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Performance review of the North Carolina Department of Transportation
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KPMG
A PERFORMANCE REVIEW
OF THE
NORTH CAROLINA
DEPARTMENT OF TRANSPORTATION
F I N A L R E P O R T
M A Y 1 9 9 8
150 Fayetteville Street Mall
Suite 1200
Post Office Box 29543
Raleigh, NC 27626- 0543
KPMG Peat Marwick LLP
Telephone 919 664 7100 Telefax 919 664 7250
May 18, 1998
Mr. Ralph Campbell, Jr.
State Auditor of North Carolina
Office of the State Auditor
300 North Salisbury Street
Raleigh, North Carolina 27603
Dear Mr. Campbell,
This report presents the results of our performance audit of the North Carolina Department of
Transportation ( NCDOT). The audit was conducted in accordance with Government Auditing Standards
issued by the Comptroller General of the United States.
Purpose and Scope
KPMG Peat Marwick LLP, with assistance from MGT of America, has undertaken a comprehensive
performance audit of the NCDOT to accomplish the following goals:
n Provide an objective analysis of the Department’s operations
n Assess whether the Department’s structure, functions and processes are meeting the public’s needs
n Evaluate the Department’s programs, functions and operating procedures
n Recommend changes to improve operational efficiency and responsiveness
n Communicate sensitive issues and complex solutions in a way the public can understand and accept
This audit, performed for the North Carolina Office of State Auditor, covered the public input process,
Transportation Improvement Program ( TIP) process; right of way procedures; preconstruction,
construction and maintenance functions; long- range planning process; management structure and customer
service; and personnel procedures. The Division of Motor Vehicles was not included in the scope of work.
Background
NCDOT is responsible for planning, engineering, constructing and maintaining the State’s transportation
system. This includes managing one of the largest state- maintained highway systems in the nation, as well
as a sizeable network of seaports, airports, railroads, public transit, bicycle and pedestrian traffic and
safety.
As North Carolina’s economy continues to grow, the demands for transportation projects— and the stakes
associated with them— steadily increase. At the same time, the Department is undergoing major internal
changes, with the arrival of Secretary of Transportation Norris Tolson and the implementation of recent
initiatives to improve the Department’s operations.
Results in Brief
Our review found that the Board and Department of Transportation do not have a formal, documented
methodology for considering overall construction and maintenance needs and translating these needs into a
viable financial strategy. There is also a significant gap between the resources set aside for the State’s
Transportation Improvement Program and the projects the Department is committed to build. While over
$ 8 billion has been programmed for projects from fiscal years 1998 through 2004, there is an additional $ 6
billion worth of “ identified future needs” projects in the program. Moreover, the Department’s projected
costs of implementing these projects do not take into account the effect of inflation or project expansion,
which could dramatically increase actual costs.
Many of the Department’s highway project development functions are built on a foundation of solid
management practices and operating procedures. However, the Department is being challenged to meet its
ambitious letting schedule, as evidenced by over $ 400 million of projects which needed to be postponed for
this federal fiscal year. The Department also has had difficulty securing environmental permits on a timely
basis.
While the State is building new roads, it is not adequately maintaining its transportation infrastructure as
required. As a result, road conditions are deteriorating, threatening North Carolina’s reputation as the
“ Good Roads State.” In addition, the State has a high number of substandard bridges ( those that are in
poor condition or are functionally obsolete) compared to its peers. Our analysis indicates that the State
does not have the resources in place to adequately address current and emerging maintenance needs.
Recommendations
Our report provides numerous recommendations for improvement in the areas of: strategic management
and customer service; statewide planning; public input; transportation improvement programming; project
planning and preconstruction; highway construction, maintenance, and operations; personnel practices;
finance; and administration.
Conclusion
Actions taken by Secretary Norris Tolson are already improving the Department’s performance and
morale. However, important issues remain to be resolved. The Board and Department of Transportation
will need to make difficult choices to address the backlog of road and bridge maintenance and the lack of
adequate funding for commitments to new highway projects. The eventual success or failure in addressing
these and other challenges identified in this report will depend on a focused, coordinated approach involving
the General Assembly, Governor, Secretary, Department managers and employees, and people of North
Carolina.
KPMG Peat Marwick LLP
PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION
FINAL REPORT I MAY 18, 1998
TA B L E O F CO N T E N T S
EXECUTIVE SUMMARY........................................................................................................................ ...... E. 1
1. INTRODUCTION
BACKGROUND..................................................................................................................... ........................... 1.1
OBJECTIVE...................................................................................................................... ................................ 1.2
SCOPE ............................................................................................................................... ............................... 1.2
METHODOLOGY.................................................................................................................... ......................... 1.3
DEPARTMENT IN TRANSITION..................................................................................................................... 1.4
2. DEPARTMENT OVERVIEW
BRIEF HISTORY ............................................................................................................................... ............... 2.1
CHALLENGES ............................................................................................................................... .................. 2.2
ORGANIZATION AND STAFFING.................................................................................................................. 2.2
REVENUES AND EXPENDITURES................................................................................................................. 2.3
TRANSPORTATION IMPROVEMENT PROGRAM......................................................................................... 2.6
KEY MEASURES ............................................................................................................................... .............. 2.7
3. STRATEGIC ISSUES AND MANAGEMENT STRUCTURE
STRATEGIC MANAGEMENT..................................................................................................................... .... 3.1
MANAGEMENT SURVEY RESULTS .............................................................................................................. 3.1
ORGANIZATIONAL STRUCTURE .................................................................................................................. 3.4
CUSTOMER SERVICE........................................................................................................................ ............. 3.5
STRENGTHS ............................................................................................................................... ..................... 3.6
FINDINGS AND RECOMMENDATIONS......................................................................................................... 3.6
4. STATEWIDE AND LONG- RANGE PLANNING
BACKGROUND..................................................................................................................... ........................... 4.1
STRENGTHS ............................................................................................................................... ..................... 4.6
FINDINGS AND RECOMMENDATIONS......................................................................................................... 4.7
5. TRANSPORTATION PROGRAM DEVELOPMENT
BACKGROUND..................................................................................................................... ........................... 5.1
STRENGTHS ............................................................................................................................... ..................... 5.4
FINDINGS AND RECOMMENDATIONS......................................................................................................... 5.5
6. PUBLIC INPUT
BACKGROUND..................................................................................................................... ........................... 6.1
COMPARATIVE ASSESSMENT ...................................................................................................................... 6.4
STRENGTHS ............................................................................................................................... ..................... 6.9
FINDINGS AND RECOMMENDATIONS......................................................................................................... 6.9
PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION
FINAL REPORT I I MAY 18, 1998I I
7. PROJECT PLANNING AND PRECONSTRUCTION
BACKGROUND..................................................................................................................... ........................... 7.1
STRENGTHS ............................................................................................................................... .................... 7.14
FINDINGS AND RECOMMENDATIONS........................................................................................................ 7.15
8. RIGHT OF WAY
BACKGROUND..................................................................................................................... ........................... 8.1
STRENGTHS ............................................................................................................................... .................... 8.10
FINDINGS AND RECOMMENDATIONS........................................................................................................ 8.11
9. DIVISIONS
BACKGROUND..................................................................................................................... ........................... 9.1
STRENGTHS ............................................................................................................................... ..................... 9.4
FINDINGS AND RECOMMENDATIONS......................................................................................................... 9.5
10. CONSTRUCTION
BACKGROUND..................................................................................................................... .......................... 10.1
STRENGTHS ............................................................................................................................... .................... 10.4
FINDINGS AND RECOMMENDATIONS........................................................................................................ 10.4
11. MAINTENANCE
BACKGROUND..................................................................................................................... .......................... 11.1
STRENGTHS ............................................................................................................................... .................. 11.12
FINDINGS AND RECOMMENDATIONS...................................................................................................... 11.13
12. OPERATIONS
BACKGROUND..................................................................................................................... .......................... 12.1
STRENGTHS ............................................................................................................................... .................... 12.8
FINDINGS AND RECOMMENDATIONS........................................................................................................ 12.9
13. PERSONNEL
BACKGROUND..................................................................................................................... .......................... 13.1
STRENGTHS ............................................................................................................................... .................... 13.4
FINDINGS AND RECOMMENDATIONS........................................................................................................ 13.5
14. FINANCE AND ADMINISTRATION
BACKGROUND..................................................................................................................... .......................... 14.1
STRENGTHS ............................................................................................................................... .................... 14.5
FINDINGS AND RECOMMENDATIONS........................................................................................................ 14.5
APPENDIX A - COMPARATIVE ANALYSIS
APPENDIX B - SELECTED DATA
DEPARTMENT OF TRANSPORTATION SECRETARY’S RESPONSE
PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION
FINAL REPORT E. 1 MAY 18, 1998
EX E C U T I V E SUMMARY
Transportation is vital to North Carolina’s economic vitality and high quality of life. Managing the State’s
vast transportation system— a critical responsibility— has been entrusted to the Department of
Transportation ( NCDOT) by the government and people of North Carolina.
The purpose of this audit, according to the State’s Request for Proposals, was to:
n Provide an objective basis for considering and improving NCDOT’s operations
n Assess whether the Department’s current structure, functions and processes are meeting the public’s
needs and allowing sufficient opportunity for public input
n Evaluate the programs, functions and operating procedures of the Department
n Recommend changes to improve operational efficiency and responsiveness to the public
KPMG Peat Marwick LLP, with assistance from MGT of America, spent the last three months conducting
this audit, in accordance with Government Auditing Standards, issued by the Comptroller General of the
United States. In addition to this performance audit, the Office of the State Auditor is undertaking separate
reviews of the Highway Trust Fund, NCDOT computer systems, and selected maintenance units.
To conduct this performance audit, KPMG Peat Marwick and MGT of America performed numerous fact-finding
and analysis activities which included:
n Reviewing budgets, organizational charts, planning documents, maintenance reports, technical
standards and other documentation
n Surveying nearly 600 Department managers, supervisors and selected staff to determine employee
responsibilities, reporting relationships, and strengths and concerns of functional groups
n Conducting over 160 interviews with internal and external stakeholders
n Making site visits to Highway Divisions in various parts of the State
n Comparing NCDOT to transportation departments in other states
This audit was conducted at a time when the Department was undergoing a major transition. Secretary
Norris Tolson, charged by Governor Hunt to develop a plan for action in 45 days, announced significant
changes to the organization’s structure, staffing and priorities in March 1998. As a result, we have been
evaluating an evolving— not static— organization. Our findings and conclusions are presented with this
understanding, in the hope of helping the Department move further forward.
PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION
FINAL REPORT E. 2 MAY 18, 1998
FI N D I N G S A N D RECOMMENDATIONS
The performance audit includes numerous recommendations for improvement. These recommendations,
and the analysis that supports our conclusions, cover 12 areas:
n Strategic Issues and Management Structure
n Statewide and Long Range Planning
n Transportation Programming Development
n Public Input
n Project Planning and Preconstruction
n Right of Way
n Divisions
n Construction
n Maintenance
n Operations
n Personnel
n Finance and Administration
Key findings and recommendations are presented below.
Transportation Finance. Our review found that the Board and Department of Transportation do not have
a formal, documented methodology for considering overall construction and maintenance needs and
translating these needs into a viable financial strategy. This performance review also found that
construction program and maintenance needs of the Department cannot be addressed at current funding
levels. More specifically:
n We estimate a shortfall of over $ 2.1 billion for the 2,281 projects funded in the current
FY 1998- 2004 Transportation Improvement Program.
n Over $ 6 billion of projects in the Transportation Improvement Program are “ identified future needs”
for which no funding is currently provided.
n To complete all the projects in the current TIP would require approximately 26 years at current
funding levels.
n According to the Department’s management systems, the roadway and bridge maintenance backlog is
increasing. For example, pavement resurfacing is underfunded by approximately $ 95 million per
year.
These challenges will require the Board and Department of Transportation to take aggressive steps to
increase funding and/ or scale back these programs to manageable levels. The Board and Department of
Transportation will also need to institute more effective management practices to ensure that transportation
programs reflect the State’s priorities and available resources.
PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION
FINAL REPORT E. 3 MAY 18, 1998
Long- Range Transportation Planning, Programming and Public Input. This review found numerous
strengths in the way that the Department conducts its long- range planning, programming, and public input
processes. Several concerns were found as well, including the following:
n The goals set in the Statewide Transportation Plan are not formally and consistently measured.
n The statewide planning process does not devote sufficient resources to studying the external forces
shaping travel and transportation needs.
n North Carolina’s cities, counties, and Metropolitan Planning Organizations are not sufficiently
involved in the process for setting transportation priorities.
n Responsibility for managing and conducting the Department’s public input processes could be better
coordinated.
To address these concerns, the Department will need to enhance the statewide planning process and provide
more effective coordination for soliciting and responding to public input. The Board and Department of
Transportation will also need to consider various ways to strengthen the involvement of North Carolina’s
localities and Metropolitan Planning Organizations in setting transportation funding and project priorities.
Project Planning, Preconstruction and Right of Way. The review found that many of the Department’s
highway project development functions are built on a foundation of solid management practices and
operating procedures. However, the Department faces several operational and workload issues in this area:
n The Department is challenged to meet its ambitious letting schedule— over $ 400 million of projects
were postponed this federal fiscal year.
n The Department has had difficulty securing environmental permits on a timely basis.
n Time allotted for right of way activities is inconsistent with Department guidelines.
The Department is actively addressing these challenges, and will need to continue to do so in order to meet
the State’s transportation improvement objectives.
Construction, Maintenance and Operations. Our review of the Department’s field- oriented highway
functions yielded a positive overall assessment: numerous strengths were identified in each of these areas.
Areas where improvements should be made include the following:
n The incentives for timely construction project completion could be stronger.
n Construction project scheduling requirements need to be strengthened.
n Maintenance underfunding has impeded a strategic approach to maintenance.
The Department will need to change several construction and maintenance procedures to address these and
other concerns.
PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION
FINAL REPORT E. 4 MAY 18, 1998
Department Management and Administration. Our review of the Department’s overall management
practices, personnel practices, and finance and administration units resulted in several key findings:
n The Transportation Program Plan and the program/ performance budget do not adequately address
funding shortfalls or strategies for reducing unmet construction and maintenance needs.
n Budgets are developed with limited involvement of NCDOT managers.
n The Department lacks an effective information technology strategic planning process.
n The Department is increasingly challenged to recruit and retain engineering and technical staff.
The Department will need to continue improving its budgeting, information systems planning, and other
strategic management activities in order to address these concerns.
A complete listing of this performance audit’s findings and recommendations in provided in Exhibit E- 1 on
the following pages.
Exhibit E- 1: Summary of Findings and Recommendations
STRATEGIC ISSUES and MANAGEMENT STRUCTURE
Findings Recommendations
The Board and Department of Transportation lack
an effective process for developing a
transportation finance strategy.
Restructure the process for defining the State’s
maintenance and long- range transportation
needs.
The Transportation Program Plan and the
program/ performance budget do not adequately
address funding shortfalls or strategies for
reducing unmet construction and maintenance
needs.
Use the Transportation Program Plan and the
program/ performance budget to address and
document transportation financing and operating
strategies.
The strategic planning process is not fully
integrated with the Department’s management
practices and operations.
Use the Transportation Program Plan to guide
and monitor day- to- day operations of NCDOT.
The Department lacks an effective Department-wide
information technology strategic planning
process.
Create a Department- wide information technology
strategic planning process.
The customer service improvement initiative
started last year has begun to deteriorate due to a
lack of management support and attention.
Revitalize and refine the customer service
improvement program.
The Department’s organizational structure offers
additional opportunities for improvement over the
long term.
Consider additional changes to the organizational
structure over the next two years.
PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION
FINAL REPORT E. 5 MAY 18, 1998
Exhibit E- 1: Summary of Findings and Recommendations ( continued)
STATEWIDE AND LONG- RANGE PLANNING
Findings Recommendations
The goals set forth in the Statewide
Transportation Plan are not formally and
consistently measured.
Develop performance indicators for addressing
how well NCDOT meets the goals and objectives
of the Statewide Transportation Plan.
The process for evaluating transportation
research efforts is not linked sufficiently to
statewide transportation planning.
Enhance the research program by linking efforts
to goals established in the Statewide
Transportation Plan.
The statewide planning process does not devote
sufficient resources to studying the external
forces shaping travel and transportation needs.
Devote resources to understanding the external
forces shaping travel and develop transportation
strategies that address these forces.
The Statewide Planning branch has limited
resources to carry out its mandated multi- modal
planning activities.
Consider providing additional resources to, and/ or
changing the responsibilities of, the Statewide
Planning branch.
TRANSPORTATION PROGRAM DEVELOPMENT
Findings Recommendations
We estimate a shortfall of over $ 2.1 billion for
projects funded in the current FY 1998 - 2004
TIP.
To complete all the projects in the current TIP
would require approximately 26 years at current
funding levels.
Develop, communicate and implement a strategy
for addressing the TIP funding shortfall.
North Carolina’s cities, counties, and Metropolitan
Planning Organizations are not sufficiently
involved in the process for setting transportation
priorities.
Evaluate the role of North Carolina’s cities and
counties in setting transportation priorities, and
strengthen involvement with the Metropolitan
Planning Organizations.
The Department has proposed switching from a
one- year to a two- year TIP development cycle.
Adopt a two- year TIP development cycle, as
proposed by the Department.
PUBLIC INFORMATION
Findings Recommendations
Responsibility for managing and conducting
public input procedures could be better
coordinated.
Expand the role of the Citizens Participation Unit
to coordinate all program and project- specific
public involvement at NCDOT.
NCDOT must continue to increase its
responsiveness to public concerns.
Enhance efforts to explain the various project
development processes and expand the types of
public input available.
PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION
FINAL REPORT E. 6 MAY 18, 1998
Exhibit E- 1: Summary of Findings and Recommendations ( continued)
PROJECT PLANNING AND PRECONSTRUCTION
Findings Recommendations
The Department is challenged to meet its
ambitious letting schedule— over $ 400 million of
projects were postponed this federal fiscal year.
Continue to review and balance the Department’s
construction letting schedule.
NCDOT has had difficulty securing environmental
permits on a timely basis.
Secure external agency approval earlier in the
project development cycle.
Improve the process for addressing mitigation
commitments.
Develop a general memorandum of
understanding between the Department and
environmental agencies.
Planning and Environmental staff lack appropriate
project management authority.
Delegate project management responsibility to
project planning staff.
Planning and Environmental lacks a clear,
concise policies and procedures manual.
Complete development of an up- to- date
environmental policies and procedures manual.
Develop an up- to- date environmental permits
manual.
The procurement of engineering consultants is
not sufficiently coordinated.
Consolidate procurement responsibilities for
consultant engineering.
Technology is not being utilized fully within the
Planning and Environmental branch.
Create an initiative to resolve technology issues
in Planning and Environmental.
There are several units involved in surveying,
mapping, and geographic information
management.
Consider the combination of Location and Survey,
Photogrammetry, and Graphical Information
Systems ( GIS) into one organizational unit.
The process for selecting and procuring technical
equipment for the Location and Survey unit is too
cumbersome.
Establish an annual equipment budget for the
Location and Survey unit.
Location and Survey unit does not have sufficient
staff to cover Division 12.
Establish a location field office in Division 12 with
a staff of eight.
The process for stamping plan sheets is too
cumbersome.
Request the State Board of Professional
Registration to change the procedure for
stamping plan sheets.
PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION
FINAL REPORT E. 7 MAY 18, 1998
Exhibit E- 1: Summary of Findings and Recommendations ( continued)
RIGHT OF WAY
Findings Recommendations
A recent right of way claim settlement indicates
the need to make changes in the settlement
review process.
Continue to take steps to strengthen the right of
way settlement review process.
The time allocated for right of way is inconsistent
with Department guidelines.
Continue to adjust project schedules to provide a
more realistic estimate of time required for
completion of right of way activities.
Many right of way procedures are paper intensive. Increase automation for right of way processes.
Complete installation of wiring and software to
ensure that Right of Way personnel can print files
electronically.
DIVISIONS
Findings Recommendations
The organizational structure of the Divisions lacks
consistency.
Consider a more consistent Division
organizational structure.
The Division Design and Construct function is
developing without adequate coordination and
consistency.
Provide enhanced monitoring and guidance for
the Division Design and Construct function.
CONSTRUCTION
Findings Recommendations
The incentives for timely construction project
completion need to be stronger.
Strengthen incentives for timely construction
project completion.
Construction project scheduling requirements
need to be strengthened.
The Department and its construction contractors
should adopt enhanced scheduling methods.
The Department lacks a standard set of
construction program performance measures.
Strengthen construction program performance
measures.
The Department has been developing its Highway
Construction and Materials System ( HiCAMS)
since 1994.
Implement up- to- date construction management
software as soon as possible.
NCDOT lacks a formalized training plan to ensure
that the future leaders and managers in
construction are adequately trained, both
professionally and technically.
Develop training plans and requirements for the
professional and technical development of
personnel for key construction positions.
A majority of roadway and bridge construction
stakeout surveys are being accomplished by
NCDOT survey crews.
Incorporate construction stakeout surveys in
construction contracts.
PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION
FINAL REPORT E. 8 MAY 18, 1998
Exhibit E- 1: Summary of Findings and Recommendations ( continued)
MAINTENANCE
Findings Recommendations
The annual roadway maintenance funding
allocation has not kept pace with the growth in
maintenance responsibilities.
The current annual pavement resurfacing funding
allocation represents a shortfall of approximately
$ 95 million.
Roadway condition is deteriorating.
The current funding allocation for bridge
maintenance has not been adequate to address
bridge maintenance backlog.
Increase the funding allocation for maintenance to
address routine maintenance needs and the
maintenance backlog.
Maintenance underfunding has impeded a
strategic approach to maintenance.
Develop a strategic approach for maintenance.
The Roadway Maintenance unit lacks certain
performance objectives/ measures for core
maintenance functions.
The Roadway Maintenance unit should develop
specific, measurable performance objectives for
each core maintenance function.
The Bridge Maintenance unit requires improved
automation.
Enhance automation in the Bridge Maintenance
unit.
The bridge maintenance database needs to be
expanded.
Expand the bridge maintenance database.
Contract management training is needed at the
Highway Division level.
The Department should provide contract
management training at the Division level.
OPERATIONS
Findings Recommendations
The Department does not have an effective
inventory of installed traffic control devices.
Develop an inventory and management system to
monitor and maintain traffic control devices.
Traffic signal systems and pavement markings
are becoming more complex.
Establish stringent certification requirements for
installing and repairing NCDOT’s traffic control
devices.
Funding for the Division of Highway’s buildings
and facilities is inadequate.
Request adequate funding for the Capital
Improvement Program.
Procurement of specialty equipment takes too
long.
The planning for equipment procurement process
should start early.
The current process for issuing
oversize/ overweight permits involves manual
verification of the proposed routes.
The Oversize/ Overweight Permit Office should
evaluate an automated permit system
implementation.
A large majority of permits issued are manually
faxed to applicants.
The current permit system should be upgraded to
provide a direct fax capability.
The present inventory turnover rate does not
meet the Department’s goal.
Continue efforts to meet inventory turnover goals.
PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION
FINAL REPORT E. 9 MAY 18, 1998
Exhibit E- 1: Summary of Findings and Recommendations ( continued)
PERSONNEL
Findings Recommendations
The current performance appraisal system is not
effective.
Consider ways to increase the effectiveness and
credibility of the performance appraisal system.
The Department is being increasingly challenged to
retain engineering and technical positions.
Increase efforts to retain engineering and technical staff.
