Working together, federal, state, local, and private-sector entities plan and execute an intermodal transportation breakthrough in Denvers Southeast Corridor.
By Van R. Johnston, Wendy Haynes, and Claire-Lauren Schulz
The megaprojects environment has changed dramatically since the 1970s. Forming and maintaining the strong coalitions required to sustain multibillion dollar, multiyear, and multiterm megaprojects have become more complicated. Our new “do-no-harm” era challenges megaproject managers to aggressively mitigate disruptions and attend to stakeholder concerns. As explored by Altshuler and Luberoff, themes that permeate most contemporary megaprojects include maintaining core constituencies, entrepreneurialism, mitigation, bottom-up federalism, and locally painless project funding. Cost escalation, delays, and obstacles have become the megaproject norm.
As metropolitan growth continues, more freeway and mass transit systems across the country will require reconstruction or expansion. Citizens—the customers of public services—are demanding higher quality transportation options in a timely manner, for less money, and with minimal disruption. Despite the inherent complexities of multibillion dollar public works projects, they continue to be planned and executed, putting public leadership to the test.
The Colorado Transportation Expansion (T-REX) project—a megaproject that has exceeded expectations— is characterized by intermodality, design-build experimentation, creative financing, accelerated construction, and collaborative partnerships. Project leadership has based its goals on community, quality, budget, and schedule. Project officials have met these demanding goals, an exceptionally rare feat for a megaproject. Exemplary elements of the T-REX project could pave the way for the next generation of megaprojects.
Like most cities, Denver is growing, and traffic congestion is a major issue. Volume along Denver’s Southeast Corridor had exceeded its maximum capacity of 180,000 vehicles per day and was quickly approaching gridlock. To solve this problem, the Colorado Department of Transportation (CDOT) and Regional Transportation District (RTD) formed a unique partnership with the Federal Highway Administration (FHWA) and Federal Transit Administration (FTA) to plan and execute extensive highway improvements and add light rail service to the Southeast Corridor.
After six years of planning and preparation,T-REX construction began in 2001 (Table 1).The project team received full funding, obtained the necessary approvals, and utilized an innovative design-build approach. Because of its unique leadership collaboration, this project will be completed two years early and within budget. Construction is scheduled for completion in September 2006, and light rail service along the Southeast Corridor will begin in November 2006.
The $1.67 billion T-REX project will transform the way people in the metro Denver area commute and live. Knowledgeable observers predict that it will improve transit and motorist travel time and reliability, increase transit ridership, enhance safety for motorists, and replace aging infrastructure. Public officials also anticipate that the project will reduce travel time and congestion on various freeway segments and major streets and support rapidly growing residential and commercial areas served by the Southeast Corridor.
Early Joint Involvement and Collaboration
Uncontrolled entrepreneurial egos, political biases, and overuse of consultants too often obscure and neglect the public interest during project planning. In the early planning stages, the parties involved will likely perform more effectively if a common goal can unite them. In the initial stages of the T-REX project, the parties agreed to work together toward mutually held goals.
They studied the Southeast Corridor to determine the most effective solution for the growing traffic problems. Many solutions were discussed, but none appeared to guarantee that traffic would be able to flow as smoothly as possible throughout the corridor during the project. All parties involved refused to advocate an incomplete solution, foreshadowing that a solution would likely involve intermodal elements. CDOT and RTD performed a Southeast Corridor major investment study (MIS).The MIS report reinforced earlier perceptions of the need for an intermodal project and recommended a rapid transit line and some highway improvements for safety—but no major highway improvements.
The study led to a proposal for the equivalent of ten highway lanes and six lanes of light rail line.The suggested plan would require the removal of several homes and businesses, which CDOT and RTD believed would sit poorly with the public, and they needed as much support as possible. Therefore, CDOT pursued studies to determine how to create more lanes without taking properties. After analyzing a “depressed” section of I-25, engineers determined that it would be possible to add the four lanes needed by cutting side-slopes and building retaining walls. Experts deemed the approach feasible, and CDOT and RTD moved forward.
