draft report FTC Study of Cost Savings for Expressway Authorities Florida Transportation Commission Cambridge Systematics, Inc.

Transcription

1 FTC Study of Cost Savings for Expressway Authorities draft report prepared for Florida Transportation Commission prepared by Cambridge Systematics, Inc. October

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3 draft report FTC Study of Cost Savings for Expressway Authorities prepared for Florida Transportation Commission prepared by Cambridge Systematics, Inc Morado Circle, Building II, Suite 340 Austin, TX October 2012

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5 Table of Contents 1.0 Design/Project Development Project Development Activities in the Agencies Work Programs Resource Sharing for Project Development Activities Coordination between Expressway Authorities and FDOT during Project Development Performance Data Recommendations Construction Construction Process Overview Construction Topic Areas Current Construction Efficiency Efforts Construction Improvements and Recommendations Maintenance Overview Asset Maintenance Contracts Administered by FDOT and Expressway Authorities Regional Sharing Recommendations Operations Review Overview of the Study Element Area Study Element Area Topic Areas Summary of Agency Efficiencies ETC Interoperability Conclusion Cambridge Systematics, Inc. i

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7 List of Tables 1.1 Project Development Resource Sharing Summary Project Development Coordination Summary Project Development Measures and Operating Indicators for Expressway Authority Consultant Contracts Design Consultant Costs as Percentage of Construction Awards ($000s) FTC Right-of-Way Acquisition Metrics for Monitored Toll Authorities Number of Parcels Acquired through Negotiation Compared with the Number Acquired through Condemnation Authority Construction Program Overview MDX Construction Lettings MDX Construction Completion Metrics OOCEA Construction Lettings OOCEA Construction Completion Metrics FTE Construction Lettings FTE Construction Completion Metrics Asset Maintenance Contracts/Bridge and Roadway Maintenance Service Agency Performance Criteria Agencies Maintenance Rating Programs Select Maintenance Activity Performance Routine Maintenance Costs by Agency ($000) Routine Maintenance Costs, Lane Miles, and Cost per Lane Mile ($000) Percentage of Pavement Meeting Standards Cambridge Systematics, Inc. iii

8 List of Tables (continued) 3.8 Percentage of Bridges Meeting Standards Overall MRP Maintenance Rating Correlation Maintenance Costs and Overall MRP Ratings O&M ($000)Routine Maintenance ($000)/Maintenance as a Percent of O&M Current Asset Maintenance Contracts and Renewals Customer Accounts and Transaction Volumes ES-iv Cambridge Systematics, Inc.

9 List of Figures 1.1 Product Support and Right-of-Way as a Percentage of FDOT Work Program FDOT Program Category FY MDX Work Program FY OOCEA Cash Flow FY Design-Bid-Build Construction Firm Relationships Design-Build Construction Firm Relationships Routine Maintenance Costs Change Year to Year Routine Maintenance Cost per Lane Mile ($000s) Percentage of Pavement Meeting Standards Percentage of Bridges Meeting Standards Correlation of Routine Maintenance Costs and Overall MRP Ratings Routine Maintenance Cost as a Percent of Operating and Maintenance Costs Florida Home Agencies Florida Client Agencies Example of Current Interoperable Transaction Flow Toll-by-Plate Generalized Transaction Flow Cambridge Systematics, Inc. v

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11 Executive Summary Cambridge Systematics, Inc. ES-1

12 ES-2 Cambridge Systematics, Inc.

13 1.0 Design/Project Development Overview The project development process for the purposes of this report includes planning and environmental evaluation, project design, and real estate acquisition. For toll agencies, the development of a plan of finance and a test for financial feasibility are also a routine part of the project development process but are beyond the scope of this study. Given the time table for the analysis and the number of agencies and processes involved, a detailed process flow examination and cost comparison for each phase of project development for each agency was not practical. The following section describes information collected and developed in these areas: pooled procurements, coordination among and between agencies; agency data on aspects of performance and opportunities to future enhance efficiencies through increased collaboration and cooperation. All of the agencies under study are unique in many aspects, and the capital projects and work programs are no different. By their very nature, project development and construction programs will vary widely not only among different agencies, but also across time within an agency. Demands for services, the condition of the facilities and economic conditions are among the factors that cause transportation work programs to ebb and flow. In addition, comparison of capital programs and the development of the projects that are included in those work programs is further clouded by the extremely wide range of the complexity of the designs, the location of the projects, and the local conditions that impact project development. Adding an additional lane on a rural facility, within the existing right-of-way, with minimal environmental impacts can be accomplished more expeditiously and less expensively on a unit cost basis than a capacity improvement in a dense urban area with a myriad of environmental, cultural, maintenance of traffic, and design nuances and complexities. Further, the agencies included in this study range from one that has not yet completed the design for their inaugural project to an established department of transportation that manages a Five-Year Work Program in excess of $30 billion. Capital programs, including project development phases, are typically developed for multiple years (e.g., Florida Department of Transportation has a Five-Year Work Program) and can vary year to year due to changes in revenue forecasts, Federal-aid assumptions, or other legislative or policy changes. There is, however, stability for those years for the projected expenditures for projects underway. Agencies also differ in what activities are included in multiyear programs with some only agencies, including capital projects by phase of development and others, including Cambridge Systematics, Inc. 1-1

14 maintenance and operations expected financial outlays. Further, each agency dissects project funding slightly differently with some separating out Final Design from Preliminary Engineering phases. Lastly, the size and composition of work programs depend on the function of the agency and where they are in their development of their system. A single-purpose authority like the Mid-Bay Bridge Authority (MBBA) is ramping up for a significant project to build a new connector to the bridge across the Choctawhachee Bay in Okaloosa County, while the Tampa-Hillsborough County Expressway Authority (THEA) had a significant project development and construction program for their reversible express lane project in the past decade. All of the agencies included in this study have been granted the powers of eminent domain in their enabling statutes in order to acquire needed rights-of-way for authorized projects. Those agencies with regional or statewide network responsibilities were examined to determine the percentage of resources that are being committed to project development activities for their program horizons. These include the Florida Department of Transportation (FDOT), Miami-Dade Expressway Authority (MDX), and Orlando-Orange County Expressway Authority (OOCEA). 1.1 Project Development Activities in the Agencies Work Programs FDOT The FDOT data were taken from the Review of the Department of Transportation Tentative Work Program documents produced by the Florida Transportation Commission for the , , , , , and FDOT Tentative Work Programs. Major Work Program categories include Product, Product Support, Operations and Maintenance, Administration, and Fixed Capital. Product Support includes the functions typically related to project development, including Project Engineering, Planning, and Right-of-Way Support as well as Construction Engineering and Inspection (CEI). Actual right-of-way acquisition is included under the Product category and is reported separately. For the last six work programs, Product Support has ranged from 16.2% to 14.8% of the program total and right-of-way from 9.4 to 6.3%. The data show a healthy investment in keeping needed projects moving through the project development pipeline but do not provide a significant comparison with capital investment as considerable operating expenditures are reported in the work program. 1-2 Cambridge Systematics, Inc.

15 Figure 1.1 Product Support and Right-of-Way as a Percentage of FDOT Work Program Percent % 7.7% 8.3% 7.2% 8.9% 6.3% % 15.8% 14.9% 14.8% 15.7% 15.2% /08 to 2011/ /09 to 2012/ /10 to 2013/ /11 to 2014/ /12 to 2015/ /13 to 2016/17 Product Support as a Percentage of Total Program Right of Way as Percentatge of Total Work Program Source: FTC Reviews of Department of Transportation Tentative Work Program, 2008 through 2012 Reports. For the most current program analyzed by the FTC, Figure 1.2 shows the distribution of over $33 billion anticipated to be spent over the next five fiscal years for the FDOT Tentative 2012/2013 to 2016/2017 work program. Product Support activities make up 15.2% and right-of-way acquisition accounts for 6.3% of the most recent work program. Product Support cannot be assumed to be the same as Project Development. As noted earlier, Product Support also includes significant activities such as CEI that may not be included as project development expenditures by other agencies. Cambridge Systematics, Inc. 1-3

16 Figure 1.2 FDOT Program Category FY % 2% 1% 15% 67% Product Product Support Operations & Maintenance Administration Fixed Capital Source: FTC Review of FDOT Tentative Work Program, MDX The MDX work program data are taken from their most recently published FY Work Program. Their work program appears to be comprised solely of capital projects. The phases indentified for cash flow expenditures are Project Development, Final Design, Right-of-Way, Construction, and Design/Build. MDX data also include funds that have been expended to date on the projects included in the program. CEI costs are assumed to be included in the Construction phase and the categories of Construction and Design/Build are combined for this analysis. For the over $860 million current MDX work program, illustrated in Figure 1.3, Project Development costs are estimated at $157.5 million, or just over 18% of the program total. Right-of-way costs are projected at 3.6% or $31.2 million. Again, caution is urged in comparing these percentages from agency to agency. An excellent example in the numbers that are presented here is the categorization of at least one project on which MDX partnered with FDOT. Funding the JPA for acquisition of right-of-way, design, and construction of a joint project is included as a Project Development expenditure. Without an extensive analysis of the details of each agency s work program composition, conclusions on efficiencies-based programmed project phases are best avoided. 1-4 Cambridge Systematics, Inc.

17 Figure 1.3 MDX Work Program FY % Project Development 6% Final Design 4% Right-of-Way 72% Construction and Design Build Source: MDX Tentative Work Program, OOCEA For the OOCEA, the agency s 10-year cash flow document, FY 2012 through FY 2021, dated March 7, 2012 was used for analysis. OOCEA s Work Program document was not utilized as costs were categorized into encumbered and unencumbered funds. The Cash Flow document seemed more relevant to this study. The $2.1 billion cash flow projection is broken down by Design, Construction, CEI, and Right-of-Way. For this agency, the Construction expenditures also include costs for Engineering, Administration, and Legal Support services attributable to each project. For the program of projects included in the document, the funding by phase is presented in Figure 1.4. Cambridge Systematics, Inc. 1-5

18 Figure 1.4 OOCEA Cash Flow FY % 6% 8% Design Construction CEI Right-of-Way 75% Source: OOCEA Cash Flow Forecast, March 7, Other Authorities THEA, MBBA, and OCX do not program capital plans of substantive size at this time in their history to warrant an examination of funding devoted to project development. Each of these agencies is demonstrating, or has demonstrated, their resourcefulness in developing projects. For THEA, one of several recently completed projects includes the Brandon Feeder Roads Project. The PD&E Study was completed in 13 months at a cost of approximately $1 million. It included 3.5 miles of arterial roadways, nearly 2 miles of which were on new location and a bridge over Interstate 75 connecting to the Selmon Expressway. The final cost of construction of the roadways and bridge over the Interstate and right-of-way was in the vicinity of $50 million. The project was outsourced to the THEA General Engineering Consultant (GEC) and managed by a THEA staff member. THEA also coordinated closely with the City of Tampa in creating a new gateway to the downtown and Channelside Districts through the development of the Meridian Street project. Consistent with redevelopment plans for that part of Tampa, the project has helped in the resurgence of the area for residential, commercial, and entertainment interests. The Reversible Express Lane project PD&E Study covered approximately 10 miles of reversible express lanes and a 1-mile long six lane arterial boulevard in downtown Tampa. More than half of the project is on structure and the overall project construction cost was in excess of $300 million. THEA staff and consultants successfully completed the 1-6 Cambridge Systematics, Inc.

