Think Big

| January 1, 2011

FHWA head sees a year of thinking big, dreaming big and change.

 By John Latta

The lights are off in Victor Mendez’s office. He likes it that way. It is a blustery, freezing but clear day shortly before Christmas in D.C. and the Administrator of the Federal Highway Administration (FHWA) looks into 2011.

Our interview wandered, but I have focused here, in the interests of available space, on what I consider its key discussions.

Mendez talks mainly about goals such as speeding up project delivery, being more flexible in working with states, pushing the innovation envelope and pressing hard on safety improvements to cut road deaths.

“I would say these are things we have to do regardless of the revenue picture. There are efficiencies and innovations out there that we need to implement and we need to do that in an urgent manner and, given where we are with the economy, I would repeat what [DOT] Secretary [Ray] LaHood said very recently. He said in America we are a land of big dreamers and despite the economy we cannot cease to dream.” We must, says Mendez, “think big” because “if you stop dreaming simply because today’s economy is not doing well, you are going to fall behind the eight-ball. We have to continue thinking about our infrastructure and the big picture. We have to continue to plan and prepare for it and – whatever that revenue picture turns out to be – if we are prepared to do things in a smarter, faster, more efficient manner, we’ll be able to make the best investment we can for the American people.”

Changes in the way FHWA works with states, and changes written into any reauthorization bill seem to be the key machinery for pushing goals ahead this year for Mendez.

Streamlining the D.C.-State Relationship

When it comes to dealings with state DOTs, Mendez believes the Stimulus, the American Recovery and Reinvestment Act, helped clear away a lot of the clutter that has often tangled those relationships. “In that kind of a time crunch, we were forced to ramp up our coordination with state DOTs. The relationships we have with state DOTs have actually improved, and that is incredible. I think that will play a key role as we move into the future.”

Mendez sees these improved relationships bearing fruit under any new reauthorization act, but also as FHWA tries to spur innovation. He uses Utah’s use of rapid bridge replacement practices as a simple example. “Utah is doing great. They build bridges off-site, and when you think about that it’s like building Legos and then sliding it in. But think about the big implications – it’s costing less, it’s taking less time to actually deliver to the American people, then I think of the safety benefits when you don’t have all this construction underway for a long period of time, and then the traffic control from a congestion-reduction standpoint. There’s less impact to the traveling public – that in and of itself is incredible.” His vision, he says, would be that where today we make a “big deal” about such relatively new practices, “that it will be just common standard practice throughout the nation; where it’s appropriate, just do these things quickly, efficiently and effectively. Just get ‘em done, so that we can go fix what we have to fix, take care of the issue and then move on to the next challenge.”

FHWA is recommending that states make innovative contracting practices the standard way of doing business, a position that it seems will inevitably be reflected in the wording, and regulations, of any reauthorization bill.

Mendez and FHWA have been talking to all levels of government in states, based on regional meetings, and “the outcome of these sessions is obviously to talk about the broad issues, but the outcome is that every state will go back working with us individually to create for us a state implementation plan. What that means, [for example] Utah and New York will go back and work with us directly to create an implementation plan for these concepts and ideas for their states.”

The result, he hopes, is that state, regional and local governments will expand and redefine how they work with Washington, bringing, for example, such practices as design/build and alternate bidding into arenas where they are now not considered, accepted or allowed. He cites this example: “In some cases, some states don’t have design/build legislation. I came from Arizona, where we were working on that for the past 10 to 12 years. So you’ll be able to identify a specific state approach that works for them. If it’s design/build and you don’t have design/build legislation maybe at the state level, maybe I need to be talking to the right people to get that. And that’s going to really fall back on the states to make that happen. Not every idea is applicable everywhere, I understand that, but where it is we ought to take a hard look at it.”

Faster, Better, Smarter

As Representative John Mica [R-Fla] as incoming chairman of the House Transportation and Infrastructure Committee moves to draft a new reauthorization bill, Mendez is ready to respond, and leaves little doubt one of his most prized goals, and one he shares with Mica, is any move to speed up project delivery.

“Our hope is that maybe by March, or I should say maybe spring, we may actually have a reauthorization proposal. I know Mr. Mica has been talking about his ideas. One of his great ideas is improving project delivery.” FHWA had the same idea, says Mendez, which was “let’s cut project delivery time by 50 percent. If its 13 years, let’s cut that to six-and-a-half to seven years. If we can do that, I think we show the American taxpayer that we give them great value for their investment, plus it shows that we know what we’re doing.” Mendez says he received feedback from a meeting where Mica said that he wanted major projects that take 14 years cut by 50 percent in start-to-finish delivery time. “So great minds think alike,” he says with a smile. He adds that he expects Mica to ask him: “Victor, do you think you can reduce this [delivery time]?”

FHWA initiatives in trying to find ways to shorten delivery time has lead to the creation of a toolkit that includes ideas for using flexibilities in the law and not duplicating efforts in the planning and environmental review process. Topics addressed in that toolkit include Planning and Environmental Linkages, Legal Sufficiency Enhancements, Expanding Use of Programmatic Agreements, Uses of In-Lieu Fee and Mitigation Banking, Clarifying the Scope of Preliminary Design, Flexibilities in Rights of Way, Flexibilities in Utility Accommodation and Relocation, and Enhanced Technical Assistance on Delayed EISs.

