Performance audit, Department of Transportation, Highway Division, highway maintenance function

              DOUGLAS R NORTON. CPA
AUDITOR GENERAL
STATE OF ARIZONA
OFFICE OF THE
AUDITOR GENERAL
LINDA J. BLESSING, CPA
DEPUTY AUDITOR GENERAL
August 17, 1987
Members of the Arizona Legislature
The Honorable Evan Mecham, Governor
Charles L. Miller, Director
Arizona Department of Transportation
Transmitted herewith is a report of the Auditor General, A Performance Audit of
the Arizona Department of Transportation Highways Division - Highway
Maintenance Function. This report is in response to a July 26, 1985, resolution of
the Joint Legislative Oversight Committee.
The report addresses several areas for improvement. We found that ADOT could
increase its effectiveness by expanding its contracting of routine maintenance
activities. We also found that ADOT could improve its effectiveness by
implementing changes in the PeCos system used by the Maintenance Section to
plan, budget, and control maintenance activities; and by establishing a method to
evaluate district maintenance conditions. Finally, we found that AD 0 T's central
office needs to strengthen its oversight of the maintenance function.
My staff and I will be pleased to discuss or clarify items in the report.
Respectfully submitted,
DOU& R. Norton
Auditor General
Staff: William Thomson
Peter N. Francis
Deborah A. Klein
Anthony J. Guarino
Kurt L. Schulte
2700 NORTH CENTRAL AVE. 0 SUITE 700 PHOENIX, ARIZONA 85004 e ( 602) 255- 4385
SUMMARY
The Office of the Auditor General has conducted a performance audit of the Arizona
Department of Transportation ( ADOT) in response to a July 26, 1985, resolution of
the Joint Legislative Oversight Committee. This performance audit was conducted
as part of the Sunset Review set forth in the Arizona Revised Statutes ( A. R. S.)
$ 541 - 2351 through 41 - 2379.
This is the third of several reports to be issued on the Arizona Department of
Transportation. The report focuses on the Highway Maintenance Section of the
Highways Division of A D 0 T.
Highway maintenance organizations ( orgs) perform numerous maintenance activities
including maintenance of paved surfaces, unpaved surfaces, unpaved shoulders,
vegetation, roadsides, rest areas and landscapes. Major highway maintenance
projects such as pavement overlays or reconstruction are generally performed by
private contractors through the Construction Section of the Highways Division.
ADOT Should Continue To Expand
Its Contract Maintenance Program ( see pages 5 through 13)
ADOT should expand its contracting of routine maintenance activities. ADOTts
Maintenance Section uses private firms for maintenance activities such as rest and
picnic area maintenance, litter pickup, sweeping, trash collection, mowing, pumping
and landscaping. The contract maintenance program has demonstrated that
contractors are able to perform some maintenance activities at a lower cost than
ADOT, while generally providing an improved level of service. In 1986, the
approximate savings from the program were more than $ 1,200,000.
Because of its cost effectiveness and improved level of service, the contracting
program should be expanded. Many maintenance activities such as shoulder
maintenance, culvert cleaning, guardrail repair, and hand patching with premix are
successfully contracted by other states. A t a minimum, ADOT should evaluate the
feasibility of contracting out these activities. In addition, the Legislature may wish
to establish a technical advisory committee ( consisting of representatives from
AD 0 TI private contractors and other persons knowledgeable in contracting and
highway maintenance), to conduct a systematic evaluation of all maintenance
activities to identify other activities that should be contracted.
ADOTqs System For Planning, Budgeting And Controlling
Highway Maintenance Continues To Need Significant Improvement To Meet
Central Office And Field Management Needs ( see pages 15 through 26)
Despite its $ 720,000 annual cost, ADOT's system for planning, budgeting and
controlling highway maintenance, called PeCos, does not work as intended.
PeCos is designed to help the central office plan an annual work program and budget
available resources to accomplish the annual plan. PeCos should indicate the labor
hours, and amount of materials and equipment required to do a given amount of work.
PeCos' usefulness is limited because key elements for: ( 1) projecting annual
maintenance requirements, ( 2) setting production rates for field crews, and ( 3)
assessing maintenance costs and resource requirements are inaccurate and
unreliable. In eight of 12 activities reviewed, actual field productivity had no
relationship to PeCos estimates. For example, for one of these activities, blading
unpaved shoulders, daily production is estimated at either 4.5 or 4.6 shoulder miles;
however, actual daily production ranged from .5 to 7.1 shoulder miles. This reduces
PeCos usefulness as a planning and budgeting tool because reliable production
estimates are necessary to develop a viable budget.
Nor does PeCos meet operational needs in the field. It does not enable area
personnel to effectively plan and control the work of maintenance crews. Our
analysis showed that confidence in PeCos is so low that 11 of the 12 org supervisors
interviewed do not use, or even consider, PeCos planned work when scheduling
maintenance activities.
A DOT Should Establish A Method For Evaluating
District Maintenance Conditions ( see pages 27 through 30)
In addition to implementing needed improvements to its maintenance management
system, ADOT needs to establish a method for evaluating the level of service
provided by maintenance field crews. Field staff report the amount of work done but
do not systematically survey and report highway conditions. As a result, ADOT
central office cannot compare highway conditions Statewide to direct resources to
areas and activities of greatest need.
ADOT should consider adopting some methods used in other states. Florida and Ohio
have supplemented their maintenance management systems by developing systematic
approaches to evaluating maintenance conditions throughout their highway systems.
Both states have developed condition standards. For example, one Florida standard
requires that shoulders have no more than a 3 inch drop- off. Another standard
requires that potholes be no greater than 1.5 square feet in area and 1.5 inches deep.
Both Florida and Ohio send observers into the field each quarter to test for
compliance with their standards.
Central Office Needs To Strengthen Its Oversight
Of The Maintenance Function ( see pages 31 through 35)
Central office needs to strengthen its Statewide oversight of the maintenance
function. Upper management, which oversees district operations, needs to take a
greater interest in maintenance management. The Deputy State Engineer of the
Highway Operations Group, who oversees district operations, does not review any
reports prepared by the Maintenance Section of the central office. The Maintenance
Section prepares and allocates the budget and oversees the maintenance manage men t
system; however, it has no line authority over district maintenance operations. As a
result, Statewide oversight and enforcement is lacking. Deviations in field
performance, such as an org that performs 100 percent less work on an activity than
was planned, are not routinely pursued to determine i f problems exist and corrective
action is needed.
TABLE OF CONTENTS
Page
INTRODUCTION AND BACKGROUND. . . . . . . . . . . . . . . . . . . . . 1
FINDING I: ADOT SHOULD CONTINUE TO EXPAND
ITS CONTRACT MAINTENANCE PROGRAM . . . . . . . . . . . . . . . 5
L e g i s l a t i v e I n t e r e s t I n Contracting . . . . . . . . . . . . . . 5
Program Saved More Than $ 1.2 M i l l i o n I n 1986. . . . . . . . . . 6
Contracting Program Should Be Expanded . . . . . . . . . . . . 10
Recommendations . . . . . . . . . . . . . . . . . . . . . . . . 13
FINDING II: ADOT'S SYSTEM FOR PLANNING, BUDGETING AND CONTROLLING
HIGHWAY MAINTENANCE CONTINUES TO NEED SIGNIFICANT IMPROVEMENT
TO MEET CENTRAL OFFICE AND FIELD MANAGEMENT NEEDS . . . . . . . 15
PeCos Does Not Provide Adequate Management Support
To The Central O f f i c e Maintenance Section . . . . . . . . . . . 15
PeCos Does Not F u l f i l l F i e l d Management's Operational Needs . . 22
ADOT Must Take Steps To Upgrade PeCos . . . . . . . . . . . . . 24
Recommendations . . . . . . . . . . . . . . . . . . . . . . . . 26
FINDING Ill: ADOT SHOULD ESTABLISH A METHOD FOR
EVALUATING DISTRICT MAINTENANCE CONDITIONS . . . . . . . . . . 27
Maintenance Conditionsunknown To Central O f f i c e .. . . . . . . 27
Other States Have Developed
C o n d i t i o n E v a l u a t i o n Systems. . . . . . . . . . . . . . . . . . 28
Recommendations . . . . . . . . . . . . . . . . . . . . . . . . 30
TABLE OF CONTENTS
Page
FINDING IV: CENTRAL OFFICE NEEDS TO STRENGTHEN
ITS OVERSIGHT OF THE MAINTENANCE FUNCTION . . . . . . . . . . . 31
Upper Management Not A c t i v e
I n Maintenance Management . . . . . . . . . . . . . . . . . . . 31
Central Oversight I s Needed . . . . . . . . . . . . . . . . . . 33
Recommendations . . . . . . . . . . . . . . . . . . . . . . . . 35
OTHERPERTINENT INFORMATION . . . . . . . . . . . . . . . . . . . . 37
AGENCYRESPONSE . . . . . . . . . . . . . . . . . . . . . . . . . . 41
L I S T OF TABLES
Page
TABLE 1 ARIZONA DEPARTMENT OF TRANSPORTATION
HIGHWAY MAINTENANCE EXPENDITURES
FOR FISCAL YEARS 1984- 85 THROUGH 1986- 87 ( UNAUDITED). . . 2
TABLE 2 MAINTENANCE CONTRACTS I N EFFECT DURING 1986 . . . . . . . 6
TABLE 3 CONTRACT SAVINGS
FOR CALENDAR YEARS 1982 THROUGH 1986 . . . . . . . . . . 7
TABLE 4 CONTRACTOR VS. ADOT LABOR COST COMPARISON . . . . . . . . 8
TABLE 5 OTHER STATES' ACTlVlTlES
NOTCONTRACTEDBYADOT . . . . . . . . . . . . . . . . . . 11
TABLE 6 COMPARISON OF CONTROLLED AND UNCONTROLLED HOURS IN 1980- 81
TO CONTROLLED AND UNCONTROLLED HOURS I N 1985- 86 . . . . . 38
LIST OF FIGURES
Page
0
FIGURE 1 INTERACTION OF PLANNING AND BUDGETING ELEMENTS
EXAMPLE: SWATHMOWING . . . . . . . . . . . . . . . . 16
F l GURE 2 PERCENT D l FFERENCE FROM PeCos WORK PROJECT l ONS
C R A C K F I L L I N G . . . . . . . . . . . . . . . . . . . . . 18 9
FIGURE 3 PeCos PRODUCTION RATES VS. ACTUAL PRODUCTIVITY
BLADE UNPAVED SHOULDERS . . . . . . . . . . . . . . . . 19
ir
FIGURE 4 PeCos ESTIMATED VERSUS ACTUAL COSTS
ROUTINEDRAINAGEMAINTENANCE . . . . . . . . . . . . . 2 1
FIGURE 5 ARIZONA DEPARTMENT OF TRANSPORTATION,
ORGANIZATION CHART FOR HIGHWAY MAINTENANCE . . . . . . 32 4
INTRODUCTION AND BACKGROUND
The Office of the Auditor General has conducted a performance audit of the
Arizona Department of Transportation in response to a July 26, 1985, resolution of
the Joint Legislative Oversight Committee. This performance audit was conducted
as part of the Sunset Review set forth in Arizona Revised Statutes 9941- 2351
through 41- 2379.