19 PD&E in approximately 14 months at a cost of $1.35 million. The project PD&E was outsourced to the THEA GEC and managed by one THEA staff member. In addition, the project also included the acquisition of just under $30 million in right of way and the design and construction of a new centralized Transportation Management Center and computer based traffic control system. MBBA within just five years of its creation constructed the Mid Bay Bridge after completing environmental studies, permitting, design, and financing. This included obtaining right-of-way from Eglin Air Force Base through the Army Corps of Engineers. Since the facility opened in 1993, the toll plaza has been expanded three times and the south approach widened from two to four lanes, along with improvements to the intersection with U.S. Highway 98. All of these projects were necessary to keep up with the traffic demands in Okaloosa County. In 2005, MBBA began a project to alleviate traffic congestion on the north approach to the bridge. MBBA undertook the task of developing and constructing an 11-mile controlled access north approach to the bridge and will have it completed early in The first three miles of this Mid-Bay Bridge Connector, including improvements to State Road 20, were completed in Construction of the remaining 8 miles of the Connector will be completed in early This 11-mile roadway has historically been a priority project for FDOT to relieve congestion on Okaloosa County roadways. 1.2 Resource Sharing for Project Development Activities The element of the study examined practices to efficiently share the use of existing staff and consultants, specifically these ideas: pooled procurements; piggy-backing on contracts, and sharing project development consultant or in-house engineering staff resources. The value in documenting these examples is that they can provide guidance to the Commission and to the agencies for further opportunities of resource sharing. Examples of current or past practices in sharing consultant or in-house resources are presented below. A more extensive list is provided in Table 1.1. The OCX and Florida s Turnpike Enterprise (FTE) have agreed that FTE will manage the Project Development and Environmental (PD&E) phase of one of its first projects, a feasibility study to examine the potential realignment and extension of the Osceola Parkway from its terminus at Boggy Creek Road to the Northeast Planning District (approximately 10 miles). MDX has been very actively cooperating with other transportation providers in its service area to bring critical improvements to fruition. Along with FTE, FDOT District 6 and Miami-Dade County, several cost sharing and project combining efforts have resulted in cost efficiencies through leveraging economies of scale and simultaneous project delivery. Another noteworthy collaboration is the agreement by FTE to include an MDX interchange improvement, the reconfiguration of the ramps at SR 874 (Don Shula Cambridge Systematics, Inc. 1-7

20 Expressway) with its design/build project to widen the Homestead Extension of Florida s Turnpike (HEFT) between SW 117 th Avenue to south of Kendall Drive. Table 1.1 Project Development Resource Sharing Summary Agency Project Description FTE/OCX Osceola Parkway Extension FTE/MDX HEFT Widening SR 874 Ramp Connector Project THEA/FDOT District 7 Ongoing proposal development and review Project Management being performed by FTE FTE to include design and construction of the SR 874 extension over HEFT into FTE Design Build project THEA routinely seeks FDOT District 7 expertise in consultant selection OOCEA/FDOT Permitting Provision FDOT District 5 provides permitting services for OOCEA avoiding duplication of staff MDX/FDOT SR 826/SR 874 interchange MDX/FDOT SR 826/SR 836 Interchange MDX/FDOT/Miami- Dade County Airport Central Boulevard Project Co-Funded $60 Million improvement with FDOT MDX co-funded $200 Million project with FDOT Partnered with FDOT and Miami-Dade County Cofunding Sharing Arrangement Sharing In-House or Consultant resource Piggy Backing on project development contracts Sharing In-House resource Sharing In-House or Consultant resource Joint Participation Agreement pooled financing Joint Participation Agreement pooled financing Joint Participation Agreement pooled financing Source: Agency provided data and Interviews. 1.3 Coordination Between Expressway Authorities and FDOT During Project Development Another set of activities that yield efficiencies in the project development process involves the coordination between the FDOT Districts, the Turnpike Enterprise, and the expressway/bridge authorities. The organizational structures of all of these entities facilitate coordination. Each of the authorities included in this study has the FDOT District Secretary as part of its governing board. While the value of the Secretaries appointment seems obvious, it also is required in the legislative or statutory authority creating MBBA, MDX, OCX, OOCEA,and THEA. In addition, with FTE being a part of the 1-8 Cambridge Systematics, Inc.

21 FDOT, there is a ready pool of projects under development that are evaluated as potential toll facilities. All of the authorities, including MBBA, are in designated metropolitan areas. The metropolitan planning process provides another ongoing opportunity and in some cases a requirement for project development coordination between the Department, the authorities and county and local governments. In addition, a review of the enabling statutes and laws of each of the agencies includes specific language to allow and encourage sharing of resources and the assignment of project development activities. Below is an excerpt from the OOCEA part of Florida Statute. Similar or exact language also appears for all of the entities under study. Cooperation with other units, boards, agencies, and individuals. Express authority and power is hereby given and granted any county, municipality, drainage district, road and bridge district, school district or any other political subdivision, board, commission, or individual in, or of, the State to make and enter into with the authority, contracts, leases, conveyances, partnerships, or other agreements within the provisions and purposes of this part. The authority is hereby expressly authorized to make and enter into contracts, leases, conveyances, partnerships, and other agreements with any political subdivision, agency, or instrumentality of the State and any and all Federal agencies, corporations, and individuals, for the purpose of carrying out the provisions of this part or with the consent of the Seminole County Expressway Authority, for the purpose of carrying out and implementing part VIII of this chapter. Cambridge Systematics, Inc. 1-9

22 Table 1.2 Project Development Coordination Summary Agency Legislative Authority FDOT District Secretary Authorization to Construct a New Project Provisions for Cooperation with Local Governments Type of Entity MPO Affiliation FTE FDOT F.S FTE F.S Executive Director member of FDOT Executive Team Inclusion in FDOT Work Program, legislative approval, financial tests. Inclusion in Fla. Transportation Plan, metro areas long-range plans, nonmetro County notification FDOT State Executive Department Through Districts MBBA Ch Laws of Florida Member of MBBA Board ex-officio nonvoting Mid Bay Bridge, approaches and other facilities County budget review and approval County sits on MPO Board County dependent special district Okaloosa County on TPO MDX Florida Expressway Act F.S. Chapter 348 Part I Member of MDX Board ex-officio nonvoting Add facilities with the prior express written consent of the Board of County Commissioners Expenditures are consistent with MPO adopted long-range plan. Voting seat on the MPO Board with two FDOT reps (nonvoting) Independent Special District State Miami-Dade MPO OCX F.S. Chapter 348 Part V Member of OCX Board ex-officio nonvoting Add facilities with the prior express written consent of the Board of County Commissioners Same as Part I authorities Expenditures are consistent with MPO adopted long-range plan County on MPO Board no seat for OCX Independent Special District State Metroplan Orlando OOCEA F.S. Chapter 348 Part III Member of OOCEA Board ex-officio voting Expressway System in Orange County, extensions, and new facilities at the invitation of another County Voting seat on the MPO Board with FDOT District Sec. (nonvoting advisor) Independent Special District State Metroplan Orlando THEA F.S. Chapter 348 Part II Member of THEA Board ex-officio voting Expressway System in Hills. County Collaboration/Consultation Hills. Co. Planning Commission. Voting seat on the MPO Board with FDOT District Sec. (nonvoting adv.) Independent Special District State Hillsborough County MPO Source: Florida Statutes and CUTR Cambridge Systematics, Inc.

23 Further, if circumstances warrant an expressway or bridge authority to have the Department act on its behalf as its construction agent, the following (or similar) language also appears for each authority. Department may be appointed agent of authority for construction. The department may be appointed by said authority as its agent for the purpose of constructing improvements and extensions to the Orlando-Orange County Expressway System and for the completion thereof. In such event, the authority shall provide the department with complete copies of all documents, agreements, resolutions, contracts and instruments relating thereto and shall request the department to do such construction work, including the planning, surveying and actual construction of the completion, extensions, and improvements to the Orlando-Orange County Expressway System and shall transfer to the credit of an account of the department in the treasury of the State the necessary funds therefore and the department shall thereupon be authorized, empowered and directed to proceed with such construction and to use the said funds for such purpose in the same manner that it is now authorized to use the funds otherwise provided by law for its use in construction of roads and bridges. With few exceptions, the facilities planned, designed, constructed, and operated by the bridge and expressway authorities are a part of the State Highway System and are subject to the design standards of the Department. The exceptions are for those facilities that are access routes to the authorities main facilities, other highways providing more of a local function or where a design exception is approved. The established Federal and state planning requirements ensure some level of coordination during the project development process between not only the subject agencies but also with regional, county, and municipal entities. Examples of the results of the coordination were discussed in the earlier section on shared resources. 1.4 Performance Data The efficacy of the project development process can be assessed by a myriad of measures. The Florida Transportation Commission requires annual reporting from the toll agencies covered under Chapter 348 of Florida Statutes (MDX, OOCEA, OCX, and THEA) and for FTE as a part of the FDOT performance report. Unfortunately for the purposes of this study, the FTC reporting requirements are different and in some cases for FTE are included in FDOT totals. Attempts were made to gather all data from the agencies for both the authority and FDOT performance measures with limited success. The MBBA is not covered under the FTC oversight provisions, and OCX is a relatively new entity. Cambridge Systematics, Inc. 1-11

24 One measure of an agency s ability to estimate and manage the project development process is to track the final closed out costs of consultant contracts against the upset limit or award amount. This metric has been collected for the Chapter 348 organizations by the FTC since the inception of their oversight. The data were unavailable for MBBA and FTE. Table 1.3 below indicates that measure from FY 2007 to FY Table 1.3 Project Development Measures and Operating Indicators for Expressway Authority Consultant Contracts For Consultant Contracts Closed Out the Percent Over the Original Contract Amount FTE MDX MBBA OOCEA THEA N/A N/A N/A % Source: FTC Performance Reports. For the agencies reporting, there seems to be little issue with consultant contract overruns in recent years. In fact, the data suggest that those entities reporting have a good handle on estimating consultant services costs and managing those contracts. Another measure of the complexity of projects and efficiency of the use of capital funds is the percentage of construction dollars spent on design consultants for those projects. Data were requested and the results of the responses are presented below in Table 1.4. Caution should be exercised when comparing these percentages because of the wide variances in program sizes and complexities Cambridge Systematics, Inc.

25 Table 1.4 Design Consultant Costs as a Percentage of Construction Awards ($000s) Year Award FTE MDX MBBA OOCEA THEA Percent Design Percent Design Percent Design Percent Design Percent Design Consult Award Consult Award Consult Award Consult Award Consult 2007 $43,680 8% $367,881 7% 2008 $17,753 9% $66,415 6% 2009 $109,117 10% $22,828 17% $22,927 11% 2010 $60,675 9% $97,992 9% 2011 $9,000 10% $197,746 9% 0 0% 2012 $46,431 7% $20,955 11% $697 22% Source: Agency provided data. Cambridge Systematics, Inc. 1-13

26 The FTC annually assesses the right-of-way acquisition function for Chapter 348 agencies by comparing costs through the process from property appraisals to final settlement. Table 1.5 summarizes the data available from FY 2007 to FY Table 1.5 FTC Right-of-Way Acquisition Metrics for Monitored Toll Authorities MMBA FTE OCX MDX OOCEA THEA Agency Appraisals Initial Offers Owners Appraisals Final Settlements 2007 N/A N/A N/A N/A 2008 N/A N/A N/A N/A 2009 $7,200 N/A N/A $10, N/A N/A N/A N/A 2011 $17,600 N/A N/A $21, N/A N/A N/A N/A Not Reported Not Available Not Requested Agency Initial Owners Final Appraisals Offers Appraisals Settlements 2007 $5,095 $4,969 $3,790 $6, $1,420 $1,420 $2,959 $2, $392 $500 $2,528 $1, $2,200 $1,868 $1,868 $1, $653 $413 $2,180 $ $0 $0 $0 $0 Agency Initial Owners Final Appraisals Offers Appraisals Settlements 2007 $38,380 $14,423 $18,177 $45, $22,096 $22,096 $30, $14,972 $7,587 $13,551 $20, $5,765 $4,021 $7, $5,221 $3,378 $11,645 $9, $1,385 $1,321 $2,919 $2,118 Agency Initial Owners Final Appraisals Offers Appraisals Settlements 2007 N/A N/A N/A $ N/A N/A N/A $ N/A N/A N/A $ N/A N/A N/A $ N/A N/A N/A $ N/A N/A N/A $0 Source: Authority Data, FTC Performance Reports Cambridge Systematics, Inc.

