As state departments of transportation continue their battles against declining resources, growing backlogs of needed repairs and increasing congestion, the DOT CEOs see little to indicate these challenges will dwindle anytime soon.

The hope that the federal government will ride in on a white horse to “save the day” is fading fast. In fact, federal investment in transportation may actually drop precipitously. States are dealing with huge budget shortfalls that will not be remedied quickly, even with a rebound in the nation’s economy; years of deferred pension contributions and deep holes created in education and human services likely will take priority.

But, despite budget shortfalls, we can’t overlook the role transportation plays in a modern economy. Can DOTs move ahead despite years of infrastructure underfunding? And keep citizens safe? And enhance quality of life? The answer: yes, there is a solution.

My nearly 14 years as a CEO of two DOTs, both of which were at the extreme low end of available resources, taught me there are several strategies that produce significant results, even in states facing declining revenues.

Every DOT in the country is severely underfunded. As a result, circumstances demand drastic actions:

1. Target what you want to deliver. This may sound simple, but actually is quite difficult. An agency with the many responsibilities of a DOT typically has a difficult time prioritizing which of its duties is most critical to customers. Also, as legislatures have applied across-the-board budget cuts and staff hiring freezes, resources can become skewed and misapportioned. Without constant monitoring, this will simply make the entire operation inefficient and ineffective.

My approach has been to understand why my agency exists. This forms the basis for all allocations of budget and staff. Essentially, here are the questions that must be asked: Is this service absolutely critical to our mission? And, can we afford to provide it any longer? As an example, new maintenance facilities may be needed, but do they provide a direct benefit to the condition of the road? Do printed maps provide a direct benefit?

2. Practical Design. DOTs have evolved as project factories. They plan, design, construct and maintain projects. Controls, budgets and staffing are built around managing projects. Being project-centric has its costs. Almost any decision can be justified within the confines of a project starting and ending point.

At its core, practical design is a system-centric methodology. It prioritizes the needs of the system over the wants of a project.

Every design choice must be evaluated for the value it brings to the overall system and its appropriateness to its use. An example is having a minimum standard for a 40-feet-wide bridge with a 100-year flood elevation, even though it’s being placed on a 400 average daily traffic route with 22-feet-wide pavement. This is an easy way of unnecessarily pushing a $300,000 project into a $1.5 million project. The Missouri Department of Transportation estimates that practical design has saved in excess of $1 billion over the more traditional approach. This is the equivalent of a six-cent gas tax increase over the six years the practice has been implemented. 

3. Radical Cost Control. A DOT has two sides to an accounting ledger and both can produce additional revenue to invest into the system. “Money saved” produces the same result as “new cash.”

Most construction management systems allow a project to overrun its budget by 10 percent before real questions are asked. Applied throughout the Statewide Transportation Improvement Program, this can mean that hundreds of millions of dollars that could be dedicated to more improvements on the system are expended without strategic consideration.

DOT management should ask questions at 1 or 2 percent in change orders. Radical cost control simply means a budget is a budget — period. It means the programmed amount in the STIP is how much money is available for a project. With discipline, scope creep can be eliminated. This should apply department-wide. Any expenditure that exceeds anticipated cost should be either scaled back or cancelled. 

4. Innovation. When an environment has been created that allows — or even better, encourages — innovation, great things can result. It’s important to understand that innovation does not occur if what’s being done produces satisfactory results. It’s only through an emphasis on continuous improvement — always wanting to do more better-faster-cheaper — that innovation becomes a viable tool in the toolbox.
5. Shifting ownership. What cannot be done should be passed on to others for them to decide if it is important to them that a task or service be delivered. This is the organizational equivalent to “cleaning out the garage.” Retaining ownership of responsibilities that cannot be achieved only distracts and confuses members of the department and your customers.
6. Seek nontraditional funding. Tolling authority has taken many forms and each has varying degrees of public acceptance. Utilizing tolls for new “greenfield” developments is fairly well accepted. High-occupancy toll lanes also have become acceptable to the general public. The challenge for all DOTs is how to pay for the reconstruction of existing interstate highways.

Eventually, tolling those will become the only solution. Public-private partnerships can offer efficiency and expand financing options, as long as the DOT has an identified revenue stream to commit to repayment of the private sector investment either in the form of tolls or availability payments. Disposal of unused assets is another way to produce additional revenue.

MoDOT has undertaken a “Realty to Roads Program” that sells unneeded right-of-way, resulting in several million dollars of revenue statewide, as well as reducing the liability of owning unattended property. The proceeds are dedicated to support new highway projects.

Another area for exploration is converting idle assets into revenue-generating assets. This can entail leasing property that the department might want for future expansion; utilizing property for commercial signage like on the sides of fabric salt domes; or even the possibility of naming rights to high-profile facilities.

Pete Rahn is the national transportation practice leader of HNTB Corporation, an employee-owned infrastructure firm, serving federal, state, municipal, military and private clients, and former CEO of Missouri and New Mexico Departments of Transportation.

HNTB expert contact information:

Pete Rahn
Leader National Transportation Practice
HNTB Corporation
(816) 527-2034
Email: prahn@hntb.com

The no-tax-increase solution to challenges facing DOTs