This is the third of several reports to be issued on the Arizona Department of
Transportation. The report focuses on the Highway Maintenance Section of the
Highways Division of A DOT.
The Highway Maintenance function's goal is stated in the Highway Maintenance
Management Manual.
II . . . the preservation, upkeep, and restoration of roadways, structures,
landscaped areas, and facilities to, as near as possible, their original condition
of construction, or subsequent improvement, in the most efficient and
economical manner."
To meet this goal, ADOT performs numerous maintenance activities including
maintenance of paved surfaces, unpaved surfaces, unpaved shoulders, vegetation,
roadsides, rest areas and landscapes. Maintenance crews also handle snow and ice
control, traffic signing and striping, and materials processing. Major highway
maintenance projects such as pavement overlays or reconstruction are generally
performed by private contractors through the Construction Section of the Highways
Division.
Staffing And Budget
For fiscal year 1986- 87, ADOT had 793 maintenance staff allocated Statewide.
Maintenance staff are assigned to specific organizations ( orgs) throughout the
State. ADOT has 66 maintenance orgs, which are: 46 roadway orgs, eight sign and
stripe orgs, seven landscape orgs, one pump org, and four area orgs.
Monies for highway maintenance are appropriated from the State Highway Fund.
Expenditures for highway maintenance for fiscal years 1984- 85 through 1986- 87 are e
presented in Table 1.
TABLE 1
ARIZONA DEPARTMENT OF TRANSPORTATION
HIGHWAY MAINTENANCE EXPENDITURES
FOR FISCAL YEARS 1984- 85 THROUGH 1986- 87
( Unaud i ted
ACTUAL ACTUAL EST l MATED
1984- 85 1985- 86 1986- 87
FTEs 754 (' 1 760 ( a) 7 93
Personal Services $ 13,971,077 $ 14,374,375 $ 16,143,460
Employee Related
Expenditures 3,989,588 3,906,663 4,442,040
Professional Services 63,972 0 0
Trave 1 256,800 255,410 290,000
Other Operating
Expenditures 1,294,062 1 ,492,965 1,405,100
M a t e r i a l s 6,867,025 9,965,360 10,005,700
Equ i pmen t 14,938,061 13,158,595 15,305,600
Contracting 1,344,203 2,036,614 2,623,600
Contingency 137,330 81,184 668,700
Total $ 42.862.118 $ 45,271 ,166 $ 50.884.20Q
( a ) FTEs projected f o r f i s c a l year.
Source: Maintenance Planning Services s t a f f ' s f i n a n c i a l reports and
State o f Arizona Appropriations Reports.
In the early 1970s, ADOT management determined that greater control over the 6
maintenance program was needed. To ensure cost effective management of
resources, ADOT contracted with Jorgenson and Jorgenson Associates, Inc., for the
development of the Performance Controlled system, called PeCos. PeCos was
implemented in 1971 and is s t i l l used to plan, budget and control ADOT's
maintenance allocation.
Scope Of Audit
Our audit of the Department of Transportation's Highways Division was limited to
the routine maintenance function within the Highway Maintenance Section. The
report presents findings in the following areas.
0 Whether more maintenance activities should be contracted out,
0 The adequacy of the Highway Maintenance Management System for planning,
budgeting and controlling work,
0 The need to establish a method for evaluating district maintenance conditions,
and
0 The adequacy of central office's role in maintenance management.
Limited time was devoted to addressing the 12 statutory sunset factors. Sunset
factors will be addressed on a Departmental basis at the completion of the series of
ADOT audits.
The audit was conducted in accordance with generally accepted governmental
auditing standards.
The Auditor General and staff express appreciation to the Director and staff of the
Department of Transportation for their cooperation and assistance during the course
of our audit.
FINDING I
ADOT SHOULD CONTINUE TO EXPAND ITS CONTRACT
MAINTENANCE PROGRAM
AD OT should expand i t s contracting of routine maintenance activities. The contract
maintenance program has shown that contractors are able to perform some
maintenance activities at a lower cost than ADOT, while providing an improved level
of service. In calendar year 1986, the contracting program saved ADOT
approximately $ 1.2 million. Because of the success of the program, ADOT should
evaluate the feasibility of contracting additional areas, and request additional
resources for contract administration.
Legislative Interest
In Contracting
In 1981, a technical advisory committee was requested by the Legislature to conduct
a study of the feasibility of a contract maintenance program. The committee, which
included representatives of the business community, construction industry, local and
county government and ADOT, issued a report in 1982 which recommended that six
activity categories be considered for the pilot contracting program. These categories
were: asphalt patching with premix, crack sealing, swath machine mowing, l i t t e r
pickup, urban curb sweeping and landscape maintenance. The committee also
recommended that guardrail and rest area maintenance be studied for contracting
feasibility.
In 1986, the Maintenance Section of the Highways Division had 48 maintenance
contracts in effect, worth more than $ 2.5 million. The contracts range from $ 780 for
trash collection in Cordes Junction to $ 400,310 for landscape maintenance in
Phoenix. The following table summarizes the 48 contracts in effect during 1986.
TABLE 2
MAINTENANCE CONTRACTS IN EFFECT FOR FISCAL YEAR 1986
Number o f
A c t i v i t y Contracts in E f f e c t
Rest Area
Landscap i ng
Sweep i ng
Mow i ng
Mechanical Debris Retrieval
L i t t e r Pick Up
Pump i ng
Picnic Area
Building Demolition
Maintenance Yard S a n i t o r i a l
Trash Service
Contract
Amount
Source: " Highway Maintenance by Contract, a four year experience, 1983- 1987,"
Maintenance Planning Services.
Program Saved More Than
$ 1.2 Million In 1986
The contract maintenance program has demonstrated that contractors are able to
perform some maintenance activities at a lower cost than ADOT. In 1986, the 1( 1
contracting program saved approximately $ 1.2 million. Contracted activities have, in
some cases, also resulted in a better level of service.
Significant savings - As the number of maintenance contracts has increased, so has 0
the amount of cost savings for ADOT. ADOT determines its cost savings by
comparing the contractors costs to complete an activity to its costs to perform the
same activity. ( 1 )
( ' 1 Contractors g e n e r a l l y b i d on a c o s t per u n i t ( i . e., $ 20 per swath m i l e f o r mowing o r
$ 10 per curb m i l e f o r curb sweeping). The t o t a l cost i s t h e c o s t per u n i t m u l t i p l i e d
by the t o t a l number of u n i t s t o be completed p e r t h e c o n t r a c t . ADOT's maintenance
contract a d m i n i s t r a t o r derives ADOT1s cost per u n i t and t o t a l cost to perform an
a c t i v i t y from maintenance expenditure reports. The maintenance expenditure reports
r e f l e c t f i s c a l year expenditure estimates, by a c t i v i t y , f o r l a b o r , equipment and
m a t e r i a l .
Contracting of maintenance activities appears to have been cost effective. Savings
from contracting have increased by more than $ 1 million since 1983, as shown in
Table 3. For 1986, the cost savings from contracting totalled approximately
$ 1,277,415.
TABLE 3
CONTRACT SAVINGS FOR
CALENDAR YEARS 1982 THROUGH 1986
Savings as a %
Ca l endar Estimated Approximate of Estimated
Year ADOT Cost Contract Cost Savings ( a) ADOT Cost
( a) Actual cost savings may be 5 to 10 percent l e s s to account f o r overhead costs to
administer t h e contract program.