Overcoming Fiscal and Regulatory Hurdles
Obtaining fiscal support for megaprojects has changed since the 1970s. Federal funds are granted only if a project receives authorization through a federal bill; the primary constituencies of such legislation consist of mass transit advocates, environmental groups, and other critics and skeptics. These constituencies make compromising on priorities and resolving project-related conflicts more difficult. However, usage of the federal funds granted has become more flexible. This flexibility has allowed for wider distribution of available resources and fewer restrictions on various facets of a project, an advantageous development for state and local governments, as exemplified in the T-REX project. In 1997,CDOT faced a tight reauthorization deadline. Fortunately, “policy entrepreneurs” deftly navigated through the political straits and helped alleviate the situation. The Transportation Commission identified the Southeast Corridor project as one of the most important strategic projects in the state.The passage of Senate Bill 1 in June 1997 (sponsored by Senator Ray Powers of Colorado Springs) authorized local officials to accelerate the construction of the project. A 10 percent funding provision that could be utilized for transit was included in this bill, which gave CDOT $84 million toward the project. CDOT would be able to immediately offer this $84 million to match U.S. Department of Transportation funds.CDOT convinced rural commissioners to use the funds on something other than highways, and the agency persuaded then- Governor Ray Romer that CDOT should retain authority over the project.
Southeast Corridor Project Team
In May 1998, Congress passed the new Federal Transportation Bill,TEA-21.All corridors in the metro Denver area were authorized; the act also included $10 million in federal funding earmarked specifically for the Southeast Corridor.
CDOT and RTD officially joined forces to form the Southeast Corridor project team to design and build improvements in the corridor. Shortly thereafter,CDOT and RTD began the environmental impact statement (EIS) process for the project, required under the National Environmental Policy Act of 1970, hiring Carter and Burgess for the EIS. The EIS must demonstrate that a project can be built with minimal detriment to the environment and that the adverse impacts are mitigated. Public officials incorporated environmental issues, public comment, and project design into the T-REX EIS to provide a sound basis for an accurate estimate of costs. In efforts to further mitigate environmental concerns, the T-REX EIS also considered a wide array of consequences, including “build” and “no-build” alternatives, right-of-way acquisition, and condemnation.
Project leaders worked hard to involve citizens in the process through various public open houses and numerous presentations to public and civic groups.To the surprise of many, the EIS was completed in eighteen months. Informed observers attribute the speedy completion to the collaborative nature of this project, during which those involved set aside differences and focused on project goals.
Transportation Revenue Notes
Funding for the project soon found the spotlight. In 1999, Bill Owens, who supported the Southeast Corridor project, took office as governor. He wanted to execute the project without a tax increase. For this reason, and to minimize local objections, the cost needed to be as painless as possible locally. This required elected leaders to consider a bonding strategy that would minimize the impact of inflation while accelerating project completion. The Colorado State Constitution limits the state in contracting debt in any form, including bonds and other long-term debt, without voter approval.As a result, project officials pursued an innovative approach for funding, Transportation Revenue Notes—also known as Grant Anticipation Revenue Vehicle (GARVEE) bonds—which still require voter approval. (GARVEE bonding is a federal instrument that allows future federal fund allocations to pay off bonds issued by the state.)
To enable CDOT to use GARVEE bonds, the Colorado legislature enacted legislation in 1999 giving it eligibility.CDOT began a massive statewide outreach campaign to acquire the necessary voter support for the GARVEE bond strategy. Throughout the campaign, CDOT’s message was that all Coloradans would benefit, not only Denver residents. In November 1999, Colorado voters overwhelmingly approved the two bond initiatives to fund the highway project, as well as the light rail in the Southeast Corridor.
As project costs rose and federal aid decreased, GARVEE bonds provided local governments a means to accelerate T-REX while reducing costs.With this bonding strategy,RTD sold bonds for the light rail, and CDOT sold bonds both to help finance the highway portion of the Southeast Corridor and to help other state highway projects. CDOT also borrowed against federal funds not yet granted. Without the issuance of GARVEE bonds to provide up-front capital with the ability to use federal funds, CDOT would have had to default to pay-as-you-go financing, resulting in a project completion date of 2017 instead of 2006.
Other Public and Private Funding
In 1999, numerous bills passed, helping T-REX move forward.They allowed for contractor selection on design-build best value, increased private participation in public transportation facilities, petition for inclusion into the RTD tax district by landowners adjacent to preexisting RTD boundaries, and any necessary relocation of utilities.
The City of Seattle was not fulfilling its federal commitments to transit, which ultimately freed up $500 million in federal funds for transportation. Federal officials granted the City of Denver high priority for these funds, due at least in part to sound local planning and mitigation efforts. In November 2000, the FTA signed a $525 million full funding grant agreement in RTD’s name.With federal and state support, local governments pledged $30 million in matching funds.
The T-REX project has effectively reexamined and reengineered ways to obtain funding and overcome regulatory hurdles. As costs for public projects continue to rise, the processes associated with obtaining funding and complying with regulations will likely become more complicated and competitive. Other project officials should take heed of the T-REX experience and respond nimbly to changing circumstances.