The current approach for providing hiring
managers with information regarding applicant
ethnicity is excessive and inappropriate.
Discontinue providing information regarding applicant
ethnicity to hiring managers.
The Personnel Office is excessively involved in the
process for routine reorganization of Departmental
units.
Refocus the Position Management section on updating
the Department’s position classifications and
descriptions.
The Personnel Office has two vacant positions that
could be eliminated.
Consider eliminating or reallocating the two vacant
positions in the Personnel Office.
FINANCE AND ADMINISTRATION
Findings Recommendations
Budgets are developed with limited involvement by
NCDOT operating management.
Create a Budget Office responsible for establishing and
managing a budget development process that is
founded on resource requests from operating units.
The Department lacks an effective customer
service structure for management information
systems issues.
Consolidate the responsibilities for networking and
information systems training.
The current automated fiscal systems have limited
capabilities for producing ad hoc reports requested
by managers.
Continue to modify and improve the current fiscal
system until the new system is implemented.
Functions related to worker safety and injury
compensation are organizationally separated and
misplaced.
Establish a new Workers’ Safety unit within the
Personnel section by merging the Workers’
Compensation and Safety and Loss Prevention units.
Research and Policy Analysis functions are limited
to customer- satisfaction market research studies.
Reformulate the Research and Policy Analysis unit so
that it becomes a Department- wide resource for
improved customer service.
Internal Audit reports to the Deputy Secretary for
Administration.
Establish Internal Audit as a staff function reporting
directly to the NCDOT Secretary.
Only FHWA- mandated audits and certain other
financial audits of the highest priority are currently
being performed.
Establish a comprehensive internal audit program,
consisting of financial, compliance and operational
audits.
The Management Assessment unit consists of five
dissimilar functions.
Eliminate the Management Assessment unit and transfer
the functions to other units.
Contractor EEO compliance problems are not
identified while construction projects are in process
so that corrective actions can be taken.
Require monthly reports from contractors of actual EEO
participation.
Purchasing processes payment approval requests
for imprest cash and transmittal emergency
purchases even though payment has already been
made.
Streamline the imprest cash and transmittal emergency
purchases approval.
PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION
FINAL REPORT 1.1 MAY 18, 1998
1 . I N T R O D U C T I O N
The North Carolina Department of Transportation ( NCDOT) is responsible for managing the State’s vast
transportation system, including highways, bridges, airports, seaports, railroads, mass transit, bicycles and
pedestrians and safety. What the Department does— and how well it performs— thus plays a major role in
North Carolina’s economic development, environment and quality of life.
To determine the quality of services and consider opportunities for improvement, the State Auditor and
former Secretary of Transportation Garland Garrett called for a performance audit of NCDOT. This
report presents the results of that audit, conducted by KPMG Peat Marwick LLP with assistance from
MGT of America. In this introductory chapter, we explain the audit in terms of background, scope,
objectives and methodology; the following chapter presents an introduction to the Department itself. This
information provides a framework for understanding the findings and conclusions addressed in the
remainder of the report:
n Strategic Issues and Management Structure
n Statewide and Long Range Planning
n Transportation Programming Development
n Public Input
n Project Planning and Preconstruction
n Right of Way
n Divisions
n Construction
n Maintenance
n Operations
n Personnel
n Finance and Administration
BACKGROUND
NCDOT manages, and the Board of Transportation oversees, a complex transportation system with a
multi- billion dollar annual budget. These are big dollars and high stakes— for communities, developers,
businesses and current and future citizens.
Recent allegations of impropriety at the Board level have had a significant effect at the Department level.
For example, reports of the last few months have suggested that the process for funding safety projects
such as stoplights and turn lanes may have been subject to political influences; that the public may lack the
opportunity to provide adequate input into the process; and that the system of allocating funds between
highways and mass transit may not be equitable.
NCDOT is also facing the general issues that plague transportation departments across the country:
n A growing infrastructure that must be maintained to avoid huge deferred costs
n Environmental and quality of life considerations that require increasing levels of analysis and public
involvement
PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION
FINAL REPORT 1.2 MAY 18, 1998
n Increasing pressure from constituents to enhance and expand the transportation network
n Increasing demands of high- tech highways
Some changes have already been made to improve the operation of the Board and the Department. Early
this year, Governor Hunt appointed a new Secretary, Norris Tolson, and charged him with developing a
plan for change within 45 days. Secretary Tolson has taken action to change the Department’s
organizational structure, shift people, and reorder priorities, and more changes are on the way.
In addition, Secretary Tolson has been cooperative with the audits of NCDOT and the Board of
Transportation called for by the State Auditor and former Secretary. KPMG’s audit of the Board was
released in April and is now being considered by the General Assembly. This report focuses on the
Department’s operation and activities, as outlined below.
OB J E C T I V E
Our audit is intended to help NCDOT achieve its goal: to greatly enhance the quality of service provided by
the Department, its management and employees. Specifically, the objectives are:
n To provide an objective basis for considering and improving the Department’s operations
n To assess whether the Department’s current structure, functions and processes are meeting the public’s
needs and allowing sufficient opportunity for public input
n To evaluate the programs, functions and operating procedures of the Department
n To recommend changes to improve operational efficiency and responsiveness to the public
n To communicate sensitive issues and complex solutions in a way the public can understand and accept
SCOPE
Our performance audit covered the following areas, as directed by the State Auditor:
n Public input process
n Transportation Improvement Program ( TIP) process
n Right of way procedures
n Preconstruction, construction and maintenance functions
n Long- range planning process
n Management structure and customer service
n Personnel procedures
The Division of Motor Vehicles was not included in the scope of work.
PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION
FINAL REPORT 1.3 MAY 18, 1998
METHODOLOGY
This audit was conducted in accordance with the Government Auditing Standards, issued by the
Comptroller General of the United States. We organized our work to follow the three major components of
a “ Yellow Book” performance audit: audit work plan, field work and reporting. The field work portion of
the audit relied on the following activities.
Reviewing data provided by the Department. We reviewed reams of information to familiarize
ourselves with the various divisions of the Department and to gain a clear understanding of the issues it
faces. This included reviewing applicable organization and program descriptions and responsibilities,
planning and budget documents, routine maintenance and financial reports, technical standards and
guidelines, administrative operating policies and procedures documentation, project databases and
historical materials.
Analyzing Job Activity Questionnaires ( JAQs). We distributed 581 confidential questionnaires to
managers, supervisors and selected staff to compile information on employee responsibilities, reporting
relationships and strengths and issues of functional groups. Five hundred nineteen questionnaires were
completed and returned, for a response rate of almost 90 percent. The questionnaires were invaluable in
providing feedback on many aspects of the NCDOT from those who are actually doing the work.
Conducting interviews. The team conducted over 160 interviews to cover a wide range of perspectives,
functions and services. Among those we interviewed:
n Department executives
n Board of Transportation members
n North Carolina legislators
n High- level Department managers
n Selected staff in Raleigh and the field offices
n United States Department of Transportation representatives
n Metropolitan Planning Organizations
n Members of the Association of General Contractors, North Carolina chapter
n Consulting engineering firms
n Local transit agencies
These interviews provided comprehensive information on the roles and responsibilities of the various
divisions, as well as candid views on barriers to effective management of NCDOT resources and activities.
Conducting site visits. To gain a deeper understanding of NCDOT’s operations, we made site visits to
offices in various parts of the State. These visits took us to four of the State’s 14 Highway Divisions:
Division 3 ( Wilmington), Division 7 ( Greensboro), Division 10 ( Charlotte- Mecklenburg) and Division 13
( Asheville).
Obtaining and analyzing comparative statistics. As part of this audit, we compared NCDOT to
transportation departments in 13 neighboring states, as well as to regional and national averages, on key
PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION
FINAL REPORT 1.4 MAY 18, 1998
variables. Our assessment also included interviews with knowledgeable representatives from programs in
other states. The information gathered through these means enabled us to identify potential strengths and
weaknesses in the Department’s management practices, operational efficiency and effectiveness,
organizational structure and staffing levels.
DE P A R T M E N T I N TR A N S I T I O N
This audit was conducted from February to May 1998— a period during which the Department was
undergoing a major transition. The appointment of the new Secretary was followed by significant
organizational changes, personnel shifts and a reordering of priorities. As a result, the NCDOT we
encountered when we began our work is not the same as the one in place today.
We present this report in the hope that the recommendations for change outlined here will help the
Department in its efforts to meet the challenges it currently faces and those that lie ahead.
PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION
FINAL REPORT 2.1 MAY 18, 1998
2 . DEPARTMENT OV E R V I E W
The North Carolina Department of Transportation ( NCDOT) is responsible for the State’s transportation
system, which includes an extensive highway system, seaports, airports, railroads and public transit. North
Carolina’s residents and businesses rely on this transportation system for the effective and safe movement
of people, goods and services throughout the State. What the NCDOT does also has a tremendous impact
on economic development and quality of life in North Carolina’s neighborhoods, communities and regions.
It is hardly surprising that the Department’s activities are among the most visible of all State government
functions. But to understand how well the Department is fulfilling its responsibilities— and how it can
improve— it is necessary to grasp the basics of this vast and complex organization.
This chapter provides that overview in six areas:
n Brief History
n Challenges
n Organization and Staffing
n Revenues and Expenditures
n Transportation Improvement Program
n Key Measures
This overview establishes the framework for the performance review detailed in subsequent sections of this
document.
BRIEF HI S T O R Y
When the North Carolina General Assembly created the Highway Commission in 1915, a major part of the
responsibility for roads resided at the county level. By 1921, the legislature took additional steps toward a
unified statewide highway system by authorizing the State to take over 5,500 miles of county roads and
approving a highway bond issue for a road system to connect each of the 100 county seats. These actions
helped North Carolina earn its reputation as the “ Good Roads State.”
In the Depression of the early 1930s, the State assumed a greater role in the highway system, taking on
responsibility for virtually all county roads. However, the Highway Fund— which provided a stable
revenue source through gas taxes and highway bonds— became a tempting source of funds for other,
unrelated purposes. In 1947, the General Assembly banned the further use of Highway Fund revenues for
General Fund purposes.
Even with this dedicated revenue source, the State had to add a series of taxes and fees and issue additional
bonds to keep up with the growing demand for highways. To address this long- term need, the Highway
Trust Fund Act was passed by the General Assembly in 1989, providing billions of dollars for
transportation projects through increased gas taxes and motor vehicle fees. These revenues help fund new
and improved intrastate roads and urban “ loops” around seven metropolitan areas. In November 1996,
North Carolina voters approved a $ 950 million highway bond package, which included $ 500 million for
accelerating construction of the seven urban loops.
PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION
FINAL REPORT 2.2 MAY 18, 1998
CHALLENGES
Like all public agencies, the NCDOT is facing both increasing demands for services and an increasing need
to prove its value to the public. Among its greatest challenges are the following:
Geography. North Carolina’s widely varying terrain stretches for hundreds of miles, with coastal plains in
the east and mountains to the west. Its population density varies greatly from major metropolitan areas to
medium- sized emerging cities and rural communities. From a transportation point of view, these conditions
pose challenges in engineering and securing public input; from a political point of view, the issues are
about equity and getting a “ fair share” of the State’s transportation resources.
Economic growth. North Carolina’s tremendous growth has outpaced projections, at times creating
pressures which the transportation system was not designed to handle. There is increasing congestion in
metropolitan areas, accompanied by the growing challenge of getting people to and from work. Some areas
of North Carolina are expressing interest in enhancing public transit, while others are seeking additional
highways to promote economic development and produce jobs. Recent accomplishments— such as the
development of Global TransPark and the recent announcement of a new Federal Express hub in
Greensboro— reflect the State’s recognition of the close link between transportation and economic
development.
Competing needs. The State is being forced to balance the demand for new highways and roads with the
need to maintain and improve the existing system. There is also a need to accommodate and incorporate
other modes of transportation ( such as public transit, bicycle, and rail) into the State’s overall
transportation system.
Public controversy. Recent allegations have placed the NCDOT under the spotlight of media and public
attention. Governor Hunt responded by appointing a new Secretary, Norris Tolson, and charging him to
develop a plan for change within 45 days. The Secretary’s plan, announced in March 1998, has already
resulted in significant changes— in personnel, structure and priorities— and created a different environment
within the Department. As additional changes are forthcoming, the NCDOT continues to be an
organization in transition.
Changing expectations. NCDOT, like other public organizations across the State and the nation, is being
asked to do more for less. Taxpayers are no longer willing to let government agencies make important
transportation decisions on their own: the public wants to be involved in the process and to measure the
results.
OR G A N I Z A T I O N A N D ST A F F I N G
NCDOT is headed by a Secretary, appointed by the Governor; its operations are overseen by a 26- member
Board of Transportation, which the Secretary chairs. In March 1998, the Department’s organization
changed. It is now organized into six major divisions:
n Transportation
n Motor Vehicles
n Planning and Environmental
n Fiscal
PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION
FINAL REPORT 2.3 MAY 18, 1998
n Administration
n Personnel
The Transportation Division carries out the State’s transportation program. In this capacity, it is
responsible for the Division of Highways as well as rail, public transportation, bicycle and pedestrian,
aviation, ferry and safety. The Division of Highways— by far the largest segment of the organization—
manages the entire highway system, from design through construction and maintenance. It serves the State
through a central office and 14 highway divisions. ( The Department’s organization is further detailed in
Chapter 3, Strategic Issues and Management.)
Exhibit 2- 1: NCDOT Divisions
Source: NCDOT
Three other divisions— Fiscal, Administration and Personnel— support these efforts, while the Planning and
Environmental Division focuses on environmental and other public concerns. The Division of Motor
Vehicles, which is responsible for licensing drivers and registering motor vehicles, was not included in the
scope of our study.
The Department has over 12,000 full- time employees. A comparative analysis showed that this staffing
level is comparable to other state transportation agencies charged with managing an extensive highway
system.
REVENUES AND EXPENDITURES
NCDOT’s budget is one of the largest and most complex in State government. In fiscal year 1998,
revenues from federal, state and local sources amounted to approximately $ 2.8 billion. This section
provides a high level view of where that money comes from and where it goes.
Revenues. Appropriations to the Department are made through the Highway Fund and the Highway Trust
Fund. The majority of Highway Fund revenues ( 66 percent) are generated by the State’s motor fuel tax,
with additional monies from drivers’ license fees and investment income. Nearly half of the Highway Trust
Fund revenues are derived from a 3 percent highway use tax on motor vehicle sales, with the remainder
coming from the State’s motor fuel tax, titles, other fees and investment income. The State also receives
federal aid apportionment, obligated by Congress from revenues generated from the federal motor fuel tax
and other excise taxes.
PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION
FINAL REPORT 2.4 MAY 18, 1998
Revenue Estimates. The first challenge is to estimate the state and federal revenues the Department
expects to receive, so it can establish its program funding allocations for the next several years. These
revenue forecasts— developed by the Office of State Budget and Management in cooperation with NCDOT
and the General Assembly’s Fiscal Research Division— are used to develop the Department’s capital and
operating budgets for each biennium.
NCDOT’s Director of Budget and Planning coordinates the agency’s budget development process, working
closely with the Secretary of Transportation, Deputy Secretaries and Controller to establish the
Department’s funding priorities. Although components of this budget are developed by all NCDOT
divisions, the Division of Highways functionally determines most of NCDOT’s capital and operating needs.
Expenditures. In fiscal year 1998, NCDOT budgeted $ 2.52 billion to fund its operations and capital
projects. As the chart shows, the large majority of this total—$ 1.83 billion or roughly 72.6 percent— is
used to support highway operations, maintenance and construction activities. Other major budget
allocations are directed to transit, rail, aviation and ferry operations; other agencies; other division
operations; and reserves and transfers. The majority of these funding allocations are determined by specific
federal and North Carolina laws. These statutory requirements, by earmarking revenues to prescribed
purposes, restrict the ability of the Department to recommend or determine funding allocations.
Exhibit 2- 2: NCDOT Budget Allocations ( FY 1997- 1998)
Highway Operations,
Maintenance and
Construction
$ 1,827 million
( 72%)
Transit, Rail, Aviation,
Ferry Operations
$ 94 million
( 4%)
Other Agencies,
General Fund
$ 335 million
( 13%)
Administration, other
Programs/ Divisions
$ 190 million
( 8%)
Reserves and Transfers
$ 74 million
( 3%)
Source: NCDOT Fiscal Division, Office of the Controller
PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION
FINAL REPORT 2.5 MAY 18, 1998
Maintenance Allocations. Highway maintenance allocations are appropriated through revenue transfers
from North Carolina’s Highway Fund. These allocations generally provide for routine maintenance and
some minor construction contracting work on roads, bridges, weigh stations, rest areas and other similar
facilities. They are distributed among the Department’s 14 Highway Divisions according to various sub-allocation
formulas, which combine uniform allocations and needs- based funding outlays.
The Department also allocates funding for an annual statewide contract resurfacing program. Each
Division receives a percentage of the total allocation, based on its share of the State’s maintenance needs,
paved lane miles and population.
TIP Highway Construction Allocations. The State’s Transportation Improvement Program ( TIP) lists
the schedules and funding sources for projects programmed over the next seven years. TIP construction
allocations include funding for Federal- Aid Construction, North Carolina’s Intrastate Highway Program
and Urban Loops Program.
Federal- Aid Construction, typically the largest program area in North Carolina’s capital budget, actually
consists of a series of transportation funding categories— each with different limitations on spending, as
illustrated in Exhibit 2- 3.
Exhibit 2- 3: Major Federal- Aid Construction Program Categories
Program Category Funding Purpose
Interstate Maintenance Preservation of the Interstate Highway System
National Highway System
( NHS)
Improvements to routes on the National Highway System, as well as
certain transit capital improvements and certain projects on non- NHS
highways
Surface Transportation
Program ( STP)
To be used on any surface transportation infrastructure project,
regardless of mode ( excludes local streets and roads)
Highway Bridge Replacement
and Rehabilitation Program
( HBRRP)
Available for replacing or rehabilitating deficient highway bridges and
undertaking preventive measures to prolong the lives of existing
highway bridges
Congestion Mitigation and Air
Quality Improvement
Program ( CMAQ)
Transportation programs and improvement projects designed to
improve air quality and reduce transportation emissions in non-attainment
and maintenance areas
Transportation
Enhancements
Transportation- related activities designed to strengthen the cultural,
aesthetic and environmental aspect of the nation’s intermodal
transportation system
Minimum Allocation May be used for any project eligible for Interstate Maintenance, NHS,
STP, HBRRP, CMAQ and other miscellaneous funds
Donor State Bonus Partially compensates states that contribute more to the Highway
Trust Fund than they receive in Federal- aid apportionment; available
for obligation according to same criteria as for STP funds
Source: U. S. Department of Transportation
North Carolina’s Intrastate Highway Program is funded to facilitate the completion of the State’s
proposed four- lane, 3,600- mile Intrastate Highway System, which is intended to bring 96 percent of North
Carolina’s population within ten miles of a major highway. Funds expended for Intrastate System projects
are distributed according to an equity formula, which provides that until 90 percent of the mileage of the
Intrastate System is complete, each of seven specified Distribution Regions shall receive an equitable share
of the total annual program.
PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION
FINAL REPORT 2.6 MAY 18, 1998
The Urban Loop Program is funded to complete the construction of a multi- lane connector road in
Asheville and multi- lane beltways in Charlotte, Durham, Greensboro, Raleigh, Wilmington and Winston-
Salem. Both the Intrastate Highway Program and the Urban Loop Program are funded through a
combination of federal aid and funds transferred from North Carolina’s Highway Trust Fund.
The Board of Transportation approves a variety of other TIP projects financed entirely from State funds.
These include projects on the primary, urban, and secondary road systems funded from Highway Trust
Fund revenues under the provisions of G. S. 136- 176( c).
Other Highway Construction Allocations. Additional highway construction allocations amounting to
more than $ 185 million in capital projects are funded entirely with State dollars and are not included in the
TIP. These include:
n Secondary roads program
n Public service and access
n Spot safety program
n Small urban program
n Discretionary funds
All five of these programs are funded with revenues from the State’s Highway Fund. A substantial portion
of the funding for the secondary roads program also comes from the Highway Trust Fund.
Non- Highway Maintenance, Construction and Operations. Other non- highway allocations include
funding for North Carolina’s ferry operations, transit systems, railroads, airports, and bicycle and
pedestrian facilities. NCDOT directly operates seven ferry routes along North Carolina’s coast. Bicycle
and pedestrian projects are either funded as stand- alone projects or are included in highway projects, while
the other programs are funded through grants directly awarded by NCDOT or programmed as TIP
projects.
TRANSPORTATION IMPROVEMENT PROGRAM
The Transportation Improvement Program documents the schedule and funding sources of transportation
projects that are expected to be funded over the next seven years. The program, described in the TIP and
updated annually, is multi- modal— that is, projects with highway, ferry, bicycle and pedestrian, transit, rail,
and aviation features make up the program. Developing the TIP is a complex and lengthy process which
includes:
n Receiving requests from the General Assembly, public, Metropolitan Planning Organizations ( MPOs),
local government, civic groups and special interest groups
n Collecting data— including cost, schedule and feasibility— through legislative review, NCDOT
planning and engineering studies, public meetings and ongoing feedback
n Analyzing data to estimate federal funds, assess local and regional priorities, balance needs and
resources, and make adjustments as necessary
n Documenting the results and gaining necessary approvals from the General Assembly, Board of
Transportation, MPOs and NCDOT Secretary ( on behalf of the Governor)
PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION
FINAL REPORT 2.7 MAY 18, 1998
The current TIP includes construction of 2,620 projects with a total estimated future cost of $ 21 billion.
KEY MEASURES
How does NCDOT measure up in key areas? How does it compare to its neighboring states? We
conducted a comparative assessment to find out, collecting information on other states and calculating
regional and national averages. The results are intended to provide a high- level view of the Department and
provide context for the findings and conclusions that make up the remainder of this document.
Large Highway System. NCDOT is responsible for maintaining a very large highway system, amounting
to approximately 78,000 miles. According to the FHWA’s Highway Statistics 1996, this places North
Carolina third in the nation in state- administered lane- miles. As shown in Exhibit 2- 4, the Department is
responsible for more total state lane- mileage per square mile of land area than any of its neighboring states
and is far above the U. S. average.
Exhibit 2- 4: Total State Administered Mileage Per Square Mile of Land Area
0
0.5
1
1.5
2
2.5
3
3.5
NC VA SC WV PA KY Neigh
bor
LA TN GA FL TX AR MS AL U. S.
Avg
State
State Maintained Mileage per
Square Mile of Land Area
Source: FHWA Highway Statistics, 1996 Tables HM- 81 and PS- 1
The large size of the system drives many of the other elements considered in this analysis. Why?
Compared to other states, NCDOT has more lane miles to take care of, which require more dollars to
maintain.
Appropriate Staffing Levels. NCDOT’s staffing level is comparable to other state departments of
transportation, given its responsibilities. The three categories used to analyze the data were: number of
full- time equivalent employees, staffing distribution by functional area and number of staff per 10,000
lane- miles.
Low Expenditures per Lane- Mile. North Carolina��s expenditures per mile place the State among the five
lowest in the nation. NCDOT’s construction expenditure per mile is second lowest in the U. S., just behind
neighbor South Carolina; its maintenance expenditure is third lowest, behind South Carolina and
Mississippi. Considering construction, maintenance, administration, highway safety and bond retirement
costs, the Department ranks third lowest in expenditures per lane mile.
PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION
FINAL REPORT 2.8 MAY 18, 1998
Exhibit 2- 5: Total Expenditure per 1,000 Lane- Miles
0
1 0
2 0
3 0
4 0
5 0
6 0
7 0
8 0
9 0
S C NC WV VA AR KY TX N e ig
h b o r
M S TN AL P A U. S .
Avg
LA GA F L
S t a t e
Source: FHWA Highway Statistics, 1996 Tables HM- 81 and SF- 4
Deteriorating System Conditions. North Carolina’s road conditions are deteriorating, threatening its
reputation as the “ Good Roads State.” This study examined system conditions based on the International
Roughness Index ( IRI) for each state and the nation, using averages for rural and urban interstates. As
Exhibit 2- 6 shows, the neighboring states and the U. S. are very similar in interstate conditions, with the
majority of their roads on the smoother ( lower) end of the scale.
Exhibit 2- 6: Distribution of Reported IRI for Rural Interstates
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
40.00%
< 60 60- 94 95- 119 120- 144 145- 170 171- 194 195- 220 > 220
International Roughness Index ( IRI
from Smooth (< 60) to Rough (> 220)
Distribution
NC
Neighbor Total
U. S. Total
Source: FHWA Statistics, 1996 Table HM- 64
North Carolina, on the other hand, has fewer interstates on either end of the scale and far more in the
middle. Data comparing North Carolina’s urban interstates presents a similar picture.
PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION
FINAL REPORT 2.9 MAY 18, 1998
High Number of Bridges Below Current Standards. North Carolina exceeds the national and
neighboring states’ average of bridges rated below current standards by approximately 10 percent, as
illustrated in Exhibit 2- 7. A bridge considered below standard has been rated as either structurally
deficient ( in poor condition or having insufficient load- carrying capacity) or functionally obsolete ( narrow,
poorly aligned, inadequate or under clearance).
Exhibit 2- 7: Percentage of Interstate and State Bridges that are Below Current Standards
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
AR GA TX Nghbr SC TN FL US
Avg
AL MS LA VA KY NC PA WV
S t a t e
Source: Better Roads Magazine 1997 Bridge Inventory ( Note: Interstate and primary bridges are traditionally maintained by state DOTs)
Congestion. Congestion is a problem in most urban areas, and cities in North Carolina are no exception.
North Carolina’s level of congestion is higher than average, placing the State 43rd in the nation with over
28 percent of its road miles meeting a standard definition for congestion1. In part, the high level of
congestion here reflects vibrant economic growth, as more people move and travel throughout the State.
Exhibit 2- 8: Percentage of Miles Congested - Major Urban Roads
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
AL OK AR TX PA FL Nghb
r
SC LA GA WV U. S.
Ttl
TN NC KY MD VA
State
Percentage of Miles Congested
Source: FHWA Highway Statistics, 1996, Table HM- 61 ( Note: All 1996 data with the exception of Maryland data from 1995.)
1 As defined in this analysis, congestion occurs when the volume of traffic to service- flow ratio exceeds 80 percent.
PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION
FINAL REPORT 2.10 MAY 18, 1998
Safety. North Carolina’s highway safety was analyzed according to rates of both fatal and non- fatal
accidents. North Carolina ranks 31st in the nation with a rate of 1.68 fatalities per 100 million vehicle-miles
of travel for fatal accidents. This rate is higher than the U. S. average, but lower than the average rate
of neighboring states, as presented in Exhibit 2- 9.
Exhibit 2- 9: 1996 Fatal Accident Rate
0.00
0.50
1.00
1.50
2.00
2.50
VA P A U. S . Ttl GA NC KY Nghbr TX WV LA TN F L AR AL SC MS
State
Fatal Accident Rate per 100 Million
Vehicle- Miles
Source: FHWA Highway Statistics, 1996, Table FI- 3
North Carolina exceeds both the averages of neighboring states and the U. S. in general for non- fatal
accidents. The State ranks 42nd in the nation with a non- fatal accident rate of 115.63, compared to the
neighbor state average of 93.01 and the U. S. average of 97.12, as shown in Exhibit 2- 10.
Exhibit 2- 10: 1996 Non- Fatal Accident Rate
0.00
20.00
40.00
60.00
80.00
100.00
120.00
AR AL MS LA VA SC KY TN P A Nghbr U. S . Ttl GA WV TX F L NC
State
Non- Fatal Accident Rate per 100
Million Vehicle- Miles
Source: FHWA Highway Statistics, 1996, Table FI- 3
PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION
FINAL REPORT 3.1 MAY 18, 1998
STRATEGIC I S S U E S A N D
MANAGEMENT ST R U C T U R E
This section discusses strategic management practices, performance measurement, and overall management
practices; customer service; and overall organizational structure.
STRATEGIC MANAGEMENT
NCDOT has established various types of long- range plans and evaluation tools. Development of a formal
strategic plan began with preparation of “ Department Plans, Outlook and Management Initiatives for 1995-
2001” in response to requirements from the Office of State Planning and the State Budget Office. This was
followed two years later with development of a Transportation Program Plan that supports the
performance/ program budget document for FY 1997- 98/ 1998- 99. The program plan includes a mission
statement and the following goals:
n Plan, design, construct, repair and maintain roads and highways
n Expand, improve, and support alternative and non- highway modes of transportation
n Ensure safe transportation through education and regulation
For each goal, NCDOT established two to four programs with several subprograms. The purpose,
expected outcomes, budget, background and trends were then defined for each subprogram. The plan for
each subprogram is supported by two to six action- oriented objectives. Each objective is further defined by
specifying the funds and organizational units contributing to the objective along with implementation
strategies and activities, and innovative approaches to accomplishing the work. Two types of measures
have been established to evaluate achievement of each objective. An outcome measure is used to assess
overall accomplishment of the objective and several performance measures are used to present key volume
data and/ or accomplishments at the next lower level of detail.
MANAGEMENT SURVEY RESULTS
In the course of this study, a management survey was sent to every Department manager and supervisor
with responsibilities relevant to the scope of this study. In all, 581 questionnaires were distributed and 519
responses were received for an 89 percent response rate.
Seventeen key questions in this survey addressed Department management practices and structure.
Overall, respondents reacted positively to questions about the Department’s management practices. For
example, 94 percent responded that their unit’s mission, goals and objectives are communicated clearly.
More than 70 percent responded positively to questions regarding responsibilities and authority, policy and
procedures, performance feedback, job skills, and training. The leading negative response was related to
staffing— 39 percent of respondents indicated their unit does not have the appropriate number of staff to
do its work. Exhibit 3- 1 presents these survey results.
PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION
FINAL REPORT 3.2 MAY 18, 1998
Exhibit 3- 1: Responses to KPMG Survey Regarding Management Structure and Practices
SURVEY QUESTION PERCENT AGREEMENT BY EMPLOYEE FUNCTION
Department Executive Mgmt.
Finance
Administration
Planning
Programming
Environmental
Preconstruction Right- of- Way Construction Division Engrs.
Maintenance
Operations
The mission, goals, and objectives of my
unit are communicated clearly.
94% 91% 81% 92% 100% 96% 95%
There are up- to- date documented
policies and procedures to guide me in
my work.
75% 78% 58% 75% 90% 90% 72%
My responsibilities and authority are clear
and appropriate.
91% 81% 68% 94% 98% 90% 92%
I receive periodic feedback about my
performance from my superiors.
93% 88% 81% 98% 100% 90% 92%
My unit has the appropriate number of
staff to do its work.
39% 53% 32% 42% 66% 41% 31%
My unit has the appropriate job skills to
do its work.
86% 72% 77% 91% 88% 88% 86%
The work of my unit is planned and
prioritized.
83% 91% 74% 84% 90% 90% 79%
I receive the appropriate amount and
types of training to do my job.
86% 81% 61% 91% 78% 94% 87%
My unit has the right tools to do its work
effectively and efficiently.
70% 69% 61% 73% 71% 63% 72%
My unit’s performance measures are
useful.
81% 88% 81% 84% 80% 75% 82%
Source: KPMG survey of 581 NCDOT employees
PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION
FINAL REPORT 3.3 MAY 18, 1998 3
Exhibit 3- 1: Responses to KPMG Survey Regarding Management Structure and Practices ( continued)
SURVEY QUESTION PERCENT AGREEMENT BY EMPLOYEE FUNCTION
Department Executive Mgmt.
Finance
Administration
Planning
Programming
Environmental
Preconstruction Right- of- Way Construction Division Engrs.
Maintenance
Operations
My unit duplicates functions provided by
other units.
8% 13% 6% 10% 10% 10% 6%
My unit performs functions that should
be done by another unit.
19% 22% 23% 22% 29% 20% 15%
Other units perform functions that should
be done by my unit.
15% 31% 16% 23% 5% 14% 10%
My unit would be more effective if it was
combined with another organizational
unit.
8% 16% 6% 16% 5% 10% 4%
Functions of my unit would be more
effective if decentralized.
16% 3% 19% 12% 22% 22% 17%
Functions my unit would be more
effective if centralized.
29% 47% 42% 51% 17% 16% 20%
My unit spends much of its time dealing
with crisis situations.
39% 38% 77% 39% 37% 16% 40%
Source: KPMG survey of 581 NCDOT employees
PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION
FINAL REPORT 3.4 MAY 18, 1998
ORGANIZATIONAL STRUCTURE
Exhibit 3- 2 illustrates the organization structure of NCDOT when this study began in February 1998.
Exhibit 3- 2: Department of Transportation Organization Structure Prior to March 2, 1998
TRANSPORTATION
BOARD OF
DEPUTY ATTORNEY
GENERAL
SAFETY AND LOSS
CONTROL
CONTRACT
MONITORING
STATEWIDE PLANNING
PLANNING AND
ENVIRONMENTAL
PROGRAM
DEVELOPMENT
PROGRAM
ANALYSIS
PLANNING AND
PROGRAMMING
RIGHT- OF- WAY
TRAFFIC
ENGINEERING
HIGHWAY DESIGN
ENGINEERING
AUTOMATION
PRECONSTRUCTION
DIVISIONS ( 14)
CONSTRUCTION
AND MATERIALS
ROADSIDE
ENVIRONMENTAL
ROADWAY
MAINTENANCE
BRIDGE
MAINTENANCE
EQUIPMENT AND
INVENT'Y CONTROL
CONSTRUCTION AND
MAINTENANCE
OPERATIONS
DIVISION OF HIGHWAYS
State Highway
Administrator
DIVISION OF
MOTOR VEHICLES
Commissioner
FISCAL
MIS
PURCHASING
PRODUCTIVITY MGT
MGT ASSESSMENT
INTERNAL AUDIT
PUBLIC AFFAIRS
RESEARCH AND
POLICY ANALYSIS
GENERAL
ADMINISTRATION
Deputy Secretary
PERSONNEL
GENERAL SERVICES
GOVERNOR'S HIGHWAY
SAFETY PROGRAM
LEGISLATIVE
COORDINATOR
FEDERAL PROGRAM
COORDINATOR
APA COORDINATOR
PERSONNEL
Deputy Secretary
RAIL
PUBLIC
TRANSPORTATION
BICYCLE AND
PEDESTRIAN
AVIATION
FERRY
TRANSIT, RAIL AND
AVIATION
Deputy Secretary
SECRETARY
Department of Transportation
GOVERNOR
State of North Carolina
Source: NCDOT
This basic structure had been in place for many years. In March 1998, Secretary Tolson made several
significant organizational changes, including these:
n An Office of Planning and Environment was established, headed by a Deputy Secretary and reporting
to the Secretary.
n A Fiscal Office was established, headed by a Chief Financial Officer and reporting to the Secretary.
The Office’s primary sections are Fiscal and Purchasing plus certain functions from the Division of
Highways, such as revenue projections, budgeting and contract monitoring.
n The Office of Administration and Office of Personnel functions were realigned, reflecting Fiscal Office
transfers and shifts of certain units between Administration and Personnel.
n A Public Information Office, with a customer service section, was established, reporting to the Office
of the Secretary.
PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION
FINAL REPORT 3.5 MAY 18, 19985
Exhibit 3- 3 illustrates the NCDOT organization structure effective on March 2, 1998.
Exhibit 3- 3: Department of Transportation Organization Structure After March 2, 1998
TRANSPORTATION
BOARD OF
DEPUTY ATTORNEY
GENERAL
PUBLIC INFORMATION
OFFICE
DOT ATTORNEY
SAFETY AND LOSS
CONTROL
PLANNING AND
ENVIRONMENTAL
HIGHWAY
DESIGN
TRAFFIC
ENGINEERING
RIGHT OF WAY
ENGINEERING
AUTOMATION
PRECONSTRUCTION
DIVISIONS ( 14)
CONSTRUCTION
AND
MAINTENANCE
OPERATIONS
DIVISION OF HIGHWAYS
State Highway
Administrator
RAIL
PUBLIC
TRANSPORTATION
BICYCLE AND
PEDESTRIAN
AVIATION
FERRY
TRANSPORTATION
Deputy Secretary
DIVISION OF
MOTOR VEHICLES
Commissioner
STATEWIDE
PLANNING
PROGRAM
DEVELOPMENT
PROGRAM
ANALYSIS
PLANNING AND
ENVIRONMENTAL
Deputy Secretary
FISCAL
CONTRACT
MONITORING
PURCHASING
PRODUCTIVITY
MGT/
RESEARCH POLICY
ANALYSIS
MANAGEMENT
ASSESSMENT
FISCAL
Chief Financial Officer
GENERAL SERVICES
MANAGEMENT
INFORMATION
SERVICES
INTERNAL AUDIT
CIVIL RIGHTS
ADMINISTRATION
Deputy Secretary
PERSONNEL
GOVERNOR'S
HIGHWAY SAFETY
PROGRAM
APA COORDINATOR
GOVERNMENT
AFFAIRS
PERSONNEL
Deputy Secretary
SECRETARY
Department of Transportation
GOVERNOR
State of North Carolina
Source: NCDOT
CUSTOMER SERVICE
Four years ago, NCDOT reformulated the Office of Research and Policy Analysis to increase attention to
customer service. The mission of this office was to help units find out what their customers think about the
services being provided. The assistance provided by this office is primarily market research – designing
and executing customer surveys to collect information about service effectiveness and quality. The market
research studies are voluntary, initiated in response to unit requests. About 12 studies have been
completed, including some follow- up studies in areas such as ferry service.
In response to a State customer service initiative, NCDOT established a Customer Service Council in 1997
with representatives of most major units. Council members attended a workshop in June 1997 to orient
them to customer service and to initiate development of customer service plans. Plans for 55 units were
completed and approved by the Council in December 1997.
PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION
FINAL REPORT 3.6 MAY 18, 19986
STRENGTHS
The new strategic planning process meets the requirements of the Office of State Planning and the
State Budget Office. The Transportation Program Plan presents the Department’s mission, goals,
commitments, functions, trends and implications, and the objectives of each performance/ program budget
area.
New management improvement initiatives have been launched. Thirteen working groups were
established in March 1998. Each group, composed of 7 to 20 managers from both field and central office
units, have been charged with the task of identifying, analyzing and resolving problems within their
assigned area:
n Enhancements n Environmental n Truck Safety
n Outsource/ Privatize n Safety n Work First
n Personnel n Maintenance n Funding
n Training n Purchasing n Decentralization
n Communications n Intelligent Transportation Systems
The Department’s leadership has indicated that these groups are addressing numerous issues, including
concerns identified in this report. Formation of these “ participative management” groups is also reported to
have a positive influence on employee morale.
Recent changes in organization structure are positive. Several organizational changes made in March
1998 provide an improved alignment of responsibilities and additional emphasis on key Department
functions. For example, certain programming functions that had previously reported to the State Highway
Administrator were moved into a separate Office of Planning and Programming, reporting directly to the
Secretary. Another change moved the Public Information Office into the Secretary’s Office, which
demonstrates an enhanced commitment to inform and engage the public.
FI N D I N G S A N D RECOMMENDATIONS
Finding: The Board and Department of Transportation lack an effective process for developing a
transportation finance strategy.
NCDOT currently receives over $ 2 billion annually in state and federal funding – yet, this substantial
yearly outlay is not sufficient to both meet North Carolina’s growing transportation needs and to maintain
its current transportation infrastructure. Our analysis indicates that:
n The State’s current Transportation Improvement Program is underfunded by approximately $ 2.1
billion for the fiscal years 1998- 2004
n Maintenance has not being funded adequately for years, resulting in a cumulative maintenance backlog
of hundreds of millions of dollars
Our review found that the Board and Department of Transportation have no formal, documented
methodology for considering overall construction and maintenance needs and translating these needs into a
PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION
FINAL REPORT 3.7 MAY 18, 19987
viable financial strategy. Although the Board should be considering such matters as one of its primary
responsibilities, the Board of Transportation is currently heavily focused on individual project selection and
day- to- day operations of the Department. ( These weaknesses were detailed in KPMG’s April 1998
performance review of the North Carolina Board of Transportation.)
In developing its biennial budget, NCDOT presents annual funding allocation levels for each of the major
transportation program categories, based on estimates of available State and federal funding sources.
According to NCDOT, the Department’s discretion concerning funding priorities is quite limited— well
over half of the funding allocations are predetermined by specific State or federal law, or are required to
fund legislatively mandated activities at current levels. As a result, program analysis and goal setting that
could result in optimal use of funds is currently not performed.
Recommendation: Restructure the process for defining the State’s maintenance and long- range
transportation needs.
The State must decide how to invest substantial but limited revenues to meet its transportation objectives.
North Carolina’s transportation program should be strategically managed— with performance measurement
systems in place to evaluate whether specific funding allocations are effective in achieving goals and
objectives related to factors such as economic development, mobility, system conditions, and safety.
The Board of Transportation and Department of Transportation could more effectively recommend to the
Governor and General Assembly proposed funding allocations that address defined maintenance and long-term
transportation needs. To accomplish this, the Board and Department should create an open, objective
process to analyze alternative transportation investments. To accomplish this, NCDOT should:
n Establish desired levels of service for North Carolina’s transportation network
n Collect current measurements of system conditions and operating characteristics ( e. g., pavement or
bridge conditions, volume- to- capacity ratios or delay- times on major corridors, accident data, etc.)
n Use this data to make funding recommendations that will help achieve desired goals, objectives and
levels of service
n Validate these recommendations by presenting this information for public review and comment during
the State’s Transportation Improvement Program development process ( biennially)
n Measure system conditions and operating characteristics annually to assess the degree to which funding
allocations were successful in helping achieve transportation goals and objectives
n Adjust recommended funding allocations in subsequent years as necessary to meet goals and objectives,
or evaluate means for acquiring additional revenues needed to meet goals and objectives
For this process to be effective, the Governor and the General Assembly will need to assess existing
funding levels relative to NCDOT’s recommended funding allocations. This may include reassessing the
procedures and statutes that earmark funds for specific transportation purposes. These proposed changes
PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION
FINAL REPORT 3.8 MAY 18, 1998
would provide the State with an improved ability to match its significant but limited transportation funding
resources with maintenance and long- range transportation needs.
Finding: The Transportation Program Plan and the program/ performance budget do not
adequately address funding shortfalls or strategies for reducing unmet construction and
maintenance needs.
The process for developing the Transportation Program Plan and the program/ performance budget was
first initiated at NCDOT in the fiscal year 1997- 99 budget cycle. It was initiated late in the funding cycle
and did not involve substantial participation from NCDOT managers. However, the process did establish
baseline performance measures and met the State’s requirements.
Because much of the Department’s funding is earmarked by statute for specific uses, the ability to develop
a meaningful linkage between funding and program objectives is limited. The current transportation
program/ performance budget reflects this— it does not quantify or address anticipated construction and
maintenance needs, expected revenues, or funding shortfalls. For example:
n An outcome measure for major arterial highways is that 90 percent of planned projects in the
Transportation Improvement Program will be programmed. However, no measure is established
regarding the percentage that will actually be funded and completed.
n The program to “ maintain and repair roads and highways” identifies a $ 260 million backlog of routine
maintenance needs. The pavement resurfacing backlog is not quantified. Stated objectives are to
reduce pavement resurfacing backlogs on a 10 year or 12 year cycle and to reduce the routine
maintenance backlog by 10 percent annually. The supporting strategies for these objectives, however,
are very broad and general. They do not adequately address how these backlogs will actually be
reduced.
Recommendation: Use the Transportation Program Plan and the program/ performance budget
to address and document transportation financing and operating strategies.
The process holds promise to become a mechanism for developing meaningful strategic plans linked to
implementation resource requirements. To realize this potential, NCDOT will need to involve the Board of
Transportation and key senior NCDOT managers in this process. The State’s budget process will also
need to rely on the information concerning goals, objectives, and measurable program outcomes to make
transportation funding decisions.
Finding: The strategic planning process is not fully integrated with the Department’s management
practices and operations.
The long- range Statewide Transportation Plan, the information technology strategic plan, and Department
operational plans are developed without integration or reference to the Transportation Program Plan. The
program output measures and performance measures are not used to monitor and evaluate daily operations.
PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION
FINAL REPORT 3.9 MAY 18, 19989
Results against the measures are reported only on an annual basis, as required for development of the next
program/ performance budget document.
Recommendation: Use the Transportation Program Plan to guide and monitor day- to- day
operations of NCDOT.
Each operating unit should use the relevant program objectives to guide and manage its operations. Current
outcome and performance measures should be revised to be more meaningful and to facilitate tracking.
Results should be reported to the Secretary and the Board of Transportation regularly. This will help focus
operations on the Department’s key goals and objectives and help refine the planning process and content.
Finding: The Department lacks an effective Department- wide information technology strategic
planning process.
NCDOT has in place various procedures for planning and budgeting technology initiatives. The
Management Information Systems unit coordinates many of these activities, including coordinating the
development of the information technology budget and seeking approval from appropriate officials
regarding major technology investments. Recently, Management Information Systems developed an
information technology strategy document that maps out changing responsibilities and objectives over the
next few years.
Although these efforts are commendable, they do not suffice. Specifically, NCDOT lacks a formal process
led by senior management to consider and prioritize information technology initiatives with long- range,
Department- wide implications. Instead, areas of NCDOT largely plan information technology initiatives
separately, utilizing ordinary channels for decision- making and budgeting to seek approval and funding for
their respective initiatives. This process fosters a reactive approach to technology planning and has led to
inconsistency, duplication, and incompatibility in the Department’s systems.
Note: The Office of State Auditor is currently conducting a detailed review of the Department’s computer systems
and information technology operations.
Recommendation: Create a Department- wide information technology strategic planning process.
A cooperative effort across the Department and among other information technology units should be
adopted to coordinate an effective strategic plan. This ongoing effort should be led by a Steering
Committee of senior Department managers. Management Information Systems, Engineering Automation,
and other technology driven units should be supporting participants in this process. A schedule of cyclical
activities should be defined that includes: establishing and revising the information technology strategic
plan; performing tactical ( technical and business unit- level) planning activities; performing follow- up
activities; and preparing inputs to the budgeting and operational planning processes. Outcomes of an
information technology strategic plan institutionalization effort should include:
n Identification and alignment of strategic objectives
n Aligning Department- wide goals with the strategy
n Linking strategic objectives to long- term performance targets and annual budgets
PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION
FINAL REPORT 3.10 MAY 18, 199180
n Obtaining feedback and buy- in from the user community to improve strategy
n Clearly communicating the information technology strategy and responsibilities
n Developing a formal information technology strategic plan
n Performing periodic and systematic strategy reviews
n Clarifying and gaining consensus to changes in NCDOT’s strategy
n Regularly reporting progress to the Secretary of Transportation
n Regularly ensuring compliance with the adopted information technology strategic plan
Finding: The customer service improvement initiative started last year has begun to deteriorate
due to a lack of management support and attention.