( b) This f i g u r e excludes two contracts, t o t a l l i n g $ 12,066, f o r which no ADOT data were
a v a i l a b l e t o make a cost saving comparison.
Source: " Analysis of " Highway Maintenance by Contract, a Four Year
Experience, 1983- 1987, " Maintenance Planning Services.
According to the Deputy State Engineer of the Highway Operations Group, the main
reason contractors are able to perform some activities at a lower cost than ADOT is
labor expenses. ADOT maintenance employees are paid an average of $ 14.45 an hour,
including employee related expense ( ERE), no matter what activity they perform.
Maintenance staff are assigned many different types of activities to perform, with
varying skill levels required. For example, a maintenance employee may be assigned a
to pick up l i t t e r one day and repair a guardrail on another day. Contractors, on the
other hand, are able to hire employees to perform a specific activity. Depending on
the activity, the contractor is often able to hire employees at a much lower hourly
rate. The following table shows the difference between ADOT and contractor labor •
costs.
TABLE 4
CONTRACTOR VS. ADOT LABOR COST COMPARISON
Contract Type Avg . Hour 1 y Wage ( a ) % ERE Total Hourly Wage ( b)
Contractor
Sweep i ng $ 7.75 27% ( c ) $ 9.92
Mow i ng 6.50 0 6.50
Rest Area 5 - 58 0 5.58
L i t t e r Pick Up 4.75 0 4.75
ADOT - ALL $ 11.32
ACTIVITIES
( a) Hourly wages are estimates based on wages reported by selected contractors who were
a v a i l a b l e and w i l l i n g to provide information. The number of employees a t each salary
l e v e l was not provided.
( b, Includes employee re1 ated expenses
( c ) ERE i s estimated based on ranges provided by two contractors.
Source: Interviews with six maintenance contractors who have current contracts @
with ADOT.
Better work methods may also contribute to contractors' lower operating costs. This
factor is evident in an evaluation done on the swath mowing contract in District 3 in
1983. This contract was for mowing more than 4,000 miles of roadside grass and
vegetation, and proved to be cost effective with a better overall result. Mechanical
breakdown has always been a problem with ADOT mowing equipment, particularly the
slow turnaround time on repair and the subsequent loss of productivity. During the
course of the contract, the contractor also experienced numerous equipment
problems. However, the contractor's mowing equipment was supported by a service
truck with the capability to make on- the- spot repairs, which minimized downtime.
Better service is provided - In addition to cost savings, contracting has also resulted
in better service in some cases. ADOT maintenance contracts are limited to specific
activities, and clearly indicate the amount and frequency of work to be performed.
The contractors must meet the contract requirements, or risk not being paid. ADOT,
on the other hand, is responsible for numerous maintenance activities with differing
priorities. Because of limited resources and varying priorities, some activities do not
get accomplished. In addition, there is no financial incentive to ensure that work is
completed. As a result, contractors have generally provided an improved level of
service. A l l contracted work is inspected for compliance with the contract
specifications and approved by ADOT personnel before payment is made. The
following case examples highlight some of the benefits that can be obtained through
contracting.
e Case 1 - ADOT contracted swath mowing in District 3 in 1983. In 1983, 286 more
miles were mowed than were planned. The contractor was able to achieve 107
percent of planned activity, while the previous year under ADOT only 74 percent
was achieved. It was observed mid- term in the contract that the roads looked
better because there were no longer intermittent sections of mowed and
unmowed shoulder. The current contract for this activity calls for 3,337 swath
miles to be mowed, at a cost of $ 22.50 per mile for mountainous terrain and $ 20
per mile for flat terrain. ADOT's average cost per mile for mowing is $ 25.51.
Overall, the contract represents a savings of more than $ 17,000 over what it
would cost ADOT to do this activity.
e Case 2 - ADOT contracted urban curb sweeping in District I during 1983. The
level of service set forth i n the contract called for 20 sweepings on 153.3 curb
miles, or 3,066 total curb miles. Midway through the contract, District
Management decided that the contractor was performing more than adequately,
and the decision was made to increase the sweeping frequency by 38 percent, or
1,173 curb miles. This was still less costly than having an ADOT crew perform
the work on the original 3,066 curb miles. The current contract for this activity
represents a savings of nearly $ 60,000 over AD 0 T's cost.
Because contracting of routine maintenance activities has proven cost effective
while providing an improved level of service, expansion should be encouraged.
Contracting has considerable untapped potential. However, A DOT management has
not committed sufficient resources to contracting and does not systematically review
all contracting possibilities.
Contracting has untapped potential - Although ADOT has contracted some routine
activities, the contracting program has not realized its full potential. According to a
survey conducted by the Transportation Research Board ( TRB), Arizona ranks about
average among states in the number and extent of maintenance activities
contracted. ADOT currently has contracts in force for six major activities. Several
states, however, have successfully contracted out numerous additional activities.
Massachusetts, Pennsylvania and Texas all contract more than 20 activities. Twenty
states have more extensive programs than ADOT in both number and percentage of
activities contracted. ( 1 )
Of the agencies that responded to the TRB survey, 70 percent indicated that they
found contracting to be cost effective, and 64 percent indicated that they were
satisfied with both the quality and quantity of work completed by the contractors.
Some of the benefits these agencies see from contracting include: the ability to
complete more work at a lower cost, greater success in meeting schedules,
elimination of the need to purchase and maintain specialized equipment, the
flexibility to reassign staff to other work, and the potential to accomplish work that
otherwise wouldn't be performed.
( ' 1 I n Arizona, Pima County c o n t r a c t s more than 20 a c t i v i t i e s , and i t s contract
expenditures c o n s t i t u t e almost 50 percent o f i t s t o t a l maintenance budget. By
c o n t r a s t , ADOT's c o n t r a c t expenditures are approximate1 y 5 percent of i t s t o t a l
maintenance budget.
Maintenance planning staff and district personnel have identified numerous activities
to consider for contracting. Many of these activities are currently contracted by
other states. The following table highlights some of these activities. In addition to
the activities indicated in the table, ADOT personnel have recommended contracting
of crack filling, blading unpaved roads, tumbleweed disposal, annual fence inspection
and routine fence maintenance.
Act i v i ty
TABLE 5
OTHER STATES' ACTIVITIES NOT CONTRACTED BY ADOT
Roadway St r i pi ng
Hand Patching/ Premix
Material Supply
Guardrai l Repai r
Snow/ l ce Remova l
Shoulder Maintenance
Culvert Cleaning
Unpaved Shou l de r Ma i n tenance
Number of States
Source: " Maintenance A c t i v i t i e s Accomplished by Contract," National
Cooperat ive Highway Research Program- Synthes i s of Highway Pract ice
125, Transportation Research Board, July 1986.
Reasons for limited contracting - ADOT's expansion of the contract program is
limited. ADOT lacks sufficient resources to effectively administer the contracting
program. In addition, ADOT lacks a mechanism to ensure that possible areas for
contracting are identified and evaluated.
Resources for maintenance contract administration are very limited. Currently,
ADOT has only one full- time employee for this function. Some responsibilities of the
position include: negotiating extensions for expired contracts, selecting the panel
and evaluating bid proposals, encumbering funds for each contract, answering
inquiries about contracts, and monitoring expenditures of all contracts. Because the
Contract Administrator has extensive responsibilities, he is unable to even evaluate
all district requests for contracting.
The Maintenance Planning Section requested an additional position for both fiscal
years 1986- 87 and 1987- 88 to assist in contract administration. However, the budget
request, totalling $ 47,500, was denied by ADOT management each time.
Funding an additional position for contracts administration would be cost effective.
The Contract Administrator has received 21 contract requests from district and area
staff that he is unable to process. These requests represent more than $ 1.6 million
worth of work. From 1983 through 1986, ADOT averaged approximately 27 percent
in savings from maintenance contracting. If ADOT processed the current requests
and realized only a 10 percent savings on these additional activities, the savings
would total $ 160,000.
ADOT1s lack of a mechanism for identifying possible contracting areas may have
limited growth of the contracting program. Currently, areas for contract review are
generated by both district personnel and the central office Contract Administrator.
AD OT would benefit from a process whereby all maintenance activities were
systematically reviewed for contract feasibility. As discussed previously, other
states contract several activities not contracted by ADOT. Experience in
contracting government services at the Federal level shows that: ( 1) a systematic
review of activities is needed, and ( 2) legislation may be needed to require agencies
to conduct such reviews. The Federal government, through OMB Circular A- 76,'"
states that for an agency to have a successful contracting program, all activities that
could benefit from competitive cost comparison must be analyzed. Such analysis may
not occur, however, without a legislative requirement to do so. In 1978, 1981 and
1986, the U. S. General Accounting Office studied the Federal A- 76 program and
recommended that Congress enact legislation to require agencies to fully implement
A- 76.
RECOMMENDATIONS
1. A DOT should immediately assign additional staff to the maintenance contracts
administration function to allow all current requests for contracting to be
evaluated. Additional staff should be added, as necessary, as the number and
type of contracts increase.
2. A DOT should continue expanding its contract maintenance program by
identifying additional activities that would be cost effective to contract out.
