Accelerate delivery
– Minimize road user impacts / travel delay
– Recover user costs
– Risk allocation ~ contractor controls MOT and job sequencing
• What is the top option used by VDOT?
– Incentive/Disincentive
• Successful
• Easy Administration 72
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AASHTO Bottom Line Report – 2009
• Annual investment $166 billion [2010 to 2015]
– Highways and Bridges
• Highway capital investment 78.7 billion [2006]
– Total from all levels of government
• Model-based investment estimates do not address all needs
– Additional annual highway requirements total over $13 billion
• >$7 billion in environmental mitigation costs
• $2.6 billion in highway operations costs
• $1.2 billion in safety program costs
• $1.6 billion in highway security costs.
74
AASHTO Bottom Line Report – 2009
75
AASHTO Bottom Line Report – 2009
76
AASHTO Bottom Line Report – 2009
77
Top 3 Challenges
• Funding
– Is the “pie” big enough?
• Funding
– Are you getting your “correct” piece of the pie?
• Funding
– Are you “eating” your pie appropriately?
78
Varina Enon Bridge
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AASHTO Subcommittee on Bridges & Structures
• Strategic Plan
• 2005 Workshop Prioritized Major Challenges – Extending Service Life
– Optimizing Structural Elements
– Accelerating Bridge Construction
– Advancing the AASHTO Specifications
– Monitoring Bridge Condition
– Contributing to the National Policy
– Managing Knowledge
80
AASHTO Subcommittee on Bridges & Structures
• 2000 Workshop Prioritized Major Challenges
– Enhance Materials, Structural Systems, and Technologies
– Efficient Maintenance, Rehabilitation, and Construction
– Bridge Management
– Enhanced Specifications for Improved Structural Performance
– Computer-Aided Design, Construction, and Maintenance
– Leadership
81
AASHTO Subcommittee on Bridges & Structures
• Leadership Objective
– Engage in policy development, planning and budgeting
• Leadership Approach
– Professional articulation of safety risks
– Bridge Engineers viewpoint
• Aesthet ics
• Environment
• Maintenance Investment
• Bridge Alignment
• Construction Methods
– Leadership and Management Training for Bridge Engineers82
AASHTO Subcommittee on Bridges & Structures
83
Questions
84
Questions
• What is the primary source of transportation revenue for Virginia?
• To which program does VDOT allocate the most money?
• What is the predominant, traditional project delivery method?
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Questions
• What are one or two delivery methods wherein the owner
relinquishes certain authority to the contractor?
• Why would an owner choose an alternative delivery method?
• What are the top three challenges faced by DOTs?
• What is one of AASHTO’s Leadership Objectives for bridge
engineers?
86
Answers to Questions
• What is the primary source of transportation revenue for Virginia? – Fuel sales
• To which program does VDOT allocate the most money?
– Maintenance
• What is the predominant, traditional project delivery method?
– Design-Bid-Build
87
Answers to Questions
• What are one or two delivery methods wherein the ownerrelinquishes certain authority to the contractor?
– Public-Private Partnerships and Design-Build
• Why would an owner choose an alternative delivery method?
– To accelerate project delivery
– To access additional funding sources
• What are the top three challenges faced by DOTs?
– Funding, Funding, Funding
• What is one of AASHTO’s Leadership Objectives for bridgeengineers?
– Engage in policy development, planning and budgeting