27 For FDOT, the Commission monitors the right-of-way acquisition activity by measuring how many of an entity s parcels are acquired through a negotiated settlement with those that proceed through the entire condemnation process. All of the study agencies provided some data for this metric and they are displayed in Table 1.6. Table 1.6 Number of Parcels Acquired through Negotiation Compared with the Number Acquired through Condemnation FTE MDX MBBA OOCEA THEA Negotiated Condemned Negotiated Condemned Negotiated Condemned Negotiated Condemned Negotiated Condemned Source: FTC Review of FDOT Tentative Work Program, 2008 through 2012 Reports, and Agency provided data. One of the most telling results of an efficient and effective project development process is in measurements of the delivery of actual construction projects. While site conditions, weather, and other factors certainly come into play, solid design plans and projects with no outstanding right-of-way issues are more likely to be completed within the engineer s estimates and the budget and time that are bid on the project. This aspect of the agencies performance will be examined in a subsequent section on construction. During the course of the interview phase of this project, it was suggested that the study team reach out to industry representatives for their assessment of the relative efficiency of the agencies. Interviews were conducted with contractors that have dealt with each of the agencies, including FDOT Districts (with the exception of OCX). Five contractors were contacted and were asked to compare and contrast the various entities in the general areas of: Quality of plans; Knowledge of staff; Ease of conducting business; Best practices that could be shared; and General comments on differences working with Districts, Toll Authorities and FTE. Cambridge Systematics, Inc. 1-15

28 Quality of Plans There was general praise for the quality of plans from the Districts, FTE, and Authorities. There was consistency in the comment that all of the agencies use essentially the same pool of design consultants and that there is very little difference in this area. In addition, the comment was made that with more procurement moving to Design-Build, it is not an issue. Knowledge of Staff Comments on this topic included: there are as many differences from District to District as there are from FDOT to authorities when interacting with facility owners; all the agencies are using highly qualified CEI firms and there is no discernible difference in working a project from agency to agency. One interviewee had a negative experience with an authority a decade ago and commented that the FDOT personnel have come up through the ranks and are easier to deal with and that there is transparency in the contractor selection process. He did, however, say that once the initial negotiations on the problem project were resolved, the job went smoothly. Ease of Conducting Business Contractors commented that none of the work is easy, but that it is positive that there is consistency in that all agencies are using FDOT technical specification that govern the specifics of construction. Some agencies have their own terms and conditions but the work must conform to consistent standards. Some are better at partnering than others and in avoiding claims. Toll agencies are generally more sensitive to timely resolution of conflicts as they seem more customer-driven, but some authorities do not pay in as timely a manner does FDOT and FTE. One interviewee commented that minority participation programs should be consistent across the agencies. Best Practices That Could be Shared One contractor thought that FTE and FDOT could be a little more sensitive to community needs and learn from some authority examples. Another noted that some authorities have not done many Design/Build projects and could learn much from FDOT about this project delivery model as they have been a leader in this area. Contractors like to see consistency across agencies and several commented that the entities all run about the same. General Comments Interviewees took the opportunity to weigh-in on the consolidation issue even though it was explained that it was not the focus of this study and there was no specific question 1-16 Cambridge Systematics, Inc.

29 asked on the topic. Comments on this issue ranged from authority boards are too political and should be abolished to an option for examining having FDOT administer construction for the toll agencies to an opinion that all of the agencies under review are good at what they do, play fair and are transparent in their dealings. 1.5 Recommendations Standardized Reporting Requirements Recommendation: If the State s policy-makers and the Florida Transportation Commission want to make finding efficiencies among and between the entities a priority, then it is recommended that existing metrics for the agencies be standardized and that new reporting requirements documenting actions and progress that demonstrate improvements in collaborations in the project delivery arena be implemented. As stated at the outset, the lack of consistent data, the complexity of all of the processes involved, and the mandated schedule for this review, does not make specific detailed efficiency recommendations feasible. Risk Assessment: Organizational resistance; Lack of Commission resources to commit; Inability to integrate before next reporting cycle; and Policy-maker perception of postponing action on project development efficiency gains. Implementation: Assess acceptability of recommendation to the Commission; If positive, Commission action to adopt; Charge Commission working group to establish new, combined reporting metrics; Working with agencies, establish standardized measures for toll agencies; Present to Commission for approval; and Incorporate into ongoing performance reporting process. Establish Regular Forum for Discussing Project Development Opportunities Recommendation: Establish a regular forum for agencies to discuss and brainstorm innovative techniques and project teaming efforts. This kind of forum could not only allow the Authorities to share new ideas, best practices and innovations, the meeting Cambridge Systematics, Inc. 1-17

30 could allow the Authorities to share news on their respective work programs and seek ways of cooperating on project development activities. This could be accomplished by using an existing meeting opportunities such as piggy backing on TEAMFL quarterly meetings or through the establishment of sessions in conjunction with the Commission. Risk Assessment: Organizational resistance; Lack of Commission resources to commit; Lack of Agency resources; and Perception of being duplicative. Implementation Plan: Assess acceptability of recommendation to the Commission; If positive Commission action to adopt; and Charge FDOT, FTE, MBBA, MDX, OCX, OOCEA, and THEA with development with forum, agenda and Commission reporting mechanism Cambridge Systematics, Inc.

31 2.0 Construction This section will include an overview of the Construction Process, a discussion of construction-related topics, including performance data, current efficiency efforts, and recommendations. 2.1 Construction Process Overview Florida DOT has demonstrated an organizational strategy that relies on private firms to accomplish many functions that in some states are performed by in-house resources, particularly in project development and maintenance, as is explained elsewhere in this report. Florida s Authorities extend that strategy and use layers of private firms to augment modest in-house staff. In the area of roadway construction, DOTs have long used private firms to construct new facilities or make major adjustments (capacity expansion or major rehabilitation) to existing facilities. Construction projects require specialized equipment, skilled labor, materials acquisition and sophisticated project management, all which can be applied to distinctive kinds of projects across a wide geographic area. Public agencies have relied upon construction firms (referred to as general contractors ) to put together teams of specialized subcontractors to offer turnkey delivery of completed roadway projects (pavement, structures, earthwork, drainage, landscaping). Authorities use many of the same contracting methods and specifications used by Florida DOT and use many of the same contractors to deliver Authority projects. Generally, Authorities and Florida DOT use the Design-Bid-Build (DBB) process for construction projects. In this process, the public agency contracts with an engineering firm (PS&E) to prepare plans and specifications for a project (as described in Section 1.0), makes those plans and specifications available to qualified contractors to prepare bids on unit costs (and project time in some cases). Public agencies award the construction project to the contractor with the lowest responsive bid (generally), and the contractor is responsible for all materials, equipment and labor to deliver the project as planned and specified. Authorities also employ private firms to manage this project development and construction process. As explained in the previous section, Authorities use General Engineering Consultants to coordinate planning and design/engineering of projects that are performed by a number of other consulting firms. Authorities also use General Engineering Consultants to provide overall construction management services (GEC-CM). The GEC-CM is an extension of Authority staff to manage construction bidding and keep Cambridge Systematics, Inc. 2-1

32 all projects on time and on budget. Authorities also use private firms to perform Construction Engineering and Inspection (CEI) services on particular construction projects, acting as the Authorities agents to ensure that projects are constructed as planned, to inspect and test materials actually used on a project to those specified in the plans and specifications, and to verify construction progress to evaluate project invoices and budget and schedule management. The GEC-CM coordinates all the work products of these CEI firms to provide consistent application of Authority procedures for the benefit of the Authority and its contractors. Figure 2.l illustrates this DBB process, distinguishing between private firms working as agents for the Authority and private firms working as contractors to the Authority. In this figure, the GEC and GEC-CM are singular for each Authority, and the other firms (CEI, PS&E, Contractor) are different for each individual construction project. Figure 2.1 Design-Bid-Build Construction Firm Relationships Private Agent for Authority Private Contractor to Authority GEC PS&E PLANS PROJECT AUTHORITY GEC-CM CONTRACTOR CEI Directs Reports Payment Product A variation on this contracting process became more widely used in the 1990s, referred to as Design/Build (DB). The public agency executes a single contract with a team of firms to provide the plans and build the project. This allows the contractor to work with the 2-2 Cambridge Systematics, Inc.

33 design engineer to consider constructability, different construction methods and materials, and project phasing that would allow a project to be completed in less time or lower budget. The contractor, more familiar with the plans, should be able to build the project while reducing project risks that the contractor would otherwise include in a bid price. This process requires a more complicated procurement process for the public agency, and the agency s engineering and construction management GECs perform an independent engineering function to review the DB firm s work. Florida DOT and the Authorities have used this method on a number of projects, and the process is illustrated in Figure 2.2. Figure 2.2 Design/Build Construction Firm Relationships Private Agent for Authority Private Contractor to Authority GEC PS&E PROJECT PLAN AUTHORITY GEC-CM CONTRACTOR CEI Directs Reports Payment Product Because the procurement is more complicated, Florida DOT and the Authorities use this method on larger projects, and each Authority s use of this method will be described below. Cambridge Systematics, Inc. 2-3

34 2.2 Construction Topic Areas This section will include data and metrics on each Authority s construction program and a discussion of construction-related issues and how the Authorities address those issues differently Construction Metrics Construction data was collected from FTC performance reports (for the Authorities and for FDOT) and from the Authorities directly. As these metrics are evaluated, some distinctions between the overall scale of construction programs can be made among the Authorities. First, since the Osceola County Expressway Authority has not constructed its first project, it is not included in this data discussion. As Table 2.1 shows, MBBA and THEA have much smaller, more occasional construction programs. Therefore, more details will be provided on the other Authorities with larger, regular construction programs MDX, OOCEA, and FTE. This distinction is unsurprising given the larger number of lane miles and overall toll revenues of these three Authorities. A description of each Authority follows. Table 2.1 Authority Construction Program Overview Fiscal Years a Authority Total Contract Lettings Average Number of Contracts Completed Per Year FTE $1,044,200, OOCEA $775,915, MDX $308,056, THEA N/A a 0.50 MBBA $71,560, Source: Authority Data, FTC Performance Reports. a THEA data collection was incomplete beyond FTC Performance Reports. THEA Data collection were incomplete for THEA in terms of contract estimates and lettings, but available data indicates that during the period, THEA completed one project in 2009 and two in 2012, both within FTC performance standards for contract time and budget. 2-4 Cambridge Systematics, Inc.