3. The Legislature should consider establishing a technical advisory committee
( similar to the 1981 committee which included ADOT officials, private
contractors and other knowledgeable persons) to conduct a systematic review of
- all maintenance activities to identify other activities that may be feasible to
contract.
( ) The O f f i c e of Management and Budget c i r c u l a r A- 76, " Performance of Commerci a1
A c t i v i t i e s , " provides a means f o r examining the mu1 ti tude o f government a c t i v i t i e s
that are also performed i n the p r i v a t e sector, determining the most economical way t o
perform those a c t i v i t i e s , and implementing those procedures. Federal agencies are
required t o review t h e i r in- house commercial a c t i v i t i e s and determine the l e a s t
cost1 y means of p r o v i d i n g these services.
FINDING 11
ADOT'SSYSTEM FOR PLANNING, BUDGETING AND CONTROLLING
HIGHWAY MAINTENANCE CONTINUES TO NEED SIGNIFICANT IMPROVEMENT
TO MEET CENTRAL OFFICE AND FIELD MANAGEMENT NEEDS
Despite its $ 720,000 annual cost, ADOT's automated management system for
planning, budgeting and controlling highway maintenance, called Pe Cos, does not
work as intended. PeCos does not provide adequate management support to ADOT's
central office Maintenance Section, nor does it meet field management's operational
needs. ADOT, aware of PeCos deficiencies, should take steps to upgrade the system.
PeCos is intended to assist central office and field managers in planning, budgeting
and controlling A D 0 T's maintenance allocation. The central office Maintenance
Section and Maintenance Field offices are responsible for managing the annual
highway maintenance program and budget. PeCos was implemented in 1971 to
provide management support through an objective basis from which the maintenance
program can be planned and executed. Based on a survey conducted by our
Office, "' the system has annual administrative costs of approximately $ 720,000
for PeCos related activities. Thus, ADOT has made a substantial financial
commitment to this management system.
PeCos Does Not Provide Adequate Management Support
To The Central Office Maintenance Section
PeCos does not provide adequate management support to the central office
Maintenance Section in developing or overseeing the maintenance program and
budget. The central office's ability to plan and budget maintenance activities is
limited because key elements for: ( 1) projecting annual maintenance requirements, ( 2)
setting production rates for field staff, and ( 3) assessing maintenance costs and
resource requirements are inaccurate and unreliable. Further, reports generated by
the PeCos system are not very useful.
An employee survey was conducted to i d e n t i f y the approximate annual labor costs
devoted to PeCos. Maintenance s t a f f estimated time spent on PeCos r e l a t e d
a c t i v i t i e s . These time estimates were used with salary information to determine
approximate annual costs. Survey response was 86 percent, and t o t a l costs were
estimated a t approximately $ 720,000.
AD OTfs central office Maintenance Section is responsible for preparing the annual •
maintenance program and budget. The Section uses the PeCos system to conduct
these activities. PeCos contains several key elements that the Maintenance Section
uses for planning and budgeting.
a quantity standards - These are numerical values used by Section staff to plan
the field staff's annual work load for each maintenance activity.
0 average daily productivity - PeCos uses work standards to plan the amount of
work a crew should produce in a day. a
a maintenance cost estimates - Daily maintenance costs are estimated by PeCos
for each maintenance activity. The estimates are used to determine the costs
for equipment, personnel and materials to conduct an activity.
Figure 1 illustrates how these elements interact and are used by the Section to plan
and budget the annual maintenance program.
FIGURE 1
INTERACTION OF PLANNING AND BUDGETING ELEMENTS
Example: Swath Mowing
Quantity Standard = 2 mowings a year
Average D a i l y Production = 12 miles a day
Crew Day Cost = $ 100
Feature Inventory ( ' 1 = 1000 swath m i les
2 mowings a year
x 1,000 miles needing swath mowing i n a region
= 2,000 miles of swath mowing needed for that region.
2,000 t o t a l miles of needed swath mowing
+ average d a i l y production of 12 miles a day ( f o r a
t y p i c a l maintenance crew)
= 166 crew days required
166 crew days required for the year
x d a i l y crew day cost of $ 100
= $ 16,600 annual cost for swath mowing.
Source: Highway Maintenance Management System Manual.
( ' 1 A maintenance f e a t u r e i s defined by the PeCos manual as a d i s t i n c t f e a t u r e o f the
roadway system f o r which one o r more work a c t i v i t i e s w i l l be required. Swath miles
then are a " d i s t i n c t feature" f o r which swath mowing i s required to maintain a road
i n as near the o r i g i n a l c o n d i t i o n as possible.
Our office analyzed PeCos planning and budgeting elements for 12 labor intensive
activities. We reviewed the quantity standards, average daily productivity and unit
cost estimates for the following activities. ( 1
0 ACTIVITY 101 - Hand Patching with Premix
0 ACTIVITY 103 - Crack Filling
0 A CTlVlTY 131 - Blading Unpaved Shoulders
0 A CTlVlT Y 132 - Repairing Unpaved Shoulders
0 ACTlVlTY 141 - Swath Machine Mowing
0 ACTIVITY 146 - Tree and Brush Removal
0 ACTIVITY 153 - Accident Guardrail Repair
0 ACTIVITY 155 - Routine Fence Maintenance
0 ACTIVITY 161 - Routine Drainage Maintenance
a ACTIVITY 163 - Clean Cuts
a ACTlVlTY306- ManualWeedControl
0 ACTIVITY 312 - Shrub Trimming
These 12 activities represent 45 percent of all labor hours controlled by PeCos.
Quantity standards - Our analysis shows that PeCos quantity standards do not
adequately assist Section staff in projecting maintenance requirements. In 49
percent of the activities reviewed, work completed by maintenance staff differed
from PeCos projections by more than 50 percent. Figure 2 illustrates that org
accomplishments for the maintenance activity of crack filling ( fiscal year 1985- 86)
ranged from 100 percent lower to 411 percent higher than planned by the
Maintenance Section.
An i n d u s t r i a l engineer from Arizona State U n i v e r s i t y was h i r e d by our O f f i c e t o help
determine a useful s t r a t e g y f o r evaluating PeCos effectiveness. He advised us t o
analyze these key planning and budgeting elements t o determine t h e i r re1 i a b i l i t y and
v a l i d i t y .
FIGURE 2
Percent Difference From PeCos Work Projections
Crack Filling
500
450
400
350
300
2 s 250
n, 0) .' 03$ zoo
2> o a 150
- c. c ' 0 loo
0) 0
z2a% so
0
- 50
- 1 00
- 2 o o J : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : I
46 Maintenance Orgs
Our review of quantity standards raises serious questions about PeCos credibility as
a planning tool. Quantity standards are critical to an effective maintenance
management system. They are used to plan maintenance goals and objectives, and
for compiling the annual work program and budget. The serious discrepancies
between planned and actual work completed, uncovered by our analysis, indicate @
that PeCos is not providing an accurate prediction of maintenance work to be
completed.
Average daily productivity - Our study indicates that production rates used by
the Section to plan and budget maintenance are frequently invalid. The relationship
between planned and actual production was tested to determine if differences
between the two are statistically significant. For eight of 12 of the activities
reviewed, differences were significant enough to conclude that actual field
productivity had no relationship to PeCos estimates. Figure 3 illustrates that
although daily production for blading unpaved shoulders is estimated at either 4.5 or
4.6 shoulder miles depending on the org, actual daily productivity ranged from .5 to
7.1 shoulder miles.
FIGURE 3
PeCos Production Rates vs. Actual Productivity
Blade Unpaved Shoulders
" T LEGEND
PeCos
Actual
Production Rate
Productivity
planned and actual productivity
for 37 maintenance Orgs
The lack of validity displayed by many of PeCos production rates seriously
diminishes PeCos u t i l i t y as a planning and budgeting tool. Without reliable
production rates, the Maintenance Section lacks a realistic basis for determining the
resources needed to perform the work scheduled in the annual maintenance
program. Likewise, reliable production rates are necessary to develop a viable
budget.
Maintenance cost estimates - Our review indicates that PeCos unit cost
estimates, which the Maintenance Section uses to allocate maintenance monies, are
also invalid. We found that actual unit costs, as reported by the PeCos system, had
no relationship to PeCos estimates for 92 percent of the activities tested. ( 1 )
For example, the unit cost estimate in 1985- 86 for routine drainage maintenance
was approximately $ 41 ( see Figure 4). One org, however, spent about $ 542 on a unit
cost basis ( 13 times as much money as was budgeted) to conduct this activity.
Expenditures reported by the PeCos system a r e d e r i v e d from Statewide cost averages
f o r personnel, equipment and m a t e r i a l s . I n 1984, however, a p r i v a t e consultant
h i r e d by ADOT disclosed t h a t expenditures reported by PeCos d i f f e r from the Arizona
F i n a n c i a l I n f o r m a t i o n System's ( A F I S ) f i s c a l r e p o r t by " as much as 8 percent." The
consultant noted t h a t " when cost f i g u r e s d i f f e r s i g n i f i c a n t l y , ( which i s frequently
the case) PeCos loses c r e d i b i l i t y , since AFIS accounts f o r real d o l l a r s ' and the
real bottom l i n e . " '
FIGURE 4
zoo I I
1 5 0 ~ 1
' I \
100 I , It
PeCas Estimated vs. Actual Costs
Routine Drainage Maintenance
- PeCos Estimates
-- AZCIJCI
planned and actual costs
for 46 maintenance Orgs
As with the problems displayed by PeCos quantity standards and production rates,
the lack of validity exhibited by most PeCos unit cost estimates tested undermines
its value as a budget tool. PeCos unit cost estimates are used to calculate labor,
equipment and materials costs for a standard crew day of work on each activity.
