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General: Manual for Oversight Managers

FHWA Implementation Plan

FHWA Logo  U.S. Department of Transportation
  Federal Highway Administration

MEMORANDUM

Subject: INFORMATION: Oversight and Management of Major Transportation Improvement Projects

Date: October 5, 2001

From: /s/

Original signed by:
King W. Gee
Program Manager, Infrastructure

Refer To: HIPA-30

To: CBU Program Managers
SBU Directors
Directors of Field Services
Division Administrators

 

As discussed with the Division Administrators at the May 2001 Business meeting, the FHWA is responsible for implementing improvements in our oversight and management of major transportation projects. Attached to this memorandum is the FHWA implementation plan. As evidenced by the plan, the improved management of major projects will rely on the sound implementation of the restated Stewardship and Oversight policy and FHWA technical assistance and technology deployment in addition to specific initiatives that will be implemented for the oversight of major projects. The plan was developed to take advantage of our existing partnerships with each State and AASHTO to allow flexibility in the actual tools and processes used to achieve sound project management. The DOT Task Force Report on the Oversight of Major Infrastructure Projects, discussions between FHWA and the Office of Management and Budget, and experiences gained in the administration of current major projects have influenced the development of the attached implementation plan.

To provide additional information on the goals of Federal oversight of major infrastructure projects, the DOT Task Force Report is also attached to this memorandum. This report was shared with all division offices via email in April 2001. As you work with your State partners, please be aware of the task force recommendations, and work with your State partners to ensure that the planned development and management of these projects includes processes to achieve sound management of these projects. The existing FHWA/State Stewardship agreements, the documented State project development and financial procedures in existence in each State, and the FHWA Financial Plan guidance provide the foundation for the implementation of these recommendations. Each major project should be reviewed at its initiation to see if there are unique features or unique roles or relationships between the project sponsors that require additional documentation to ensure that these roles and responsibilities and the resultant project management processes are identified and implemented.

If you have questions regarding this implementation plan, or the DOT Task Force recommendations, please feel free to contact Carol Jacoby at 202-366-1561.

2 Attachments

Implementation Plan

The Federal-aid highway programs is unique in the Federal arena since the law provides the framework for the distribution of the majority of the Federal-aid funding back to the States and specifies that the States will determine which projects will be funded with the Federal-aid funds. The FHWA involvement in the review and approval of a project for funding is to verify that the project has been developed in compliance with the requirements for Federal-aid funding. The status of an individual project being funded with Federal-aid funds does not affect the amount of money a State receives in Federal-aid funding unless the proposed project is being funded through a discretionary program.

The framework of the Federal-aid funding has led FHWA oversight to be done mostly in the form of program and process management oversight in lieu of project oversight, and has resulted in a State/FHWA sharing of the management of the review processes that are tailored to each State program's needs and developed to ensure projects selected for Federal-aid funding comply with all Federal regulations and policies. The benefits of program oversight is that it is an effective use of limited Federal resources, supports well managed State processes for all projects since the processes typically conform to Federal-aid requirements so there is flexibility on which projects will be funded with Federal funds, and ensures that the majority of all the transportation projects implemented have been developed with environmental considerations and extensive public involvement, and safety and operational improvements.

With that as background information, the FHWA approach to improving the management of major transportation projects has four major elements:

  1. Implementation of FHWA Stewardship and Oversight Policy

    FHWA completed a review of its stewardship and oversight policy in FY 2001. As a result, a new policy was issued that clarifies the Federal and State roles in the implementation of the FHWA programs, will strengthen the ability of the FHWA to fulfill its Federal oversight role on the entire FHWA program, and allows for implementation of the flexibilities provided in ISTEA and TEA 21 for States to assume project approval responsibilities of the Secretary to their fullest extent.