35 MBBA MBBA has one major construction project underway, the Mid-Bay Bridge Connector, which has been bid in phases, with the same contractor winning each contract. In 2007, MBBA completed a contract for expansion of its Toll Plaza. Phase 1 of the Mid-Bay Bridge Connector and the SR 20 widening was let in 2008 for $22.8 million, 86.14% of the project estimate. Phase 2 and 3 were let in 2011 for $48.7 million, 92.55% of the project estimate. Both the Toll Plaza expansion and the Bridge Connector Phase 1/SR 20 widening were completed within FTC standards for time and budget. Cost changes for the contract completed in 2011 totaled 8% of the original contract bid amount, but 41% of the change amount was for work requested by the Authority at contract bid unit costs, and 32% of the change amount was for a FDOT-standard contract adjustment for fuel and bituminous costs (to account for market volatility in fuel prices for equipment, transportation, and materials). MDX MDX has a more regular construction program, with a variety of roadway and toll collection construction projects. Table 2.2 shows that project estimates have been close to contract bids with limited exceptions, an annual average of 84.7% of project estimates. Table 2.2 MDX Construction Lettings, Fiscal Years Fiscal Year Ending June 30 Estimated Amount of All Construction Contracts Let During the Fiscal Year Actual Amount of Construction Contracts for those Contracts Let During the Fiscal Year Letting Total Percent of Estimated Amount 2007 $53,674,300 $53,679, % 2008 $6,300,000 $6,300, % 2009 $173,905,953 $123,570, % 2010 $95,019,469 $67,575, % 2011 $10,500,000 $10,500, % 2012 $69,619,886 $46,430, % Source: Authority Data, FTC Performance Reports. MDX has a good record of completing construction projects within FTC performance standards for contract time and budget, as shown in Table 2.3. Cambridge Systematics, Inc. 2-5

36 Table 2.3 MDX Construction Completion Metrics, Fiscal Years Fiscal Year Ending June 30 Number of Construction Contracts Completed During Fiscal Year Percent Contracts Completed During Fiscal Year within 20 Percent Above Original Contract Time Percent Contracts Completed During Fiscal Year within 10 Percent Above Original Contract Amount % 50.00% % 80.00% % % % % % % % % Source: Authority Data, FTC Performance Reports. Cost changes to MDX contracts completed during the past two years have been within 2% of original contract amounts, as MDX accounts for its contract supplemental agreements. Looking at the top 15 contractors annual contract payments from MDX for the past three fiscal years (2010 to 2012), the total payments to the top six contractors account for 94% of the total payments made to the top 15 contractors over that three-year period. This overall concentration of contractor payments is related to the smaller number of projects let by MDX annually. OOCEA OOCEA has a more extensive construction program, a mixture of expansion, new location, interchanges, and toll collection system upgrades. Table 2.4 shows that OOCEA contract bids are an annual average of 81% of total project estimates. 2-6 Cambridge Systematics, Inc.

37 Table 2.4 OOCEA Construction Lettings, Fiscal Years Fiscal Year Ending June 30 Estimated Amount of All Construction Contracts Let During the Fiscal Year Actual Amount of Construction Contracts for those Contracts Let During the Fiscal Year Letting Total Percent of Estimated Amount 2007 $473,682,157 $367,881, % 2008 $86,651,639 $66,414, % 2009 $27,543,636 $22,926, % 2010 $126,400,131 $97,992, % 2011 $230,908,578 $197,746, % 2012 $23,399,079 $20,954, % Source: Authority Data, FTC Performance Reports. OOCEA has a excellent record of completing construction projects within FTC performance standards for contract time and budget, as shown in Table 2.5. Table 2.5 OOCEA Construction Completion Metrics, Fiscal Years Fiscal Year Ending June 30 Number of Construction Contracts Completed During Fiscal Year Percent Contracts Completed During Fiscal Year within 20 Percent Above Original Contract Time Percent Contracts Completed During Fiscal Year within 10 Percent Above Original Contract Amount % % % % % % % % % % % % Source: Authority Data, FTC Performance Reports. Cambridge Systematics, Inc. 2-7

38 Cost changes to OOCEA contracts completed during the past two years have been within 1% to 2% of original contract amounts, as OOCEA accounts for its contract supplemental agreements. Looking at the top 15 contractors annual contract payments from OOCEA for the past three fiscal years (2010 to 2012), the total payments to the top six contractors account for 89% of the total payments made to the top 15 contractors over that three-year period. FTE FTE has a more extensive construction program, a mixture of expansion, new location, interchanges, facilities, and toll collection system upgrades. Table 2.6 shows that FTE contract bids are an annual average of 81% of total project estimates. FTE has a good record of completing construction projects within FTC performance standards for contract time and budget, as shown in Table 2.7. FTE reports this data to the FTC in the FDOT annual performance report, and these reports also includes data on the small number of completed contracts which account for a majority of time and budget overages. Table 2.6 FTE Construction Lettings, Fiscal Years Fiscal Year Ending June 30 Estimated Amount of All Construction Contracts Let During the Fiscal Year Actual Amount of Construction Contracts for those Contracts Let During the Fiscal Year Letting Total Percent of Estimated Amount ,400, ,100, % ,900, ,900, % ,900, ,100, % ,000, ,700, % ,500,000 30,300, % ,800, ,100, % Source: Authority Data, FTC Performance Reports. 2-8 Cambridge Systematics, Inc.

39 Table 2.7 FTE Construction Completion Metrics, Fiscal Years Fiscal Year Ending June 30 Number of Construction Contracts Completed During Fiscal Year Percent Contracts Completed During Fiscal Year within 20 Percent Above Original Contract Time Percent Contracts Completed During Fiscal Year within 10 Percent Above Original Contract Amount % % % 70.37% % 68.97% % 81.25% % 73.33% % 92.31% Source: Authority Data, FTC Performance Reports. Cost changes to FTE contracts completed during the past two years have been within 3% to 5% of original contract amounts, as FTE accounts for its contract supplemental agreements (according to FDOT policy, which offers an easier process to document time extensions). In 2011, FTE had participated in a pilot project that offered contractors an inflation cost adjustment to account for material cost volatility, and that adjustment accounted for 45% of the contract cost adjustments for that year. Looking at the top 15 contractors annual contract payments from FTE for the past three fiscal years (2010 to 2012), the total payments to the top six contractors account for 61% of the total payments made to the top 15 contractors over that three-year period. The lower contractor concentration can be explained by FTE s larger geography (which involves more contractors bidding on FTE s projects) and larger number of projects Construction Issues Contract Size Authorities have flexibility to set project limits to result in smaller contracts in order to increase contractor competition. This depends on the nature of the construction project and the need to coordinate activities across the project; an interchange would generally not be broken into smaller contracts. In setting contract size, Authorities face a tradeoff: having to coordinate more projects to keep an entire corridor on schedule compared to the risks of being subject to possible delays from a single contractor. MDX, OOCEA, and FTE all approach the matter of contract size similarly. MDX is not only interested in overall contractor competition, but also in allowing certified small and Cambridge Systematics, Inc. 2-9

40 minority businesses an opportunity to bid on smaller projects (smaller businesses can face challenges obtaining completion bond coverage for larger projects). DB/DBB The Authorities enjoy legislative flexibility to use DB as a project delivery mechanism, but the three larger Authorities (MDX, OOCEA, and FTE) use DB in different ways. MDX generally uses DB on larger projects (over $10 million), and has done so for a number of years. MDX has grown more comfortable using the method, as have its local contractors, although about 10% to 15% of its construction program uses DBB. OOCEA rarely uses DB, preferring to conduct as many project development activities in parallel to accelerate project completion and reduce risks for contractors. OOCEA has data that favorably compare its project delivery times to DOTs in the Southeast using its conventional DBB method. FTE is comfortable using DB, using it for most of its vertical construction (facilities), but less frequently for roadway projects. Incentives/Disincentives, Time Acceleration DOTs have used a variety of contract provisions to add incentives and disincentives to motivate contractors, usually focused on time completion. In new location construction, toll road agencies have a more direct interest in project completion, as revenue collection depends on it. Most Authorities incorporate some time measurement in contract bids, in which contractors bid on unit prices and contract time (which may be monetized for bid award calculations). This not only encourages contractors to compete on time completion (using innovative construction methods) and to carefully commit to project completion timeframes, so that future time adjustments may be less necessary. Most Authorities do not use bonuses or incentives, preferring to control total contract costs instead of time. The success of these practices is demonstrated in metrics earlier in this section, particularly in the small amounts involved in supplemental agreements to change the timing or amounts for construction projects. FTE reports that FDOT incentives/ disincentives (completion and milestone bonuses, liquidated damages) generally result in contract time savings. 2.3 Current Construction Efficiency Efforts Authorities finance their capital programs through bond financing tied to projected revenue collections, and the Authorities are legally bound in these bond covenants to be directly responsible for construction contract delivery. So while Authorities have demonstrated various methods to seek efficiencies and share resources and best practices, ultimately each Authority is accountable to its bondholders for construction contract management. Interviews conducted for this project have identified a number of instances of sharing resources and practices to increase construction efficiencies: 2-10 Cambridge Systematics, Inc.

41 OOCEA/MDX Best Practices Sharing. A few years ago, the GECs of these two Authorities facilitated a meeting to share best practices in construction management. MDX was able to incorporate some of the administrative provisions that OOCEA had altered from FDOT s standard project specifications to gain better control of contracts. FDOT/FTE/MDX Project Coordination. This project was discussed in Section 1.0, and not only involves the coordination of design, right-of-way, and utility relocation, but also means that construction projects can be divided or shared. The decision on which agency leads and which contributes to the other is situational, but represents an effort to coordinate construction projects on facilities owned by different public agencies. CEI Procurement Sharing. Most authorities report executing contracts with pools of CEI consultants that allow those contracts to be accessed by other public entities, sharing among FDOT districts and among Authorities. This reduces construction delivery times by reducing procurement delays. OOCEA Contract Provisions. OOCEA reports a number of initiatives to increase construction contract efficiencies. First, OOCEA includes provisions in its contracts to require substantial completion 30 days before the end of the contract. This provision reduces the number and amounts of contractor claims at the end of a project. Second, OOCEA has streamlined its contractor payment procedures, offering twice monthly payments and accelerating payment processing. This is believed to reduce the overhead charged by contractors in their bids. Finally, OOCEA incorporates a Dispute Resolution Board in many of its larger contracts, in which the Authority pays for services of a three-member board (one chosen by the contractor and by the Authority and one agreed to by both) that keeps apprised of project status and is available to quickly resolve claims and disputes. 2.4 Construction Improvements and Recommendations Authorities believe they have legislative flexibility to experiment with different delivery mechanisms and construction contract terms. Florida Legislators deserve credit for having equipped FDOT and the Authorities with a range of tools to use in delivering construction projects. Three recommendations could further increase efficiencies for Authority construction programs. Construction Project Revenue Estimates Recommendation: For larger projects (over $10 million), Authorities could prepare traffic and revenue estimates for construction projects that would calculate the traffic benefits and revenue implications of the completed construction project. This revenue calculation could be used in setting contract completion bonuses, as the bonus amount could be tied Cambridge Systematics, Inc. 2-11

42 to a portion of the increased revenues from the resulting completed facility. The current system considers incentives only in terms of the total construction contract amount. For new location projects, like the Wekiva Parkway, traffic and revenue estimates could be calculated not only on an annual basis for purposes of project financing, but also on a monthly basis at project opening, so that the Authorities could have a estimate of the additional revenues possible if the project were opened early. This revenue stream can be converted to a present value, and used in setting incentive payments. For expansion or improvements to existing facilities, in which additional lanes are added or bottlenecks or interchanges improved, the traffic and revenue consultant can create simulation models that estimate the traffic improvements associated with the project. Depending on the project, construction completion could remove any revenue reductions from construction-related traffic delays or lead to increased volumes and toll revenues from improved throughput. Using microsimulation (interchange level) or mesoscopic simulation (corridor level) could consider the revenue implications of such projects. Risk Assessment: This additional level of analysis would lead to increased consulting costs by the traffic and revenue consultants. More complicated levels of simulation also could take additional time during project planning. This may increase the risk of not having nearly complete project details to input into the simulation models, which may not produce information needed at the time when plans and specifications are completed. In the case of new locations, incentive payments would have to be offered in operable corridor segments, not necessarily by construction project. If a project was split into segments for contracting purposes, any revenue-related incentives would have to be offered only if a roadway were accessible for traffic. This may complicate the negotiation of incentives among different contractors, but shared incentives can be executed. Continuing with the status quo also involves risks associated with the opportunity costs of additional revenues not collected, and the delayed benefits to Authority customers of project improvements. Implementation: This recommendation could be tested on a pilot basis by more than one Authority on a new location project and on a expansion/improvement project. Carefully collecting all costs associated with the contracts with the contractors and consultants will allow the Authorities to determine whether or how to implement a broader use of the practice where it makes good business sense. Depending on the projects involved, this pilot project may require a number of years to complete, from the time of project analysis to construction completion. But the pilot test may allow the Authorities to determine whether revenue-related incentives are a useful tool for project acceleration Cambridge Systematics, Inc.