The customer service plans were completed and approved in December 1997. Since that time no
significant progress has been made. Department sources have indicated that plan implementation had been
suspended because of management changes and other priorities.
Recommendation: Revitalize and refine the customer service improvement program.
The Department’s customer service staff should be responsible for coordinating implementation of the
program. The revitalization and refinement effort should include:
n Obtaining strong ongoing support from the Secretary
n Restructuring the Advisory Committee with the appropriate individuals
n Reviewing all previously approved plans and strengthening unit customer service initiatives
n Establishing specific implementation plans and schedules and a mechanism for evaluating progress and
accomplishments
Finding: The Department’s organizational structure offers additional opportunities for
improvement over the long term.
Secretary Tolson has taken several positive steps in improving the overall organizational structure of the
Department. These improvements include more appropriate reporting relationships and groupings of
responsibilities for the Public Information Office and the transportation program development function.
However, several areas of concern remain:
n The concentration of authority in the State Highway Administrator position is substantial, even though
planning and programming functions have been moved to another organizational unit.
PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION
FINAL REPORT 3.11 MAY 18, 199181
n The span of control of the Deputy Secretary for Personnel is narrow; only one major unit ( Personnel
Office) reports to this position.
n Units with responsibility for various external relations functions are spread throughout the
organization.
Recommendation: Consider additional changes to the organizational structure over the next two
years.
NCDOT was restructured in March 1998. The Department is also in the process of making numerous
changes in management practices and operational procedures. Therefore, it could be disruptive to
implement another reorganization at this time. However, the Department should establish a long- term plan
to implement an organization over the next two years that reflects the following principles:
n Group closely- related functions within the same organizational entity
n Clearly define authorities and responsibilities to avoid duplications and to assure accountability
n Establish appropriate spans of control; the more complex and variable the functions, the narrower the
span of control
Exhibit 3- 4 illustrates one suggested organizational structure that reflects these principles.
Exhibit 3- 4: A Suggested NCDOT Organization Structure for the Future
BOARD OF
TRANSPORTATION
DEPUTY ATTORNEY
GENERAL
INTERNAL AUDIT
DOT ATTORNEY PUBLIC INFORMATION
& EXTERNAL AFFAIRS
STATEWIDE PLANNING &
MPO COORDINATION
PROGRAMMING AND TIP
DEVELOPMENT
PUBLIC
TRANSPORTATION
RAIL
AVIATION
BICYCLE AND
PEDESTRIAN
TRANSPORTATION PLANNING &
PROGRAMMING
Deputy Secretary
PLANNING AND
ENVIRONMENTAL
RIGHT- OF- WAY
HIGHWAY DESIGN
TRAFFIC ENGINEERING
PROJECT DEVELOPMENT
State Project Development Engineer
DIVISIONS ( 14)
ROADWAY
CONSTRUCTION
BRIDGE
CONSTRUCTION
MATERIALS
CONSTRUCTION AND
MATERIALS
ROADWAY
MAINTENANCE
BRIDGE
MAINTENANCE
EQUIPMENT AND
INVENTORY
MAINTENANCE AND
OPERATIONS
FERRY OPERATIONS
CONSTRUCTION, MAINTENANCE
AND OPERATIONS
Chief Engineer
DIVISION OF MOTOR VEHICLES
Commissioner
HUMAN RESOURCES
INFORMATION
TECHNOLOGY
GENERAL SERVICES
CIVIL RIGHTS
ADMINISTRATION
Deputy Secretary
FISCAL
BUDGET
PURCHASING
PRODUCTIVITY
MANAGEMENT
FINANCE
Chief Financial Officer
SECRETARY
Department of Transportation
GOVERNOR
State of North Carolina
PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION
FINAL REPORT 3.12 MAY 18, 199182
Source: KPMG/ MGT of America
This suggested organizational structure includes the following changes relative to the March 1998 NCDOT
organizational structure:
n Statewide transportation planning and transportation programming functions are combined with the
public transportation, rail, aviation, bicycle, and pedestrian functions under a newly created Deputy
Secretary for Transportation Planning and Programming position.
n An Office of Project Development is established under a newly created State Project Development
Engineer position. This Office includes the following existing functions:
– Project Planning and Environmental
– Right- of- Way
– Highway Design
– Traffic Engineering
PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION
FINAL REPORT 3.13 MAY 18, 199183
n Highway and ferry field operations are aligned under the existing Chief Engineer position. The units
reporting directly to the Chief Engineer are:
– Construction
– Materials
– Maintenance and Operations branch
– Divisions ( 14)
– Ferry Operations
n A newly created Budget Office is added under the existing Chief Financial Officer position.
n Internal Audit is realigned to report to the Secretary rather than to the Deputy Secretary for
Administration.
n The existing Personnel Office is aligned under the Deputy Secretary for Administration.
n A Public Information and External Affairs Office is created and aligned within the Office of the
Secretary. This office includes the Governor’s Highway Safety Program, APA Coordinator, Public
Information Office, Legislative Affairs and Customer Service functions.
n This proposed organizational structure replaces or eliminates the need for the following positions:
– Deputy Secretary for Transportation
– State Highway Administrator
– Deputy Chief Engineer for Construction and Maintenance
– Deputy Secretary for Personnel
PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION
FINAL REPORT 4.1 MAY 18, 1998
4 . ST A T E W I D E A N D LONG- RANGE PL A N N I N G
Statewide and long- range transportation planning includes all activities related to identifying long- range
options for addressing transportation needs.
BACKGROUND
The Statewide Planning branch has responsibility for carrying out NCDOT’s statewide and long- range
planning activities. Prior to March 1998, this branch was located within Planning and Programming in the
Division of Highways; it is now in the newly formed Office of Planning and Environment.
The Statewide Planning branch has responsibility for: transportation system planning, state highway
research, and the Geographic Information System ( GIS) program. Major functional responsibilities of
Statewide Planning are shown in Exhibit 4- 1.
Exhibit 4- 1: Statewide Planning Branch Functional Responsibilities
STATEWIDE TRANSPORTATION PLANNING
Transportation Systems Planning Transportation Research Geographic Info Systems
Activities Supporting Functions
Internal NCDOT Research Digitized Highway Mapping
Statewide Transportation Plan Traffic Data Collection
State Supported Univ. Research Electronic Highway Inventory
Metropolitan Plans Traffic Forecasting
Cooperative Nat'l Programs Technical Assistance
Major Investment Studies State- Municipal Agreements
Research Implementation Planning Support
Small Urban Area Studies Project Planning Support
Technology Transfer Database & Software Maint.
Thoroughfare Plans Road Functional Classifications
Development/ Transport Reviews
Source: KPMG graphic based on NCDOT functional descriptions
Transportation System Planning Program
Transportation system planning is performed to identify long- range options for transportation spending and
to anticipate long- range transportation needs. It results in identification and programming of defined
projects in the project development life cycle. Transportation system planning activities include conducting
statewide and urban area studies, collecting and analyzing base traffic data to identify transportation needs
and fulfill federal reporting requirements, and conducting traffic forecasting.
Transportation System Planning Activities
The Statewide Planning branch is responsible for conducting long- range transportation planning for all
areas of the State, including metropolitan areas, small urban areas, counties, and multi- county regions. In
general, long- range plans project 20- 30 years ahead to determine where transportation problems will occur
and how to solve them. A typical long- range planning study involves several steps, including:
n Initial meetings with local citizens, staff and elected officials
PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION
FINAL REPORT 4.2 MAY 18, 1998
n Data collection and analysis
n Discussions of findings with the local area
n Development of alternative future scenarios
n Public information workshops and public hearings
n Selection of the preferred plan.
Each long- range plan is mutually adopted by the State and appropriate localities to serve as a guide in the
development of the transportation infrastructure. Adopted long- range plans are used by localities and
regions of the state to develop their requests for project funding in the seven- year Transportation
Improvement Program ( TIP).
Transportation system planning includes numerous long- range planning activities and products, some of
which are mandated by federal legislation under the Intermodal Surface Transportation Efficiency Act
( ISTEA) or the Clean Air Act. Specific activities are discussed in the section below.
Statewide Transportation Plan. The Statewide Transportation Plan establishes the direction for the
future development of the State’s multi- modal transportation network through the use of major goals and
objectives. These goals and objectives are used by policy makers to prioritize current and future
transportation needs.
In response to the ISTEA’s requirements for statewide planning, a Statewide Planning Task Force—
consisting of the North Carolina Department of Transportation; the North Carolina Department of
Commerce; the North Carolina Department of Environment and Natural Resources; the North Carolina
State Ports Authority; four representative Metropolitan Planning Organizations; and the Federal Highway
Administration— was established to develop the plan. The statewide planning process included:
n Documenting NCDOT’s existing programs and processes and comparing them to ISTEA’s 23 planning
considerations to determine the Department’s performance
n Publishing NCDOT’s current practices for a 45- day public review and comment period
n Developing the plan’s goals and objectives based on the Department’s goals and commitments and
input received from the public review period
n Developing specific strategies for improving current processes and achieving identified goals and
objectives, based on input from the public review period and suggestions from each division and branch
within NCDOT
n Developing a draft plan, which, together with public comments, provided the basis for developing a
final plan
Transit 2001. In addition to the Statewide Transportation Plan, a separate transit- long- range plan was
developed by NCDOT’s Transit, Rail and Aviation Division. A special commission appointed by the
Governor was given the responsibility to provide recommendations on improving public transportation.
The 26- member commission was supported by a technical committee consisting of 29 transit industry
professionals, as well as a joint NCDOT and consultant team. Through a number of public forums and the
work of four sub- committees, the commission examined key issues: rural and human service transportation,
PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION
FINAL REPORT 4.3 MAY 18, 1998
urban and regional transit, intercity passenger rail, and land use and development. Based on an analysis of
these issues and an examination of the transportation challenges facing the State, the commission developed
an action agenda to expand and enhance the State’s public transportation in the near term and recommend
long- term funding strategies.
Metropolitan Planning. ISTEA requires that transportation planning in urbanized areas be coordinated
through a Metropolitan Planning Organization ( MPO), which includes representatives of transportation
agencies and local governments. There are MPOs in each of the 17 metropolitan areas in North Carolina
with populations exceeding 50,000.
NCDOT plays a key role in MPO planning activities, working with the MPOs and providing technical
assistance in the development of their plans. These services include traffic monitoring, traffic forecasting,
data collection, alternatives development and evaluation, and public input, depending on the technical
complexity of the metropolitan planning process and the availability of MPO resources. The activities that
make up metropolitan planning are based primarily on requirements defined by federal statute ( ISTEA).
n Long- range plans. Long- Range Plans developed by the MPOs serve as the official intermodal plan
for transportation activities within their area, typically for a 20- year time horizon. For projects to be
designed and constructed in MPO areas using federal funds, a previous Long- Range Plan must have
identified the need for such projects. In compliance with ISTEA, Long- Range Plans are required to
meet financial capacity requirements, demonstrating that projects included can be funded and financed
from resources that can be reasonably expected. In general, these plans are updated through a
consensus- building effort with involved local, federal, state agencies, NCDOT, and the public. The
basis for the plans is projected transportation demand, which is developed using standard travel
demand forecasting methodology. Where appropriate, transit demand is included in the modeling
efforts.
n Air Quality Conformity. For regions not in compliance with Federal Clean Air Act requirements, each
time the Long- Range Plan is adopted or amended, MPOs must demonstrate through air quality
modeling that the proposed projects do not adversely impact regional air quality and do contribute to
the region’s ability to achieve federal clean air mandates.
n Major Investment Studies. Major Investment Studies are federally- required planning initiatives used
to evaluate transportation options for any proposed projects that meet the following criteria: “ a high-type
highway or transit improvement of substantial cost that is expected to have a significant effect on
capacity, traffic flow, level of service, or mode share at the transportation corridor or subarea scale”
( 23 CFR 450.104). NCDOT’s Statewide Planning branch typically assumes the lead project
management role for Major Investment Studies conducted in the state. However, large- scale transit-oriented
studies typically are undertaken by the local transit agency or local department of
transportation.
Small Urban Area Studies and Thoroughfare Plans. Although ISTEA does not require transportation
plans for areas with populations under 50,000, North Carolina General Statutes 136- 66 mandates the
development of long- range thoroughfare plans for municipalities across the state. These plans are
developed by NCDOT through community participation and consensus building. The Statewide Planning
branch is responsible for: providing planning expertise to the municipalities; developing plans for
PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION
FINAL REPORT 4.4 MAY 18, 1998
coordinated development of the road and highway system for counties, planning regions and the State;
reviewing development plans as they relate to thoroughfare plans; and providing other planning assistance
as needed.
Transportation Systems Planning Coordination
NCDOT must coordinate its transportation system planning activities with numerous other organizations
and constituencies throughout the State. At the statewide level, NCDOT’s Statewide Planning branch and
the Transit, Rail and Aviation Division are responsible for ensuring that transportation system planning is
carried out in accordance with a comprehensive set of intermodal planning principles as set forth by federal
mandates. For the State’s urbanized areas, NCDOT must coordinate its efforts with MPOs and other local
officials to plan transportation systems that maximize the efficiency of the multi- modal transportation
system. Through their participation in various forums, NCDOT, the MPOs and other local officials
consider transportation solutions of various modalities, such as public transit, bicycle and pedestrian
facilities, and highways. These forums also facilitate discussion among stakeholders of the controversial
issues that can affect transportation system planning, such as land use, energy consumption and air quality,
mobility, social equity and quality of life.
Transportation Systems Planning Supporting Functions
The Statewide Planning branch undertakes a number of special data collection, forecasting, analysis and
local government/ MPO coordination activities to support transportation system planning activities. These
include:
n Collecting and disseminating all types of travel data on the State Highway System
n Providing traffic forecasts for project planning, highway and bridge design and pavement design
n Initiating and negotiating State- Municipal Agreements on street and highway system responsibility for
areas that have mutually adopted thoroughfare plans as required by General Statutes 135- 66
n Developing and maintaining the capability to report highway needs on a statewide basis, including both
urban and rural needs
n Assisting the Program Development and Fund Administration branch and NCDOT administration in
the evaluation of candidate projects for the Transportation Improvement Program; and assisting the
Planning & Environmental branch in conducting project planning studies
n Assisting local governments in transportation plan implementation through reviewing proposed
developments in terms of their relationship and impacts on transportation plans
n Periodically reviewing and coordinating with local governments changes in the functional classification
of roads and highways
PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION
FINAL REPORT 4.5 MAY 18, 1998
State Highway Research Program
The Research and Development Unit within the Statewide Planning branch is responsible for the State
Highway Research Program. The unit is responsible for managing and directing formal research activities
within the Division of Highways and placing specific research findings into NCDOT operations through
technical reports, pilot demonstration projects, and special training projects. Such activities include
contract research programs with state- supported universities; cooperative research programs with national
organizations including the United States Department of Transportation, the Federal Highway
Administration, and the Transportation Research Board; and research sponsored by other NCDOT
divisions and branches.
The Research and Development unit annually reports on the implementation status of research initiatives to
ensure that research, development and technology transfer products are being utilized in a timely and
appropriate manner. The unit’s January 1998 report identified the status of 27 projects. Most of the
current research projects focus on improved highway design and construction techniques. However, three
projects are oriented to improved highway operating techniques, while another is assessing the use of
Geographic Information Systems for paratransit scheduling.
Geographic Information Systems Program
The Geographic Information Systems ( GIS) unit within the Statewide Planning branch is responsible for
the GIS program. The program includes:
n The production and maintenance of a set of digitized County Maintenance maps, which accurately
depict the entire state- maintained road system and a set of digitized urban maps which accurately
depict the road network for all municipalities of 5,000 or greater population
n Maintenance of an up- to- date computer file inventory system of the primary and secondary road system
and selected data on municipal streets
n Maintenance of a complete and up- to- date history of all activities related to the entire secondary road
system
n Maintenance of a reporting and analysis system for fatal accidents
n Establishment and maintenance of route numbering for U. S. and North Carolina routes
n Establishment and maintenance of American Association of State Highway and Transportation
Officials route- numbering documentation
n Development and maintenance of software protocol for use of GIS techniques to provide improved
project impact analysis and transportation planning capabilities
n Production of annual road inventory reports required by the Federal Highway Administration for the
Federal- aid program
n Training programs in the use of GIS
PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION
FINAL REPORT 4.6 MAY 18, 1998
n Development and coordination of useful GIS databases
n Participation in the development and coordination of GIS- related activities
Within NCDOT, the activities of the GIS unit are used to support NCDOT’s systems planning, project
planning, design, traffic engineering and pavement management functions. Outside of NCDOT, the unit’s
databases and geographic displays are used by MPOs, the State Highway Patrol and other state agencies
and municipalities.
STRENGTHS
The Statewide Planning branch has a clear mission and goals. The mission statement establishes the
framework that is used to guide the branch’s planning, research and GIS activities. Goals are used to
identify specific work responsibilities and to measure performance.
The Department’s statewide planning process is well- defined. The Statewide Planning branch has an
established process for undertaking long- range and transportation systems planning initiatives on a
statewide and regional basis. The process is consistent with federal planning requirements mandated by the
Intermodal Surface Transportation Efficiency Act and by North Carolina General Statute 136- 66.
Statewide planning includes effective support functions. There are well- defined traffic counting,
forecasting and GIS processes that support long- range and transportation systems planning functions.
The Statewide Planning branch has a commitment to using emerging technologies. The branch
consistently fosters the development and use of new technologies to enhance transportation planning
activities. The GIS program is providing the branch and the Department the capability to visually display
and analyze the physical and operational characteristics of the highway network. This technology will
ultimately provide both a centralized database of the State’s highway network and a powerful tool for
assessing the operating characteristics of the highway network, including traffic flows, congestion and
accident and incident locations. The branch also endeavors to provide staff with computer hardware and
software necessary to perform planning activities within the constraints of the budget.
The Statewide Planning branch is committed to enhancing project development and implementation
techniques through its research program. In partnership with universities and other NCDOT units, the
research program sponsors projects that promote the development of new construction materials, improved
construction techniques, procedures for assessing road and bridge conditions, vehicle monitoring and traffic
flow, environmental impact assessment and paratransit scheduling. The Statewide Planning branch has a
well established reporting process that is used to assess the progress and implementation status of research
efforts.
PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION
FINAL REPORT 4.7 MAY 18, 1998
FINDINGS & RECOMMENDATIONS
Finding: The goals set forth in the Statewide Transportation Plan are not formally and consistently
measured.
NCDOT’s Statewide Transportation Plan establishes a comprehensive set of strategies for meeting the
plan’s established goals. However, there is no consistent, formalized process for measuring how well the
Department achieves the plan’s goals.
Recommendation: Develop performance indicators for addressing how well NCDOT meets the
goals and objectives of the Statewide Transportation Plan.
As part of the transportation system planning process, the Department should establish a set of evaluation
measures to assess performance. These measures can be used to assess where the Department is
performing well relative to the plan and to identify potential deficiencies that require increased attention.
The Florida Department of Transportation currently utilizes this approach. In addition to a long- range
transportation plan, Florida Department of Transportation has a short- range plan component that covers
the first 10 years of the present year- 2020 planning horizon. The short- range component identifies
strategies to be undertaken based on the long- range transportation plan and establishes performance
measures and goals for assessing performance. For example, to meet the Department’s safety goal, one of
Florida Department of Transportation’s commitments and measures of performance is to “ keep the
percentage of crashes on the State Highway System where road related conditions are a contributing factor
below 1.0 percent.”
Finding: The process for evaluating transportation research efforts is not linked sufficiently to
statewide transportation planning.
NCDOT’s current research program is based primarily on the solicitation of research topics from
universities and NCDOT units. As a result, the goals of the Statewide Transportation Plan and other
planning efforts are not key drivers in determining and evaluating transportation research topics. Also,
while the current reporting structure for research efforts is adequate for tracking progress, it does not
identify the expected or actual impact of research initiatives on transportation system planning and
NCDOT operations. More specifically, there is not a clear, consistent process to measure the expected
operating cost and/ or capital cost savings associated with a research effort, or to ensure that outcome- based
performance measures ( such as improvements in customer service, safety, and the useful life of a capital
asset) are evaluated and reported.
Recommendation: Enhance the research program by linking efforts to goals established in the
Statewide Transportation Plan.
NCDOT should enhance its current research process by establishing guidelines to assure that one part of
the research efforts are geared toward meeting specific long- range plan goals and objectives, while the other
part is open to original proposals from NCDOT and universities. This will allow NCDOT to develop a
more strategic research program that complements and forwards the Department’s priorities. In addition,
Statewide Planning should establish a better process for measuring the benefits of research efforts. At key
PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION
FINAL REPORT 4.8 MAY 18, 1998
points during research efforts, an enhanced research evaluation process should evaluate the merits of these
efforts to determine they should continue. In addition, the research evaluation process should be used to
assess the actual impacts of a project after implementation.
Finding: The statewide planning process does not devote sufficient resources to studying the
external forces shaping travel and transportation needs.
Transportation plans developed as part of long- range transportation system planning are based mainly on
identifying projected population, employment and land use changes on travel demand and assessing
transportation strategies for addressing this demand. However, resources have not been devoted for
studying the forces that are shaping population, employment, and land use.
Recommendation: Devote resources to understanding the external forces shaping travel and
develop transportation strategies that address these forces.
Projected changes in population, employment and land use are due to external factors that shape North
Carolina’s economy. These external forces include the effects of aging and retirement in the population,
the price of motor vehicle fuel, and the growth of financial services industry, to name a few. Each of these
forces impacts the number and location of trip origins and destinations. As part of NCDOT’s long- range
planning process, Statewide Planning should devote resources to identify those external forces that will
likely shape travel demand, assess how the State’s transportation network should address the resulting
travel demand, and evaluate the State’s role in meeting this travel demand.
Finding: The Statewide Planning branch has limited resources to carry out its mandated multi-modal
planning activities.
Statewide Planning is faced with the challenge of meeting multi- modal responsibilities associated with the
Intermodal Surface Transportation Efficiency Act within a constrained staff and resource budget.
Historically, Statewide Planning efforts have been devoted primarily to long- range planning for the
highway network. As a result of the multi- modal planning requirements of ISTEA, however, the Statewide
Planning branch is increasingly involved in managing and participating in multi- modal planning efforts
such as the 15- 501 Major Investment Study, Regional Rail in the Triangle Area, and High Speed Rail. In
its evolving role, the Statewide Planning branch is challenged to develop the specialized skills necessary to
meet the planning needs of all transportation modes. For example, the branch may need increased skills in
transit and rail planning techniques. This situation is similar to other NCDOT divisions and branches and
at other transportation agencies. Constrained resources also have slowed the development of a new
statewide travel forecasting model, the timely implementation of state- municipal agreements and some
transportation systems planning analyses.
PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION
FINAL REPORT 4.9 MAY 18, 1998
Recommendation: Consider providing additional resources to, and/ or changing the
responsibilities of, the Statewide Planning branch.
The Statewide Planning branch needs increased resources and/ or changes in responsibilities to carry out its
increasing multi- modal planning responsibilities. To meet all the potential requests for multi- modal
planning efforts, the branch will need to develop and implement guidelines that could be used to equitably
balance the timing and scope of planning effort requests by the various modal divisions. In addition, the
Department should consider various options for devoting additional resources for Statewide Planning.
