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Chapter 4

Speed Project Delivery by Upgrading Construction Practices:
Contracting and Engineering Systems

Numerous creative contracting techniques being introduced by state departments of transportation (DOTs) and toll authorities promise to reduce costs to taxpayers while increasing accountability. TxDOT should embrace these new methods.

Several standard state practices, such as the lengthy bidding process and requirement to always award a contract to the lowest bidder, can tie an agency’s hands when it needs to respond quickly to the changing landscape. The review uncovered several ways to streamline these processes to allow TxDOT to respond more quickly and to save taxpayer money.

Modify Risk Transfer Approaches

Under traditional highway construction processes, contractors are selected based on the lowest bid and TxDOT has the primary responsibility for quality control. Contractors are pre-qualified, but the process is based primarily on the contractor’s financial stability. In contrast, a more comprehensive pre-qualification process requires review of both quality and performance factors. Alternative quality control methods can be used that place more responsibility on the contractor. One alternative is the use of warranties. One example of a warranty is for pavement. A pavement warranty is a contractual guarantee that the road will function appropriately for a certain period of time. If it does not, the provider will replace or repair the road surface at no cost to the government. One of the positive factors behind warranties is that contractors are motivated to do a better job when they have an ongoing responsibility for the quality of the work. A stricter pre-qualification process provides an enhanced assurance that the vendor selected is competent to perform quality work.

Authorize Design-Build Contracting To Complete Highway Projects Faster

Under a design-build contract, the state contracts with a single entity to provide road design and construction services. This change, while sounding minor, would eliminate one part of a two-part bidding process, thus reducing significantly the time and cost of building a road.

When used selectively, design-build contracts offer numerous advantages over traditional approaches, including substantial time savings, simplified project management, superior cost controls, and a reduced need for contract modifications (“change orders”). In addition, the approach is well received by financial institutions—an important consideration for projects funded by revenue bonds.

Increase Use Of A+B Bidding

“A+B” is bidding based on cost plus time. The contracting procedure focuses on the lowest initial cost, but also factors in the cost of the time required for project completion. A+B bidding can be valuable in speeding project delivery. Though TxDOT is slowly increasing the use of A+B, to date it has not made extensive use of the concept. TxDOT’s criteria for A+B bidding provide sufficient latitude for the increased use of this method without policy changes.

Consolidate District Design Activities

TxDOT should develop a plan to move existing design work from its area offices and consolidate it in the district headquarters. Moreover, districts should provide more of their own design review, eliminating the need for Austin headquarters to do routine reviews. Focusing this expertise in the 25 districts, rather than the more than 119 area offices, should save money, speed and improve the design review process, and simplify consultant coordination.

Reallocate Staff To Improve Support Of District Operations

TxDOT has a large decentralized workforce spread around the state located in 25 district offices, 119 area offices and 288 maintenance sections. The agency also has considerable central staff in Austin with engineering skills that are needed in field offices. TxDOT should develop a plan to shift production positions from the Austin headquarters to the district offices and move support positions to Austin from the districts to speed production and increase efficiency.

Improve The Supply Of Engineers

TxDOT has lost nearly 1,100 engineers and engineering assistants and technicians in the past 35 months. To counteract the loss of engineers, TxDOT should try to fill technical positions with non-engineers where feasible and expand its Rapid Hire Program. Further, to obtain a broader pool of candidates for the executive director of TxDOT, the requirement that applicants be registered engineers should be eliminated.