43 Project Delivery Timeline Performance Measure Recommendation: Consider a common definition for project development/construction pipelines, so that a single measure of calendar days from initiation of project design to project construction completion could be collected. The current performance measures calculate consultant contract and construction contract management, but do not allow for the tracking of project delivery results across different project delivery methods. Some Authorities may determine that proceeding with design at risk may deliver sufficient project clarity that the Authority can use in seeking alternative project financing such as Federal credit programs like the Federal Transportation Infrastructure Finance and Innovation Act program (TIFIA). But usually, an Authority decision to initiate the preparation of plans and specifications is usually tied to a commitment of financing to the completion of the project. The beginning of that design project could start the clock, which would be stopped at the completion of the construction of the project. This measurement would allow Authorities to manage their multiyear capital programs more transparently. This also would allow Authorities to test the time implications of different project delivery improvements. Risk Assessment: The administrative costs of creating and tracking this measurement should be modest, as most Authorities already use the services of a GEC and GEC-CM to manage project plans and construction projects. This measurement could be created retroactively for projects with completed construction projects during the first year of measurement collection using existing Authority records. The FTE, as part of FDOT, does not necessarily track the final cost of a consultant contract for PS&E compared to its original or estimated cost. The FTC s FDOT performance measures track production measures like the number of consultant contracts planned versus executed and the comparison of estimated consultant cost versus contracted cost. However, as the previous section reported, the FTC performance measure for other Authorities is final consultant cost versus original cost. Implementation: Even if current systems do not track project times across the project delivery pipeline, creating a simple system to track PS&E cost and time, bid preparation/ letting/contracting time and construction completion could be done to measure capital program delivery within each Authority and reported to the FTC. The availability of records should permit the creation of such a measure within an annual reporting cycle after such a measure was defined and required by the FTC. Project Estimate Calibration Recommendation: More careful matching of plan estimates to current market conditions would allow Authorities to gain the maximum benefit of their bond financing on more projects. Construction program metrics reported in this section show that the three Authorities with the largest construction programs, MDX, OOCEA, and FTE, let Cambridge Systematics, Inc. 2-13

44 construction projects within an average 84.8%, 81.1%, and 77.8% of project estimates for the period , respectively. If annual project estimates were calculated at 110% of total actual annual contract lettings, that would be equivalent to an average letting of 90% of project estimates, a modest improvement over current Authority practices listed above. Calculating the estimate from the actual lettings on an annual basis would provide a measure of how much more could be programmed by each Authority. This would not result in a cost savings, but a more careful calculation of project estimates could increase the amount of projects that could be constructed within a given capital program, resulting in increased capital investments supported by Authority customer revenues. By improving the estimates to a 90% level, the three authorities MDX, OOCEA, and FTE might have been able to expand their capital programming by average of $12.8 million, $17.3 million, or $38.1 million annually, respectively. Risk Assessment: Market volatility is a cyclical process, for just as construction bids have come in lower than estimated due to depressed market conditions and lower demand for construction materials, the experience of the previous decade was marked by steady increases in unit costs and construction bids. This meant that Authorities were able to deliver fewer projects. Therefore, the matter of unit cost calculations and market analysis requires careful study and flexibility in capital programming. FDOT has maintained a practice of carefully monitoring economic trends and unit costs in construction bids to provide a quarterly analysis of construction trends. Authorities could combine their resources with FDOT in using this cost information on a regional basis to calibrate their capital programs to market-based project estimates. Implementation: The FTC does not require reporting of construction bids versus project estimates. However, a more careful calculation of ongoing market conditions and unit costs would be a very valuable tool for each Authority to manage its capital programs and bond financings, whether or not the FTC collects these data. Since FDOT already collects this information for its construction activities, the Authorities should be able to gain access to the databases and contribute their own construction data to the benefit of the database. By contributing to the maintenance of the database, the Authorities could improve the value of the market information for Authority projects and for FDOT projects alike Cambridge Systematics, Inc.

45 3.0 Maintenance 3.1 Overview For the purpose of this report, the maintenance component includes a review of asset maintenance contracts administered by Florida Department of Transportation (FDOT) and expressway authorities in terms of maintenance standards, inspection practices, and incentives; an examination of routine maintenance costs as they relate to overall operating costs and the factors that drive them; and, consideration of the potential cost savings associated with the concept of shared contracting. While the agencies included in the study maintain assets that vary in type of roadway, facilities, geographic location, and breadth of responsibility, they operate uniformly under FDOT specifications and guidelines for the maintenance and preservation of their systems. Agency maintenance performance, in addition to performance in a variety of other areas, is evaluated annually by the FTC using established performance metrics. Oversight and monitoring of Florida s Turnpike Enterprise (FTE) by the FTC was established pursuant to Section 20.23(2)(b)8, F.S. In 2007, the legislature passed House Bill 985, amending Section 20.23(2)(b)8, F.S. and expanding the FTC s oversight role to monitor the efficiency, productivity and management of authorities created under Chapters 343 and 348, F.S., including MDX, OOCEA and THEA. The FTC was specifically charged to conduct periodic reviews of each authority s operations and budget, acquisition of property, management of revenue and bond proceeds, and compliance with applicable laws and generally accepted accounting principles. On July 1, 2010, pursuant to House Bill 1271, the newly created Osceola County Expressway Authority (OCX) became subject to FTC oversight; however, OCX operates no facilities at the present time. Performance measures and objectives established for the Turnpike Enterprise differ slightly from those established for the authorities and the (MBBA. The Mid-Bay Bridge is maintained and operated by FDOT pursuant to a Lease-Purchase Agreement with the Mid-Bay Bridge Authority and falls outside of FTC performance monitoring. Routine maintenance of Florida s State Highway System (SHS) is driven by three programs FDOT has established to meet legislatively mandated standards for the physical condition of the SHS and to achieve objectives and strategies detailed in the long-term Florida Transportation Plan. These FDOT programs include the Pavement Management Program, the Bridge Inspection Program and the Maintenance Rating Program (MRP). Annually, the Pavement Condition Unit conducts an annual survey of the entire SHS in support of the Department s Pavement Management Program. Data collected (in terms of crack, ride, and rut measurements) are used to assess the condition and performance of Cambridge Systematics, Inc. 3-1

46 the State s roadway as well as to predict future rehabilitation needs that form the basis of legislative resurfacing budget requests and distribution of funds to the districts. In addition, the unit oversees the Federally mandated Highway Performance Monitoring System (HPMS) and project-level evaluations that involve assessment of the ride quality of pavement surfaces for acceptance purposes. FDOT has established that 80% of pavement on the SHS will meet department standards, while the FTC established greater than 85% of the authorities SHS lane miles rated excellent or good. FDOT is directly responsible for the inspection of all bridges on the SHS. Within FDOT, Structures Operations provides statewide oversight of bridge inspection, bridge management, bridge repair, and bridge rehabilitation programs, including budget, and provides technical support and oversight for FDOT s statewide bridge load rating program. Each bridge is to be inspected at regular intervals not to exceed 24 months; nonetheless, the condition of a bridge s components, major features and the bridge posting rating can require increased frequency of inspection. Each district runs its own bridge inspection efforts, including underwater bridge inspections, which are performed by a combination of in-house teams and consultant efforts, and five districts have in-house dive teams. FDOT s primary measure is to have 90% of its bridges achieve a National Bridge Inventory (NBI) rating of six or higher. The NBI is a Federal Highway Administration (FHWA) requirement used to evaluate the condition of bridges, based on a scale of 0 (failed condition to 9 (excellent condition). An NBI rating of 6 means a bridge is in satisfactory condition and a rating of 7 refers to a bridge in good condition. FDOT has established that 90% of FDOT-maintained bridges will meet department standards, while keeping all FDOT-maintained bridges open to the public safe. The FTC established that greater than 95% of the authorities bridge structures rated excellent or good. Through the MRP, FDOT provides a uniform system for evaluating maintenance features on the State Highway System (SHS) in Florida. Trained FDOT personnel, using an MRP Handbook, survey all types of highway facilities. Locations to be surveyed are randomly generated from the Department s Roadway Characteristics Inventory (RCI) with approximately 30 samples per facility type or a minimum of 3 samples for each available mile for each maintenance area. Each of the highway facility types is divided into the following five elements: roadway, roadside, traffic services, drainage, and vegetation/ aesthetics, with each of the elements further divided into features that are characteristic of that element. The MRP grades the five maintenance elements as well as the characteristics and arrives at a composite score based on a scale of 1 to 100. Results are reported for each of the three rating periods and an average annual rating is calculated based on the results from the three ratings. FDOT s primary measure for roadway maintenance is an MRP of at least 80 on the SHS. Results of the MRP provide valuable information that can be used not only to schedule and prioritize routine maintenance activities, but also to provide uniform maintenance conditions that meet established FDOT objectives. FDOT is committed to achieve an MRP of at least 80 on the SHS. The FTC established an MRP rating of at least 90 for the authorities. While roadway and bridge maintenance contracts generally follow facility limits, FTE has redefined maintenance limits into four separate maintenance zones. Since maintenance costs are rarely allocated by mile post, determining actual routine maintenance costs for 3-2 Cambridge Systematics, Inc.

47 each of FTE s zones was problematic. A similar problem arose with MRP ratings. FTE s maintenance costs and performance data are reported by zone where possible, and in the absence of available zonal data, FTE data are reported in aggregate. Expressway Authority financial and performance data were obtained primarily from the FTC s Transportation Authority Monitoring and Oversight Fiscal Year 2011 Report. FTE financial and performance data were taken largely from the FTC s Performance and Production Review of the Florida Department of Transportation FY 2010/2011 and Florida s Turnpike System Comprehensive Annual Financial Reports for fiscal years 2008, 2010 and Mid-Bay Bridge data came predominantly from FDOT s Traffic Engineer s Annual Report, Enterprise Toll Operations/Fiscal Year Ended June 30, 2011 and from Mid-Bay Bridge Authority Financial Statements for fiscal years 2009 through The period of focus for data analysis of all agencies was 2006 through The authorities provided copies of roadway and bridge maintenance contracts, facilities contracts and landscaping contracts currently in place. FTE provided asset maintenance agreements for Zone 3, Zone 4, and MBBA as well as MBBA s facilities maintenance contract. Conventional contracts in place within FTE zones 1 and 2 were not reviewed. The following section is based on a detailed review of agency bridge and roadway maintenance contracts that currently are in place. 3.2 Asset Maintenance Contracts Administered by FDOT and Expressway Authorities This element of the study examined each of the bridge and roadway maintenance contracts to identify both unique and common contract components with a focus on maintenance standards, inspection practices and incentives. An overview of contracts currently in place is presented in Table 3.1 below. Cambridge Systematics, Inc. 3-3