These resources could be provided by hiring additional staff and/ or providing additional contractual
resources. The Department should also consider eliminating or transferring certain non- core
responsibilities out of Statewide Planning. For example, lead responsibility for state- municipal agreements
could be transferred to another Department unit.
PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION
FINAL REPORT 5.1 MAY 18, 1998
5 . TRANSPORTATION PROGRAM DE V E L O P M E N T
Transportation program development is the process of establishing funding levels and determining project
priorities in each of the state’s major transportation program areas. This section presents an assessment of
the processes NCDOT uses to set program allocations, establish project priorities and develop the TIP.
BACKGROUND
Transportation project priorities are identified in North Carolina’s State Transportation Improvement
Program ( TIP2), a federally- mandated document that confirms the schedules and funding sources for those
transportation projects that NCDOT plans to implement over the next seven years.
Program Overview
The current TIP document includes a total of 2,620 projects, with the total future construction and right- of-way
costs estimated at approximately $ 21 billion in today’s dollars. Of these 2,620 projects, 2,281 ( 87
percent) have received, or are scheduled to receive, some level of funding during the current planning
period ( FY 1998- 2004). The remaining 339 projects, listed in the current TIP document as “ identified
future needs,” are not scheduled to receive any funding during the current planning period.
Note: Projects funded by the Highway Trust Fund are a part of the State’s Transportation Improvement
Program. The Office of State Auditor is currently conducting a review of the Highway Trust Fund.
Exhibit 5- 1 presents a summary of the program costs. The program cost estimates presented below are
based on the current year estimates ( 1998) and do not include inflation.
Exhibit 5- 1: Current State Transportation Improvement Program Overview
Funds Expended for Projects
Click tabs to swap between content that is broken into logical sections.
| Rating | |
| Title | Performance review of the North Carolina Department of Transportation |
| Other Title | Performance review, North Carolina Department of Transportation |
| Contributor |
North Carolina. Office of the State Auditor. KPMG Peat Marwick. |
| Date | 1998-05 |
| Subjects |
North Carolina. Department of Transportation--Evaluation Transportation--North Carolina |
| Description | Transmitted to the Office of the State Auditor on May 18, 1998.; Cover title.; "Final Report"; "May 1998" |
| Publisher | KPMG Peat Marwick |
| Agency-Current | North Carolina Department of Transportation |
| Rights | State Document see http://digital.ncdcr.gov/u?/p249901coll22,63754 |
| Physical Characteristics | 1 v. (various pagings) : ill.; 28 cm. |
| Collection | North Carolina State Documents Collection. State Library of North Carolina |
| Type | Text |
| Language | English |
| Format | Reports |
| Digital Characteristics-A | 1.5 MB; 207 p. |
| Digital Collection | North Carolina Digital State Documents Collection |
| Digital Format | application/pdf |
| Related Items | Also available via the Internet.; http://www.ncauditor.net/EPSWeb/Reports/Performance/PER-0175.pdf; http://worldcat.org/oclc/39287073/viewonline |
| Audience | All |
| Pres File Name-M | pubs_performancereviewnorth051998.pdf |
| Pres Local File Path-M | \Preservation_content\StatePubs\pubs_borndigital\images_master\ |
| Full Text | KPMG A PERFORMANCE REVIEW OF THE NORTH CAROLINA DEPARTMENT OF TRANSPORTATION F I N A L R E P O R T M A Y 1 9 9 8 150 Fayetteville Street Mall Suite 1200 Post Office Box 29543 Raleigh, NC 27626- 0543 KPMG Peat Marwick LLP Telephone 919 664 7100 Telefax 919 664 7250 May 18, 1998 Mr. Ralph Campbell, Jr. State Auditor of North Carolina Office of the State Auditor 300 North Salisbury Street Raleigh, North Carolina 27603 Dear Mr. Campbell, This report presents the results of our performance audit of the North Carolina Department of Transportation ( NCDOT). The audit was conducted in accordance with Government Auditing Standards issued by the Comptroller General of the United States. Purpose and Scope KPMG Peat Marwick LLP, with assistance from MGT of America, has undertaken a comprehensive performance audit of the NCDOT to accomplish the following goals: n Provide an objective analysis of the Department’s operations n Assess whether the Department’s structure, functions and processes are meeting the public’s needs n Evaluate the Department’s programs, functions and operating procedures n Recommend changes to improve operational efficiency and responsiveness n Communicate sensitive issues and complex solutions in a way the public can understand and accept This audit, performed for the North Carolina Office of State Auditor, covered the public input process, Transportation Improvement Program ( TIP) process; right of way procedures; preconstruction, construction and maintenance functions; long- range planning process; management structure and customer service; and personnel procedures. The Division of Motor Vehicles was not included in the scope of work. Background NCDOT is responsible for planning, engineering, constructing and maintaining the State’s transportation system. This includes managing one of the largest state- maintained highway systems in the nation, as well as a sizeable network of seaports, airports, railroads, public transit, bicycle and pedestrian traffic and safety. As North Carolina’s economy continues to grow, the demands for transportation projects— and the stakes associated with them— steadily increase. At the same time, the Department is undergoing major internal changes, with the arrival of Secretary of Transportation Norris Tolson and the implementation of recent initiatives to improve the Department’s operations. Results in Brief Our review found that the Board and Department of Transportation do not have a formal, documented methodology for considering overall construction and maintenance needs and translating these needs into a viable financial strategy. There is also a significant gap between the resources set aside for the State’s Transportation Improvement Program and the projects the Department is committed to build. While over $ 8 billion has been programmed for projects from fiscal years 1998 through 2004, there is an additional $ 6 billion worth of “ identified future needs” projects in the program. Moreover, the Department’s projected costs of implementing these projects do not take into account the effect of inflation or project expansion, which could dramatically increase actual costs. Many of the Department’s highway project development functions are built on a foundation of solid management practices and operating procedures. However, the Department is being challenged to meet its ambitious letting schedule, as evidenced by over $ 400 million of projects which needed to be postponed for this federal fiscal year. The Department also has had difficulty securing environmental permits on a timely basis. While the State is building new roads, it is not adequately maintaining its transportation infrastructure as required. As a result, road conditions are deteriorating, threatening North Carolina’s reputation as the “ Good Roads State.” In addition, the State has a high number of substandard bridges ( those that are in poor condition or are functionally obsolete) compared to its peers. Our analysis indicates that the State does not have the resources in place to adequately address current and emerging maintenance needs. Recommendations Our report provides numerous recommendations for improvement in the areas of: strategic management and customer service; statewide planning; public input; transportation improvement programming; project planning and preconstruction; highway construction, maintenance, and operations; personnel practices; finance; and administration. Conclusion Actions taken by Secretary Norris Tolson are already improving the Department’s performance and morale. However, important issues remain to be resolved. The Board and Department of Transportation will need to make difficult choices to address the backlog of road and bridge maintenance and the lack of adequate funding for commitments to new highway projects. The eventual success or failure in addressing these and other challenges identified in this report will depend on a focused, coordinated approach involving the General Assembly, Governor, Secretary, Department managers and employees, and people of North Carolina. KPMG Peat Marwick LLP PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION FINAL REPORT I MAY 18, 1998 TA B L E O F CO N T E N T S EXECUTIVE SUMMARY........................................................................................................................ ...... E. 1 1. INTRODUCTION BACKGROUND..................................................................................................................... ........................... 1.1 OBJECTIVE...................................................................................................................... ................................ 1.2 SCOPE ............................................................................................................................... ............................... 1.2 METHODOLOGY.................................................................................................................... ......................... 1.3 DEPARTMENT IN TRANSITION..................................................................................................................... 1.4 2. DEPARTMENT OVERVIEW BRIEF HISTORY ............................................................................................................................... ............... 2.1 CHALLENGES ............................................................................................................................... .................. 2.2 ORGANIZATION AND STAFFING.................................................................................................................. 2.2 REVENUES AND EXPENDITURES................................................................................................................. 2.3 TRANSPORTATION IMPROVEMENT PROGRAM......................................................................................... 2.6 KEY MEASURES ............................................................................................................................... .............. 2.7 3. STRATEGIC ISSUES AND MANAGEMENT STRUCTURE STRATEGIC MANAGEMENT..................................................................................................................... .... 3.1 MANAGEMENT SURVEY RESULTS .............................................................................................................. 3.1 ORGANIZATIONAL STRUCTURE .................................................................................................................. 3.4 CUSTOMER SERVICE........................................................................................................................ ............. 3.5 STRENGTHS ............................................................................................................................... ..................... 3.6 FINDINGS AND RECOMMENDATIONS......................................................................................................... 3.6 4. STATEWIDE AND LONG- RANGE PLANNING BACKGROUND..................................................................................................................... ........................... 4.1 STRENGTHS ............................................................................................................................... ..................... 4.6 FINDINGS AND RECOMMENDATIONS......................................................................................................... 4.7 5. TRANSPORTATION PROGRAM DEVELOPMENT BACKGROUND..................................................................................................................... ........................... 5.1 STRENGTHS ............................................................................................................................... ..................... 5.4 FINDINGS AND RECOMMENDATIONS......................................................................................................... 5.5 6. PUBLIC INPUT BACKGROUND..................................................................................................................... ........................... 6.1 COMPARATIVE ASSESSMENT ...................................................................................................................... 6.4 STRENGTHS ............................................................................................................................... ..................... 6.9 FINDINGS AND RECOMMENDATIONS......................................................................................................... 6.9 PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION FINAL REPORT I I MAY 18, 1998I I 7. PROJECT PLANNING AND PRECONSTRUCTION BACKGROUND..................................................................................................................... ........................... 7.1 STRENGTHS ............................................................................................................................... .................... 7.14 FINDINGS AND RECOMMENDATIONS........................................................................................................ 7.15 8. RIGHT OF WAY BACKGROUND..................................................................................................................... ........................... 8.1 STRENGTHS ............................................................................................................................... .................... 8.10 FINDINGS AND RECOMMENDATIONS........................................................................................................ 8.11 9. DIVISIONS BACKGROUND..................................................................................................................... ........................... 9.1 STRENGTHS ............................................................................................................................... ..................... 9.4 FINDINGS AND RECOMMENDATIONS......................................................................................................... 9.5 10. CONSTRUCTION BACKGROUND..................................................................................................................... .......................... 10.1 STRENGTHS ............................................................................................................................... .................... 10.4 FINDINGS AND RECOMMENDATIONS........................................................................................................ 10.4 11. MAINTENANCE BACKGROUND..................................................................................................................... .......................... 11.1 STRENGTHS ............................................................................................................................... .................. 11.12 FINDINGS AND RECOMMENDATIONS...................................................................................................... 11.13 12. OPERATIONS BACKGROUND..................................................................................................................... .......................... 12.1 STRENGTHS ............................................................................................................................... .................... 12.8 FINDINGS AND RECOMMENDATIONS........................................................................................................ 12.9 13. PERSONNEL BACKGROUND..................................................................................................................... .......................... 13.1 STRENGTHS ............................................................................................................................... .................... 13.4 FINDINGS AND RECOMMENDATIONS........................................................................................................ 13.5 14. FINANCE AND ADMINISTRATION BACKGROUND..................................................................................................................... .......................... 14.1 STRENGTHS ............................................................................................................................... .................... 14.5 FINDINGS AND RECOMMENDATIONS........................................................................................................ 14.5 APPENDIX A - COMPARATIVE ANALYSIS APPENDIX B - SELECTED DATA DEPARTMENT OF TRANSPORTATION SECRETARY’S RESPONSE PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION FINAL REPORT E. 1 MAY 18, 1998 EX E C U T I V E SUMMARY Transportation is vital to North Carolina’s economic vitality and high quality of life. Managing the State’s vast transportation system— a critical responsibility— has been entrusted to the Department of Transportation ( NCDOT) by the government and people of North Carolina. The purpose of this audit, according to the State’s Request for Proposals, was to: n Provide an objective basis for considering and improving NCDOT’s operations n Assess whether the Department’s current structure, functions and processes are meeting the public’s needs and allowing sufficient opportunity for public input n Evaluate the programs, functions and operating procedures of the Department n Recommend changes to improve operational efficiency and responsiveness to the public KPMG Peat Marwick LLP, with assistance from MGT of America, spent the last three months conducting this audit, in accordance with Government Auditing Standards, issued by the Comptroller General of the United States. In addition to this performance audit, the Office of the State Auditor is undertaking separate reviews of the Highway Trust Fund, NCDOT computer systems, and selected maintenance units. To conduct this performance audit, KPMG Peat Marwick and MGT of America performed numerous fact-finding and analysis activities which included: n Reviewing budgets, organizational charts, planning documents, maintenance reports, technical standards and other documentation n Surveying nearly 600 Department managers, supervisors and selected staff to determine employee responsibilities, reporting relationships, and strengths and concerns of functional groups n Conducting over 160 interviews with internal and external stakeholders n Making site visits to Highway Divisions in various parts of the State n Comparing NCDOT to transportation departments in other states This audit was conducted at a time when the Department was undergoing a major transition. Secretary Norris Tolson, charged by Governor Hunt to develop a plan for action in 45 days, announced significant changes to the organization’s structure, staffing and priorities in March 1998. As a result, we have been evaluating an evolving— not static— organization. Our findings and conclusions are presented with this understanding, in the hope of helping the Department move further forward. PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION FINAL REPORT E. 2 MAY 18, 1998 FI N D I N G S A N D RECOMMENDATIONS The performance audit includes numerous recommendations for improvement. These recommendations, and the analysis that supports our conclusions, cover 12 areas: n Strategic Issues and Management Structure n Statewide and Long Range Planning n Transportation Programming Development n Public Input n Project Planning and Preconstruction n Right of Way n Divisions n Construction n Maintenance n Operations n Personnel n Finance and Administration Key findings and recommendations are presented below. Transportation Finance. Our review found that the Board and Department of Transportation do not have a formal, documented methodology for considering overall construction and maintenance needs and translating these needs into a viable financial strategy. This performance review also found that construction program and maintenance needs of the Department cannot be addressed at current funding levels. More specifically: n We estimate a shortfall of over $ 2.1 billion for the 2,281 projects funded in the current FY 1998- 2004 Transportation Improvement Program. n Over $ 6 billion of projects in the Transportation Improvement Program are “ identified future needs” for which no funding is currently provided. n To complete all the projects in the current TIP would require approximately 26 years at current funding levels. n According to the Department’s management systems, the roadway and bridge maintenance backlog is increasing. For example, pavement resurfacing is underfunded by approximately $ 95 million per year. These challenges will require the Board and Department of Transportation to take aggressive steps to increase funding and/ or scale back these programs to manageable levels. The Board and Department of Transportation will also need to institute more effective management practices to ensure that transportation programs reflect the State’s priorities and available resources. PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION FINAL REPORT E. 3 MAY 18, 1998 Long- Range Transportation Planning, Programming and Public Input. This review found numerous strengths in the way that the Department conducts its long- range planning, programming, and public input processes. Several concerns were found as well, including the following: n The goals set in the Statewide Transportation Plan are not formally and consistently measured. n The statewide planning process does not devote sufficient resources to studying the external forces shaping travel and transportation needs. n North Carolina’s cities, counties, and Metropolitan Planning Organizations are not sufficiently involved in the process for setting transportation priorities. n Responsibility for managing and conducting the Department’s public input processes could be better coordinated. To address these concerns, the Department will need to enhance the statewide planning process and provide more effective coordination for soliciting and responding to public input. The Board and Department of Transportation will also need to consider various ways to strengthen the involvement of North Carolina’s localities and Metropolitan Planning Organizations in setting transportation funding and project priorities. Project Planning, Preconstruction and Right of Way. The review found that many of the Department’s highway project development functions are built on a foundation of solid management practices and operating procedures. However, the Department faces several operational and workload issues in this area: n The Department is challenged to meet its ambitious letting schedule— over $ 400 million of projects were postponed this federal fiscal year. n The Department has had difficulty securing environmental permits on a timely basis. n Time allotted for right of way activities is inconsistent with Department guidelines. The Department is actively addressing these challenges, and will need to continue to do so in order to meet the State’s transportation improvement objectives. Construction, Maintenance and Operations. Our review of the Department’s field- oriented highway functions yielded a positive overall assessment: numerous strengths were identified in each of these areas. Areas where improvements should be made include the following: n The incentives for timely construction project completion could be stronger. n Construction project scheduling requirements need to be strengthened. n Maintenance underfunding has impeded a strategic approach to maintenance. The Department will need to change several construction and maintenance procedures to address these and other concerns. PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION FINAL REPORT E. 4 MAY 18, 1998 Department Management and Administration. Our review of the Department’s overall management practices, personnel practices, and finance and administration units resulted in several key findings: n The Transportation Program Plan and the program/ performance budget do not adequately address funding shortfalls or strategies for reducing unmet construction and maintenance needs. n Budgets are developed with limited involvement of NCDOT managers. n The Department lacks an effective information technology strategic planning process. n The Department is increasingly challenged to recruit and retain engineering and technical staff. The Department will need to continue improving its budgeting, information systems planning, and other strategic management activities in order to address these concerns. A complete listing of this performance audit’s findings and recommendations in provided in Exhibit E- 1 on the following pages. Exhibit E- 1: Summary of Findings and Recommendations STRATEGIC ISSUES and MANAGEMENT STRUCTURE Findings Recommendations The Board and Department of Transportation lack an effective process for developing a transportation finance strategy. Restructure the process for defining the State’s maintenance and long- range transportation needs. The Transportation Program Plan and the program/ performance budget do not adequately address funding shortfalls or strategies for reducing unmet construction and maintenance needs. Use the Transportation Program Plan and the program/ performance budget to address and document transportation financing and operating strategies. The strategic planning process is not fully integrated with the Department’s management practices and operations. Use the Transportation Program Plan to guide and monitor day- to- day operations of NCDOT. The Department lacks an effective Department-wide information technology strategic planning process. Create a Department- wide information technology strategic planning process. The customer service improvement initiative started last year has begun to deteriorate due to a lack of management support and attention. Revitalize and refine the customer service improvement program. The Department’s organizational structure offers additional opportunities for improvement over the long term. Consider additional changes to the organizational structure over the next two years. PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION FINAL REPORT E. 5 MAY 18, 1998 Exhibit E- 1: Summary of Findings and Recommendations ( continued) STATEWIDE AND LONG- RANGE PLANNING Findings Recommendations The goals set forth in the Statewide Transportation Plan are not formally and consistently measured. Develop performance indicators for addressing how well NCDOT meets the goals and objectives of the Statewide Transportation Plan. The process for evaluating transportation research efforts is not linked sufficiently to statewide transportation planning. Enhance the research program by linking efforts to goals established in the Statewide Transportation Plan. The statewide planning process does not devote sufficient resources to studying the external forces shaping travel and transportation needs. Devote resources to understanding the external forces shaping travel and develop transportation strategies that address these forces. The Statewide Planning branch has limited resources to carry out its mandated multi- modal planning activities. Consider providing additional resources to, and/ or changing the responsibilities of, the Statewide Planning branch. TRANSPORTATION PROGRAM DEVELOPMENT Findings Recommendations We estimate a shortfall of over $ 2.1 billion for projects funded in the current FY 1998 - 2004 TIP. To complete all the projects in the current TIP would require approximately 26 years at current funding levels. Develop, communicate and implement a strategy for addressing the TIP funding shortfall. North Carolina’s cities, counties, and Metropolitan Planning Organizations are not sufficiently involved in the process for setting transportation priorities. Evaluate the role of North Carolina’s cities and counties in setting transportation priorities, and strengthen involvement with the Metropolitan Planning Organizations. The Department has proposed switching from a one- year to a two- year TIP development cycle. Adopt a two- year TIP development cycle, as proposed by the Department. PUBLIC INFORMATION Findings Recommendations Responsibility for managing and conducting public input procedures could be better coordinated. Expand the role of the Citizens Participation Unit to coordinate all program and project- specific public involvement at NCDOT. NCDOT must continue to increase its responsiveness to public concerns. Enhance efforts to explain the various project development processes and expand the types of public input available. PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION FINAL REPORT E. 6 MAY 18, 1998 Exhibit E- 1: Summary of Findings and Recommendations ( continued) PROJECT PLANNING AND PRECONSTRUCTION Findings Recommendations The Department is challenged to meet its ambitious letting schedule— over $ 400 million of projects were postponed this federal fiscal year. Continue to review and balance the Department’s construction letting schedule. NCDOT has had difficulty securing environmental permits on a timely basis. Secure external agency approval earlier in the project development cycle. Improve the process for addressing mitigation commitments. Develop a general memorandum of understanding between the Department and environmental agencies. Planning and Environmental staff lack appropriate project management authority. Delegate project management responsibility to project planning staff. Planning and Environmental lacks a clear, concise policies and procedures manual. Complete development of an up- to- date environmental policies and procedures manual. Develop an up- to- date environmental permits manual. The procurement of engineering consultants is not sufficiently coordinated. Consolidate procurement responsibilities for consultant engineering. Technology is not being utilized fully within the Planning and Environmental branch. Create an initiative to resolve technology issues in Planning and Environmental. There are several units involved in surveying, mapping, and geographic information management. Consider the combination of Location and Survey, Photogrammetry, and Graphical Information Systems ( GIS) into one organizational unit. The process for selecting and procuring technical equipment for the Location and Survey unit is too cumbersome. Establish an annual equipment budget for the Location and Survey unit. Location and Survey unit does not have sufficient staff to cover Division 12. Establish a location field office in Division 12 with a staff of eight. The process for stamping plan sheets is too cumbersome. Request the State Board of Professional Registration to change the procedure for stamping plan sheets. PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION FINAL REPORT E. 