“I think at the end of the day, because you are being more efficient, innovative contractors will deliver quicker if you engage them in the process.” Mendez cites a single example: “If you can build a major project in half the time, that means half of your traffic control costs alone will be saved. Control is really a major cost issue within any [large] project. Just that one simple element gives you an idea of what’s possible.”

Mendez’s core point here is that innovation cannot wait for the economy or a political process; it must constantly evolve from idea to adoption.

“We have a lot of great ideas that probably already exist out there that we simply do not use, and there’s ideas we haven’t thought about that will be somehow created by somebody,” he says, “and when we latch on to those, we need to drive them forward quickly. We cannot wait decades to implement new ideas in our field.”

Our House and Theirs

It is also worth noting that Mendez is absolutely passionate about anything that will improve safety and lower road deaths, and he will surely look to put some teeth into safety initiatives via reauthorization. On this day, he is particularly impressed by a bumper sticker from Rhode Island that reads: DRIVE NOW TEXT LATER.

Mendez is also a jealous guardian of America’s lead in the world of road and bridge technology. The world, he says, looks to us and wants to learn from us, and we must maintain that premier position. As we spoke, a delegation from Asia was in the building asking for technical help. “You get so engaged working with people and talking with people. [At an international conference several years ago,] it was a Cuban delegation and the leader was talking with me – and we connected because we’re half chatting in Spanish and all that. He wanted a copy of the Green Book and I’m like, ‘Sure, not a problem,’ and then he was surprised because it kind of caught me, ‘Oh, wait a minute. We can’t give you this stuff because we have diplomatic issues,’” he bursts out laughing. “I’m sure he got one.”

One of the “front lines” he wants to see leading the way to change involves an internal initiative in FHWA workplaces called “going greener.”

“You’re sitting in it. Notice I didn’t turn on my lights; I have plenty of light. I tell them to minimize their carbon footprints: recycling , turning off lights when you don’t need them, any other ideas. I think it’s important for us an agency to look to the future and conserve resources and, at the end of the day, maybe even save money for the taxpayer.”v

Déjà Vu All Over Again. All Over Again.

Surveys show readers still dealing with a persistent recession

Better Roads surveyed readers in November, asking leaders in both construction companies and government agencies. Some highlights:

Half of the respondents in both sectors are expecting a year much like last year, with slightly more than one-third looking for a decrease in available jobs and funding. That is, 49.2 percent of responding contractors anticipate that the the amount of work put up for bid by their state agencies will “stay about the same” and 48.1 percent of responding government agencies expect their agency’s funding for road and bridge programs with do likewise. But 35.4 percent of agency respondents expect a decrease in that funding level and 34 percent of contractors expect fewer jobs to be offered by their state’s agencies.

Some details from the surveys and breakouts of some of the pithy comments filed by respondents will let you build a picture of how our readers, experienced in the field of highway and bridge work from first discussion to ribbon cutting, foresee 2011. It isn’t a rosy picture drawn by cockeyed optimists. It is instead a picture of people adapting to a new reality in terms of the economy or the stalled reauthorization of the highway bill. The reality appears to be that they are expecting another year like last year and the year before it.

What the Agencies had to say

Will your agency’s funding for road and bridge programs increase, decrease, or stay about the same in 2011?

17.9% Increase

34.0% Decrease

48.1% Stay about the same

Predicted revenue for the next several years shows a downward trend so there is no way to keep up with previous years’ programs. Right now, it seems more likely to have to lay off personnel just to do minimal road maintenance.

We are crossing our fingers and hoping that our road and bridge maintenance budget will remain the same, although there might be cuts. My program is responsible for maintaining Federal Roads and we have been receiving approximately the same budget, with no COL increases for about 20 years.

Our work program is about half of what it was in 2007.

County Highway Department Budget – 0% increase, any increase in other programs such as snow removal, flood damage or equipment purchase means a decrease in construction budget.

Our agency is rethinking what kind of work goes out in the street and as such many projects that were in the design stages have been shelved. For now, our agency has received a lot of funding for the rehabilitation of existing infrastructure instead of expansion projects (except when politically sensitive issue). The support of the industry in these times for competitive prices and quality work is well appreciated.

Don’t think it will go up, however, it may stay the same. But we do have a $3 billion shortfall that is not looking good.

We have a $220 million shortfall forecast for the 2011-13 biennium.

What the Contractors had to say

Do you anticipate that your levels of highway and bridge construction work put up for bids by your state in 2011 will increase, decrease or stay about the same?

15.4% Increase

35.4% Decrease

49.2% Stay about the same

Projects are bigger, different types of delivery options being used – it is not business as usual – probably never will be again.

NYS is a mess. At a county and local level, where I would be comfortable and qualified to bid on public projects, we have a real mess on our hands. Unfunded state mandates have driven many local governments including our entire county government into bankruptcy. We’re looking at a 50% property tax increase at the county level, just to keep the county running! This will definately affect any projects the county and local governments were considering to put up for bid. Not to mention many businesses closing and more home foreclosures next year locally.