48 Table 3.1 Asset Maintenance Contracts/Bridge and Roadway Maintenance Service Agency Term Contractor Cost Project Limits Renewal FDOT FTE 12/01/05-11/30/12 THEA 1/8/09-6/30/13 MDX 1/31/09-6/30/14 OOCEA 7/1/10-6/30/15 FDOT FTE 1/1/11-12/31/15 FDOT District 3 (MBBA) 7/1/11-6/30/18 OOCEA 7/1/11-6/30/16 VMS, Inc $35,932,358 Zone 3 FTE MP (SR 91) Seminole Expressway (SR 417) Western Beltway, Part C (SR 429) VMS, Inc $6,413,715 Lee Roy Selmon Expressway (SR 618) Reversible Express Lanes (REL) (SR 618) Brandon Parkway VMS, Inc $31,697,796 Airport Expressway (SR 112) Dolphin Expressway (SR 836) Don Shula Expressway (SR 874) Snapper Creek Expressway (SR 878) Gratigny Parkway (SR 924) ICA $7,996,000 Daniel Webster Western Beltway (SR 429) John Land Apopka Expressway (SR 414) VMS, Inc $15,855,000 Zone 4 Polk Parkway (SR 570) Veterans Expressway and SPUR (SR 589) Suncoast Parkway (SR 589) VMS, Inc $18,455,000 State Right-of-Ways in Okaloosa County and a portion of Walton County Financial Projects JCA, LLC $16,989,528 East-West Expressway (SR 408) Central Florida GreeneWay (SR 417) Goldenrod Road Extension (SR 551) 7 years 4 years 2 years 1 year 1+ Not to exceed 5 years 1+ Not to exceed 7 years 1 year Source: CUTR assembled information from: Authority and FTE active Bridge and Roadway Maintenance Service Contracts. FTE Zone 3, THEA, MDX, FTE Zone 4, and MMBA currently contract with VMS, Inc for asset maintenance services. OOCEA has bridge and roadway maintenance service contracts with Infrastructure Corporation of America (ICA) and Jorgensen Contract Services, LLC. Contract terms range from four to seven years, and all contracts contain optional renewal at the sole discretion of the agency. All contracts were competitively bid, are governed by the laws of the State of Florida and stipulate similar performance and payment bonds. Contractors are required to manage assets within the project limits and perform work that produces end results in accordance 3-4 Cambridge Systematics, Inc.

49 with FDOT specifications, design standards, maintenance activity standards, manuals, handbooks and guides in effect at the time of performance of the work and are consistent with FDOT s statewide maintenance practices. Zone 3 contract provides a 15% add-on for inflation if the contract is approved for renewal. Zone 4, MBBA, and MDX indicate that inflation will be considered at the time of renewal and could result in an increase, decrease or no change in value. THEA s contract includes a 3% increase in the lump sum annual fee for current contract years 2 through 4. THEA s renewal option contains similar increases for years 5 through 8. OOCEA makes no mention of additional compensation for contract renewal. All contracts are lump sum contracts with only one pay item listed in the contract with the exceptions of MDX and OOCEA. MDX bids a combination of lump sum, cyclical completion items and unit cost items as well as optional services. OOCEA provides a reduced payment schedule tied to construction activities that would prevent the contractor from completing all contracted services in the construction area. All contracts require monthly invoicing with payment based on 1/12 th of the amount indicated for a given fiscal year or based on a monthly payout schedule calculated on the value of the total contract. All contracts also require that proper health and safety measures be taken to ensure safety for the public, agency employees, contractor employees, and subcontractor employees. MDX provides non-revenue transponders to vehicles registered to the contractor s firm and assigned to MDX. All other agencies require contractors and agents to pay all tolls. Disadvantaged business enterprise (DBE) utilization must be monitored and reported on a regular basis; only MDX established a minimum Small Business participation rate within the contract. Contractors must receive approval from MDX and THEA for all subcontractors and comply with local lane closure restrictions and requirements at all agencies. All contractors are required to identify and provide contact information for emergency personnel, who must be available on a 24-hour basis, seven days a week. A contractual requirement unique to MDX is a contractor requirement to provide one person to be located at the MDX Headquarters full-time. The employee is designated the Reports and Submittals Manager, whose primary responsibility is performing status reporting and record archiving. All records and reports are processed by the manager within specific timeframes. MRP ratings with clearly defined deductions/retainage are a primary measure utilized by all agencies to evaluate contractor performance. Agencies do, however, differ in their use of specific deductions/disincentives for select maintenance activities. Zone 3, MBBA, MDX, and Zone 4 identify specific deductions/disincentives for a number of maintenance activities. Failure to complete an inspection on time, submit the completed inspection report on time, and complete the identified repair on time could result in three separate monetary deductions. If MDX s contractor fails to meet the required year end FDOT MRP rating two times, the contract can be terminated. OOCEA assesses liquidated damages for failure to complete work, particularly work that involves safety-related emergency repair and must be completed quickly to restore service or access. THEA uses two specific deductions. The first is a general work order, the use of which is driven by THEA s practice of agency-performed rather than contractor-performed inspections. The second Cambridge Systematics, Inc. 3-5

50 deduction involves accurate reporting. Should THEA perform a concurrent inspection on any asset and find that the contractor submitted a falsified or blatant erroneous report, THEA issues a deduction for each report. Additional performance criteria utilized by the agencies as detailed in the contracts are presented in Table 3.2. Table 3.2 Agency Performance Criteria Zone 3 THEA MDX OOCEA Zone 4 MBBA MRP ratings Deductions for failure to perform FDOT MRP requirements as expanded and amended Timely and accurate submittal of deliverables $500 per day deduction for failure to perform General Work Order $5,000 per falsified or erroneous report FDOT MRP requirements Disincentives detailed in contract Contractor Annual Evaluation Response time incentives Disciplinespecific requirements Timely and, accurate submittals, tasks and cycle Average score given to roadway features, roadside features, vegetation/ aesthetics and drainage by FDOT through annual MRP Liquidated damages not to exceed $200 per day for failure to complete the work Comparing actual work performance to criteria in scope Semiannual grading of contractor according to Asset Maintenance Contracts Procedure Time allowed and criteria included in contract Comparing actual work performance to criteria in scope Semiannual grading of contractor according to Asset Maintenance Contracts Procedure Time allowed and criteria included in contract Source: CUTR assembled information from: Authority and FTE active Bridge and Roadway Maintenance Service Contracts. Maintenance Rating Program All contracts incorporate the MRP as an integral component of the contract and require the contractor to achieve and maintain specific overall, element and characteristic MRP ratings. Both THEA and MDX provided a six-month period at the start of the contract term that focused on the contractor achieving a minimum MRP. MDX included a significant monetary incentive/disincentive for timely achievement of the initial MRP rating. For the effective annual score of the first fiscal year, a onetime MRP incentive payment of $24,000 was available to the contractor for achieving an FDOT MRP rating equal to one point above the initial baseline score, or a score of 90, whichever was greater. In addition, MDX would assess, as a reduction, $24,000 for failure to achieve an FDOT MRP rating equal to one point above the initial baseline score, or a score of 90, whichever was greater. MDX increased the MRP rating by one point per year to a maximum of 91, 3-6 Cambridge Systematics, Inc.

51 except that regardless of the baseline score, after completion of the third full fiscal year of the contract the MRP requirement was 91. An overview of each agency s implementation in Table 3.3. Table 3.3 Agencies Maintenance Rating Programs Zone 3 THEA MDX OOCEA Zone 4 MBBA OOCEA Overall MRP Rating Element Rating Characteristic Rating Sample MRP Ratings every 4 months X X X X X Contractor conducts X X Contractor subcontracts to qualified firm FDOT trained FDOT conducts for Contractor X X No sample MRP Ratings conducted X X Retainage for Periods 1 and 2 (cumulative 4-month) Retainage for each FDOT MRP Rating point <Target -1% $5,000 $5,000-1% -.5% -.5% -1% Retainage for each FDOT Element Rating point <Target -.5% $500 $ % -.25% -.25% -.5% Retainage for each FDOT Characteristic Rating point <Target Retainage for Annual Rating (entire annual contract) X -.25% $250 $ % -.125% -.125% -.25% Retainage for each FDOT MRP Rating point <Target -1% -.5% -.5% Deduction for > than one full FDOT MRP Rating point <Target Retainage for each FDOT Element Rating <Target -.5% -.25% -.25% Retainage for each FDOT Characteristic Rating point <Target Calculated amount < than retainage-balance paid Calculated amount > than retainage-deduction -1% -.25% -.125% -.125% Rating dispute resolution procedures in place X X X X X X X Source: CUTR assembled data from: Authority and FTE active Bridge and Roadway Maintenance Service Contracts. Cambridge Systematics, Inc. 3-7

52 Routine Maintenance Practices Contracts generally include responsibility for similar maintenance activities with relatively few exceptions. Most agencies require the contractor to inspect, maintain and repair guardrail, attenuators and signs. THEA completes semiannual guardrail and attenuator inspections and provides annual inspection of signs and drainage systems; however, the contractor is responsible for repair and maintenance. OOCEA s attenuators are inspected semiannually by FDOT. An overview of select maintenance activity performance is presented in Table 3.4. Bridge and structure inspections are completed by FDOT for all agencies, with routine maintenance and minor repairs completed by the contractor. MDX, THEA and OOCEA contractors inspect and maintain roadway and navigational lights. All agencies with the exception of OOCEA require that the contractor develop an Incident Response Plan/Emergency Management Plan; the contractor must comply with OOCEA s established Emergency Response Plan. Response times for covering graffiti range from 2 hours (OOCEA) to 36 hours (Zone 4 and MBBA). THEA s time limit is 12 hours and the time limit at MDX is 24 hours. The contractor is responsible for maintenance of traffic at all agencies. Other common maintenance activities include roadside and slope mowing, vegetation control inspection and maintenance, landscape, turf and tree maintenance, litter removal, clear zone obstructions, mechanical sweeping, and pavements. Zone 4, MBBA, MDX, and THEA hold the contractor responsible for the development and implementation of a Customer Service Response Plan, require contact with the customer within 24 hours and resolution of the customer service request within two weeks. 3-8 Cambridge Systematics, Inc.

53 Table 3.4 Select Maintenance Activity Performance Zone 3 THEA MDX OOCEA Zone 4 MBBA OOCEA Guardrail Deduction per day per Guardrail Perform timely inspections $1,000 $500 $500 Submit timely Inspection Reports $1,000 $500 $100 Make repairs identified in Inspection Reports $200 $500 $500 Make temporary safety repairs from incidents $200 $500 $1,000 Make permanent safety repairs from incidents $200 $500 $200 $1,000 $200 Characteristic rating <95 (per point).25%.25% Attenuator Deduction per day per Attenuator Perform timely inspections $1,000 $500 $500 Submit timely Inspection Reports $1,000 $500 $100 Make repairs identified in Inspection Reports $200 $500 $200 $500 $200 Make temporary safety repairs from incidents $200 $500 $200 $1,000 $200 Make permanent safety repairs from incidents $200 $500 $200 $1,000 $200 Characteristic rating <95 (per point).25%.25% Signs Deduction per day per Attenuator Perform timely inspections $1,000 $500 $500 $500 Submit timely Inspection Reports $1,000 $500 $100 $100 Make repairs identified in Inspection Reports $500 $500 $500 Make temporary safety repairs from incidents $200 $100 $100 Make permanent safety repairs from incidents $200 $200 $500 $500 $200 Replace missing signs (Regulatory) $200 $2,000 $2,000 Source: CUTR assembled data from: Authority and FTE active Bridge and Roadway Maintenance Service Contracts. MDX is the only agency that includes facilities maintenance in its asset maintenance contract. Zones 3 and 4 are responsible for maintenance and repair of call boxes. Zone 4 and MBBA do not include any ITS components or traffic signal maintenance in their contracts. MDX excludes ETC equipment, IT and ITS equipment, and associated Control Power. THEA excludes maintenance of toll booths, the Traffic Management Center (TMC) and the Intelligent Transportation System (ITS). Maintenance of toll facilities and equipment, the fiber optic network, landscaping and aquatic weed control are not part of OOCEA contract. Cambridge Systematics, Inc. 3-9

54 Factors that Drive Routine Maintenance Costs Routine maintenance costs from 2006 through 2011 were examined for all agencies and are shown in Table 3.5. Since Zone 3 and Zone 4 routine maintenance data were not available by year, total FTE routine maintenance costs were used in the analysis. Due to significant differences in the breadth of the agencies, a comparison of total costs across the agencies basically confirms that the larger the agency, the higher the costs. Of more relevance is the change in maintenance costs year-to-year, shown in Figure 3.1. THEA s 2011 costs have fallen since 2009, and OOCEA s 2011 costs, despite a slight increase over 2010, are lower than costs reported in 2008 and The significant fluctuations observed in 2007 and 2008 are not apparent in recent years. FTE added lane miles in 2009 (2), 2010 (20), and 2011 (64), which could account for an increase in maintenance costs. Table 3.5 Routine Maintenance Costs by Agency ($000) Routine Maintenance Expense ($000) Change Year-to-Year FTE MDX OOCEA THEA MBBA FTE MDX OOCEA THEA MBBA ,246 5,621 11,024 1, ,137 11,204 12,482 2, % 99.3% 13.2% 54.6% 26.8% ,044 3,904 14,468 3, % -65.2% 15.9% 69.3% -13.4% ,353 4,597 13,695 4, % 17.7% -5.3% 13.9% -8.5% ,909 6,022 13,577 3, % 31.0% -0.9% -13.6% -14.4% ,789 6,577 13,677 3, % 9.2% 0.7% -6.0% 21.0% Source: CUTR assembled data from: Authority Data, FTC Performance Reports; FTE Data, FTC Performance Reports and Comprehensive Annual Financial Plans; MBBA Data, FDOT Traffic Engineer s Annual Report and MBBA Financial Statements Cambridge Systematics, Inc.

