There is little rest for the weary advocates who fought for passage of a $286.5-billion, six-year federal highway and transit funding bill. Officials were able to moveahead with planning their ﬁve-year programs once the 22-month-delayed Safe,Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU) was enacted in August. But with challenges to the fund’s fuel tax base, plus an increasing emphasis on new project delivery meth-ods and private-sector participation, it isnot just business as usual for owners.
“We are clearly at a crossroads withthe federal program,” says Gene Mc-Cormick, chairman of the American Road and Transportation Builders Association. ARTBA already is gearing up for the reauthorization ﬁght in 2009, but congressional suggestions to repealthe fuel tax and siphon money off the highway bill already havethe advocacy group putting its dukes up. While the congressional efforts don’t seem likely to succeed, construction advocates are nevertheless ﬁghting the perception of “pork barrel” projects and trying to stoke public support.
ARTBA’s game plan includes a campaign to raise grass-rootssupport among the fuel-tax-paying public for the next reauthorization. “We believe the current structure of the bill serveswell,”says McCormick. “We don’t need a major reshaping, but there is a clear need to invest in new levels.
Owners are looking at investment on different levels as well.Public-private partnerships, bond ﬁnancing and innovativedelivery methods are playing increasingly bigger roles in high-way and transit construction. Two-thirds of all state transporta-tion departments already are employing innovative ﬁnancemethods,such as Grant Anticipation Guaranteed Revenue (GARVEE) bonds, says Tom Bradshaw, managing director ofCitigroup Global Markets. Four new state toll road authoritieswere established this year and SAFETEA-LU has provisions that allow greater ﬂexibility in issuing tax-exempt bonds andforming public-private partnerships.
Missouri was one of the SAFETEA-LUwinners, receiving $862 million a year, or a $200-million yearly increase. InNovember 2004, Missouri voters provided more than $1.7 bil-lion in transportation dollars to the Missouri Dept. of Transportation by approving Amendment 3. When added to existingfunding commitments for roads, bridges and other transportation modes, the construction program totals $7.3 billion—thelargest road and highway program in state history, with about 800 projects over the next ﬁve years, says Pete K. Rahn, direc-tor of MoDOT.
But owners must learn to handle more money more wisely. Rahn expects to save nearly $400 million over the next ﬁve years by customizing design of highway construction projects to ﬁt speciﬁc needs, rather than applying generic standards across theboard.“It’s a lot like when you go to buy a car,” he says.“You might like to have leather seats, but cloth will do the job at alower price.You can then spend the money you saved on something else."
In New York, a 19% increase from SAFETEA-LU to $8.4 billion is not enough. The fate of major construction projectshinged on passage of a $2.9-billion transportation ballot initia-tive scheduled for Nov. 8. It would allot $45 million each for the$6-billion East Side Access project—meant to link a commuter railroad to Grand Central Terminal—and the ﬁrst phase of a$14-billion new Second Avenue subway line in Manhattan. If the bond measure fails, the state may not be able to raise itsshare of matching funds and will then lose the promised federal share, says Mysore Nagaraja, president of MetropolitanTransportation Authority’s Capital Construction Co.
Beyond those Manhattan-centric projects, he adds: “Thereis $10-billion worth of work being postponed around the state.It would be a big blow to the construction industry” if the bondmeasure failed.
Spreading the Wealth
Florida almost has the opposite problem. Its windfall 33.2%increase in ﬁve-year funding to $8.68 billion has created new challenges for the Florida Dept. of Transportation. In letting $2.9 billion of contracts in 2005, FDOT saw a decline in bidding. “The market is so good that we are not receiving as competitive bids as in the past,” says Ananth Prasad, FDOT chief engineer. “We need more contractors.”
The situation is such that in parts of the state, FDOT cannot get more than two bids for most projects, Prasad says. “We are looking at our cost increases and seeing if it coincides withthose of comparable states such as California,” he says. The increases in cost could eat into money for contingency projects,causing a lengthening of timelines. Click here to view map
The shortage of bidders results from a combination of robustprivate, commercial and state markets, says Prasad. The explosive growth in the state combined with the massive rebuilding needs after seven hurricanes in two years has caused a
saturation in the contractor market. FDOT has reached the point of seeking contractors from other states for work that would typically be handled by in-state contractors, such as paving, hesays. The state is working with local governments to facilitate permitting for new asphalt plants so that outside ﬁrms will beable to work in the area.
