An Examination of the Montana Department of Transportations - PowerPoint PPT Presentation

An Examination of the Montana Department of Transportation’s Maintenance Division PERFORMANCE AUDIT AND RESPONSE TO HOUSE BILL 473 JUNE 2018 - 17P-07

Division Background • Maintenance program preserves the highway surface, shoulders, roadsides, structures, and traffic-control devices • Just over 25,000 lane miles maintained • 856.55 FTE in Maintenance and Equipment programs • FY 2017 Expenditures: $126.1 million (mostly state special revenue) • 117 maintenance sections; 10 maintenance areas; 5 administrative districts • New maintenance management system

Maintenance Equipment, Outsourcing, and Cost Comparison OBJECTIVE 1 AND HB 473

Maintenance Fleet Size Compared to Those of Other States Equipment Fl Fleet S Size a and L Lane M Miles B By S State Sta tate te Montana Washington Idaho Wyoming Sou outh D Dakot ota Lane M Miles a as o of 2016 2016 25,125 18,478 12,341 15,726 17,921 Mainten enance F e Fleet eet S Size 3,948 4,800 3,830 4,000 4,782 Equipment p per L Lane M Mile 0.16 0.26 0.31 0.25 0.27 Public lic D Daily ily V Vehic icle le M Mile iles Travelled ( (DVMT) i in t thousands 23,523 91,351 24,873 17,543 17,119 Equipment p per t thousand D DVMT 0.17 0.05 0.15 0.23 0.28

Equipment Fleet Composition and Age • Light-duty vehicles are replaced more • 48% of division equipment is for frequently than heavy equipment winter maintenance • Average ages of common classes: • Specialized equipment is not • ½ ton pickup trucks – 5.5 years numerous and has clear uses • Dump (plow) trucks – 13.8 years • Loaders – 20.6 years • Trailers – 15.8 years Average age of all division equipment is 14.1 years.

Equipment Replacement & Reduction Equipment Reduction 2009 to Equipment Replacement Standards 2017 Average Years of Equipment Useful Life 15.3 • 23 of 38 classes reduced Average Percent of Lifetime Currently Used 101% Average End of Life Mileage Standard 261,899 • 6% overall less equipment than Number of Equipment Past Useful Life in Years 1,811 in 2009 Number of Equipment Past End of Life Mileage 13 Number of Equipment Past Useful Life and Mileage 84 Total Equipment Due for Replacement 1,908 Percent of Equipment Past Useful Life 48.2% Percent Past Mileage Threshold 2.5% Percent Need Replacement 48.5%

Fleet Reduction Practices • Process to regularly dispose of unneeded equipment • Includes identification of underused equipment and assessment of criticality of that equipment • MDT has no formal standards for what constitutes minimum usage for each class of equipment

Recommendation #1 Develop formal standards for annual equipment usage to better identify equipment no longer needed during its equipment review process.

Current Contracting Practices • Volumes and types of work contracted is consistent with other states • Primary reasons to contract for services are lack of internal capacity, lack of specialized staff, and legal mandates • Much of what is readily outsourced is already contracted

Cost Composition Expenditure Composition of Standard Main Crack Seals and Chip Seals Fiscal Years 2016 and 2017 $6,000,000 MDT Labor and $5,000,000 Equipment $71,862.06 Dollars Expended $1,075,275.67 Paid to Vendor $4,000,000 $3,000,000 $195,513.41 $4,835,790.29 $2,000,000 $3,673,779.44 $2,494,213.45 $1,000,000 $495,807.35 $138,640.04 $0 In-House Chip Seals Contracted Chip Seals In-House Crack Seals Contracted Crack Seals Type of Project

Outsourcing Outcomes • Large-scale efforts to privatize highway maintenance in other states and provinces have been accompanied by challenges: costs, service level, and department flexibility and ability to manage contract • Considerations of market competitiveness, capacity, and desire to perform different types of work

Pavement Projects • Overlays and Mill-and-Fills involve paving and are contracted • Rut-Fills and other reactive projects done in-house • Crack Seals and Chip Seals can be contracted or done in-house

Decision-making for contracting chip seal and crack seal projects • Large projects are contracted • Small projects are performed in-house • Medium-sized projects can be performed either way • No formal cost comparison; estimation • Push to contract as much as possible • Other factors include specialization and project timeframe

Recommendation #2 Institute a formal, quantitative cost comparison between contracted and in-house maintenance pavement preservation projects .

Maintenance Prioritization and Assessment OBJECTIVE 2

Project Selection Process 2016 and 2017 Projects in Visited Maintenance • Pavement Management System Areas recommends specific treatments annually # Not # Recommended • Projects selected by area and district Area recommended by PvMS staff by PvMS Area A 4 2 • Little central oversight Area B 4 1 • Reliant upon professional judgment and expertise Area C 15 4 • Maintenance chiefs weigh a number of Area D 4 5 different factors variably Area E 8 3 • Process is not documented Total 35 15

Recommendation #3 Develop procedures for and document the maintenance pavement project selection process to consistently optimize and ensure accountability for these decisions.

Communication Between Divisions • Rut-fill over center-line rumble strips; reinstallation and re- striping • Maintenance staff using work-zone signs that were noncompliant for contractors Effects • Direct costs: $7,000 for rumble strips; estimated $100,000 for sign replacement • Harm to MDT’s reputation with partners in contracting community and the general public

Recommendation #4 Develop formal lines of communication between Maintenance and Highways and Engineering divisions .

Assessment of Maintenance Activities Top Five Maintenance Activities by Labor Cost, Fiscal Years 2013 through 2017 $10,000,000 $9,000,000 $8,000,000 $7,000,000 Labor Cost $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 $0 2013 2014 2015 2016 2017 Plowing, Sanding, Deicing Equipment Maintenance or Transportation Yard, Building, and Storage Maintenance Winter Roadway Inspection Debris Removal

Recommendation #5 Develop maintenance performance measures and goals .

Data Integrity 2016 and 2017 Chip Seal and Crack Seal Project Data in Management System 9, 11% Accurate Contained Meaningful Error 73, 89%

Recommendation #6 Develop and implement a formal quality assurance process for maintenance management system data integrity.

Inventory Management and Asset Security OBJECTIVE 3

What We Found • Inventory and equipment management systems are effective and in line with policy • High-risk, non-consumable items like power tools not inventoried in 4 of 5 visited maintenance areas • Variable security practices throughout the state • Fencing, gate closures, key security practices • Inconsistent theft reporting • No formal security or theft reporting policy

Recommendations #7 and #8 • Develop and implement inventory standards and practices for high-risk tools and equipment . • Develop a statewide policy for proactive asset security and theft reporting.