Wednesday, September 28, 2005

Kilgore on Transportation: Privatize Maintenance

One of the more interesting ideas in the Kilgore transportation strategy is to "privatize asset management and maintenance wherever feasible." Virginia has achieved some success through the privatization of maintenance, and it only makes sense to build upon it.

Virginia Maintenance Service (VMS), a Richmond engineering firm, pioneered the concept of privatizing maintenance and, under contract to maintain significant stretches of Virginia's Interstate system, has saved the state tens of millions of dollars while maintaining the highway to VDOT specifications. Surely, one would think, the potential exists to save hundreds of millions of maintenance dollars by extending the concept across the state transportation system.

What the Kilgore team isn't taking into account is the fact that VDOT is already instituting elements of an asset-management program, replicating some of the techniques that VMS uses to cut costs. Admittedly, much work remains to be done. Installing a comprehensive asset-management system was the great challenge that former Commissioner Philip Shucet left uncompleted when he resigned earlier this year.

The logic is compelling. Instead of budgeting for maintenance according to the two-year investment horizon of the state budget, VDOT should budget according to the natural life cycle of its roads and highways. Spending more on maintenance today -- on un-sexy items such as road shoulders and drainage systems -- can lengthen the life span for a road between major overhauls, significantly reducing costs over its life cycle. In an interview earlier this year, Shucet told me that VDOT could conceivably reduce maintenance expenses by 20 percent.

As part of any asset-management program, VDOT could run a cost-benefit analysis for any given section of road comparing the cost of conducting maintenance in-house or privatizing the work. What must come first, however, is the asset-management system itself. Only when that management tool is put into place can VDOT make intelligent decisions about when and where to outsource.

Maintenance costs are rising astronomically, as you may recall, fueling claims that Virginia is experiencing a fiscal crisis. Following through with the asset-management program should be a top priority for the next governor, no matter who is elected.


At 1:27 PM, Anonymous Road Hog said...

Of course there should be an"asset management" program...but the devil is in the details.

We will miss Shucet, the most competent commissioner in years who was admirably backed by the governor and Witt Clement.

We need to understand that VDOT has still not recovered from George Allen's ill advised restructuring which threw the baby out with the bath water. He came in with a meat axe and cut VDOT too mucjh. As a result, many VDOT employees who were trminated or "retired" early were retained as "consultants." Before long, Allen's personnel expenses in VDOT (including consultants) well exceeded what was there when he started.

We have to be particularly careful with these private maintenance contracts. They started basically on a "no bid" or "limited bid" basis. This is a very dangerous situation in public contracting. What seems to work today could evolve into something very different unless periodic rebidding is instituted--it may be awkward but public money should be spent in a manner that the public can trust.

This one has to be solved through analysis--slogans won't cut it.

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