And more than builders are in short supply. “We need moreconsultants,” says Prasad, noting that FDOT depends on out-sourcing. “Ninety percent of our inspection work is outsourcedand 75% of our design work is outsourced,” he says.
Working with outside consultants and contractors increasesthe importance of on-time performance and even accelerationof projects through design-build and public-private partnerships, says Bobby Clair, former South Carolina Dept. of Transportation special projects director. “The cost of business con-tinues to rise,”he points out. “Projects can double in cost in a ﬁve-year period. If you cut out some of that time, you can save25% of the construction cost due just to cost of materials.”
Clair, now with Omaha-based HDR Inc., oversaw the successful design-build $600-million Cooper River Bridge project. He advises contractors and designers: “The main thing is to deliver what you bargained for. It’s imperative to move forwardas quickly as possible once you’ve made decisions on projects.”
That principle is vital to a massive, $5.3-billion highway program under way in northern Illinois. The ambitious over-haul forced the Illinois State Toll Highway Authority to rethink the way it works with the private sector. “We have gotten much more proactive with our program manager to ensure that wehave the proper reports coming in and know what is going onin the ﬁeld,” says Jack Hartman, the tollway executive director.
By year’s end, nine collection plazas will be converted to anew “open-road tolling” system that allows motorists to passunder a transponder sensor at highway speeds. By this time nextyear, the owner and its program manager, HNTB Corp., Kansas City, plan to convert the remaining 11 mainline plazas.Other road improvements include switching some sectionsfrom segmented to continuously-reinforced concrete pavement.
The agency is funding the expansion project with existing tolls and bonds backed by future revenue (ENR 9/13/04 p. 10).It has moved from a traditional, in-house design-bid-build method to employing a program manager as the owner’s primary representative, with the potential for multiple deliverymethods. “We were doing about $150 million in construction a year,” Hartman says. "To go from $150 million to $1 billion, you have to change the way you operate.”
|Rolling. Transit projects enjoyed a windfall of federal funding in bill.|
The owner is trying to give contractors more deliveryoptions to help save costs on wildly ﬂuctuating material prices is putting bridge projects out to bid with proposed designs. On some projects it also is including performance-based speciﬁcations so contractors can propose their own design and construction method. “I feel conﬁdent that we will get a performance-spec bid,” says Jeff Dailey, the tollway’s chief engineer.
Hartman notes that communication is most important to improving the quality of his agency’s construction projects. “Itis getting [ﬁrms] to talk to each other, and it is getting them totalk to us,” he says. The tollway authority recently adopted an Internet-based tracking system for progress reports, change orders, requests for information, etc. “Someone can put in an RFI and itcan be answered in a day or two,” says Hartman.
Mass-transit officials also are adopting newways of doing business. With a record $52.6billion allocated through 2009, light rail andbus rapid transit construction got a big boost. That marketalready had embraced the idea of more local-sector funding andinvolvement.Referendums fueled a $1.4-billion, 20-mile lightrail system in Phoenix now being built and a $4.7-billion transit system in Denver (ENR 8/8, p. 31). The Dallas Area RapidTransit agency is looking at $3.3-billion in private investment to help fund its $2.5-billion program.
DART will begin a $1.5-billion phase of that program next year. It plans to ﬁnd a construction manager/general contrac-tor, or a hybrid of construction manager-at-risk, says TimMcKay, senior vice president for project management. The expansion will be designed in-house, but the construction manager/general contractor will come in at 65% design to ensure constructability and verify cost data, he says. And the agency will lnegotiate escalation clauses in cases of extreme inﬂation.
Rick Thorpe, Chief Capital Management Officer for Los Angeles County Metropolitan Transportation Authority, sayshis agencyhas shifted from traditional design-bid-build to design-build contracts and is trying an innovative “negotiateddesign-build” process for the $640-million Mid-City/Exposition Light Rail project that will be awarded in February 2007.Instead of getting a hard-dollar bid up front, the contractor with the winning fee structure works with the designer and the agency to negotiate a cost at the conclusion of the design phase.“ This will save money and time and it is the fairest approach foreveryone involved,” says Thorpe. “It reduces contractor risk because they don’t have to guess about what they are bidding.”
With counterterrorism measures, environmental concernsand other issues creating extra budget challenges, accountability and communications between all parties counts for morethan ever, says MTA’s Nagaraja. Risk assessments, mitigationmeasures and budget forecasts—plus the implementation of design-build, CM-at-risk or other methods—may add morestaffing needs and money to a project up front, but “it’s more economical in the long run,” he says.