55 Figure 3.1 Routine Maintenance Costs Change Year to Year % -60.0% -40.0% -20.0% 0.0% 20.0% 40.0% 60.0% 80.0% 100.0% 120.0% MBBA THEA OOCEA MDX FTE Source: CUTR assembled data from: Authority Data, FTC Performance Reports; FTE Data, FTC Performance Reports and Comprehensive Annual Financial Plans; MBBA Data, FDOT Traffic Engineer s Annual Report and MBBA Financial Statements. A review of maintenance cost per lane mile offers a more relevant comparison across agencies as costs are related to the number of lane miles maintained, shown in Table 3.6. The number of lane miles maintained by FTE and OOCEA grew, while lane miles maintained by MBBA and THEA remained static. THEA s reduction in maintenance costs, combined with static lane miles, resulted in a decline in the cost per lane mile. MBBA, on the other hand, increased maintenance costs with no change in lane miles, resulting in an increase in the maintenance cost per lane mile. FTE s maintenance cost per lane mile grew slightly as maintenance costs and lane miles maintained by FTE increased. OOCEA s modest changes in maintenance costs, combined with growth over time in lane miles, have produced a stable maintenance cost per lane mile since A review of the FTC s Transportation Authority Monitoring and Oversight Fiscal Year 2007 and 2008 Reports revealed that MDX maintenance expenditures in 2007 contained $4.9 million in clean-up cost expenses related to Hurricanes Katrina and Wilma. In 2008, maintenance expenses returned to normal. Since 2008, MDX has reported rising maintenance costs and relatively static lane miles, which yields an increasing maintenance cost per lane mile. Cambridge Systematics, Inc. 3-11

56 Table 3.6 Routine Maintenance Costs, Lane Miles, and Cost per Lane Mile ($000) Maintenance Expense ($000) Lane Miles on SHS Cost per Lane Mile ($000) FTE MDX OOCEA THEA MBBA FTE MDX OOCEA THEA MBBA FTE MDX OOCEA THEA MBBA ,246 5,621 11,024 1, , ,137 11,204 12,482 2, , ,044 3,904 14,468 3, , ,353 4,597 13,695 4, , ,909 6,022 13,577 3, , ,789 6,577 13,677 3, , Source: CUTR assembled data from: Authority Data, FTC Performance Reports; FTE Data, FTC Performance Reports and Comprehensive Annual Financial Plans; MBBA Data, FDOT Traffic Engineer s Annual Report and MBBA Financial Statements. Figure 3.2 Routine Maintenance Cost per Lane Mile ($000s FTE MDX OOCEA THEA MBBA Source: CUTR assembled data from: Authority Data, FTC Performance Reports; FTE Data, FTC Performance Reports and Comprehensive Annual Financial Plans; MBBA Data, FDOT Traffic Engineer s Annual Report and MBBA Financial Statements Cambridge Systematics, Inc.

57 The FTC and FDOT established minimum maintenance performance standards for FTE and the authorities that require the agencies to maintain their systems at an acceptable level. The first of the standards is pavement rating. FDOT requires that 80% of pavement on the SHS meet department standards, while the FTC requires authorities to achieve greater than 85% of SHS lane miles rated excellent or good. The authorities and FTE have routinely exceeded mandated standards shown in Table 3.7. FTE has exceeded the FTC s standard since it was established in Table 3.7 Percentage of Pavement Meeting Standards FTE MDX OOCEA THEA FTC Goal FDOT % 97% 79% 100% 80% % 96% 85% 100% 85% 80% % 94% 98% 100% 85% 80% % 89% 100% 98% 85% 80% % 92% 99% 100% 85% 80% % 91% 100% 100% 85% 80% Source: CUTR assembled data from: Authority Data, FTC Performance Reports; FTE Data, FTC Performance Reports and Comprehensive Annual Financial Plans. Cambridge Systematics, Inc. 3-13

58 Figure 3.3 Percentage of Pavement Meeting Standards 110% 100% 90% 80% 70% 60% 50% FTE MDX OOCEA THEA FTC FDOT Source: CUTR assembled data from: Authority Data, FTC Performance Reports; FTE Data, FTC Performance Reports and Comprehensive Annual Financial Plans. The next established standard is bridge condition. FDOT established that 90% of FDOTmaintained bridges will meet department standards, while the FTC requires authorities to achieve greater than 95% of their bridge structures rated excellent or good. The authorities, with the exception of THEA, and FTE have routinely exceeded mandated standards. Until this year, FTE exceeded the FTC s standard since it was established in Table 3.8 Percentage of Bridges Meeting Standards FTE MDX OOCEA THEA FTC Goal FDOT % 97% 100% 86% 90% % 98% 100% 86% 95% 90% % 98% 99% 86% 95% 90% % 98% 100% 86% 95% 90% % 98% 99% 97% 95% 90% % 98% 99% 97% 95% 90% Source: CUTR assembled data from: Authority Data, FTC Performance Reports; FTE Data, FTC Performance Reports and Comprehensive Annual Financial Plans Cambridge Systematics, Inc.

59 Figure 3.4 Percentage of Bridges Meeting Standards 105% 100% 95% 90% 85% 80% 75% FTE MDX OOCEA THEA FTC FDOT Source: CUTR assembled data from: Authority Data, FTC Performance Reports; FTE Data, FTC Performance Reports and Comprehensive Annual Financial Plans. The final established standard is overall maintenance condition rating derived from the MRP. FDOT is committed to achieving an overall MRP of at least 80 on the SHS. The FTC established an overall MRP rating of at least 90. All authorities have achieved or exceeded FTC standards since FTE has exceeded the FTC s standard since it was established in Table 3.9 Overall MRP Maintenance Rating FTE MDX OOCEA THEA MBBA FTC Goal FDOT Source: CUTR assembled data from: Authority Data, FTC Performance Reports; FTE Data, FTC Performance Reports and Comprehensive Annual Financial Plans; MBBA Data, FDOT Traffic Engineer s Annual Report and MBBA Financial Statements. Cambridge Systematics, Inc. 3-15

60 A correlation technique was applied to determine the degree to which maintenance costs and MRP ratings showed a tendency to vary together. Based on the results of the calculation, a positive correlation does exist for MDX, OOCEA, and THEA. As maintenance costs grew, overall MRP ratings rose. There were insufficient data available for MBBA for a determination. FTE showed a slightly negative correlation between maintenance costs and overall MRP ratings. There was a tendency for one variable to grow as the other variable declined. This tendency is apparent in 2008 and 2009 when routine maintenance costs declined and the overall MRP increased. Table 3.10 Correlation Maintenance Costs and Overall MRP Ratings Routine Maintenance Expenses FTE MDX OOCEA THEA MBBA ,246 5,621 11,024 1, ,137 11,204 12,482 2, ,044 3,904 14,468 3, ,353 4,597 13,695 4, ,909 6,022 13,577 3, ,789 6,577 13,677 3, Overall MRP Rating FTE MDX OOCEA THEA MBBA Correlation Source: CUTR assembled data from: Authority Data, FTC Performance Reports; FTE Data, FTC Performance Reports and Comprehensive Annual Financial Plans; MBBA Data, FDOT Traffic Engineer s Annual Report and MBBA Financial Statements, 3-16 Cambridge Systematics, Inc.

61 Figure 3.5 Correlation of Routine Maintenance Costs and Overall MRP Ratings FTE MDX OOCEA THEA MBBA Source: CUTR assembled data from: Authority Data, FTC Performance Reports; FTE Data, FTC Performance Reports and Comprehensive Annual Financial Plans; MBBA Data, FDOT Traffic Engineer s Annual Report and MBBA Financial Statements. Routine Maintenance Expenses as a Percentage of O&M Expenses Routine maintenance and O&M costs from 2006 through 2011 were examined for all agencies. Since Zone 3 and Zone 4 routine maintenance data were not available by year, total FTE costs were used in the analysis. Maintenance costs accounted for a larger percentage of O&M costs at all agencies in 2011 with the exception of OOCEA. THEA s maintenance costs constituted the highest percentage of O&M costs in Given THEA s reduction in maintenance costs in 2010 and 2011, as noted earlier in the report, THEA s O&M costs were examined further. THEA reduced O&M expenditures by $1.554 million (a 14.3% decrease) in 2010 and by $2.037 million (a 21.9% decrease) in THEA reduced maintenance costs by $547 thousand (a 13.6% decrease) in 2010 and by $210 thousand (a 6.0% decrease) in The bulk of the reduction in O&M expenditures occurred in operations, $1.007 million (a 14.7% reduction) in 2010 and $1.827 million (a 31.3% reduction) in Since operating expenses declined at a rate greater than maintenance expenses, maintenance costs accounted for a larger portion of the expenses. Cambridge Systematics, Inc. 3-17

62 Table 3.11 O&M ($000)/Routine Maintenance ($000)/ Maintenance as a Percent of O&M O&M Expenses ($000) Maintenance Costs ($000) Maintenance Costs as a % of O&M FTE MDX OOCEA THEA MBBA FTE MDX OOCEA THEA MBBA FTE MDX OOCEA THEA MBBA ,357 15,975 44,368 6,752 1,837 39,246 5,621 11,024 1, % 35.2% 24.8% 20.0% 10.6% ,386 23,673 46,308 8,463 2,162 42,137 11,204 12,482 2, % 47.3% 27.0% 24.6% 11.4% ,218 23,961 50,059 10,071 2,271 41,044 3,904 14,468 3, % 16.3% 28.9% 35.1% 9.4% ,608 27,135 45,928 10,856 2,350 39,353 4,597 13,695 4, % 16.9% 29.8% 37.0% 8.3% ,262 25,445 46,104 9,302 2,138 38,909 6,022 13,577 3, % 23.7% 29.4% 37.4% 7.8% ,758 26,840 47,191 7,265 2,263 40,789 6,577 13,677 3, % 24.5% 29.0% 44.9% 8.9% Source: CUTR assembled data from: Authority Data, FTC Performance Reports; FTE Data, FTC Performance Reports and Comprehensive Annual Financial Plans; MBBA Data, FDOT Traffic Engineer s Annual Report and MBBA Financial Statements. Figure 3.6 Routine Maintenance Cost as a Percent of Operating and Maintenance Costs 50.0% 45.0% 40.0% 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% FTE MDX OOCEA THEA MBB Source: CUTR assembled data from: Authority Data, FTC Performance Reports; FTE Data, FTC Performance Reports and Comprehensive Annual Financial Plans; MBBA Data, FDOT Traffic Engineer s Annual Report and MBBA Financial Statements Cambridge Systematics, Inc.