Without reliable crew day cost estimates, the PeCos work program cannot be
executed as intended, and significant modifications and adjustments need to be
made in the field.
PeCos reports - Furthermore, the reports generated by the system are
inadequate. In addition to its role in preparing and distributing the annual
maintenance program and budget, the Maintenance Section is responsible for
monitoring and evaluating field performance. For each maintenance org and
activity, the PeCos system contains planned vs. actual work accomplished; and
planned versus actual performance, in terms of average daily productivity and unit
costs. However, current PeCos reports are too cumbersome to be used effectively
by Maintenance Section officials. In the current format for example, a performance
report, depicting the performance of 66 maintenance orgs, is hundreds of pages long
and not practical for ongoing analysis. The administrator of the Maintenance
Section's Planning Services Unit confirmed that the size of these reports inhibits
comprehensive review.
Because PeCos planning and budgeting elements are not systematically reviewed by
the central office, the deficiencies, described on page 23, go undetected by central
office staff responsible for monitoring the system. Following up on deviations in
standards could improve the accuracy of quantity standards used to determine
annual maintenance needs, and the productivity standards and cost estimates used to
determine its budget needs.
PeCos does not meet the operational needs in the field. PeCos does not enable area
personnel to effectively plan and control the work of maintenance crews.
In addition to being a management tool for ADOT's central office, PeCos was
developed to provide field managers with operational support. PeCos has a similar
function at the field office level that it has at the central office level. It is expected
to enhance maintenance management by providing standards for maintenance
planning, budgeting and control.
However, we uncovered a variety of cases which demonstrate that PeCos fails to
provide adequate operational support at the local level.
0 Confidence in PeCos is so low that 11 of 12 ( 92 percent) of the org supervisors
interviewed do not use, or even consider, PeCos planned accomplishments when
scheduling maintenance activities. Org supervisors emphasized that PeCos does
not control the work to be done. Planned maintenance accomplishments are
derived from PeCos quantity standards. The lack of attention to work planned
through Pe Cos illustrates that quantity standards are not establishing meaningful
maintenance goals and objectives.
m Field personnel do not find PeCos production standards useful for evaluating
worker productivity. According to area and org officials interviewed, PeCos
production rates are not sensitive to local conditions that impact productivity,
such as: road condition, road class, travel time, traffic control and local terrain.
Because of this imprecision, field staff often do not evaluate workers'
performance based on their compliance with standards. In addition, some stated
that PeCos performance reports raise too many " red flags" to follow up on.
PeCos is intended to provide field managers with a means to measure actual
performance against plan, and take corrective action i f necessary. However,
inherent flaws with the system's production rates prevent field personnel from
using PeCos for this important purpose.
0 PeCos specifies the annual and daily requirements for labor, equipment and
materials to be used in completing the work program. According to field staff,
however, very often the equipment and manpower at the orgs simply do not
match PeCos specifications. For example, PeCos specified that one
maintenance org needed 15 full- time equivalent employees ( FTEs) to complete
its work program, even though that org was only authorized to have 12 FTEs.
Moreover, other orgs had more FTEs on hand than PeCos planned for. This
inherent flaw of the system hinders an org's ability to comply with the work
program.
a Five of the 11 area offices have developed their own procedures for tracking
maintenance expenditures because PeCos does not provide effective assistance.
Many field staff have lost confidence in the accuracy of PeCos expenditure
reports, which are based on PeCos cost estimates. To compensate, field
personnel at five area offices compile manual logs of actual expenditures based
on " real" dollars. A sixth area office simply discards PeCos expenditure reports
and waits for the AFlS report.
A DOT Must Take Steps
To Upgrade PeCos
ADOT is aware of the system's deficiencies and should take steps to upgrade
PeCos. The system's defects and potential improvements have been outlined for the
Department, but ADOT decided not to expend the resources to fully upgrade PeCos.
ADOT should investigate its options, and move to upgrade the system.
PeCos deficiencies and potential improvements previously noted - Since 1982,
PeCos deficiencies and potential improvements have been outlined for ADOT on
several occasions.
0 In 1984, Burke and Associates, a private consultant hired by ADOT, reported
that PeCos quantity standards, performance standards, cost estimates, report
formats and other related areas were deficient and required management
attention. Burke presented 12 recommendations to make PeCos a more viable
system. Included were recommendations that A 0 OT: ( 1) refine its quantity
standards by incorporating variables such as road condition and road class; ( 2)
refine performance standards to reconcile climactic, regional, area and org
exceptions to current production rates and resource specifications; and ( 3)
upgrade the information system to produce more effective management reports.
0 In 1984, ADOT tested a procedure that could improve its capability to plan,
budget and set priorities for maintenance objectives. Developed by
Woodward- Clyde Consultants, this procedure is designed to systematically set
Statewide maintenance service levels. A t the time it was tested, a
Maintenance Section official described this procedure as ' I. . . a logical next
step . . . in [ the] development of maintenance management systems.
0 In 1982, the Auditor General's Office reported that PeCos was an inadequate
control tool, and concluded that field personnel were not efficiently deployed as
a result. A t that time, we reported that worker productivity fell outside the
prescribed range recommended by PeCos more than 50 percent of the time. We
recommended that ADOT modify PeCos to make it a more useful evaluation
and control tool.
Despite these various critiques and recommendations, ADOT has not made a
concerted effort to upgrade the system. According to the administrator of the
Maintenance Section, uncertain revenue projections and the preeminence of the
construction program have caused upper management to treat maintenance as a
secondary concern. Further, the Deputy State Engineer in charge of Highway
Operations states that he has been unwilling to divert money from field operations
to address problems with PeCos.
Consequently, PeCos improvements have either been postponed or addressed on a
part- time basis. Two Maintenance Section Planning Services staff, for example,
have been working part time since early 1984 toward implementing the Burke
recommendations. Some improvements have been addressed. For example, the
Section automated the feature inventory update process. However, as our analysis
demonstrates, there are many more substantive problems that have not been
corrected.
ADOT should explore its options and upgrade PeCos - ADOT should investigate its
options and move to upgrade the system. One option is to reexamine prior
recommendations made by our Office and Burke and Associates. Most of the
substantive problems disclosed in those two reports have not been addressed. A
second option is to review and implement Woodward- Clyde's systematic approach to
planning, budgeting and setting priorities for maintenance. Finally, A D 0 T should
evaluate innovations and new processes used by other states. We found that other
states have experienced similar problems. Some states, like California and Florida,
have acted, and are in the process of implementing new systems and procedures.
Additionally, ADOT needs to explore other means of overseeing the maintenance
program, as a supplement to its use of PeCos. For example, in Finding I l l ( page 27)
we recommend that ADOT adopt an inspection program to assess maintenance
conditions Statewide. Also, in order to better utilize PeCos information, ADOT
needs to strengthen central oversight of the maintenance function ( see Finding IV,
page 31).
RECOMMENDATIONS
1. ADOT should examine its options and move to upgrade its maintenance
management system ( PeCos). A D OT's options include: ( 1) fully implementing
recommendations previously made by our Office and its own consultant, Burke
and Associates; ( 2) implementing the process developed by Woodward- Clyde
Consultants to systematically plan and budget maintenance activities; and ( 3)
incorporating some innovations and new approaches to maintenance
management that are currently employed by other states.
2. After reviewing its options, ADOT should report to the Legislature and present
its plan for improving PeCos, including total costs and a timetable.
FINDING Ill
ADOT SHOULD ESTABLISH A METHOD FOR EVALUATING
DISTRICT MAINTENANCE CONDITIONS
To supplement its maintenance management system, ADOT needs to establish a
method for evaluating the level of service being provided by maintenance field
crews. Since field staff do not systematically survey the condition of district
highways, central office has no means of knowing the overall condition of the
highway system. Ohio and Florida, on the other hand, have developed systematic
methods of evaluating maintenance conditions throughout their states.
Maintenance Conditions
Unknown To Central Office
Although ADOT may know the location and quantity of work done, the Department
does not have a method to determine whether maintenance needs are being
satisfied. Currently, central office lacks a mechanism for capturing maintenance
conditions. Field staff do perform inspections; however, these inspections do not
provide the needed information to evaluate maintenance conditions Statewide.
Central office has no means of assessing the condition of the highway system. Field
staff do not systematically survey the condition of district highways. In addition,
management reports generated by the maintenance management system do not
indicate whether maintenance needs are being met. For example, central office
Maintenance Section may know that an org has been provided resources to complete
200 cubic yards of pothole patching, but i f the year- end report shows that 150 cubic
yards of patching was done, central office does not know whether the amount of
work completed was sufficient to meet maintenance needs. Further, as discussed in
Finding II ( page IS), our review of planned maintenance accomplishments shows that
nearly half of the maintenance orgs are performing either 50 percent more or 50
percent less than the work planned. Thus, without a condition report, central office
lacks important planning information to know whether resources are being utilized
effectively.