What the Agencies had to say

Will your funding level allow you to do all the work you consider essential in 2011?

28.3% Yes 71.7% No

We are operating on about the same funds as 2002.

We are at the point where we are only bandaiding the local streets and some collectors, because of delayed maintenance over the last several years and because of funding shortages have caught up with us.

Preventive maintenance limited.

Will prioritize.

Until there is real focus on roads and infrastructure, all we can do is put “band aids” on our roads and hope for the best.

What the Contractors had to say

Do you anticipate that the kind of highway and bridge construction work put up for bids by your state in 2011 will change?

40.0% Yes 60.0% No

In what ways do you anticipate the kind of highway and bridge construction put up for bids by your state in 2011 will change?

More preventive-maintenance-type work.

More maintenance, less expansion.

More alterations and upgrades to existing network.

Increase in Design/Build projects.

More repair than construction of highways and bridges.

More preservation, less rehab.

More repair work minus less replacement equals basically painted rust like the state of the entire country’s infastructure.

More design consultants, less DOT.

Scope of work. More performance criteria.

What the Agencies had to say

What sort of work will be your priority for 2011?

That which we know we will get paid for.

Maintenance of existing facilities will be a priority.

Street maintenance, as in the past. We have been underfunded for years.

Low-cost maintenance.

If we can make it through the winter snow and ice season with any maintenance funding remaining, we will try to keep the federal roads we maintain as safe as possible.

Ongoing maintenance of existing streets and alleys. One major street improvement project including new curb/gutter, paving and storm sewer.

Pavement preservation.

Resurfacing and structure rehabilitation. Necessary network expansion will suffer due to lack of funding.

What the Agencies had to say

Do you think your state will pass legislation or regulations increasing highway/road user fees?

21.7% Yes 78.3% No

Unlikely to see gas tax increase this legislative session; toll finance and PPP for highway capacity projects seem to be the trend in financing additional highway capacity, as ongoing system maintenance needs consume an increasing majority of the (declining) gas tax revenues.

New governor with no desire to raise gas taxes.

Not at this time.

The discussions in our state are a joke – endless two-year political posturing. Legislators only concerned about the next election. No leadership due to term limits. What will be the tipping point?

We have asked our legislatures numerous times for the liquid fuels tax to be raised.

I work for the federal government and I expect some increase in taxes, but Congress and the Administration need to tell the public they need to “pay up” to just maintain what we have, and should expect a doubling of the gas tax to make any real improvements to our surface transportation infrastructure.

What the Contractors had to say

How has “The Great Recession” changed the way you operate?

Being more diligent in cutting any and every cost to performing the work safely and meeting all specification requirements. Not letting equipment/trucks idle for long periods, watching quantities used more closely, watching labor hours, etc.

Bid on jobs farther away, lower profit margin, lower wages being paid to employees, no more company-paid health insurance, fewer employees, etc.

What the Contractors had to say

Where do you see your company three years from now?

Right where we are today. Doing what we do well and not taking any more risks than we currently do in a job.

Still in business, I hope.

Increased revenue, but with tighter-than-ever margins and covering a larger geographical area to secure that revenue.

More diversified, yet more lean.

I will either be retired or will have sold out.

If things don’t change, and very soon, I will be out of business.

No larger than we are now but with fewer employees. The new regulations being imposed on business makes it less favorable to hire new employees. We will have to find ways to increase production with fewer people.

We are projecting to double in size.

Back where we were three years ago.

What the Agencies had to say

When do you believe you will be functioning at the same levels as you did before the recession?

Maybe never, but we will get close to the previous level in 3 to 5 years.

Never. There will be an entirely different view for economic decisions in the future.

The way things look, I don’t expect to get back to the levels we had two or three years ago. The funding just won’t be available to ever hope to catch up.

At least 3 to 5 years from now.

At least 5 years from now.

We believe that it will be several years before we are able to catch up so that we are back on our regular maintenance/reconstuction schedule. The recession has pushed that out to 7 to 10 years.

We have consolidated into one agency and will never function in the same way however, it may not be a bad thing.

What the Agencies had to say

What is your primary need for 2011; in other words, what tops your wish list?

Rebuild infrastructure.

Low prices on materials for overlays.

Funding for manpower.

Increased maintenance funding.

Cash flow and raises.

More jobs in the local community so our cities can turn the corner!

Rehab as well as ground breaking of new projects that were in the pipeline (already approved).

More funding.

Upgraded equipment.

New revenue sources for road maintenance and repair.

Additional funding to utilize on local arterials and major collectors and to support additional staff and/or consultants to accomplish the catch-up we need to do.

Elected officials who would do the job they were elected to, not worry about the next election.

Pavement preservation.

Gas tax increase.

What the Contractors had to say

Are you now doing, or considering bidding, for jobs that…

are not in your traditional field? YES 50.8%    NO 49.2%

are further from home than you usually go? YES 66.2%    NO 33.8%

I am not currently bidding projects because there are too many very low bids out there.

You have to go where the work is.

Go where the fish are.

Go where the work is attractive.

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