63 3.3 Regional Sharing From a maintenance perspective, based on the asset maintenance agreements reviewed, there appears to be minimal sharing among and the authorities or between FTE and the authorities. Maintenance activities are performed within the limits defined in the contracts. The authorities function within their geographic footprints in much the same way that FTE s Zones 3 and 4 operate. A concept that might have potential for regional sharing is overlap. For areas that abut or are contained within another agency s footprint, affected agencies could consider identifying optimum limits and adjust asset maintenance agreements accordingly. Unfortunately, all areas with the exception of FTE Zones 1 and 2 currently have contracts in place, and some renewal options could extend contracts until The table below presents a timeline of existing contracts and renewal periods. Table 3.12 Current Asset Maintenance Contracts and Renewals Zone 3 THEA MDX OOCEA Zone 4 MBBA OOCEA 2006 VMS, Inc 2007 VMS, Inc 2008 VMS, Inc 2009 VMS, Inc VMS, Inc VMS, Inc 2010 VMS, Inc VMS, Inc VMS, Inc ICA 2011 VMS, Inc VMS, Inc VMS, Inc ICA VMS, Inc VMS, Inc JCS, LLC 2012 VMS, Inc VMS, Inc VMS, Inc ICA VMS, Inc VMS, Inc JCS, LLC 2013 VMS, Inc VMS, Inc ICA VMS, Inc VMS, Inc JCS, LLC 2014 VMS, Inc ICA VMS, Inc VMS, Inc JCS, LLC 2015 VMS, Inc VMS, Inc JCS, LLC 2016 VMS, Inc 2017 VMS, Inc Renewal Options Source: CUTR assembled information from: Authority and FTE active Bridge and Roadway Maintenance Service Contracts. Cambridge Systematics, Inc. 3-19

64 Authorities and FDOT Best Practices and Efficiencies In terms of best practices, the FTC and FDOT appear to be the threads that tie all the systems together through the use of performance standards supplemented with FDOT s sophisticated inspection program and detailed maintenance specifications and standards that provide a framework for effective maintenance operations. The Authorities and FTE have incorporated performance-based contracts with a high level of oversight. FDOT specifications and standards provide a framework to ensure consistent maintenance practices across all agencies. All agencies are evaluated through FDOT s Pavement Condition Unit, Bridge Inspection Program and Maintenance Rating Program. The effectiveness of the agencies maintenance activities is documented in this report. While the Authorities and FTE are evaluated by the FTC through use of the same performance metrics, performance targets for the Authorities and FTE are established at different levels. In the absence of comparable agency-specific data, identification of efficiency across agencies cannot be determined. 3.4 Recommendations Standardized Performance Metrics Recommendation: Maintenance performance measures for all agencies subject to review should be established at the same rates. At the present time, FTE and MBBA are evaluated by similar maintenance performance measures but with performance targets below the performance targets required of the Authorities. Risk Assessment: Organizational resistance; Lack of resources to commit; Inability to integrate before next reporting cycle; and Policy-maker perception of postponing action on maintenance efficiency gains. Implementation Plan: Assess acceptability of recommendation to the FTC; If positive, FTC action to adopt; Charge FTC working group to establish new, combined reporting metrics; Working with agencies, establish standardized measures for toll agencies; 3-20 Cambridge Systematics, Inc.

65 Present to FTC for approval; and Incorporate into ongoing performance reporting process. Track FTE Maintenance Costs and Performance Metrics by Maintenance Zone Recommendation: Common metrics should be tracked for each defined area of maintenance. FTE maintains the Turnpike within four distinct geographic zones, but does not track zone-specific cost or performance data. Evaluating the effectiveness and efficiency of maintenance within each of those zones requires the collection of cost and performance data specific to each of the areas. Risk Assessment: FTC may not be interested in obtaining data at a secondary level; Organizational resistance; Lack of resources to commit; Inability to integrate before next reporting cycle; and Policy-maker perception of postponing action on maintenance efficiency gains. Implementation Plan: Assess acceptability of recommendation to the FTC; If positive, FTC action to adopt; Charge FTC working group to establish new reporting requirements; Working with FTE, establish standardized maintenance and performance data collection procedures for maintenance zones; Present to FTC for approval; and Incorporate into ongoing performance reporting process. Cambridge Systematics, Inc. 3-21

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67 4.0 Operations Review 4.1 Overview of the Study Element Area The purpose of this section is to document and summarize toll operations as it relates to the toll agencies, including FTE, OOCEA, MDX, and THEA. This section includes a review of transaction processing both electronic tolls and violations; a summary of customer account management; examples of interagency cooperation; existing efficiencies in electronic toll collections; and a summary operational recommendations. Florida has a long history of implementing electronic toll collections (ETC) that was initiated by the OOCEA and the FTE. Florida also is a national leader in all electronic tolling (AET). Currently, MDX, THEA, and FTE selected facilities include transponderbased and image-based toll collection methods with new business rules, systems and customer account types developed to accommodate AET. THEA is one the first toll authorities in the United States to move its entire toll collection system to AET. There are three agencies that provide ETC customer account management. Commonly referred to as Home Agencies, OOCEA, FTE, and LeeWay all provide toll transponders sales, customer account management, and full transaction processing. MDX and THEA play important roles in processing AET Pay-by-Plate transactions that includes establishing direct customer interfaces and AET processing capabilities. Table 4.1 provides a summary of customer accounts and transactions to highlight transaction volumes, account management and the importance of toll interoperability among the toll agencies. Cambridge Systematics, Inc. 4-1

68 Table 4.1 Customer Accounts and Transaction Volumes Agency Total Annual Transactions of FY 2011 Customer Accounts (in Thousands) Accounts Transponders ETC a Total FTE 7,800,000 4,100, , ,857 OOCEA 291, , , ,598 LeeWay Missing Missing 9,803 17,199 MDX NA NA 223,090 b 232,655 THEA NA NA 31,635 c 31,635 a ETC transactions include transponder and image (Toll-by-Plate) transactions. b Approximately 85% of ETC transactions are SunPass customers. c Approximately 80% of ETC transactions are SunPass customers. 4.2 Study Element Area Topic Areas Agency Transaction Processing Based on the start-up of ETC technology in Florida, three agencies invested in comprehensive electronic tolling systems that are designed to manage customer accounts, provide transponder sales, process electronic transactions, and pursue toll violators. Today these three agencies FTE, OOCEA and Lee County remain as the only customer outlets for transponder-based ETC systems. As depicted in Figure 4.1 these agencies are referred to as Florida Home Agencies. 4-2 Cambridge Systematics, Inc.

69 Figure 4.1 Florida Home Agencies Florida Home Agency FTE (Florida's Turnpike Enterprise) OOCEA (Orlando Orange County Expressway Authority) Lee County Home Agencies establish and maintain customer accounts. This also includes specific responsibility for distributing toll revenue to the designed toll authority. The distribution process, typically referred to as the settlement process, requires each Home Agency to transfer the appropriate toll revenue from their customer accounts for all valid transactions that take place on the other toll agency roadways. As highlighted in Table 4.1, the FTE manages the vast majority of customer accounts, which is the primary reason it is responsible for processing such a large percentage of electronic toll transactions. FTE provides toll collections for the Mid-Bay Bridge Authority and OOCEA provides full services to Osceola County. By agreement, Home Agencies interact with each other, and with all other toll agencies in Florida. As highlighted in Figure 4.2, Client Agencies do not establish or maintain customer accounts. They essentially operate without a designated (or defined) customer account base. All electronic toll transactions from Client Agency toll facilities are sent to the appropriate Home Agency for posting and settlement. Electronic toll transaction file transfer, posting, and settlement are defined in a strict set of interface specification documents. In Florida, these procedures are codified in the Interagency Electronic Toll Collection Interoperability and Reciprocity Agreement. These binding agreements include the following elements. Records and data file interface specifications; Accounting business rules (methods and timing for the exchange of toll-related funds); and Technical business rules (detailed business rules documenting the acceptance of tollrelated transactions exchanged between each participating agency). Cambridge Systematics, Inc. 4-3

70 The structured process defined in the Agreement is a central functional element in developing and maintaining interoperability between Florida toll agencies and provides an excellent working example of offering significant efficiencies to Florida s toll customers. Interoperability eliminates redundancies in systems, minimizes the financial burden of customer account management, while offering significant cost savings to the participating toll agencies. Figure 4.2 Florida Client Agencies Florida Client Agency Osceola County MDX (Miami-Dade Expressway Authority) THEA (Tampa Hillsborough Expressway Authority) A simplified example of electronic toll interoperability, Figure 4.3, provides a graphic representation of the data and transaction flow between a Home Agency and a Client Agency. The toll posting and settlement process is similar between any Home Agency to Home Agency or Home Agency to Client Agency as depicted in Figure 4.3. There are at least three steps that occur to complete the toll settlement process for transponder-based tolls. Once a customer incurs a toll on a Florida facility, the toll transaction is assigned to the Home Agency that maintains that customer s prepaid toll account. The transaction is bundled with other identical transactions and sent to the Home Agency for processing. Once the transaction is received the Home Agency will identify the correct customer account, post the toll to the account, and create a settlement file to transfer the toll amount to the proper agency. In the case depicted in Figure 4.3, the toll occurs on a MDX facility by a SunPass customer. The interaction occurs between systems maintained by FTE and MDX. It is important to note that at each step of the simplified process requires several accounting actions along with detailed electronic documentation of data files that contain the toll transaction information. The Interagency Electronic Toll Collection Interoperability and Reciprocity Agreement provides the detailed codes, descriptions, and transaction record formats used to exchange the toll-related data and information to complete the transaction highlighted in Figure Cambridge Systematics, Inc.

71 Figure 4.3 Example of Current Interoperable Transaction Flow 1. FTE customer travels on MDX facility 2. MDX sends FTE the toll transaction 3. FTC posts to customer account and settles with MDX While Figure 4.3 provides a generic example of how toll transactions are settled between agencies and accounted for using independent toll systems, it is important to highlight that SunPass customers and the associated electronic toll process capabilities of FTE play a very important role in the providing interoperability with all toll Agencies in Florida. Based on the data included in Table 4.1, the FTE toll systems play a vital role in supporting interoperability between all other agencies within Florida. Over the last few years, FTE, MDX and THEA have converted some facilities to cashless, AET systems. While AET improves the increased efficiency in travel (eliminating plazabased delay and potential safety issues) and reduces roadway design costs by eliminating toll plazas, it also introduces new interoperability rules and processes. In the case of Florida, it introduced new tolling systems for MDX and THEA. Customers who maintain a valid transponder experience no significant difference in transaction processing. AET systems allow for Toll-by-Plate transactions that use the vehicle license plate as the primary source of customer identification and toll billing information. The challenge is to obtain accurate billing information for those customers (and vehicles) not enrolled in a Home Agency program programs. Home Agency toll systems must accommodate the new Toll-by-Plate toll transaction type, which requires adding the ability to match toll transactions to customer accounts using only the image of a vehicles license plate. Many image-based transactions require some type of manual intervention and review. Toll-by-Plate customers on MDX and THEA facilities (customers without an active ETC account) rely on MDX and THEA systems to process and bill each transaction. Again, this has introduced new toll systems Cambridge Systematics, Inc. 4-5