Although district, area and org personnel perform field inspections, these
inspections do not currently provide the needed information to evaluate maintenance
conditions Statewide. District engineers, area engineers, area supervisors and org
supervisors conduct inspections within their geographic boundaries. However, AD 0 T
has not developed a standardized method for evaluating maintenance conditions
Statewide. Because central management does not have a uniform Statewide basis
for comparison, it is unable to direct resources to those roads and conditions most in
need. In making budget cuts to the 1986- 87 work program, central management
made across- the- board, cuts to maintenance activities. Central management did
not know the impact of cuts on the level of service provided.
Other States Have Developed
Condition Evaluation Systems
By contrast, at least two states have supplemented their maintenance management
systems by developing systematic methods of evaluating maintenance conditions
throughout the state. Florida has developed a maintenance condition rating system,
and Ohio has developed a recordable condition survey for assessing maintenance
conditions.
Florida's maintenance condition standards - Florida's Depart ment of Transportation
has developed a maintenance condition rating system that uses condition standards
to define what service levels are necessary for acceptable road conditions. For
example, shoulders should have no more than a 3 inch drop off, potholes should be no
greater than 1.5 square feet in area and 1.5 inches deep, and grass should be no
higher than 12 inches or be mowed no closer than 4 inches. ' Florida has teams
that go into the field quarterly and randomly sample the highway system, "' testing
for compliance with the standards. The data gathered by the teams is summarized
and an overall rating is derived for each sample site. The maintenance units are
expected to attain an overall maintenance condition rating of 80 out of a possible
100 points.
F l o r i d a ' s s e r v i c e l e v e l s f o r grass vary depending on t h e type of highway.
( 2) A computerized random s i t e s e l e c t i o n program i s used t o i d e n t i f y s i t e s f o r the
survey by s e c t i o n and m i l e post.
Florida moved to i t s maintenance condition rating system because of inconsistencies
in maintenance decisions and problems in monitoring maintenance field staff.
Florida's Department of Transportation found that field supervisors were making
inconsistent decisions as to maintenance priorities, thus leading to the need for a
systematic decision- making mechanism. Further, Florida's Department of
Transportation found that the maintenance management system alone was not
sufficient to monitor maintenance field staff performance.
Although Florida still uses its maintenance management system to show the work
that needs to be done, it now evaluates its maintenance units on their ability to
meet maintenance condition standards. Florida uses trained observers to inspect the
condition of pavements, roadsides, drainage, traffic services and aesthetics.
The maintenance condition standard system has been beneficial to Florida's
maintenance management. According to the Director of Maintenance, the new
system is more simplified than relying on a maintenance management system, and it
provides a more valid measure. Florida ties its budget to the maintenance condition
standard system, rather than to the maintenance management system. A report on
the system presented by Florida's State Maintenance Engineer indicates that the
system allows the state to predict maintenance outputs and the required resources.
I f . . . By having a rating system which actually measures the results of
the activities performed to maintain a highway facility an agency can
adjust programs and resources to either achieve a specified level of
service or design a program for a particular budget allocation and
predict its result^.'^
Ohio's recordable condition survey - Ohio's Department of Transportation
established its maintenance quality system in the early 1970s. Ohio has identified
15 conditions by which to evaluate its highway system. For example, there should
be no more than ten pieces of l i t t e r in a tenth- mile segment. Ohio uses observers
who go into the field quarterly and randomly sample the highway system, testing for
compliance with the condition requirements.
Ohio observers inspect: the condition of the pavement for deterioration,
obstructions, flushing ( bleeding), striping deterioration and auxiliary marking
deterioration; shoulders for drop- off and obstructions; guardrails for appearance and
deterioration; signs for deterioration; vegetation appearance; amount of litter;
culverts for obstructions and deterioration; and drainage ditches for obstructions.
According to Ohio's " Recordable Conditions Manual," the purpose of the recordable
condition survey is " to develop numerical data from observations and measurements
using a sample of the Ohio highway system." Ohio summarizes the information into
measured deficiencies versus maintenance costs, and concluded that: ". . . the study
has proved remarkably flexible in showing where our maintenance dollar is going and
how efficiently it is being used."
RECOMMENDATIONS
1. ADOT should consider developing a maintenance condition system to evaluate
Statewide maintenance conditions.
2. ADOT should establish uniform inspection standards and reporting to be
maintained by each district.
3. Central office should incorporate results of inspections into the annual planning
process to ensure that resources are utilized to meet priority needs.
FINDING IV
CENTRAL OFFICE NEEDS TO STRENGTHEN ITS OVERSIGHT
OF THE MAINTENANCE FUNCTION
Central office needs to strengthen its Statewide oversight of the maintenance
function. ADOT's upper management is not active in maintenance management, and
the authority and role of the Maintenance Section is limited. ADOT needs to
strengthen its central oversight to increase enforcement and to ensure
implementation of innovative district methods.
Upper Mana~ ement Not Active In Maintenance Management.
Upper management, which oversees the district operations, does not take an active
interest in maintenance management. The Deputy State Engineer of the Highway
Operations Group does not review any management reports prepared by the
Maintenance Section. He considers the monitoring of maintenance districts to be
the responsibility of the Maintenance Section.
However, the central office unit devoted exclusively to maintenance has no tine
authority over district maintenance staff. Although Maintenance Planning Services
staff prepare and allocate the budget, and oversee the maintenance management
system, the staff has limited authority over the districts' maintenance staff. The
Assistant State Engineer of the Maintenance Section and the District Engineers
report to the Deputy State Engineer of the Highway Operations Group. Figure 5
depicts the organizational structure.
FIGURE 5
ARIZONA DEPARTMENT OF TRANSPORTATION
ORGANIZATION CHART FOR HIGHWAY MAINTENANCE
STATE ENGINEER
HIGHWAY OPERATIONS
GROUP I
DISTRICT ENGINEER ASSISTANT STATE
DISTRICTS 1 - 4 / 1 ENGINEER
MAINTENANCE SECTION I
, 1 1 MAINxFAFcFFNNINGl
DISTRICTS 1- 4
AREA SUPERVISORS F
1
1 1
HIGHWAY MAINTENANCE
ORG
CREW SUPERVISORS
MAINTENANCE ANALYSTS
L
According to the Assistant State Engineer of the Maintenance Section, one result of
the Section's limited authority is confusion as to the Maintenance Section's
responsibility to monitor and control field performance. He indicated that since the
reorganization of the department, it is difficult to identify his section's
responsibility and the field's responsibility. Thus, although the section prepares
detailed reports ( hundreds of pages long) on the maintenance efforts of the districts,
his section does not review conformance with performance standards or dictate how
resources should be allocated.
Central Oversight Is Needed
ADOT needs to increase its oversight of the districts. Statewide oversight and
enforcement are lacking, as evidenced by the deviations in field performance.
Further, central oversight is needed to facilitate implementation of innovative
methods.
Statewide oversight and enforcement are lacking - Because of limited upper
management involvement and the weak role of the Maintenance Section, ADOT has
limited Statewide maintenance oversight and enforcement. As indicated in Finding
11, maintenance orgs experience wide variations in meeting quantity standards, cost
estimates and productivity standards. For example, for the 12 activities we
reviewed, nearly 50 percent of the maintenance orgs deviated from planned quantity
standards by more than 50 percent. However, central office does not routinely
follow up on these deviations nor review district compliance with standards. Thus,
those maintenance orgs that have problems may not be identified for corrective
action.
Innovative methods - Central oversight would also facilitate Statewide
implementation of innovative methods that are being used in some districts. During
staff visits to area offices, we found that some areas had developed unique
managerial methods for maintenance that may benefit other area management.
Examples of some of the practices are as follows.
0 Measurable performance evaluations - Maintenance management in some
areas had implemented the use of measurable performance evaluations. The
evaluations based performance on the ability of the org supervisor or
maintenance worker to meet predetermined goals.
I Work control module report - Maintenance staff in several areas have begun
using a work control module report. ( 1 ) The report compares labor hours
planned and spent for each activity for a given month. It allows org
supervisors and area management to track whether orgs are spending labor
hours on the work outlined in their monthly and six- month schedules. The
report was developed in one district, and has been shared among areas in the
same and in other districts.
I Crew evaluation system - Area management in District 2, Area 2 conduct
field inspections of maintenance work crews. An evaluator observes crews to
determine i f the crews are following safety requirements, are using the
proper equipment, and are following recommended work methods. The
observation is recorded on a standardized form.
Although Maintenance Section management is responsible for implementing
improved methods, it could do more to evaluate unique managerial methods, and i f
warranted, encourage implementation of the methods Statewide. Per the Highway
Maintenance Management Manual, it is the responsibility of the Maintenance
Section management to " participate in the research, investigation, and adoption of
improved managerial and technological development and methods applicable to
solving highway maintenance problems." However, as shown in the previous
examples, some managerial improvements have not been implemented Statewide.
Only one of the three methods have been evaluated by the Maintenance Section and
shared with other districts.