7 MAY 18, 1998 Exhibit E- 1: Summary of Findings and Recommendations ( continued) RIGHT OF WAY Findings Recommendations A recent right of way claim settlement indicates the need to make changes in the settlement review process. Continue to take steps to strengthen the right of way settlement review process. The time allocated for right of way is inconsistent with Department guidelines. Continue to adjust project schedules to provide a more realistic estimate of time required for completion of right of way activities. Many right of way procedures are paper intensive. Increase automation for right of way processes. Complete installation of wiring and software to ensure that Right of Way personnel can print files electronically. DIVISIONS Findings Recommendations The organizational structure of the Divisions lacks consistency. Consider a more consistent Division organizational structure. The Division Design and Construct function is developing without adequate coordination and consistency. Provide enhanced monitoring and guidance for the Division Design and Construct function. CONSTRUCTION Findings Recommendations The incentives for timely construction project completion need to be stronger. Strengthen incentives for timely construction project completion. Construction project scheduling requirements need to be strengthened. The Department and its construction contractors should adopt enhanced scheduling methods. The Department lacks a standard set of construction program performance measures. Strengthen construction program performance measures. The Department has been developing its Highway Construction and Materials System ( HiCAMS) since 1994. Implement up- to- date construction management software as soon as possible. NCDOT lacks a formalized training plan to ensure that the future leaders and managers in construction are adequately trained, both professionally and technically. Develop training plans and requirements for the professional and technical development of personnel for key construction positions. A majority of roadway and bridge construction stakeout surveys are being accomplished by NCDOT survey crews. Incorporate construction stakeout surveys in construction contracts. PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION FINAL REPORT E. 8 MAY 18, 1998 Exhibit E- 1: Summary of Findings and Recommendations ( continued) MAINTENANCE Findings Recommendations The annual roadway maintenance funding allocation has not kept pace with the growth in maintenance responsibilities. The current annual pavement resurfacing funding allocation represents a shortfall of approximately $ 95 million. Roadway condition is deteriorating. The current funding allocation for bridge maintenance has not been adequate to address bridge maintenance backlog. Increase the funding allocation for maintenance to address routine maintenance needs and the maintenance backlog. Maintenance underfunding has impeded a strategic approach to maintenance. Develop a strategic approach for maintenance. The Roadway Maintenance unit lacks certain performance objectives/ measures for core maintenance functions. The Roadway Maintenance unit should develop specific, measurable performance objectives for each core maintenance function. The Bridge Maintenance unit requires improved automation. Enhance automation in the Bridge Maintenance unit. The bridge maintenance database needs to be expanded. Expand the bridge maintenance database. Contract management training is needed at the Highway Division level. The Department should provide contract management training at the Division level. OPERATIONS Findings Recommendations The Department does not have an effective inventory of installed traffic control devices. Develop an inventory and management system to monitor and maintain traffic control devices. Traffic signal systems and pavement markings are becoming more complex. Establish stringent certification requirements for installing and repairing NCDOT’s traffic control devices. Funding for the Division of Highway’s buildings and facilities is inadequate. Request adequate funding for the Capital Improvement Program. Procurement of specialty equipment takes too long. The planning for equipment procurement process should start early. The current process for issuing oversize/ overweight permits involves manual verification of the proposed routes. The Oversize/ Overweight Permit Office should evaluate an automated permit system implementation. A large majority of permits issued are manually faxed to applicants. The current permit system should be upgraded to provide a direct fax capability. The present inventory turnover rate does not meet the Department’s goal. Continue efforts to meet inventory turnover goals. PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION FINAL REPORT E. 9 MAY 18, 1998 Exhibit E- 1: Summary of Findings and Recommendations ( continued) PERSONNEL Findings Recommendations The current performance appraisal system is not effective. Consider ways to increase the effectiveness and credibility of the performance appraisal system. The Department is being increasingly challenged to retain engineering and technical positions. Increase efforts to retain engineering and technical staff. The current approach for providing hiring managers with information regarding applicant ethnicity is excessive and inappropriate. Discontinue providing information regarding applicant ethnicity to hiring managers. The Personnel Office is excessively involved in the process for routine reorganization of Departmental units. Refocus the Position Management section on updating the Department’s position classifications and descriptions. The Personnel Office has two vacant positions that could be eliminated. Consider eliminating or reallocating the two vacant positions in the Personnel Office. FINANCE AND ADMINISTRATION Findings Recommendations Budgets are developed with limited involvement by NCDOT operating management. Create a Budget Office responsible for establishing and managing a budget development process that is founded on resource requests from operating units. The Department lacks an effective customer service structure for management information systems issues. Consolidate the responsibilities for networking and information systems training. The current automated fiscal systems have limited capabilities for producing ad hoc reports requested by managers. Continue to modify and improve the current fiscal system until the new system is implemented. Functions related to worker safety and injury compensation are organizationally separated and misplaced. Establish a new Workers’ Safety unit within the Personnel section by merging the Workers’ Compensation and Safety and Loss Prevention units. Research and Policy Analysis functions are limited to customer- satisfaction market research studies. Reformulate the Research and Policy Analysis unit so that it becomes a Department- wide resource for improved customer service. Internal Audit reports to the Deputy Secretary for Administration. Establish Internal Audit as a staff function reporting directly to the NCDOT Secretary. Only FHWA- mandated audits and certain other financial audits of the highest priority are currently being performed. Establish a comprehensive internal audit program, consisting of financial, compliance and operational audits. The Management Assessment unit consists of five dissimilar functions. Eliminate the Management Assessment unit and transfer the functions to other units. Contractor EEO compliance problems are not identified while construction projects are in process so that corrective actions can be taken. Require monthly reports from contractors of actual EEO participation. Purchasing processes payment approval requests for imprest cash and transmittal emergency purchases even though payment has already been made. Streamline the imprest cash and transmittal emergency purchases approval. PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION FINAL REPORT 1.1 MAY 18, 1998 1 . I N T R O D U C T I O N The North Carolina Department of Transportation ( NCDOT) is responsible for managing the State’s vast transportation system, including highways, bridges, airports, seaports, railroads, mass transit, bicycles and pedestrians and safety. What the Department does— and how well it performs— thus plays a major role in North Carolina’s economic development, environment and quality of life. To determine the quality of services and consider opportunities for improvement, the State Auditor and former Secretary of Transportation Garland Garrett called for a performance audit of NCDOT. This report presents the results of that audit, conducted by KPMG Peat Marwick LLP with assistance from MGT of America. In this introductory chapter, we explain the audit in terms of background, scope, objectives and methodology; the following chapter presents an introduction to the Department itself. This information provides a framework for understanding the findings and conclusions addressed in the remainder of the report: n Strategic Issues and Management Structure n Statewide and Long Range Planning n Transportation Programming Development n Public Input n Project Planning and Preconstruction n Right of Way n Divisions n Construction n Maintenance n Operations n Personnel n Finance and Administration BACKGROUND NCDOT manages, and the Board of Transportation oversees, a complex transportation system with a multi- billion dollar annual budget. These are big dollars and high stakes— for communities, developers, businesses and current and future citizens. Recent allegations of impropriety at the Board level have had a significant effect at the Department level. For example, reports of the last few months have suggested that the process for funding safety projects such as stoplights and turn lanes may have been subject to political influences; that the public may lack the opportunity to provide adequate input into the process; and that the system of allocating funds between highways and mass transit may not be equitable. NCDOT is also facing the general issues that plague transportation departments across the country: n A growing infrastructure that must be maintained to avoid huge deferred costs n Environmental and quality of life considerations that require increasing levels of analysis and public involvement PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION FINAL REPORT 1.2 MAY 18, 1998 n Increasing pressure from constituents to enhance and expand the transportation network n Increasing demands of high- tech highways Some changes have already been made to improve the operation of the Board and the Department. Early this year, Governor Hunt appointed a new Secretary, Norris Tolson, and charged him with developing a plan for change within 45 days. Secretary Tolson has taken action to change the Department’s organizational structure, shift people, and reorder priorities, and more changes are on the way. In addition, Secretary Tolson has been cooperative with the audits of NCDOT and the Board of Transportation called for by the State Auditor and former Secretary. KPMG’s audit of the Board was released in April and is now being considered by the General Assembly. This report focuses on the Department’s operation and activities, as outlined below. OB J E C T I V E Our audit is intended to help NCDOT achieve its goal: to greatly enhance the quality of service provided by the Department, its management and employees. Specifically, the objectives are: n To provide an objective basis for considering and improving the Department’s operations n To assess whether the Department’s current structure, functions and processes are meeting the public’s needs and allowing sufficient opportunity for public input n To evaluate the programs, functions and operating procedures of the Department n To recommend changes to improve operational efficiency and responsiveness to the public n To communicate sensitive issues and complex solutions in a way the public can understand and accept SCOPE Our performance audit covered the following areas, as directed by the State Auditor: n Public input process n Transportation Improvement Program ( TIP) process n Right of way procedures n Preconstruction, construction and maintenance functions n Long- range planning process n Management structure and customer service n Personnel procedures The Division of Motor Vehicles was not included in the scope of work. PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION FINAL REPORT 1.3 MAY 18, 1998 METHODOLOGY This audit was conducted in accordance with the Government Auditing Standards, issued by the Comptroller General of the United States. We organized our work to follow the three major components of a “ Yellow Book” performance audit: audit work plan, field work and reporting. The field work portion of the audit relied on the following activities. Reviewing data provided by the Department. We reviewed reams of information to familiarize ourselves with the various divisions of the Department and to gain a clear understanding of the issues it faces. This included reviewing applicable organization and program descriptions and responsibilities, planning and budget documents, routine maintenance and financial reports, technical standards and guidelines, administrative operating policies and procedures documentation, project databases and historical materials. Analyzing Job Activity Questionnaires ( JAQs). We distributed 581 confidential questionnaires to managers, supervisors and selected staff to compile information on employee responsibilities, reporting relationships and strengths and issues of functional groups. Five hundred nineteen questionnaires were completed and returned, for a response rate of almost 90 percent. The questionnaires were invaluable in providing feedback on many aspects of the NCDOT from those who are actually doing the work. Conducting interviews. The team conducted over 160 interviews to cover a wide range of perspectives, functions and services. Among those we interviewed: n Department executives n Board of Transportation members n North Carolina legislators n High- level Department managers n Selected staff in Raleigh and the field offices n United States Department of Transportation representatives n Metropolitan Planning Organizations n Members of the Association of General Contractors, North Carolina chapter n Consulting engineering firms n Local transit agencies These interviews provided comprehensive information on the roles and responsibilities of the various divisions, as well as candid views on barriers to effective management of NCDOT resources and activities. Conducting site visits. To gain a deeper understanding of NCDOT’s operations, we made site visits to offices in various parts of the State. These visits took us to four of the State’s 14 Highway Divisions: Division 3 ( Wilmington), Division 7 ( Greensboro), Division 10 ( Charlotte- Mecklenburg) and Division 13 ( Asheville). Obtaining and analyzing comparative statistics. As part of this audit, we compared NCDOT to transportation departments in 13 neighboring states, as well as to regional and national averages, on key PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION FINAL REPORT 1.4 MAY 18, 1998 variables. Our assessment also included interviews with knowledgeable representatives from programs in other states. The information gathered through these means enabled us to identify potential strengths and weaknesses in the Department’s management practices, operational efficiency and effectiveness, organizational structure and staffing levels. DE P A R T M E N T I N TR A N S I T I O N This audit was conducted from February to May 1998— a period during which the Department was undergoing a major transition. The appointment of the new Secretary was followed by significant organizational changes, personnel shifts and a reordering of priorities. As a result, the NCDOT we encountered when we began our work is not the same as the one in place today. We present this report in the hope that the recommendations for change outlined here will help the Department in its efforts to meet the challenges it currently faces and those that lie ahead. PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION FINAL REPORT 2.1 MAY 18, 1998 2 . DEPARTMENT OV E R V I E W The North Carolina Department of Transportation ( NCDOT) is responsible for the State’s transportation system, which includes an extensive highway system, seaports, airports, railroads and public transit. North Carolina’s residents and businesses rely on this transportation system for the effective and safe movement of people, goods and services throughout the State. What the NCDOT does also has a tremendous impact on economic development and quality of life in North Carolina’s neighborhoods, communities and regions. It is hardly surprising that the Department’s activities are among the most visible of all State government functions. But to understand how well the Department is fulfilling its responsibilities— and how it can improve— it is necessary to grasp the basics of this vast and complex organization. This chapter provides that overview in six areas: n Brief History n Challenges n Organization and Staffing n Revenues and Expenditures n Transportation Improvement Program n Key Measures This overview establishes the framework for the performance review detailed in subsequent sections of this document. BRIEF HI S T O R Y When the North Carolina General Assembly created the Highway Commission in 1915, a major part of the responsibility for roads resided at the county level. By 1921, the legislature took additional steps toward a unified statewide highway system by authorizing the State to take over 5,500 miles of county roads and approving a highway bond issue for a road system to connect each of the 100 county seats. These actions helped North Carolina earn its reputation as the “ Good Roads State.” In the Depression of the early 1930s, the State assumed a greater role in the highway system, taking on responsibility for virtually all county roads. However, the Highway Fund— which provided a stable revenue source through gas taxes and highway bonds— became a tempting source of funds for other, unrelated purposes. In 1947, the General Assembly banned the further use of Highway Fund revenues for General Fund purposes. Even with this dedicated revenue source, the State had to add a series of taxes and fees and issue additional bonds to keep up with the growing demand for highways. To address this long- term need, the Highway Trust Fund Act was passed by the General Assembly in 1989, providing billions of dollars for transportation projects through increased gas taxes and motor vehicle fees. These revenues help fund new and improved intrastate roads and urban “ loops” around seven metropolitan areas. In November 1996, North Carolina voters approved a $ 950 million highway bond package, which included $ 500 million for accelerating construction of the seven urban loops. PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION FINAL REPORT 2.2 MAY 18, 1998 CHALLENGES Like all public agencies, the NCDOT is facing both increasing demands for services and an increasing need to prove its value to the public. Among its greatest challenges are the following: Geography. North Carolina’s widely varying terrain stretches for hundreds of miles, with coastal plains in the east and mountains to the west. Its population density varies greatly from major metropolitan areas to medium- sized emerging cities and rural communities. From a transportation point of view, these conditions pose challenges in engineering and securing public input; from a political point of view, the issues are about equity and getting a “ fair share” of the State’s transportation resources. Economic growth. North Carolina’s tremendous growth has outpaced projections, at times creating pressures which the transportation system was not designed to handle. There is increasing congestion in metropolitan areas, accompanied by the growing challenge of getting people to and from work. Some areas of North Carolina are expressing interest in enhancing public transit, while others are seeking additional highways to promote economic development and produce jobs. Recent accomplishments— such as the development of Global TransPark and the recent announcement of a new Federal Express hub in Greensboro— reflect the State’s recognition of the close link between transportation and economic development. Competing needs. The State is being forced to balance the demand for new highways and roads with the need to maintain and improve the existing system. There is also a need to accommodate and incorporate other modes of transportation ( such as public transit, bicycle, and rail) into the State’s overall transportation system. Public controversy. Recent allegations have placed the NCDOT under the spotlight of media and public attention. Governor Hunt responded by appointing a new Secretary, Norris Tolson, and charging him to develop a plan for change within 45 days. The Secretary’s plan, announced in March 1998, has already resulted in significant changes— in personnel, structure and priorities— and created a different environment within the Department. As additional changes are forthcoming, the NCDOT continues to be an organization in transition. Changing expectations. NCDOT, like other public organizations across the State and the nation, is being asked to do more for less. Taxpayers are no longer willing to let government agencies make important transportation decisions on their own: the public wants to be involved in the process and to measure the results. OR G A N I Z A T I O N A N D ST A F F I N G NCDOT is headed by a Secretary, appointed by the Governor; its operations are overseen by a 26- member Board of Transportation, which the Secretary chairs. In March 1998, the Department’s organization changed. It is now organized into six major divisions: n Transportation n Motor Vehicles n Planning and Environmental n Fiscal PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION FINAL REPORT 2.3 MAY 18, 1998 n Administration n Personnel The Transportation Division carries out the State’s transportation program. In this capacity, it is responsible for the Division of Highways as well as rail, public transportation, bicycle and pedestrian, aviation, ferry and safety. The Division of Highways— by far the largest segment of the organization— manages the entire highway system, from design through construction and maintenance. It serves the State through a central office and 14 highway divisions. ( The Department’s organization is further detailed in Chapter 3, Strategic Issues and Management.) Exhibit 2- 1: NCDOT Divisions Source: NCDOT Three other divisions— Fiscal, Administration and Personnel— support these efforts, while the Planning and Environmental Division focuses on environmental and other public concerns. The Division of Motor Vehicles, which is responsible for licensing drivers and registering motor vehicles, was not included in the scope of our study. The Department has over 12,000 full- time employees. A comparative analysis showed that this staffing level is comparable to other state transportation agencies charged with managing an extensive highway system. REVENUES AND EXPENDITURES NCDOT’s budget is one of the largest and most complex in State government. In fiscal year 1998, revenues from federal, state and local sources amounted to approximately $ 2.8 billion. This section provides a high level view of where that money comes from and where it goes. Revenues. Appropriations to the Department are made through the Highway Fund and the Highway Trust Fund. The majority of Highway Fund revenues ( 66 percent) are generated by the State’s motor fuel tax, with additional monies from drivers’ license fees and investment income. Nearly half of the Highway Trust Fund revenues are derived from a 3 percent highway use tax on motor vehicle sales, with the remainder coming from the State’s motor fuel tax, titles, other fees and investment income. The State also receives federal aid apportionment, obligated by Congress from revenues generated from the federal motor fuel tax and other excise taxes. PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION FINAL REPORT 2.4 MAY 18, 1998 Revenue Estimates. The first challenge is to estimate the state and federal revenues the Department expects to receive, so it can establish its program funding allocations for the next several years. These revenue forecasts— developed by the Office of State Budget and Management in cooperation with NCDOT and the General Assembly’s Fiscal Research Division— are used to develop the Department’s capital and operating budgets for each biennium. NCDOT’s Director of Budget and Planning coordinates the agency’s budget development process, working closely with the Secretary of Transportation, Deputy Secretaries and Controller to establish the Department’s funding priorities. Although components of this budget are developed by all NCDOT divisions, the Division of Highways functionally determines most of NCDOT’s capital and operating needs. Expenditures. In fiscal year 1998, NCDOT budgeted $ 2.52 billion to fund its operations and capital projects. As the chart shows, the large majority of this total—$ 1.83 billion or roughly 72.6 percent— is used to support highway operations, maintenance and construction activities. Other major budget allocations are directed to transit, rail, aviation and ferry operations; other agencies; other division operations; and reserves and transfers. The majority of these funding allocations are determined by specific federal and North Carolina laws. These statutory requirements, by earmarking revenues to prescribed purposes, restrict the ability of the Department to recommend or determine funding allocations. Exhibit 2- 2: NCDOT Budget Allocations ( FY 1997- 1998) Highway Operations, Maintenance and Construction $ 1,827 million ( 72%) Transit, Rail, Aviation, Ferry Operations $ 94 million ( 4%) Other Agencies, General Fund $ 335 million ( 13%) Administration, other Programs/ Divisions $ 190 million ( 8%) Reserves and Transfers $ 74 million ( 3%) Source: NCDOT Fiscal Division, Office of the Controller PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION FINAL REPORT 2.5 MAY 18, 1998 Maintenance Allocations. Highway maintenance allocations are appropriated through revenue transfers from North Carolina’s Highway Fund. These allocations generally provide for routine maintenance and some minor construction contracting work on roads, bridges, weigh stations, rest areas and other similar facilities. They are distributed among the Department’s 14 Highway Divisions according to various sub-allocation formulas, which combine uniform allocations and needs- based funding outlays. The Department also allocates funding for an annual statewide contract resurfacing program. Each Division receives a percentage of the total allocation, based on its share of the State’s maintenance needs, paved lane miles and population. TIP Highway Construction Allocations. The State’s Transportation Improvement Program ( TIP) lists the schedules and funding sources for projects programmed over the next seven years. TIP construction allocations include funding for Federal- Aid Construction, North Carolina’s Intrastate Highway Program and Urban Loops Program. Federal- Aid Construction, typically the largest program area in North Carolina’s capital budget, actually consists of a series of transportation funding categories— each with different limitations on spending, as illustrated in Exhibit 2- 3. Exhibit 2- 3: Major Federal- Aid Construction Program Categories Program Category Funding Purpose Interstate Maintenance Preservation of the Interstate Highway System National Highway System ( NHS) Improvements to routes on the National Highway System, as well as certain transit capital improvements and certain projects on non- NHS highways Surface Transportation Program ( STP) To be used on any surface transportation infrastructure project, regardless of mode ( excludes local streets and roads) Highway Bridge Replacement and Rehabilitation Program ( HBRRP) Available for replacing or rehabilitating deficient highway bridges and undertaking preventive measures to prolong the lives of existing highway bridges Congestion Mitigation and Air Quality Improvement Program ( CMAQ) Transportation programs and improvement projects designed to improve air quality and reduce transportation emissions in non-attainment and maintenance areas Transportation Enhancements Transportation- related activities designed to strengthen the cultural, aesthetic and environmental aspect of the nation’s intermodal transportation system Minimum Allocation May be used for any project eligible for Interstate Maintenance, NHS, STP, HBRRP, CMAQ and other miscellaneous funds Donor State Bonus Partially compensates states that contribute more to the Highway Trust Fund than they receive in Federal- aid apportionment; available for obligation according to same criteria as for STP funds Source: U. S. Department of Transportation North Carolina’s Intrastate Highway Program is funded to facilitate the completion of the State’s proposed four- lane, 3,600- mile Intrastate Highway System, which is intended to bring 96 percent of North Carolina’s population within ten miles of a major highway. Funds expended for Intrastate System projects are distributed according to an equity formula, which provides that until 90 percent of the mileage of the Intrastate System is complete, each of seven specified Distribution Regions shall receive an equitable share of the total annual program. PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION FINAL REPORT 2.6 MAY 18, 1998 The Urban Loop Program is funded to complete the construction of a multi- lane connector road in Asheville and multi- lane beltways in Charlotte, Durham, Greensboro, Raleigh, Wilmington and Winston- Salem. Both the Intrastate Highway Program and the Urban Loop Program are funded through a combination of federal aid and funds transferred from North Carolina’s Highway Trust Fund. The Board of Transportation approves a variety of other TIP projects financed entirely from State funds. These include projects on the primary, urban, and secondary road systems funded from Highway Trust Fund revenues under the provisions of G. S. 136- 176( c). Other Highway Construction Allocations. Additional highway construction allocations amounting to more than $ 185 million in capital projects are funded entirely with State dollars and are not included in the TIP. These include: n Secondary roads program n Public service and access n Spot safety program n Small urban program n Discretionary funds All five of these programs are funded with revenues from the State’s Highway Fund. A substantial portion of the funding for the secondary roads program also comes from the Highway Trust Fund. Non- Highway Maintenance, Construction and Operations. Other non- highway allocations include funding for North Carolina’s ferry operations, transit systems, railroads, airports, and bicycle and pedestrian facilities. NCDOT directly operates seven ferry routes along North Carolina’s coast. Bicycle and pedestrian projects are either funded as stand- alone projects or are included in highway projects, while the other programs are funded through grants directly awarded by NCDOT or programmed as