Is This The Paradigm Shift That’s Needed at WiDOT?

First in a series

A scathing audit of spending and project efficiency at the Wisconsin Department of Transportation has shifted debate in Madison from how to pay for new road projects to how to cure systemic dysfunction at the DOT.  While the deficiencies have been widely reported, here’s a brief recap:

Major highway projects in Wisconsin over the past decade have cost twice as much as the state Department of Transportation initially estimated, thanks in large part to not accounting for inflation, a highly critical audit released Thursday said.

The much-anticipated Legislative Audit Bureau report comes as the agency faces a nearly $1 billion budget shortfall and Gov. Scott Walker and Republicans who control the Legislature are sparring over how to solve it.

The audit found that 19 major highway projects completed in the past decade cost a total of $1.5 billion — twice as much as the $772 million original price tag. It also said the cost of 16 ongoing major highway projects more than doubled to a total of $5.8 billion — increasing by a staggering $3.1 billion — from the time they were approved through August 2016.

Wisconsin’s roads have consistently deteriorated over the past five years and are in “considerably” worse shape than roads in six other Midwestern states, the report said. The proportion of state highways in good condition decreased from 53.5 percent in 2010 to 41.0 percent in 2015, the audit said.

Prior to the audit’s release, DOT secretary Mark Gottleib resigned and was replaced by former City of Superior Mayor Dave Ross. Ross told lawmakers on March 16 that his formula to fix what ails the DOT is simple: build less and prioritize more:

“It’s a spending problem, not a revenue problem,” Ross said. Ross, testifying to the state Senate Transportation committee, placed new emphasis on what he called a key contributor to excessive transportation spending: committing to build too many large highway expansion projects at once.

Ross’ testimony complements Gov. Scott Walker’s no-new-tax stance heading into a potential transportation budget battle with Assembly Republicans. That fight could escalate in the coming months as Walker and lawmakers craft the state’s next two-year budget.

Others feel a more dramatic change is needed. Governor Scott Walker’s proposed 2017-2019 Budget would, for the first time, allow the state to try a new project-delivery method: Construction Manager/General Contractor. CMGC, as its known, moves from the low bid system to one where contractors can influence project design from the beginning. An argument in favor of CMGC is that states that have tried it discovered contractors can offer cost and time saving suggestions. Critics argue the low bid system already saves taxpayer monies. Meanwhile, suggest even that change isn’t far enough.

At a transportation hearing Wednesday, James Hoffman, President/Owner of Hoffman Construction suggested that lawmakers go a step beyond CMGC, to a “design build” concept: “I applaud the Legislature for introducing legislation to explore additional contract delivery methods for highway projects. In fact, the State could, and should, go even further by adopting another contract delivery method known as “Design-Build.”

According to Hoffman, the differences between CMGC and Design Build:

Under the proposed CMGC bill, the DOT would select the designer and then they jointly would select a construction-general manager contractor to work together with the DOT to finalize design and construction. The process is as follows:

  • Bidders submit their qualifications in a 10-12 page resume
  • DOT selects the contractor based on their qualifications
  • DOT and contractor negotiate a fixed fee to develop plans and collaborate on the design
  • Contractor is is awarded the project if their cost estimate is within 10% of DOT’s independent estimator
  • If not, DOT can bid out the project

Hoffman says under design-build:

Under Design-Build, DOT would enumerate certain projects and take responsibility for early design work. Contractors would them team up with designers and submit a statement of qualifications listing their abilities to meet the project requirements. The DOT would then select three to five contractor-designer teams based on merit to submit a proposal.

Hoffman says while design-build contracting isn’t for every project, it would provide the State significant savings on many large projects.

Meanwhile, others say an even more dramatic paradigm shift is needed at DOT. A source with a private firm who has years of experience with the workings of the DOT, who spoke with Media Trackers on the condition he not be identified,  says he’s seen a shift over the years in how things get done at the DOT.

“Prior to the Walker administration when Jim Doyle was governor, Frank Busalacchi (DOT secretary), realized internal operations(DOT bureaucracy) made it difficult to get things done, large projects such as the Marquette interchange. He bypassed some of those Madison central office people and went right to the project people and worked with them to get things done. People in Madison didn’t like that. When you’re in central office you’re in control. They have prestige and they don’t like it when they’re cut out of the process. Under Walker, power was concentrated again back into the central office.”

Our source says as a result, he’s not convinced the change at the top of the DOT is sufficient. He believes the tier of management just below Ross and Deputy Secretary Bob Seitz is the problem and feels that’s where wholesale cdhange is needed:

“The administrator group below Ross and Seitz has the mindset: screw the legislature. I’m the department. We’re in charge. You can’t just shuffle the deck with existing staff and think things are going to change. You need to look outside to improve situation.” But he also agrees design-build would be a step in the right direction:

“Design build  is a wholly appropriate tool to have in their toolbox. It’s not for every project. There are advantages coming out of that in a complex project. There are a lot of efficiency that can be made. But under the current administration structure there is no motivation to take risk, to innovate.”