( ' 1 According to the Burke report: ll. . . the report represents a p o s i t i v e step toward
g e t t i n g org supervisors i n t o the work control process. However, the report i s not
t i e d to the annual work program; nor does it i n c l u d e d a t a on accomplishments and
expenditures. Thus, it lacks a l l of the ingredients necessary to monitor actual
performance.''
RECOMMENDATIONS
1. Central Office should take a more active role in overseeing maintenance
performance in the districts. Specifically, central office should compare field
performance against quantity standards, productivity standards and cost
estimates. Further, central office should review procedures used by field
crews, and take action to either correct the standards or improve field
performance.
2. ADOT should establish a system to review innovative maintenance management
ideas, and i f warranted, implement the methods statewide.
OTHER PERTINENT INFORMATION
During the audit we developed other information pertinent to highway maintenance.
Our office conducted a follow- up analysis of our 1982 report to determine whether
ADOT had increased controlled maintenance activities. We found that l i t t l e progress
has been made in controlling activities, since there is still a larger percentage of
uncontrolled activities than controlled activities.
ADOT's maintenance activities can be categorized as either ttcontrolledu or
" uncontrolled." Controlled activities are activity categories for which the work units
are expressed in quantified measures of work accomplished ( e. g., swath miles
mowed). Uncontrolled activities are activity categories for which the work units are
the labor expended - a value equal to the resource input with no measure of highway
accomplishments.
Uncontrolled activities lack a recordable accomplishment. For example, activity
168, roadway pump maintenance, has no work unit attached. This means that a crew
could service one or 100 pumps, but there is no recorded measure of what was
accomplished by the crew in an eight- hour day. Thus, there is no way to compare the
crew's performance against any established standard, or against the crew's
performance on any other workday.
A 1982 analysis of fiscal year 1980- 81 labor hours showed that 48 percent of the
maintenance labor hours were expended on uncontrolled maintenance activities and
only 37 percent of the labor hours were expended on controlled activities. Our
consultant (" analyzed the fiscal year 1985- 86 labor hours to determine the
progress made in controlling activities. The analysis shows that 45.7 percent of the
labor hours were spent on uncontrolled maintenance, while 39.1 percent of the labor
hours were spent on controlled activities. Thus, only slight progress has been made in
controlling activities. The results of the analysis are presented in Table 6.
(' I Our O f f i c e contracted w i t h Dr. B i l l Moor, an I n d u s t r i a l Engineer from Arizona State
U n i v e r s i t y , t o a s s i s t i n our study of highway maintenance.
TABLE 6
COMPAR I SON OF CONTROLLED AND UNCONTROLLED HOURS I N 1980- 81
TO CONTROLLED AND UNCONTROLLED HOURS IN 1985- 86
Total Hours Expended 1 ,590,358 1 ,606,983
Control led Hours
Type A - Clear causal work u n i t s ( a) 28.4% 31 .4%
Type B - Q u a n t i t a t i v e work u n i t s ( b )
acceptable f o r Statewide planning 5.6 7.5
Type C - F i a t s t a f f i n g ( c ) 3.0 .2
Total C o n t r o l l e d Hours
Uncontrolled Hours
Type D - No q u a n t i t a t i v e work u n i t s other
than labor hours
Type E - Overhead, e t c . ( l a b o r hours)
Type F - Support ( l a b o r hours)
Type G - T r a i n i n g
T o t a l U n c o n t r o l l e d Hours
Type H - Leave
Source: Arizona O f f i c e of the Auditor General, Performance Audit of the
Arizona Department of T r a n s p o r t a t i o n Highway Maintenance System,
December 1982; and 1985- 86 maintenance management system data
analyzed by B i l l Moor, Associate Professor, College of
Engineering, Arizona State U n i v e r s i t y .
( a) The work u n i t s counted f o r the a c t i v i t y have a clear causal r e l a t i o n s h i p t o the s t a f f
resource input.
( b) The work u n i t count has a l e s s c l e a r causal r e l a t i o n s h i p t o the s t a f f resource input,
but i s probably v a l i d f o r Statewide planning.
( c ) The work u n i t i s i m p l i c i t i n the a c t i v i t y .
According to our consultant on the 1982 audit of the Highway Maintenance
Management System, ' when more labor hours are spent on uncontrolled versus
controlled activities, there may be a significant under utilization of labor resources.
Specifically, he reported: " It is usually taken as axiomatic that when an organization
does not work to specific output goals, and this characterizes most of ADOT's
highway maintenance, it is most common to achieve only 65 to 70 percent of the 100
percent feasible without undue exertion."
Our o f f i c e employed the services of O r . Marvin E. Mundel, an i n t e r n a t i o n a l l y
recognized a u t h o r i t y on p r o d u c t i v i t y and work measurement, f o r the 1982 study.
I,
ARIZONA DEPARTMENT OF TRANSPORTATION
206 South Seventeenth Avenue Phoenix, Arizona 85007
EVAN MECHAM
Governor
CHARLES L MILLER
Dlrector
August 12, 1987
Mr. Douglas R. Norton
Auditor General
2700 N. Central Ave., Suite 700
Phoenix, Arizona 85004
Dear Mr. Norton:
We appreciate the opportunity to discuss your findings
in " A Performance Audit of the Highway Maintenance Function"
prior to the finalization of the report. We have taken this
report as constructive criticism and are appreciative of the
information which you have transmitted to us.
It is apparent that the comments contained in the findings
are in substantial alignment with our current thinking, which
is to refine and strengthen the maintenance management system.
We have attached the specific responses to your report so that
you will understand our views with regard to the maintenance
operation. In most instances, the net hods which ADOT intends
to irnplernent will, in fact, be parallel to your recommendations.
It is my understanding that these con~ ments will be appended
to your final report.
Thank you again for the opportunity to make comments on
the findings. I am confident our response will clarify the
points you have made. These are mentioned individually in
our response. Please accept my compliments to your staff for
the professional manner in which they conducted themselves
while visiting our agency.
h
._"...--
CHARLES L. MILLER
Director
CLM: hlo
Att.
HIGHWAYS . AERONAUTICS . MOTORVEHICLE PUBLlCTflANSlT ' ADMlNlSTRATIVESERVlCES TRANSPORTATIONPLANNING
QDOT'S RESPONSE TO
PERFO- RUDIT OF MCIINTENQNCE SECTION
FINDING I: RDOT SHOULD CDNTINUE TO EXPRND ITS CONTRRCT MRINTENRNCE
PROGRRM:
We ccrncur with this finding.
With respect to the three spec1 f ic recsmmerrdat ioris, w e have the
f o 1 1 ow i rig csmment s :
1. The administrat ive costs of the contract maintenance program must
be f urided from the Departmerit, s admiriistrat ive budget, which alsca
serves to fund the other various administrative needs of the ageney.
Department priorities have precluded the establ ishmenk c~ f an addi t ional
position to the current budget. However, requests for the fiscal
1988- 89 budget do include an additional posit ion for the contract
maintenance office, arid if approved, will result in add~ tional staff
beirig added to that office July 1, 1388
2. In anticipatiori of receiving an additional FTE, we will evaluate
the effectiveness of contracting for the following maintenance
activities: roadway striping, hand patching, guardrail repair, srtow and
ice removal, shoulder maintenance, culvert clearting, crack f i 11 ing,
blading unpaved roads, tumbleweed disposal, arrnual fence inspect ion,
arid rout irte fence maintenance. Those act ivit ies indicat ing a pusi t ive
benefit / cost ratio will be made part of the contract rflaintenarrce
program.
3. Should the legislature decide tu establish a committee to review
maintenance activities, we would be pleased to assist them in arty way
pcls. si ble. We would note that several activities were evaluated for
contract maintenance as a result of the report issued by the
legislature7s technical advisory committee in 1382. Rt that time,
crack sealing, hand patching with premix, and guardrail repair did nut
prctve to be cost effective. However, as indicated, these activities
will be reevaluated.
FINDING 11: CZDOT'S SYSTEM FDR PLRNNING, BUDGETING RND CONTROLLING
HIGHWQY MQINTENQNCE CONTINUES TO NEED SIGNIFICRNT
IMPROVEMENT TO MEET CENTRQL OFFICE QND FIELD MQNRGEMENT
NEEDS.
We qenerally agree with this finding as currently warded; therefore, we
will make improvements in the system that will strengthen it and will
enable it to better meet the needs of the maintenance central office
and field management needs.
There is a g e n e r a l misconception s t a t e d iri t h e first paragraph on Page
15 of t h e a u d i t r e p o r t , arid t h a t is t h a t " PeCuS does not wcsrk as
i n t ended. " In fact, PeCoS does c u r r e n t l y work f o r RDOT as o r i g i n a l l y
intended which w a s to s e r v e as a budgeting tool to determine f i s c a l and
manpower needs for maintenance act i v i t ies on a s t a t e w i d e b a s i s .
N a t u r a l l y , t h e s e needs are t r a n s f e r r e d down to t h e urg l e v e l , but t h e a
emphasis f r o m t h e c e n t r a l o f f i c e has been to c o n t r o l t h e o v e r a l l
s t a t e w i d e p i c t u r e . W e acknowledge t h e need to s t r e n g t h e n c o n t r o l at
t h e org l e v e l i n t h e f u t u r e .