    Key elements of the FHWA policy are:

    • All Federally funded activities and projects are subject to Federal oversight, regardless of agency with project approval authority;
    • FHWA will conduct program oversight, process management, and project oversight;
    • FHWA will conduct risk assessments with State to identify strengths and improvement areas of the implementation of the Federal-aid funds, and they will prioritize their oversight activities based on the risks involved in the activity and the benefits obtainable in improving the processes and procedures;
    • FHWA will trust but verify. FHWA is to have confidence in the quality of the product and the State's processes, or the FHWA will work to improve those products and processes in accordance with assessment of risk and benefit.
  2. Information/Technology Transfer

    While the existence of transportation improvement projects that exceed $1 billion is new to Federal and State transportation agencies, the Federal Highway Administration has been doing this since the 1980's with its management of the Central Artery/Tunnel, and the management of the I-15 reconstruction project in Salt Lake City, Utah. The agency has experienced success and has identified issues with the management of these large projects. In addition to the Financial Plan guidance issued May 23, 2000, the FHWA is relying extensively on information and technology sharing developed from these early experiences to guide the planning, delivery, and management of current and future major projects.

    The dissemination of information and technology occurs at FHWA and industry meetings, extensive outreach done by Division office staff on the engineering and project management successes and assistance in the planning of new major projects, and one-on-one assistance provided to the FHWA and State staff in the early stages of planning and managing a major project.

    Examples of outreach and information sharing are:

    • Denver I-25 project did extensive coordination with Utah FHWA staff, extensive modeling from the I-15 project specifications and the UDOT Legacy project, which incorporates improvements UDOT implemented from their experience on the I-15 project;
    • Massachusetts staff travel extensively to make presentations on engineering and project management ideas that have been implemented on the CA/T project;
    • Woodrow Wilson Bridge Project Management team has talked extensively with Utah and MA Division office staff on project management and tracking, audit procedures, the issues to manage in implementing and OCIP;
    • Major Projects Team disseminates information through Major Project Newsletter as well as one-on-one discussions. The major project team also refers people to those individuals that have first hand experience.
  3. Industry and One DOT Partnership Activities

    FHWA is committed to working with AASHTO to develop additional tools to implement the restated FHWA stewardship and oversight policy, and to working together to conduct further analysis on construction cost increases and trends. AASHTO and the individual State agencies are aware of the heightened project accountability responsibilities and are in the process of improving planning, programming, and project management processes in response to the increased level of accountability. In addition to these State and FHWA/AASHTO joint initiatives, there are several industry focused research initiatives that will result in dissemination of best practices and the development of new tools for the implementation of major projects.

    Examples of Industry wide activities:

    • TRB Synthesis on OCIPs;
    • TRB Forum for the planning of projects to expedite the delivery on construction projects and reducing construction impacts. Study is going to show issues to be addressed in the early development of the project to facilitate expedited construction sequencing, the impacts of innovative materials in construction time, use of innovative contracting practices to provide incentive for managing construction time, etc.;
    • Implementation of GASB and asset management principles in the selection and programming of projects and the determination of the appropriate scope of work to manage the past, current and future infrastructure investment;
    • Proposed research project to review the extent of consultant services being used to augment State forces in the delivery of projects, and documentation of the different staffing models being utilized in augmenting state forces with consultant services;
    • There are numerous studies underway to identify and discuss innovative contracting best practices, which typically affect not only the procurement method but also the quality control processes to be utilized in the delivery of the project.

    Within the DOT, the FHWA Major Project Team is working closely with the TIFIA Joint Program Office on the management of major projects, and coordinating with the FTA PMO staff. While the focus of these efforts is to effect One DOT oversight on projects with joint funding, we are also learning from each other on effective management of projects.

  4. Implementation of DOT Task Force Recommendations on the Oversight of Large Infrastructure Projects

    The FHWA participated in this Task Force, and thinks that the recommendations are sound mechanisms for improving the management of major projects. While the States and AASHTO have initiatives underway to improve planning and project management procedures, there is a need for Federal initiatives to: (1) continue the industry focus on improved accountability; (2) serve as a conduit of information on varying processes and procedures and to provide technical assistance in the implementation of improved procedures; and (3) to improve the accountability on the use of Federal funds.