TIP projects. TRANSPORTATION IMPROVEMENT PROGRAM The Transportation Improvement Program documents the schedule and funding sources of transportation projects that are expected to be funded over the next seven years. The program, described in the TIP and updated annually, is multi- modal— that is, projects with highway, ferry, bicycle and pedestrian, transit, rail, and aviation features make up the program. Developing the TIP is a complex and lengthy process which includes: n Receiving requests from the General Assembly, public, Metropolitan Planning Organizations ( MPOs), local government, civic groups and special interest groups n Collecting data— including cost, schedule and feasibility— through legislative review, NCDOT planning and engineering studies, public meetings and ongoing feedback n Analyzing data to estimate federal funds, assess local and regional priorities, balance needs and resources, and make adjustments as necessary n Documenting the results and gaining necessary approvals from the General Assembly, Board of Transportation, MPOs and NCDOT Secretary ( on behalf of the Governor) PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION FINAL REPORT 2.7 MAY 18, 1998 The current TIP includes construction of 2,620 projects with a total estimated future cost of $ 21 billion. KEY MEASURES How does NCDOT measure up in key areas? How does it compare to its neighboring states? We conducted a comparative assessment to find out, collecting information on other states and calculating regional and national averages. The results are intended to provide a high- level view of the Department and provide context for the findings and conclusions that make up the remainder of this document. Large Highway System. NCDOT is responsible for maintaining a very large highway system, amounting to approximately 78,000 miles. According to the FHWA’s Highway Statistics 1996, this places North Carolina third in the nation in state- administered lane- miles. As shown in Exhibit 2- 4, the Department is responsible for more total state lane- mileage per square mile of land area than any of its neighboring states and is far above the U. S. average. Exhibit 2- 4: Total State Administered Mileage Per Square Mile of Land Area 0 0.5 1 1.5 2 2.5 3 3.5 NC VA SC WV PA KY Neigh bor LA TN GA FL TX AR MS AL U. S. Avg State State Maintained Mileage per Square Mile of Land Area Source: FHWA Highway Statistics, 1996 Tables HM- 81 and PS- 1 The large size of the system drives many of the other elements considered in this analysis. Why? Compared to other states, NCDOT has more lane miles to take care of, which require more dollars to maintain. Appropriate Staffing Levels. NCDOT’s staffing level is comparable to other state departments of transportation, given its responsibilities. The three categories used to analyze the data were: number of full- time equivalent employees, staffing distribution by functional area and number of staff per 10,000 lane- miles. Low Expenditures per Lane- Mile. North Carolina��s expenditures per mile place the State among the five lowest in the nation. NCDOT’s construction expenditure per mile is second lowest in the U. S., just behind neighbor South Carolina; its maintenance expenditure is third lowest, behind South Carolina and Mississippi. Considering construction, maintenance, administration, highway safety and bond retirement costs, the Department ranks third lowest in expenditures per lane mile. PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION FINAL REPORT 2.8 MAY 18, 1998 Exhibit 2- 5: Total Expenditure per 1,000 Lane- Miles 0 1 0 2 0 3 0 4 0 5 0 6 0 7 0 8 0 9 0 S C NC WV VA AR KY TX N e ig h b o r M S TN AL P A U. S . Avg LA GA F L S t a t e Source: FHWA Highway Statistics, 1996 Tables HM- 81 and SF- 4 Deteriorating System Conditions. North Carolina’s road conditions are deteriorating, threatening its reputation as the “ Good Roads State.” This study examined system conditions based on the International Roughness Index ( IRI) for each state and the nation, using averages for rural and urban interstates. As Exhibit 2- 6 shows, the neighboring states and the U. S. are very similar in interstate conditions, with the majority of their roads on the smoother ( lower) end of the scale. Exhibit 2- 6: Distribution of Reported IRI for Rural Interstates 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00% 40.00% < 60 60- 94 95- 119 120- 144 145- 170 171- 194 195- 220 > 220 International Roughness Index ( IRI from Smooth (< 60) to Rough (> 220) Distribution NC Neighbor Total U. S. Total Source: FHWA Statistics, 1996 Table HM- 64 North Carolina, on the other hand, has fewer interstates on either end of the scale and far more in the middle. Data comparing North Carolina’s urban interstates presents a similar picture. PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION FINAL REPORT 2.9 MAY 18, 1998 High Number of Bridges Below Current Standards. North Carolina exceeds the national and neighboring states’ average of bridges rated below current standards by approximately 10 percent, as illustrated in Exhibit 2- 7. A bridge considered below standard has been rated as either structurally deficient ( in poor condition or having insufficient load- carrying capacity) or functionally obsolete ( narrow, poorly aligned, inadequate or under clearance). Exhibit 2- 7: Percentage of Interstate and State Bridges that are Below Current Standards 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% AR GA TX Nghbr SC TN FL US Avg AL MS LA VA KY NC PA WV S t a t e Source: Better Roads Magazine 1997 Bridge Inventory ( Note: Interstate and primary bridges are traditionally maintained by state DOTs) Congestion. Congestion is a problem in most urban areas, and cities in North Carolina are no exception. North Carolina’s level of congestion is higher than average, placing the State 43rd in the nation with over 28 percent of its road miles meeting a standard definition for congestion1. In part, the high level of congestion here reflects vibrant economic growth, as more people move and travel throughout the State. Exhibit 2- 8: Percentage of Miles Congested - Major Urban Roads 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00% AL OK AR TX PA FL Nghb r SC LA GA WV U. S. Ttl TN NC KY MD VA State Percentage of Miles Congested Source: FHWA Highway Statistics, 1996, Table HM- 61 ( Note: All 1996 data with the exception of Maryland data from 1995.) 1 As defined in this analysis, congestion occurs when the volume of traffic to service- flow ratio exceeds 80 percent. PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION FINAL REPORT 2.10 MAY 18, 1998 Safety. North Carolina’s highway safety was analyzed according to rates of both fatal and non- fatal accidents. North Carolina ranks 31st in the nation with a rate of 1.68 fatalities per 100 million vehicle-miles of travel for fatal accidents. This rate is higher than the U. S. average, but lower than the average rate of neighboring states, as presented in Exhibit 2- 9. Exhibit 2- 9: 1996 Fatal Accident Rate 0.00 0.50 1.00 1.50 2.00 2.50 VA P A U. S . Ttl GA NC KY Nghbr TX WV LA TN F L AR AL SC MS State Fatal Accident Rate per 100 Million Vehicle- Miles Source: FHWA Highway Statistics, 1996, Table FI- 3 North Carolina exceeds both the averages of neighboring states and the U. S. in general for non- fatal accidents. The State ranks 42nd in the nation with a non- fatal accident rate of 115.63, compared to the neighbor state average of 93.01 and the U. S. average of 97.12, as shown in Exhibit 2- 10. Exhibit 2- 10: 1996 Non- Fatal Accident Rate 0.00 20.00 40.00 60.00 80.00 100.00 120.00 AR AL MS LA VA SC KY TN P A Nghbr U. S . Ttl GA WV TX F L NC State Non- Fatal Accident Rate per 100 Million Vehicle- Miles Source: FHWA Highway Statistics, 1996, Table FI- 3 PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION FINAL REPORT 3.1 MAY 18, 1998 STRATEGIC I S S U E S A N D MANAGEMENT ST R U C T U R E This section discusses strategic management practices, performance measurement, and overall management practices; customer service; and overall organizational structure. STRATEGIC MANAGEMENT NCDOT has established various types of long- range plans and evaluation tools. Development of a formal strategic plan began with preparation of “ Department Plans, Outlook and Management Initiatives for 1995- 2001” in response to requirements from the Office of State Planning and the State Budget Office. This was followed two years later with development of a Transportation Program Plan that supports the performance/ program budget document for FY 1997- 98/ 1998- 99. The program plan includes a mission statement and the following goals: n Plan, design, construct, repair and maintain roads and highways n Expand, improve, and support alternative and non- highway modes of transportation n Ensure safe transportation through education and regulation For each goal, NCDOT established two to four programs with several subprograms. The purpose, expected outcomes, budget, background and trends were then defined for each subprogram. The plan for each subprogram is supported by two to six action- oriented objectives. Each objective is further defined by specifying the funds and organizational units contributing to the objective along with implementation strategies and activities, and innovative approaches to accomplishing the work. Two types of measures have been established to evaluate achievement of each objective. An outcome measure is used to assess overall accomplishment of the objective and several performance measures are used to present key volume data and/ or accomplishments at the next lower level of detail. MANAGEMENT SURVEY RESULTS In the course of this study, a management survey was sent to every Department manager and supervisor with responsibilities relevant to the scope of this study. In all, 581 questionnaires were distributed and 519 responses were received for an 89 percent response rate. Seventeen key questions in this survey addressed Department management practices and structure. Overall, respondents reacted positively to questions about the Department’s management practices. For example, 94 percent responded that their unit’s mission, goals and objectives are communicated clearly. More than 70 percent responded positively to questions regarding responsibilities and authority, policy and procedures, performance feedback, job skills, and training. The leading negative response was related to staffing— 39 percent of respondents indicated their unit does not have the appropriate number of staff to do its work. Exhibit 3- 1 presents these survey results. PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION FINAL REPORT 3.2 MAY 18, 1998 Exhibit 3- 1: Responses to KPMG Survey Regarding Management Structure and Practices SURVEY QUESTION PERCENT AGREEMENT BY EMPLOYEE FUNCTION Department Executive Mgmt. Finance Administration Planning Programming Environmental Preconstruction Right- of- Way Construction Division Engrs. Maintenance Operations The mission, goals, and objectives of my unit are communicated clearly. 94% 91% 81% 92% 100% 96% 95% There are up- to- date documented policies and procedures to guide me in my work. 75% 78% 58% 75% 90% 90% 72% My responsibilities and authority are clear and appropriate. 91% 81% 68% 94% 98% 90% 92% I receive periodic feedback about my performance from my superiors. 93% 88% 81% 98% 100% 90% 92% My unit has the appropriate number of staff to do its work. 39% 53% 32% 42% 66% 41% 31% My unit has the appropriate job skills to do its work. 86% 72% 77% 91% 88% 88% 86% The work of my unit is planned and prioritized. 83% 91% 74% 84% 90% 90% 79% I receive the appropriate amount and types of training to do my job. 86% 81% 61% 91% 78% 94% 87% My unit has the right tools to do its work effectively and efficiently. 70% 69% 61% 73% 71% 63% 72% My unit’s performance measures are useful. 81% 88% 81% 84% 80% 75% 82% Source: KPMG survey of 581 NCDOT employees PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION FINAL REPORT 3.3 MAY 18, 1998 3 Exhibit 3- 1: Responses to KPMG Survey Regarding Management Structure and Practices ( continued) SURVEY QUESTION PERCENT AGREEMENT BY EMPLOYEE FUNCTION Department Executive Mgmt. Finance Administration Planning Programming Environmental Preconstruction Right- of- Way Construction Division Engrs. Maintenance Operations My unit duplicates functions provided by other units. 8% 13% 6% 10% 10% 10% 6% My unit performs functions that should be done by another unit. 19% 22% 23% 22% 29% 20% 15% Other units perform functions that should be done by my unit. 15% 31% 16% 23% 5% 14% 10% My unit would be more effective if it was combined with another organizational unit. 8% 16% 6% 16% 5% 10% 4% Functions of my unit would be more effective if decentralized. 16% 3% 19% 12% 22% 22% 17% Functions my unit would be more effective if centralized. 29% 47% 42% 51% 17% 16% 20% My unit spends much of its time dealing with crisis situations. 39% 38% 77% 39% 37% 16% 40% Source: KPMG survey of 581 NCDOT employees PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION FINAL REPORT 3.4 MAY 18, 1998 ORGANIZATIONAL STRUCTURE Exhibit 3- 2 illustrates the organization structure of NCDOT when this study began in February 1998. Exhibit 3- 2: Department of Transportation Organization Structure Prior to March 2, 1998 TRANSPORTATION BOARD OF DEPUTY ATTORNEY GENERAL SAFETY AND LOSS CONTROL CONTRACT MONITORING STATEWIDE PLANNING PLANNING AND ENVIRONMENTAL PROGRAM DEVELOPMENT PROGRAM ANALYSIS PLANNING AND PROGRAMMING RIGHT- OF- WAY TRAFFIC ENGINEERING HIGHWAY DESIGN ENGINEERING AUTOMATION PRECONSTRUCTION DIVISIONS ( 14) CONSTRUCTION AND MATERIALS ROADSIDE ENVIRONMENTAL ROADWAY MAINTENANCE BRIDGE MAINTENANCE EQUIPMENT AND INVENT'Y CONTROL CONSTRUCTION AND MAINTENANCE OPERATIONS DIVISION OF HIGHWAYS State Highway Administrator DIVISION OF MOTOR VEHICLES Commissioner FISCAL MIS PURCHASING PRODUCTIVITY MGT MGT ASSESSMENT INTERNAL AUDIT PUBLIC AFFAIRS RESEARCH AND POLICY ANALYSIS GENERAL ADMINISTRATION Deputy Secretary PERSONNEL GENERAL SERVICES GOVERNOR'S HIGHWAY SAFETY PROGRAM LEGISLATIVE COORDINATOR FEDERAL PROGRAM COORDINATOR APA COORDINATOR PERSONNEL Deputy Secretary RAIL PUBLIC TRANSPORTATION BICYCLE AND PEDESTRIAN AVIATION FERRY TRANSIT, RAIL AND AVIATION Deputy Secretary SECRETARY Department of Transportation GOVERNOR State of North Carolina Source: NCDOT This basic structure had been in place for many years. In March 1998, Secretary Tolson made several significant organizational changes, including these: n An Office of Planning and Environment was established, headed by a Deputy Secretary and reporting to the Secretary. n A Fiscal Office was established, headed by a Chief Financial Officer and reporting to the Secretary. The Office’s primary sections are Fiscal and Purchasing plus certain functions from the Division of Highways, such as revenue projections, budgeting and contract monitoring. n The Office of Administration and Office of Personnel functions were realigned, reflecting Fiscal Office transfers and shifts of certain units between Administration and Personnel. n A Public Information Office, with a customer service section, was established, reporting to the Office of the Secretary. PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION FINAL REPORT 3.5 MAY 18, 19985 Exhibit 3- 3 illustrates the NCDOT organization structure effective on March 2, 1998. Exhibit 3- 3: Department of Transportation Organization Structure After March 2, 1998 TRANSPORTATION BOARD OF DEPUTY ATTORNEY GENERAL PUBLIC INFORMATION OFFICE DOT ATTORNEY SAFETY AND LOSS CONTROL PLANNING AND ENVIRONMENTAL HIGHWAY DESIGN TRAFFIC ENGINEERING RIGHT OF WAY ENGINEERING AUTOMATION PRECONSTRUCTION DIVISIONS ( 14) CONSTRUCTION AND MAINTENANCE OPERATIONS DIVISION OF HIGHWAYS State Highway Administrator RAIL PUBLIC TRANSPORTATION BICYCLE AND PEDESTRIAN AVIATION FERRY TRANSPORTATION Deputy Secretary DIVISION OF MOTOR VEHICLES Commissioner STATEWIDE PLANNING PROGRAM DEVELOPMENT PROGRAM ANALYSIS PLANNING AND ENVIRONMENTAL Deputy Secretary FISCAL CONTRACT MONITORING PURCHASING PRODUCTIVITY MGT/ RESEARCH POLICY ANALYSIS MANAGEMENT ASSESSMENT FISCAL Chief Financial Officer GENERAL SERVICES MANAGEMENT INFORMATION SERVICES INTERNAL AUDIT CIVIL RIGHTS ADMINISTRATION Deputy Secretary PERSONNEL GOVERNOR'S HIGHWAY SAFETY PROGRAM APA COORDINATOR GOVERNMENT AFFAIRS PERSONNEL Deputy Secretary SECRETARY Department of Transportation GOVERNOR State of North Carolina Source: NCDOT CUSTOMER SERVICE Four years ago, NCDOT reformulated the Office of Research and Policy Analysis to increase attention to customer service. The mission of this office was to help units find out what their customers think about the services being provided. The assistance provided by this office is primarily market research – designing and executing customer surveys to collect information about service effectiveness and quality. The market research studies are voluntary, initiated in response to unit requests. About 12 studies have been completed, including some follow- up studies in areas such as ferry service. In response to a State customer service initiative, NCDOT established a Customer Service Council in 1997 with representatives of most major units. Council members attended a workshop in June 1997 to orient them to customer service and to initiate development of customer service plans. Plans for 55 units were completed and approved by the Council in December 1997. PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION FINAL REPORT 3.6 MAY 18, 19986 STRENGTHS The new strategic planning process meets the requirements of the Office of State Planning and the State Budget Office. The Transportation Program Plan presents the Department’s mission, goals, commitments, functions, trends and implications, and the objectives of each performance/ program budget area. New management improvement initiatives have been launched. Thirteen working groups were established in March 1998. Each group, composed of 7 to 20 managers from both field and central office units, have been charged with the task of identifying, analyzing and resolving problems within their assigned area: n Enhancements n Environmental n Truck Safety n Outsource/ Privatize n Safety n Work First n Personnel n Maintenance n Funding n Training n Purchasing n Decentralization n Communications n Intelligent Transportation Systems The Department’s leadership has indicated that these groups are addressing numerous issues, including concerns identified in this report. Formation of these “ participative management” groups is also reported to have a positive influence on employee morale. Recent changes in organization structure are positive. Several organizational changes made in March 1998 provide an improved alignment of responsibilities and additional emphasis on key Department functions. For example, certain programming functions that had previously reported to the State Highway Administrator were moved into a separate Office of Planning and Programming, reporting directly to the Secretary. Another change moved the Public Information Office into the Secretary’s Office, which demonstrates an enhanced commitment to inform and engage the public. FI N D I N G S A N D RECOMMENDATIONS Finding: The Board and Department of Transportation lack an effective process for developing a transportation finance strategy. NCDOT currently receives over $ 2 billion annually in state and federal funding – yet, this substantial yearly outlay is not sufficient to both meet North Carolina’s growing transportation needs and to maintain its current transportation infrastructure. Our analysis indicates that: n The State’s current Transportation Improvement Program is underfunded by approximately $ 2.1 billion for the fiscal years 1998- 2004 n Maintenance has not being funded adequately for years, resulting in a cumulative maintenance backlog of hundreds of millions of dollars Our review found that the Board and Department of Transportation have no formal, documented methodology for considering overall construction and maintenance needs and translating these needs into a PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION FINAL REPORT 3.7 MAY 18, 19987 viable financial strategy. Although the Board should be considering such matters as one of its primary responsibilities, the Board of Transportation is currently heavily focused on individual project selection and day- to- day operations of the Department. ( These weaknesses were detailed in KPMG’s April 1998 performance review of the North Carolina Board of Transportation.) In developing its biennial budget, NCDOT presents annual funding allocation levels for each of the major transportation program categories, based on estimates of available State and federal funding sources. According to NCDOT, the Department’s discretion concerning funding priorities is quite limited— well over half of the funding allocations are predetermined by specific State or federal law, or are required to fund legislatively mandated activities at current levels. As a result, program analysis and goal setting that could result in optimal use of funds is currently not performed. Recommendation: Restructure the process for defining the State’s maintenance and long- range transportation needs. The State must decide how to invest substantial but limited revenues to meet its transportation objectives. North Carolina’s transportation program should be strategically managed— with performance measurement systems in place to evaluate whether specific funding allocations are effective in achieving goals and objectives related to factors such as economic development, mobility, system conditions, and safety. The Board of Transportation and Department of Transportation could more effectively recommend to the Governor and General Assembly proposed funding allocations that address defined maintenance and long-term transportation needs. To accomplish this, the Board and Department should create an open, objective process to analyze alternative transportation investments. To accomplish this, NCDOT should: n Establish desired levels of service for North Carolina’s transportation network n Collect current measurements of system conditions and operating characteristics ( e. g., pavement or bridge conditions, volume- to- capacity ratios or delay- times on major corridors, accident data, etc.) n Use this data to make funding recommendations that will help achieve desired goals, objectives and levels of service n Validate these recommendations by presenting this information for public review and comment during the State’s Transportation Improvement Program development process ( biennially) n Measure system conditions and operating characteristics annually to assess the degree to which funding allocations were successful in helping achieve transportation goals and objectives n Adjust recommended funding allocations in subsequent years as necessary to meet goals and objectives, or evaluate means for acquiring additional revenues needed to meet goals and objectives For this process to be effective, the Governor and the General Assembly will need to assess existing funding levels relative to NCDOT’s recommended funding allocations. This may include reassessing the procedures and statutes that earmark funds for specific transportation purposes. These proposed changes PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION FINAL REPORT 3.8 MAY 18, 1998 would provide the State with an improved ability to match its significant but limited transportation funding resources with maintenance and long- range transportation needs. Finding: The Transportation Program Plan and the program/ performance budget do not adequately address funding shortfalls or strategies for reducing unmet construction and maintenance needs. The process for developing the Transportation Program Plan and the program/ performance budget was first initiated at NCDOT in the fiscal year 1997- 99 budget cycle. It was initiated late in the funding cycle and did not involve substantial participation from NCDOT managers. However, the process did establish baseline performance measures and met the State’s requirements. Because much of the Department’s funding is earmarked by statute for specific uses, the ability to develop a meaningful linkage between funding and program objectives is limited. The current transportation program/ performance budget reflects this— it does not quantify or address anticipated construction and maintenance needs, expected revenues, or funding shortfalls. For example: n An outcome measure for major arterial highways is that 90 percent of planned projects in the Transportation Improvement Program will be programmed. However, no measure is established regarding the percentage that will actually be funded and completed. n The program to “ maintain and repair roads and highways” identifies a $ 260 million backlog of routine maintenance needs. The pavement resurfacing backlog is not quantified. Stated objectives are to reduce pavement resurfacing backlogs on a 10 year or 12 year cycle and to reduce the routine maintenance backlog by 10 percent annually. The supporting strategies for these objectives, however, are very broad and general. They do not adequately address how these backlogs will actually be reduced. Recommendation: Use the Transportation Program Plan and the program/ performance budget to address and document transportation financing and operating strategies. The process holds promise to become a mechanism for developing meaningful strategic plans linked to implementation resource requirements. To realize this potential, NCDOT will need to involve the Board of Transportation and key senior NCDOT managers in this process. The State’s budget process will also need to rely on the information concerning goals, objectives, and measurable program outcomes to make transportation funding decisions. Finding: The strategic planning process is not fully integrated with the Department’s management practices and operations. The long- range Statewide Transportation Plan, the information technology strategic plan, and Department operational plans are developed without integration or reference to the Transportation Program Plan. The program output measures and performance measures are not used to monitor and evaluate daily operations. PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION FINAL REPORT 3.9 MAY 18, 19989 Results against the measures are reported only on an annual basis, as required for development of the next program/ performance budget document. Recommendation: Use the Transportation Program Plan to guide and monitor day- to- day operations of NCDOT. Each operating unit should use the relevant program objectives to guide and manage its operations. Current outcome and performance measures should be revised to be more meaningful and to facilitate tracking. Results should be reported to the Secretary and the Board of Transportation regularly. This will help focus operations on the Department’s key goals and objectives and help refine the planning process and content. Finding: The Department lacks an effective Department- wide information technology strategic planning process. NCDOT has in place various procedures for planning and budgeting technology initiatives. The Management Information Systems unit coordinates many of these activities, including coordinating the development of the information technology budget and seeking approval from appropriate officials regarding major technology investments. Recently, Management Information Systems developed an information technology strategy document that maps out changing responsibilities and objectives over the next few years. Although these efforts are commendable, they do not suffice. Specifically, NCDOT lacks a formal process led by senior management to consider and prioritize information technology initiatives with long- range, Department- wide implications. Instead, areas of NCDOT largely plan information technology initiatives separately, utilizing ordinary channels for decision- making and budgeting to seek approval and funding for their respective initiatives. This process fosters a reactive approach to technology planning and has led to inconsistency, duplication, and incompatibility in the Department’s systems. Note: The Office of State Auditor is currently conducting a detailed review of the Department’s computer systems and information technology operations. Recommendation: Create a Department- wide information technology strategic planning process. A cooperative effort across the Department and among other information technology units should be adopted to coordinate an effective strategic plan. This ongoing effort should be led by a Steering Committee of senior Department managers. Management Information Systems, Engineering Automation, and other technology driven units should be supporting participants in this process. A schedule of cyclical activities should be defined that includes: establishing and revising the information technology strategic plan; performing tactical ( technical and business unit- level) planning activities; performing follow- up activities; and preparing inputs to the budgeting and operational planning processes. Outcomes of an information technology strategic plan institutionalization effort should include: n Identification and alignment of strategic objectives n Aligning Department- wide goals with the strategy n Linking strategic objectives to long- term performance targets and annual budgets PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION FINAL REPORT 3.10 MAY 18, 199180 n Obtaining feedback and buy- in from the user community to improve strategy n Clearly communicating the information technology strategy and responsibilities n Developing a formal information technology strategic plan n Performing periodic and systematic strategy reviews n Clarifying and gaining consensus to changes in NCDOT’s strategy n Regularly reporting progress to the Secretary of Transportation n Regularly ensuring compliance with the adopted information technology strategic plan Finding: The customer service improvement initiative started last year has begun to deteriorate due to a lack of management support and attention. The customer service plans were completed and approved in December 1997. Since that time no significant progress has been made. Department sources have indicated that plan implementation had been suspended because of management changes and other priorities. Recommendation: Revitalize and refine the customer service improvement program. The Department’s customer service staff should be responsible for coordinating implementation of the program. The revitalization and refinement effort should include: n Obtaining strong ongoing support from the Secretary n Restructuring the Advisory Committee with the appropriate individuals n Reviewing all previously approved plans and strengthening unit customer service initiatives n Establishing specific implementation plans and schedules and a mechanism for evaluating progress and accomplishments Finding: The Department’s organizational structure offers additional opportunities for improvement over the long term. Secretary Tolson has taken several positive steps in improving the overall organizational structure of the Department. These improvements include more appropriate reporting relationships and groupings of responsibilities for the Public Information Office