W e have t h e f o l l o w i n g comments r e g a r d i n g t h e s p e c i f i c recommendat ions:
1. R s a r e s u l t of t h e December 1382 a u d i t of t h e Highway Maintenance
Mariaqernerit System, RDOT employed Burke and Flssociates t o review arid
e v a l u a t e PeCoS. Burke' 5 work w a s completed i n Jarictary, 1384, and
i n c l uded twelve s p e c i f i c recommendat i o n s f o r improving our maintenance
management system. W e support t h e Burke r e p o r t , and with c o n s u l t a n t
a s s i s t a n c e , w i l l f u l l y implernerrt a l l twelve recornrnendatiar~ is by J u l y 1, ( I
1383. W e expect t h i s e f fcart t o cost approximately 835f21,888.88
2- The total costs and t i m e t a b l e for implementing t h e recommendations
included i n t h e Burke r e p o r t are shown i n Rttachment R.
FINDING 111: RDOT SHOULD ESTABLISH R METHOD FOR EVRLUATING DISTRICT
MRINTENRNCE CONDITIONS
W e p a r t i a l l y c o n c u r w i t h t h i s f i n d i n g .
Curl- ent 1 y, pavemerit corid it ion a r ~ d pavernent st r i ping cond i t ion a r e
surveyed on a s t a t e w i d e b a s i s and t h e r e s u l t s are recorded. This
informat ictn a s s i s t s i n t h e development uf t h e annual Pavement
Management Program and Pavement S t r i p i n g Program. Rddit i o n a l l y ,
D i s t r i c t and R r e a persclnnel review roadway cctr~ di t ictrts ar~ dr o u t i n e ly
r e p o r t d e f i c i e n c i e s t o maintenance o r g s f c ~ r correct i v e a c t ion.
Therefore, w e do cant i n u o u s l y e v a l u a t e maintenance c o n d i t ic~ ns, but do ( I
not systemat icall y document a1 1 i n s p e c t ions.
W e have t h e f o l lc~ winq comments r e g a r d i n g t h e s p e c i f i c reccsmmendat ians.
1. W e w i l l develop a maintenance cc* ndition r e p o r t i n g system. This
w i l l be c a r r i e d out at D i s t r i c t l e v e l and at t h e area l e v e l . This w i l l
e n a b l e it to be a p p l i c a b l e to t h e v a r i o u s geographical and c l i m a t i c
c o n d i t i o n s of t h e state. Therefore, it can be used ta e v a l u a t e
s t a t e w i d e maintenance c o n d i t i o n and needs. The r e p e r t ing system w i 1 l
be implemented by January 1, 1388, and t h e f i r s t i n s p e c t ion completed
by July 1, 1988.
2. The above mentioned system w i 11 i n c l u d e t h e e s t a b l i s h m e n t of
uni furm i n s p e c t ion and r e p o r t i n g s t a n d a r d s .
3. The c e n t r a l o f f i c e does i n c o r p o r a t e t h e r e s u l t s of i n s p e c t i o n s irito
t h e anriual planniriq process, and w i l l c o n t i n u e t u do so i n t h e f u t u r e .
This a c t i v i t y has been enhanced over t h e past t w o y e a r s through t h e
e s t a b l ishment of t h e annual Ores Maintenance Prograrn M e e t ing, and w i 11
be f u r t h e r enhanced with t h e development of uniform repclrt ing
st aridards.
Page Two
FINDING IV: CENTRUL OFFICE NEEDS TD STRENGTHEN ITS DVERSIGHT OF THE
MRINTENRNCE FUNCTION
D
We c a n c u r w i t h t h i s f i n d i n q , but t a k e e x c e p t i a r i ta t h e p h i l o s o p h i c a l
p o s i t iczn r e g a r d i n g t h e f u n c t i s n of t h e C e n t r a l Mairiteriance Sect ic~ ri.
Mairiter~ artce, 1 i ke c o n s t r u c t i o n , can b e s t b e a d m i n i s t e r e d at t h e l c c a l
l e v e l . Fcvr t h a t v e r y r e a s o n , t h e Department h a s e s t a b l i s h e d D i s t r i c t
and Q r e a o f f i c e s , to o v e r s e e b o t h ma i n t eriance arid c o r # s t r u c t i cm
a c t i v i t i e s . These r e s p o n s i b i 1 it ies are u n d e r t h e Deputy State E n g i n e e r
- O p e r a t i c ~ n s . The a s s i s t a n t State Erigineer- - Mainteriance r e p o r t s on an
e q u a l l e v e l w i t h t h e D i s t r i c t E n g i n e e r s to t h e Deputy State E n g i n e e r -
O p e r a t i oris. T h i s is by no means u n i q u e i n t h e v a r i o u s state highway
and t r a r i s p c t r t at ictn depar- trnent s, ar: d w e d o TIC& s u p p o r t any charige t o
this r e p o r t i n g s t r u c t u r e .
The R s s i s t a n t State E n g i n e e r - M a i n t e n a n c e and h i s staff r o u t i n e l y work
d i r e c t l y w i t h t h e D i s t r i c t , Q r e a and M a i n t e n a n c e ctrg p e r s o n n e l to
a d d r e s s m a i n t e n a n c e r e e d s . I n t h o s e i n s t a r t c e s where d i f f e r i n g o p i r r i o r r s
e x i s t , t h e m a t t e r is r e f e r r e d t i t t h e Deputy State E n g i n e e r - O p e r a t i o n s
# for resol u t ion.
W e have t h e fol lowing comrnent r e g a r d i n g t h e s p e c i f i c recommendat i on:
t
A. The M a i n t e n a n c e S e c t i o n d o e s and w i : l c o n t i n u e t o cumpare f i e l d
m a i n t e n a n c e p e r f o r m a n c e t u s t a n d a r d s and r e p o r t f i n d i n g s to t h e Deputy
B State E n g i n e e r - O p e r a t i o n s , and to t h e D i s t r i c t and R r e a E n g i n e e r s .
A l s c i , imp1 ernent at ictrr of t h e Bur- ke r e p c ~ r t w i l 1 s t r e n g t h e n PeCoS wh ich
w i 11 i n h e r e n t f y s t r e n g t h e n t h e c e n t r a l off ice's role i n t h e c t v e r s i q h t
c~ f ma i n t e n a n c e p e r f ormance.
2. I n o r d e r to assist i n t h i s , arid s t r e r i g t h e r r t h e o v e r s i g h t f u r r c t iort
8 by C e n t r a l M a i n t e n a n c e , t h e r e h a s been e s t a b l i s h e d a n FIrea M a i n t e n a n c e
S u p e r i n t e n d e n t p o s i t i o n i n e a c h of t h e 18 Q r e a off ices. T h i s
i n d i v i d u a l is to h a v e as h i s f u l l - t i m e r e s p o n s i b i l i t y t h e s u p e r v i s i o n
of t h e mairitersance f u n c t i o r r in h i s area. Or8 a r e g u l a r b a s i s t h e area
s u p e r i n t e n d e n t s w i l l m e e t as a c o m m i t t e e w i t h t h e R s s i s t a n t State
E n g i n e e r of t h e M a i n t e n a n c e S e c t i o n w i t h t h e f u l l a w i n g g o a l s :
D
R. The r e v i s i o n of p r o d u c t i v i t y s t a n d a r d s f o r each
m a i n t e n a n c e a c t i v i t y .
3. The r e v i e w of t h e m a i n t e n a n c e program accornpl i s h r n e r i t s
w i t h r e s p e c t to l e v e l - o f - s e r v ' i Ce.
C. The comrnunirat i o n of m a i n t e n a n c e p h i l o s o p h y w i t h r e g a r d
t o s t a n d a r d i z a t i o n for s t a t e w i d e c o n t i n u i t y of wurk
e f f o r t s .
Dm Problem- Solving.
Page T h r e e
QTTRCHMENT R.
RECOMMENDED F1eCoS REQUIREMENTS:
ESTIMQTED COST RND CDMFEETION DGTE
( To Complet e Burke Recommendat ions)
.......... R.. E. F. IN.. E. M.. E. N. T. ...................... C. O.. S. T. ................ C. O. M.. P. L. E TION DRTE
1. F e a t ut- e I n v e n t u r y
R e f i n e m e n t s
2. M a i n t e n a n c e F I c t i v i t y
R e f i nernerit s
3. Ruturnat ic Rct i v i t y /
I n v e n t ~ r Cya r r e l a t i on
4. Quarit i t y S t a n d a r d
Update Refinements
5. P e r f o r m a n c e S t a r t d a r d
Update R e f i n e m e n t s
6. Mot- k Ft- clgt- am & Budget
F i e l d G p p l i c a t ions
7. FeCoS/ RFIS
Budget C o m p a t i b i l i t y
8. R e s c l l ~ r e e D e s c r i p t i or1
R e f i n e m e n t s
3. Work C a l e r i d a r &
R e s o u r c e I d e n t .
bld. Work S c h e d u l i n g
R e f i nement s COST RND TIME INCLUDED
1 1. Work R e p o r t i n q
P r o c e d u r e Refinements
1 Work C o n t r o l
P r o c e d u r e Refinements
* The c o m p l e t i o n of t h e s e p r o j e c t s w i t h i n t h e t i m e f r a m e i n d i c a t e d is
cant irrgerrt upon t h e programming b e i n g d u n e by rneans uf c e r i s c t l t irrg
c u n t ract . a