RD358 - Annual Report on Initiatives on Outsourcing, Privatization, and Downsizing within the Department of Transportation


Executive Summary:
For the first time since adopting its on-time and on-budget performance measures in 2002, VDOT met or exceeded all of its on-time, on-budget, and quality targets.

• Construction projects:
o From 20% on-time in FY2002 to 90% on-time in FY2007
o From 51% on-budget in FY2002 to 90% on-budget in FY2007

• Maintenance projects:
o From 38% on-time in FY2002 to 80% on-time in FY2007
o From 59% on-budget in FY2002 to 91% on-budget in FY2007

• Highway project quality:
o From 89.8% quality score in FY2002 to 90.9% in FY2007

VDOT spent $2.13 billion, or 73% of total expenditures externally (payments to private vendors and to localities). Considering VDOT’s debt service payments ($0.26 billion), the agency’s total external expenditures increases to 81%. In order to become a more efficient agency, VDOT has developed strategic initiatives to focus on the system, the business, and the workforce.

As VDOT seeks to improve its methods of doing business, it looks to outsource, privatize, and downsize where it is prudent and economical to do so. Highlights of activity in these areas include:

Outsourcing:

FY2007 • Outsourced 58% of interstate maintenance to Turnkey Asset Management System (TAMS contracts)
FY2008 • Continue to outsource 100% of interstate system by July 2009

Privatization:

FY2007 • Pursued four active private partnership agreements (PPTA projects) to build additional capacity, valued at $3.8 billion
FY2008• Continue four additional PPTA projects currently under review, valued at $4.2 billion

Downsizing:

FY2007 • Consolidated maintenance facility operations from 335 to 248 sites (a reduction of 87 properties), resulting in reduced administrative overhead and increased span of control for superintendents
FY2008 • Continue to consolidate sign fabrication facilities from 7 sign shops to 1 facility, reducing fabrication costs and improving efficiency

Outsourcing, privatization, and downsizing are not objectives in and of themselves; rather, they are strategies to leverage when appropriate and where the business case exists. While VDOT’s basic mission may not change, the way VDOT delivers the transportation system will. VDOT’s FY2007/FY2008 Business Plans (see Appendix B) outline how VDOT plans to focus on the system, the business, and the workforce on its journey. The following highlights some of the goals from the business plans:

Focus on the system
• Progress towards decreasing the percent of structurally deficient bridges
• Progress towards decreasing the percent of deficient pavements
• Implement safety measures that will assist in the goal of reducing highway deaths by 100 by 2010 (from 946 annually to 846 or less)

Focus on the Business
• Reduce project development time by 10%
• Continue the First Cities Initiative
• Meet SWaM participation FY09 target of 40%

Focus on the Workforce
• Reduce injuries that result in lost time from work by 5%
• Achieve 25% telework or alternative work schedule (reducing office space needs)