Overview of WSDOT Capital Project Management

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

2. 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 JLARC Review of WSDOT Capital Project Mgmt

3. Objectives of Review • 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 JLARC Review of WSDOT Capital Project Mgmt

4. 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 JLARC Review of WSDOT Capital Project Mgmt

5. 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 JLARC Review of WSDOT Capital Project Mgmt

6. 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) JLARC Review of WSDOT Capital Project Mgmt

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

8. Northwest Region CentralRegion Olympic Region 1 EasternRegion 2 3 8 4 4 5 6 Southwest Region South Central Region 7 Projects Reviewed (cont’d) JLARC Review of WSDOT Capital Project Mgmt

9. 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. JLARC Review of WSDOT Capital Project Mgmt

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

11. 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. JLARC Review of WSDOT Capital Project Mgmt

12. Planning and Program Development Project Delivery Authorization and Funding 1. Describe Procedures/Process • Capital program involves three inter-related processes Project Delivery JLARC Review of WSDOT Capital Project Mgmt

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

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

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

16. 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 JLARC Review of WSDOT Capital Project Mgmt

17. 4. Critical Path Management • Consultant found varied application of scheduling practices for the example projects JLARC Review of WSDOT Capital Project Mgmt

18. 5. Risk Management • Consultant found varied application of risk management practices for the example projects JLARC Review of WSDOT Capital Project Mgmt

19. 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%) • 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%) JLARC Review of WSDOT Capital Project Mgmt

20. 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 JLARC Review of WSDOT Capital Project Mgmt

21. 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) • Project Delivery Information System (PDIS) • Primavera Project Planner for the Enterprise (P3e) JLARC Review of WSDOT Capital Project Mgmt

22. 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; • Improving project communication by documenting terms and definitions; and • Confirming the consistency and currency of reporting information. JLARC Review of WSDOT Capital Project Mgmt

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

24. 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. JLARC Review of WSDOT Capital Project Mgmt

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