    The intent of the DOT Task Force recommendations was to achieve improved Federal procedures in the oversight of large infrastructure projects. It is clear that there was the intent that the implementation of these recommendations would be guided through the existence of the Executive Council. However, this Council has not been active since early 2001, therefore the FHWA has developed an implementation plan in response to the DOT Task Force recommendations. The FHWA plans to implement the intent of the recommendation within the framework of existing laws pertaining to the FHWA programs, and to allow flexibility to the States in how they implement each recommendation in the development and management of these major projects. Each major project is unique in its complexity, sponsoring agencies, and contracting plans. Therefore, the FHWA does not approach the implementation of these recommendations as "one-size-fits-all". The following table provides detail on FHWA plan for each recommendation in the Task Force Report.


ONE-DOT Task Force
Oversight of Large Infrastructure Projects

FHWA Implementation Plan
DOT Recommendation FHWA Recommended Action FHWA Lead Person Target Implementation Date Status
A.1
Incorporate Oversight of Mega Projects into DOT Strategic and Performance Plans
FHWA discussing ways to include oversight of all projects into Strategic and Performance Plans CM SBU FY 2002 Performance Plan Organizational Excellence performance plan includes items in response to Stewardship and Oversight.
Policy SBU New FHWA Strategic Plan - schedule not available FHWA Quality journey includes the Division offices implementing Key Process Measures in 2002 that will provide data to guide the Divisions on the quality of the implementation of the program.
A.2
DOT Executive Council provide oversight of mega projects.
  • Establish a Database for reporting mega projects
  • Quarterly reporting updates from Operating Administrations
Dwight Horne has been designated to be FHWA representative.   Done No activity by DOT Exec Council since initial meeting in calendar year 2001.

FHWA supporting bimonthly reporting process through OST. FHWA Major Project team notifies David Napoliello of FHWA Project Manager once NEPA document/ROD signed.

FHWA created process for tracking projects annually for full update; quarterly updates for projects active within fiscal year.
Assume DOT Executive Council will discuss format of database and FHWA will implement update process.      
A.3
OIG conduct an evaluation of ONE DOT mega project oversight program (implementation of ONE DOT recommendations)
       
B.1
Designate a dedicated DOT Mega Project Oversight Manager for each mega project who: is accountable to Senior Operating Administration officials; serves in consulting role to DOT Executive Council; is responsible for the analysis of all information on the status of the mega project. Appropriate credentials highly recommended.
Designated Project Managers are identified for all projects and listed on project status updates. Division Offices Done  
Identify training materials and providers on project management. Major Projects Team Done Materials will be first installment in a Major Project Management Resource Manual.
Train all FHWA designated project managers. Division Offices See B.2 below. If the DOT Executive Council does not provide guidance on core competencies, FHWA will develop competency framework in 2002.
B.2
Establish Core Competencies for DOT Mega Project Managers
DOT Executive Council lead.      
B.3
Establish and charter integrated project teams under the direction of the project manager
FHWA encourages multi-discipline approach to project development - including disciplines within sponsoring agency as well as multi-agencies.

No further action required.

  Done Draft TIFIA program guidance will require project management plans and agency oversight agreements.

FHWA looks for indications of roles and responsibilities in the finance plans since these roles and responsibilities play into how entities will manage change.

B.4
Foster a culture within the Department and with recipients and other stakeholders that promotes sound project management
FHWA distributes quarterly newsletter on mega project issues to FHWA Field offices. Major Projects Team Dec 2000 and June 2001 issued. Newsletters have been prepared and distributed semiannually - since there was insufficient new information on a quarterly basis.
Working to conduct outreach to others on project management tools Major Projects Team for Coordination of Outreach Requested technology deployment funds in 2002. Major Project/Finance Plan presentations have been made at FHWA Management meetings (Dec 2000 and May 2001), FHWA/AASHTO Financial Managers meeting, and Auditing Subcommittee meeting.

Major Project team works with Divisions directly to discuss project management, status reporting processes, and leverages CA/T and others to work with Divisions in the early stages of their major project.

