Overview of WSDOT Capital Project Management Preliminary Report

Overview of WSDOT Capital Project Management Preliminary Report Keenan Konopaski, JLARC Analyst Dan Estrada and Roberta Manshel, Gannett Fleming December 17, 2004 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 December 17, 2004 JLARC Review of WSDOT Capital Project Mgmt 2

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

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

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 ðCaveat: Findings from example projects represent diversity of practices in place December 17, 2004 JLARC Review of WSDOT Capital Project Mgmt 5

Criteria for Selecting Projects Ö Ö Ö Ö 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) December 17, 2004 JLARC Review of WSDOT Capital Project Mgmt 6

Projects Reviewed by Consultant 1. 2. 3. 4. 5. 6. 7. 8. Shaw Island Slip Reconstruction SR 527 Widening - 164 th to 132 nd St SE I-5 196 th (SR 524) Interchange Southworth/Fauntleroy Slip Reconstructions SR 16 HOV - Olympic Dr to Union Ave SR 161 - 234 th to 204 th St E SR 500 - NE 112 th Interchange I-90 Build Lanes from Argonne to Sullivan December 17, 2004 JLARC Review of WSDOT Capital Project Mgmt 7

Projects Reviewed (cont’d) Northwest Region Olympic Region Central Region 1 Eastern Region 3 2 8 4 4 5 6 Southwest Region December 17, 2004 7 South Central Region JLARC Review of WSDOT Capital Project Mgmt 8

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. December 17, 2004 JLARC Review of WSDOT Capital Project Mgmt 9

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

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. December 17, 2004 JLARC Review of WSDOT Capital Project Mgmt 11

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

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

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

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

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 n Opportunities exist to improve efficiency and reliability of information with system linkages, though costs and benefits should be examined December 17, 2004 JLARC Review of WSDOT Capital Project Mgmt 16

4. Critical Path Management Consultant found varied application of scheduling practices for the example projects Project Feature SR 16 Comprehensive Integrated Measurable Scalable √ √ Continuous Critical Path √ √ SR 161 √ √ SR 500 √ √ I-90 √ √ √ √ √ I-5 SR 527 √ √ Shaw √ √ Southworth/ Fauntleroy √ √ December 17, 2004 JLARC Review of WSDOT Capital Project Mgmt 17

5. Risk Management Consultant found varied application of risk management practices for the example projects Project Feature SR 16 Identified Formal Assessment Conducted Quantified Response Strategy Developed Tracked in Register √ √ √ SR 161 SR 500 √ I-90 √ I-5 √ SR 527 √ Shaw √ Southworth/ Fauntleroy √ December 17, 2004 √ √ √ JLARC Review of WSDOT Capital Project Mgmt √ √ 18

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 n n n 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%) Recent time overruns on construction contracts compared to initial awards increased (from 3% to 8%) December 17, 2004 JLARC Review of WSDOT Capital Project Mgmt 19

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 December 17, 2004 JLARC Review of WSDOT Capital Project Mgmt 20

Management Recommendations Rec. 1: WSDOT should extend the application of existing principles and tools, and put management steps in place to confirm their adoption: n n n Managing Project Delivery (MPD) Project Delivery Information System (PDIS) Primavera Project Planner for the Enterprise (P 3 e) December 17, 2004 JLARC Review of WSDOT Capital Project Mgmt 21

Management Recommendations (cont’d) Rec. 2: WSDOT should develop a plan and timeline for implementing consultant recommendations, focused primarily on: n n n 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 Confirming the consistency and currency of reporting information. December 17, 2004 JLARC Review of WSDOT Capital Project Mgmt 22

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

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. December 17, 2004 JLARC Review of WSDOT Capital Project Mgmt 24

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. December 17, 2004 JLARC Review of WSDOT Capital Project Mgmt 25