HD12 - Improvement in Cash-Flow and Project Management in the Virginia Department of Transportation


Executive Summary:
As directed by HJR 685 of the 2003 General Assembly Session, this report describes actions taken to improve project and cash-flow management within the Virginia Department of Transportation (VDOT) and improvements achieved as a result of such actions.

At Governor Warner's direction, we have initiated a process of reform at VDOT to improve efficiency and accountability within the agency - toward the goal of regaining the public's trust. The Governor's VDOT reform package from the 2003 session has guided this process.

Specifically, actions have been taken to:

1) Streamline agency management and the decision-making process,
2) Establish clear lines of authority and accountability,
3) Establish internal financial controls, and
4) Ensure that planning and programming decisions are based on sound data and professional recommendations.

As this report describes, significant progress has been achieved. Of the 50 recommendations directed to VDOT in the 2002 Special Review of Cash Management and Capital Budgeting Practices by the Auditor of Public Accounts (APA), 34 (68%) are complete.

The remaining recommendations are being implemented currently. We are on schedule to complete implementation of all of the APA's recommendations by the fall of 2004.

These reforms have laid the groundwork for the long-term transformation of VDOT. However, continued focus and sustained effort will be necessary to realize the full benefit of the reforms that have been implemented and to follow through with additional steps.

With the exception of safety, I have no higher single priority for VDOT than the flawless execution of the Six-Year Program. The business-like reforms that we have implemented will help drive the transformation of VDOT and its institutional culture. While this transformation cannot be accomplished overnight, solid progress has been achieved.

Two of the east coast's largest highway construction projects, the Springfield Interchange and the Woodrow Wilson Bridge, are currently on-time and on-budget. VDOT and the Federal Highway Administration have reached agreement on a streamlined decision-making process to conduct an environmental review of the I-81 corridor. The agreement will result to ensure that all environmental issues are adequately addressed in a timely fashion.

The percentage of contracts completed on-budget (within 110% of contract award) improved from 66% in the first half of FY03 to 73% during the same period in FY04. Progress has clearly been achieved.

In the first two quarters of FY04, 26% of projects were completed on schedule (as defined by original contract completion date). This is a decline from 30% during the same period in FY03. This performance is not acceptable and meeting deadlines will be VDOT's first priority in 2004.

Moving forward, I expect further improvement as the reforms in place and those we continue to implement increasingly reflect on VDOT's on-time and on-budget metrics.

I am committed to true business and performance reform at VDOT that can be sustainable for the long-term. The continued support of the General Assembly will be essential as our efforts continue. I stand ready to meet with you to discuss this progress and the continuing challenge ahead.

Sincerely,
Philip A. Shucet