B.5
Establish Mega projects Award Program
DOT Executive Council lead.      
C.1
Require recipients to submit Project Management Plans
Interagency Project Agreements, FHWA Stewardship Agreement on Project, and Finance plans include elements of project management plan. Division Offices    
FHWA to issue guidance on content of good project management plans to assist Divisions in formulating the above reference documents. Major Projects Team September 2002
C.2
Enter into written agreements with recipients that address the terms and conditions of Federal participation in the project; roles and responsibilities of the parties and the working relationships; and independent duty of third party experts
Accomplished in FHWA Stewardship agreement. Where processes differ from Stewardship agreement, interagency project agreements provide that information. Division Offices Done  
FHWA should make policy call on whether all major projects should have full FHWA project oversight.   December 2001 Policy statement is needed for credibility and some clarity. Divisions still say some of these projects are normally exempt - we should be on record in saying any project over $1 billion will have full oversight.
C.3
Conduct periodic, independent reviews under the direction of the Project Manager to ensure the recipient has the capability to efficiently and effectively complete the mega project without compromising the Federal government
FHWA will issue new oversight policy Spring 2001 - that discusses FHWA independent review responsibilities for all projects. Major Projects Team July 2001 Oversight policy issued June 22, 2001.

Major project team provides some additional oversight in their project monitoring activities (quarterly updates, review and discussion of monthly status reports - mainly tracking hot issues or FHWA commitments).

Independent Government cost verification reviews conducted on standard Design-Bid-Build major projects.

C.4
Operating Administrations should allow PE/Design to achieve 20-35% before approving funding for final design and construction
For projects requiring FHWA project approval actions, FHWA does not approve construction funding prior to sufficient information for Design Build approval (typically 30% design) or completion of full design.

FHWA does approve design funding prior to 20-35% design, however final design cannot begin until NEPA process complete.

Division Offices Done  
C.5
Conduct Financial Capacity Assessments prior to commitment of funds for final design and construction
FHWA issued Financial Plan requirements in May 2000, which prohibit funding of construction prior to FHWA accepting the financial plan.   Done FHWA Financial Plan is a plan for the project - and the impact of the proposed project on the statewide plan is reviewed to the extent necessary.

FHWA process is not a "capacity assessment" of an agency to fulfill all of its financial obligations.

C.6
Develop oversight processes that incorporate earned value management systems
FHWA agrees with promoting the appropriate tools - but does not support mandating any one tool.     Major project team is building a resource manual of tools which will include earned value management. It will also include procurement options and other project management tools that provide timely reporting and resolution of issues.
C.7
Designate "At Risk" when significant deviations from baseline schedule, cost estimate, funding, or significant tech/mgmt issues occur.
FHWA has done this on CA/T; was under discussion with OST on WWB when States responded to Financial plan requirement.

FHWA will implement as needed on individual projects.

HIF Program Manager recommends designation to FHWA Admin. Done  
C.8
Deny additional Federal funding awards where the recipient fails to correct deficiencies in "At Risk" - consider requiring reimbursement in extreme cases
See comments C.7.      
C.9
Establish Mega projects Award Program
DOT Executive Council lead.      
L.1
Provide funding for preliminary design separate from final design and construction
DOT Lead with reauthorization proposal.     FHWA does not support.
L.2
Provide financial incentives for recipients to implement comprehensive project management systems
DOT Lead with reauthorization proposal.      
L.3
Authorize greater use of negotiated procurements on mega projects
DOT Lead with reauthorization proposal      
L.4
Provide dedicated source of funds for Administrations to conduct independent reviews
DOT Lead with reauthorization proposal     FHWA supports. Technical difficulty is how to provide for this since any FHWA funds can be used to fund a major project (funding not confined to single pot like FTA New Starts program).
L.5
Amend TEA-21 to make it clear that FHWA has full oversight authority for all mega projects
DOT Lead with reauthorization proposal      
L.6
Fund professional certifications for DOT employees engaged in mega projects
DOT Lead with reauthorization proposal.      
L.7
Require recipients project management staff and outside experts to have professional credentials and be free from conflicts of interest.
DOT Lead with reauthorization proposal      
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