and the transportation program development function. However, several areas of concern remain: n The concentration of authority in the State Highway Administrator position is substantial, even though planning and programming functions have been moved to another organizational unit. PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION FINAL REPORT 3.11 MAY 18, 199181 n The span of control of the Deputy Secretary for Personnel is narrow; only one major unit ( Personnel Office) reports to this position. n Units with responsibility for various external relations functions are spread throughout the organization. Recommendation: Consider additional changes to the organizational structure over the next two years. NCDOT was restructured in March 1998. The Department is also in the process of making numerous changes in management practices and operational procedures. Therefore, it could be disruptive to implement another reorganization at this time. However, the Department should establish a long- term plan to implement an organization over the next two years that reflects the following principles: n Group closely- related functions within the same organizational entity n Clearly define authorities and responsibilities to avoid duplications and to assure accountability n Establish appropriate spans of control; the more complex and variable the functions, the narrower the span of control Exhibit 3- 4 illustrates one suggested organizational structure that reflects these principles. Exhibit 3- 4: A Suggested NCDOT Organization Structure for the Future BOARD OF TRANSPORTATION DEPUTY ATTORNEY GENERAL INTERNAL AUDIT DOT ATTORNEY PUBLIC INFORMATION & EXTERNAL AFFAIRS STATEWIDE PLANNING & MPO COORDINATION PROGRAMMING AND TIP DEVELOPMENT PUBLIC TRANSPORTATION RAIL AVIATION BICYCLE AND PEDESTRIAN TRANSPORTATION PLANNING & PROGRAMMING Deputy Secretary PLANNING AND ENVIRONMENTAL RIGHT- OF- WAY HIGHWAY DESIGN TRAFFIC ENGINEERING PROJECT DEVELOPMENT State Project Development Engineer DIVISIONS ( 14) ROADWAY CONSTRUCTION BRIDGE CONSTRUCTION MATERIALS CONSTRUCTION AND MATERIALS ROADWAY MAINTENANCE BRIDGE MAINTENANCE EQUIPMENT AND INVENTORY MAINTENANCE AND OPERATIONS FERRY OPERATIONS CONSTRUCTION, MAINTENANCE AND OPERATIONS Chief Engineer DIVISION OF MOTOR VEHICLES Commissioner HUMAN RESOURCES INFORMATION TECHNOLOGY GENERAL SERVICES CIVIL RIGHTS ADMINISTRATION Deputy Secretary FISCAL BUDGET PURCHASING PRODUCTIVITY MANAGEMENT FINANCE Chief Financial Officer SECRETARY Department of Transportation GOVERNOR State of North Carolina PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION FINAL REPORT 3.12 MAY 18, 199182 Source: KPMG/ MGT of America This suggested organizational structure includes the following changes relative to the March 1998 NCDOT organizational structure: n Statewide transportation planning and transportation programming functions are combined with the public transportation, rail, aviation, bicycle, and pedestrian functions under a newly created Deputy Secretary for Transportation Planning and Programming position. n An Office of Project Development is established under a newly created State Project Development Engineer position. This Office includes the following existing functions: – Project Planning and Environmental – Right- of- Way – Highway Design – Traffic Engineering PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION FINAL REPORT 3.13 MAY 18, 199183 n Highway and ferry field operations are aligned under the existing Chief Engineer position. The units reporting directly to the Chief Engineer are: – Construction – Materials – Maintenance and Operations branch – Divisions ( 14) – Ferry Operations n A newly created Budget Office is added under the existing Chief Financial Officer position. n Internal Audit is realigned to report to the Secretary rather than to the Deputy Secretary for Administration. n The existing Personnel Office is aligned under the Deputy Secretary for Administration. n A Public Information and External Affairs Office is created and aligned within the Office of the Secretary. This office includes the Governor’s Highway Safety Program, APA Coordinator, Public Information Office, Legislative Affairs and Customer Service functions. n This proposed organizational structure replaces or eliminates the need for the following positions: – Deputy Secretary for Transportation – State Highway Administrator – Deputy Chief Engineer for Construction and Maintenance – Deputy Secretary for Personnel PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION FINAL REPORT 4.1 MAY 18, 1998 4 . ST A T E W I D E A N D LONG- RANGE PL A N N I N G Statewide and long- range transportation planning includes all activities related to identifying long- range options for addressing transportation needs. BACKGROUND The Statewide Planning branch has responsibility for carrying out NCDOT’s statewide and long- range planning activities. Prior to March 1998, this branch was located within Planning and Programming in the Division of Highways; it is now in the newly formed Office of Planning and Environment. The Statewide Planning branch has responsibility for: transportation system planning, state highway research, and the Geographic Information System ( GIS) program. Major functional responsibilities of Statewide Planning are shown in Exhibit 4- 1. Exhibit 4- 1: Statewide Planning Branch Functional Responsibilities STATEWIDE TRANSPORTATION PLANNING Transportation Systems Planning Transportation Research Geographic Info Systems Activities Supporting Functions Internal NCDOT Research Digitized Highway Mapping Statewide Transportation Plan Traffic Data Collection State Supported Univ. Research Electronic Highway Inventory Metropolitan Plans Traffic Forecasting Cooperative Nat'l Programs Technical Assistance Major Investment Studies State- Municipal Agreements Research Implementation Planning Support Small Urban Area Studies Project Planning Support Technology Transfer Database & Software Maint. Thoroughfare Plans Road Functional Classifications Development/ Transport Reviews Source: KPMG graphic based on NCDOT functional descriptions Transportation System Planning Program Transportation system planning is performed to identify long- range options for transportation spending and to anticipate long- range transportation needs. It results in identification and programming of defined projects in the project development life cycle. Transportation system planning activities include conducting statewide and urban area studies, collecting and analyzing base traffic data to identify transportation needs and fulfill federal reporting requirements, and conducting traffic forecasting. Transportation System Planning Activities The Statewide Planning branch is responsible for conducting long- range transportation planning for all areas of the State, including metropolitan areas, small urban areas, counties, and multi- county regions. In general, long- range plans project 20- 30 years ahead to determine where transportation problems will occur and how to solve them. A typical long- range planning study involves several steps, including: n Initial meetings with local citizens, staff and elected officials PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION FINAL REPORT 4.2 MAY 18, 1998 n Data collection and analysis n Discussions of findings with the local area n Development of alternative future scenarios n Public information workshops and public hearings n Selection of the preferred plan. Each long- range plan is mutually adopted by the State and appropriate localities to serve as a guide in the development of the transportation infrastructure. Adopted long- range plans are used by localities and regions of the state to develop their requests for project funding in the seven- year Transportation Improvement Program ( TIP). Transportation system planning includes numerous long- range planning activities and products, some of which are mandated by federal legislation under the Intermodal Surface Transportation Efficiency Act ( ISTEA) or the Clean Air Act. Specific activities are discussed in the section below. Statewide Transportation Plan. The Statewide Transportation Plan establishes the direction for the future development of the State’s multi- modal transportation network through the use of major goals and objectives. These goals and objectives are used by policy makers to prioritize current and future transportation needs. In response to the ISTEA’s requirements for statewide planning, a Statewide Planning Task Force— consisting of the North Carolina Department of Transportation; the North Carolina Department of Commerce; the North Carolina Department of Environment and Natural Resources; the North Carolina State Ports Authority; four representative Metropolitan Planning Organizations; and the Federal Highway Administration— was established to develop the plan. The statewide planning process included: n Documenting NCDOT’s existing programs and processes and comparing them to ISTEA’s 23 planning considerations to determine the Department’s performance n Publishing NCDOT’s current practices for a 45- day public review and comment period n Developing the plan’s goals and objectives based on the Department’s goals and commitments and input received from the public review period n Developing specific strategies for improving current processes and achieving identified goals and objectives, based on input from the public review period and suggestions from each division and branch within NCDOT n Developing a draft plan, which, together with public comments, provided the basis for developing a final plan Transit 2001. In addition to the Statewide Transportation Plan, a separate transit- long- range plan was developed by NCDOT’s Transit, Rail and Aviation Division. A special commission appointed by the Governor was given the responsibility to provide recommendations on improving public transportation. The 26- member commission was supported by a technical committee consisting of 29 transit industry professionals, as well as a joint NCDOT and consultant team. Through a number of public forums and the work of four sub- committees, the commission examined key issues: rural and human service transportation, PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION FINAL REPORT 4.3 MAY 18, 1998 urban and regional transit, intercity passenger rail, and land use and development. Based on an analysis of these issues and an examination of the transportation challenges facing the State, the commission developed an action agenda to expand and enhance the State’s public transportation in the near term and recommend long- term funding strategies. Metropolitan Planning. ISTEA requires that transportation planning in urbanized areas be coordinated through a Metropolitan Planning Organization ( MPO), which includes representatives of transportation agencies and local governments. There are MPOs in each of the 17 metropolitan areas in North Carolina with populations exceeding 50,000. NCDOT plays a key role in MPO planning activities, working with the MPOs and providing technical assistance in the development of their plans. These services include traffic monitoring, traffic forecasting, data collection, alternatives development and evaluation, and public input, depending on the technical complexity of the metropolitan planning process and the availability of MPO resources. The activities that make up metropolitan planning are based primarily on requirements defined by federal statute ( ISTEA). n Long- range plans. Long- Range Plans developed by the MPOs serve as the official intermodal plan for transportation activities within their area, typically for a 20- year time horizon. For projects to be designed and constructed in MPO areas using federal funds, a previous Long- Range Plan must have identified the need for such projects. In compliance with ISTEA, Long- Range Plans are required to meet financial capacity requirements, demonstrating that projects included can be funded and financed from resources that can be reasonably expected. In general, these plans are updated through a consensus- building effort with involved local, federal, state agencies, NCDOT, and the public. The basis for the plans is projected transportation demand, which is developed using standard travel demand forecasting methodology. Where appropriate, transit demand is included in the modeling efforts. n Air Quality Conformity. For regions not in compliance with Federal Clean Air Act requirements, each time the Long- Range Plan is adopted or amended, MPOs must demonstrate through air quality modeling that the proposed projects do not adversely impact regional air quality and do contribute to the region’s ability to achieve federal clean air mandates. n Major Investment Studies. Major Investment Studies are federally- required planning initiatives used to evaluate transportation options for any proposed projects that meet the following criteria: “ a high-type highway or transit improvement of substantial cost that is expected to have a significant effect on capacity, traffic flow, level of service, or mode share at the transportation corridor or subarea scale” ( 23 CFR 450.104). NCDOT’s Statewide Planning branch typically assumes the lead project management role for Major Investment Studies conducted in the state. However, large- scale transit-oriented studies typically are undertaken by the local transit agency or local department of transportation. Small Urban Area Studies and Thoroughfare Plans. Although ISTEA does not require transportation plans for areas with populations under 50,000, North Carolina General Statutes 136- 66 mandates the development of long- range thoroughfare plans for municipalities across the state. These plans are developed by NCDOT through community participation and consensus building. The Statewide Planning branch is responsible for: providing planning expertise to the municipalities; developing plans for PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION FINAL REPORT 4.4 MAY 18, 1998 coordinated development of the road and highway system for counties, planning regions and the State; reviewing development plans as they relate to thoroughfare plans; and providing other planning assistance as needed. Transportation Systems Planning Coordination NCDOT must coordinate its transportation system planning activities with numerous other organizations and constituencies throughout the State. At the statewide level, NCDOT’s Statewide Planning branch and the Transit, Rail and Aviation Division are responsible for ensuring that transportation system planning is carried out in accordance with a comprehensive set of intermodal planning principles as set forth by federal mandates. For the State’s urbanized areas, NCDOT must coordinate its efforts with MPOs and other local officials to plan transportation systems that maximize the efficiency of the multi- modal transportation system. Through their participation in various forums, NCDOT, the MPOs and other local officials consider transportation solutions of various modalities, such as public transit, bicycle and pedestrian facilities, and highways. These forums also facilitate discussion among stakeholders of the controversial issues that can affect transportation system planning, such as land use, energy consumption and air quality, mobility, social equity and quality of life. Transportation Systems Planning Supporting Functions The Statewide Planning branch undertakes a number of special data collection, forecasting, analysis and local government/ MPO coordination activities to support transportation system planning activities. These include: n Collecting and disseminating all types of travel data on the State Highway System n Providing traffic forecasts for project planning, highway and bridge design and pavement design n Initiating and negotiating State- Municipal Agreements on street and highway system responsibility for areas that have mutually adopted thoroughfare plans as required by General Statutes 135- 66 n Developing and maintaining the capability to report highway needs on a statewide basis, including both urban and rural needs n Assisting the Program Development and Fund Administration branch and NCDOT administration in the evaluation of candidate projects for the Transportation Improvement Program; and assisting the Planning & Environmental branch in conducting project planning studies n Assisting local governments in transportation plan implementation through reviewing proposed developments in terms of their relationship and impacts on transportation plans n Periodically reviewing and coordinating with local governments changes in the functional classification of roads and highways PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION FINAL REPORT 4.5 MAY 18, 1998 State Highway Research Program The Research and Development Unit within the Statewide Planning branch is responsible for the State Highway Research Program. The unit is responsible for managing and directing formal research activities within the Division of Highways and placing specific research findings into NCDOT operations through technical reports, pilot demonstration projects, and special training projects. Such activities include contract research programs with state- supported universities; cooperative research programs with national organizations including the United States Department of Transportation, the Federal Highway Administration, and the Transportation Research Board; and research sponsored by other NCDOT divisions and branches. The Research and Development unit annually reports on the implementation status of research initiatives to ensure that research, development and technology transfer products are being utilized in a timely and appropriate manner. The unit’s January 1998 report identified the status of 27 projects. Most of the current research projects focus on improved highway design and construction techniques. However, three projects are oriented to improved highway operating techniques, while another is assessing the use of Geographic Information Systems for paratransit scheduling. Geographic Information Systems Program The Geographic Information Systems ( GIS) unit within the Statewide Planning branch is responsible for the GIS program. The program includes: n The production and maintenance of a set of digitized County Maintenance maps, which accurately depict the entire state- maintained road system and a set of digitized urban maps which accurately depict the road network for all municipalities of 5,000 or greater population n Maintenance of an up- to- date computer file inventory system of the primary and secondary road system and selected data on municipal streets n Maintenance of a complete and up- to- date history of all activities related to the entire secondary road system n Maintenance of a reporting and analysis system for fatal accidents n Establishment and maintenance of route numbering for U. S. and North Carolina routes n Establishment and maintenance of American Association of State Highway and Transportation Officials route- numbering documentation n Development and maintenance of software protocol for use of GIS techniques to provide improved project impact analysis and transportation planning capabilities n Production of annual road inventory reports required by the Federal Highway Administration for the Federal- aid program n Training programs in the use of GIS PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION FINAL REPORT 4.6 MAY 18, 1998 n Development and coordination of useful GIS databases n Participation in the development and coordination of GIS- related activities Within NCDOT, the activities of the GIS unit are used to support NCDOT’s systems planning, project planning, design, traffic engineering and pavement management functions. Outside of NCDOT, the unit’s databases and geographic displays are used by MPOs, the State Highway Patrol and other state agencies and municipalities. STRENGTHS The Statewide Planning branch has a clear mission and goals. The mission statement establishes the framework that is used to guide the branch’s planning, research and GIS activities. Goals are used to identify specific work responsibilities and to measure performance. The Department’s statewide planning process is well- defined. The Statewide Planning branch has an established process for undertaking long- range and transportation systems planning initiatives on a statewide and regional basis. The process is consistent with federal planning requirements mandated by the Intermodal Surface Transportation Efficiency Act and by North Carolina General Statute 136- 66. Statewide planning includes effective support functions. There are well- defined traffic counting, forecasting and GIS processes that support long- range and transportation systems planning functions. The Statewide Planning branch has a commitment to using emerging technologies. The branch consistently fosters the development and use of new technologies to enhance transportation planning activities. The GIS program is providing the branch and the Department the capability to visually display and analyze the physical and operational characteristics of the highway network. This technology will ultimately provide both a centralized database of the State’s highway network and a powerful tool for assessing the operating characteristics of the highway network, including traffic flows, congestion and accident and incident locations. The branch also endeavors to provide staff with computer hardware and software necessary to perform planning activities within the constraints of the budget. The Statewide Planning branch is committed to enhancing project development and implementation techniques through its research program. In partnership with universities and other NCDOT units, the research program sponsors projects that promote the development of new construction materials, improved construction techniques, procedures for assessing road and bridge conditions, vehicle monitoring and traffic flow, environmental impact assessment and paratransit scheduling. The Statewide Planning branch has a well established reporting process that is used to assess the progress and implementation status of research efforts. PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION FINAL REPORT 4.7 MAY 18, 1998 FINDINGS & RECOMMENDATIONS Finding: The goals set forth in the Statewide Transportation Plan are not formally and consistently measured. NCDOT’s Statewide Transportation Plan establishes a comprehensive set of strategies for meeting the plan’s established goals. However, there is no consistent, formalized process for measuring how well the Department achieves the plan’s goals. Recommendation: Develop performance indicators for addressing how well NCDOT meets the goals and objectives of the Statewide Transportation Plan. As part of the transportation system planning process, the Department should establish a set of evaluation measures to assess performance. These measures can be used to assess where the Department is performing well relative to the plan and to identify potential deficiencies that require increased attention. The Florida Department of Transportation currently utilizes this approach. In addition to a long- range transportation plan, Florida Department of Transportation has a short- range plan component that covers the first 10 years of the present year- 2020 planning horizon. The short- range component identifies strategies to be undertaken based on the long- range transportation plan and establishes performance measures and goals for assessing performance. For example, to meet the Department’s safety goal, one of Florida Department of Transportation’s commitments and measures of performance is to “ keep the percentage of crashes on the State Highway System where road related conditions are a contributing factor below 1.0 percent.” Finding: The process for evaluating transportation research efforts is not linked sufficiently to statewide transportation planning. NCDOT’s current research program is based primarily on the solicitation of research topics from universities and NCDOT units. As a result, the goals of the Statewide Transportation Plan and other planning efforts are not key drivers in determining and evaluating transportation research topics. Also, while the current reporting structure for research efforts is adequate for tracking progress, it does not identify the expected or actual impact of research initiatives on transportation system planning and NCDOT operations. More specifically, there is not a clear, consistent process to measure the expected operating cost and/ or capital cost savings associated with a research effort, or to ensure that outcome- based performance measures ( such as improvements in customer service, safety, and the useful life of a capital asset) are evaluated and reported. Recommendation: Enhance the research program by linking efforts to goals established in the Statewide Transportation Plan. NCDOT should enhance its current research process by establishing guidelines to assure that one part of the research efforts are geared toward meeting specific long- range plan goals and objectives, while the other part is open to original proposals from NCDOT and universities. This will allow NCDOT to develop a more strategic research program that complements and forwards the Department’s priorities. In addition, Statewide Planning should establish a better process for measuring the benefits of research efforts. At key PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION FINAL REPORT 4.8 MAY 18, 1998 points during research efforts, an enhanced research evaluation process should evaluate the merits of these efforts to determine they should continue. In addition, the research evaluation process should be used to assess the actual impacts of a project after implementation. Finding: The statewide planning process does not devote sufficient resources to studying the external forces shaping travel and transportation needs. Transportation plans developed as part of long- range transportation system planning are based mainly on identifying projected population, employment and land use changes on travel demand and assessing transportation strategies for addressing this demand. However, resources have not been devoted for studying the forces that are shaping population, employment, and land use. Recommendation: Devote resources to understanding the external forces shaping travel and develop transportation strategies that address these forces. Projected changes in population, employment and land use are due to external factors that shape North Carolina’s economy. These external forces include the effects of aging and retirement in the population, the price of motor vehicle fuel, and the growth of financial services industry, to name a few. Each of these forces impacts the number and location of trip origins and destinations. As part of NCDOT’s long- range planning process, Statewide Planning should devote resources to identify those external forces that will likely shape travel demand, assess how the State’s transportation network should address the resulting travel demand, and evaluate the State’s role in meeting this travel demand. Finding: The Statewide Planning branch has limited resources to carry out its mandated multi-modal planning activities. Statewide Planning is faced with the challenge of meeting multi- modal responsibilities associated with the Intermodal Surface Transportation Efficiency Act within a constrained staff and resource budget. Historically, Statewide Planning efforts have been devoted primarily to long- range planning for the highway network. As a result of the multi- modal planning requirements of ISTEA, however, the Statewide Planning branch is increasingly involved in managing and participating in multi- modal planning efforts such as the 15- 501 Major Investment Study, Regional Rail in the Triangle Area, and High Speed Rail. In its evolving role, the Statewide Planning branch is challenged to develop the specialized skills necessary to meet the planning needs of all transportation modes. For example, the branch may need increased skills in transit and rail planning techniques. This situation is similar to other NCDOT divisions and branches and at other transportation agencies. Constrained resources also have slowed the development of a new statewide travel forecasting model, the timely implementation of state- municipal agreements and some transportation systems planning analyses. PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION FINAL REPORT 4.9 MAY 18, 1998 Recommendation: Consider providing additional resources to, and/ or changing the responsibilities of, the Statewide Planning branch. The Statewide Planning branch needs increased resources and/ or changes in responsibilities to carry out its increasing multi- modal planning responsibilities. To meet all the potential requests for multi- modal planning efforts, the branch will need to develop and implement guidelines that could be used to equitably balance the timing and scope of planning effort requests by the various modal divisions. In addition, the Department should consider various options for devoting additional resources for Statewide Planning. These resources could be provided by hiring additional staff and/ or providing additional contractual resources. The Department should also consider eliminating or transferring certain non- core responsibilities out of Statewide Planning. For example, lead responsibility for state- municipal agreements could be transferred to another Department unit. PERFORMANCE REVIEW NORTH CAROLINA DEPARTMENT OF TRANSPORTATION FINAL REPORT 5.1 MAY 18, 1998 5 . TRANSPORTATION PROGRAM DE V E L O P M E N T Transportation program development is the process of establishing funding levels and determining project priorities in each of the state’s major transportation program areas. This section presents an assessment of the processes NCDOT uses to set program allocations, establish project priorities and develop the TIP. BACKGROUND Transportation project priorities are identified in North Carolina’s State Transportation Improvement Program ( TIP2), a federally- mandated document that confirms the schedules and funding sources for those transportation projects that NCDOT plans to implement over the next seven years. Program Overview The current TIP document includes a total of 2,620 projects, with the total future construction and right- of-way costs estimated at approximately $ 21 billion in today’s dollars. Of these 2,620 projects, 2,281 ( 87 percent) have received, or are scheduled to receive, some level of funding during the current planning period ( FY 1998- 2004). The remaining 339 projects, listed in the current TIP document as “ identified future needs,” are not scheduled to receive any funding during the current planning period. Note: Projects funded by the Highway Trust Fund are a part of the State’s Transportation Improvement Program. The Office of State Auditor is currently conducting a review of the Highway Trust Fund. Exhibit 5- 1 presents a summary of the program costs. The program cost estimates presented below are based on the current year estimates ( 1998) and do not include inflation. Exhibit 5- 1: Current State Transportation Improvement Program Overview Funds Expended for Projects |
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