A Different Project Delivery Method: Design-Build
Many past public projects have utilized the traditional design-bid-build approach. In this approach, the design plans are completed first, and contractors bid and build the sections in separate phases. Some public officials argue that this approach has resulted in higher costs, delays, dissatisfaction, and quality problems. Clearly, such undesirable outcomes would conflict with T-REX officials’ commitment to community, quality, budget, and schedule. Therefore, they selected the innovative design-build delivery method, under which a single contractor team designs and builds an entire project, for a predetermined price, with oversight from a designated authority. The method is entrepreneurial; it decentralizes authority while empowering those who play a direct, vital role in implementation.
CDOT and RTD chose Southeast Corridor Constructors (SECC), a joint venture team consisting of Kiewit Construction and Parsons Transportation Group, as the design-build contractor for T-REX. SECC was chosen through a best-value process in which CDOT and RTD jointly evaluated and weighted the technical and price aspects of the proposal.The experience and prior accomplishments of the team also impressed project officials. The deal was sealed when SECC agreed to finish the project ahead of schedule and $39 million under the $1.23 billion bid price.
After completing project planning,T-REX officials moved to execution, which not only involved constructing the project, but also managing traffic and maintaining public support. Table 2 depicts the intermodal elements of the project, and Figure 1 depicts the scope.
Given the diverse nature of the project and its stakeholders, the project team knew that success would require transparency and good will as it coordinated the various elements of the megaproject. Collaboration, accountability, and consistency became the guiding principles. Adherence to these principles allowed the project team to overcome challenges, develop and maintain relationships with the public, and reach early completion.
This multimodal project entailed a multiagency partnership.The T-REX project team took a “one team, one project” approach to focus on the best interests of the project and its stakeholders. CDOT and RTD formalized their partnership with an intergovernmental agreement (IGA) in September 1999. This agreement, besides explaining the design-build concept and the financing methods, assigned responsibilities to each agency, establishing a benchmark for accountability. Through this agreement, both agencies agreed to work together to fund and build T-REX through a designbuild, best-value contract. In addition, in October 1999 the FHWA and FTA also formalized an agreement regarding their roles on T-REX.This interagency agreement, similar to the IGA, also outlined the principles of the project and assigned responsibility.
CDOT,RTD, FHWA, and FTA all agreed to work as “one DOT,” coordinating efforts together on T-REX. After signing their own partnership agreements, all four agencies signed a partnering charter emphasizing the importance of community, safety, cost, quality, schedule, and teamwork in the project. Specifically, the four agencies agreed to the following project goals: F Minimize inconvenience to the public F Meet or beat the total program budget of $1.67 billion F Provide for a quality project F Meet or beat the schedule to be fully operational by June 30, 2008.
The modern era of megaprojects differs from eras past. Funding limitations and demands for higher quality public projects require project managers to explore alternative ways to deliver better projects with more stringent budgets. Citizens expect project outcomes to be achieved with minimal harm to neighborhoods and the general environment. Public managers must find ways to make government work better and cost less by reexamining and reengineering work programs and processes. Even in this challenging era, the T-REX project demonstrates that completion of a successful megaproject is possible.
T-REX has shown that it is possible to effectively meet the needs of stakeholders in spite of limited resources, higher public expectations, do-no-harm values, and mitigation strategies. Because of design-build innovation and effective leveraging of federal resources, T-REX will be completed earlier and at lower cost than a project using a traditional approach—a rarity in the history of megaprojects.
The success of design-build and innovative project financing can be attributed to the collaborative partnerships— the backbone of the project. Personal egos and agency politics were set aside. By collaborating, the T-REX team drew upon a multitude of skills, knowledge, and experience, which allowed for innovative, effective execution. Collaboration—and clear lines of accountability—were essential to the design-build environment. The quality and speed of decision-making increased dramatically. Individual accountability among the agencies played a crucial role in meeting the goals of the project. T-REX has focused on the task, remained under budget, and stayed on track.
Neither unanticipated disruption nor taxes plagued the public. This project nears completion unhindered by the controversy and contentiousness that so often characterize megaprojects.
The authors thank the following for their contributions to this article: Cal Marsella, general manager of RTD; Larry Warner, former project director of T-REX; Betty McCarty, administrative officer, Denver Regional Council of Governments; Toni Gatzen, T-REX public information manager; and Allison Hodge,T-REX staff.
Altshuler, Alan A., and David E. Luberoff. MegaProjects:The Changing Politics of Urban Public Investment (Washington, DC: Brookings Institution, 2003).
Johnston,Van R.,Wendy Haynes, George Scheurenstuhl, Bill Vidal, Tom Norton, and Richard Clarke.T-REX Panel for the National American Society for Public Administration (ASPA). ASPA National Conference, Denver, March 31–April 4, 2006.
Johnston,Van R.“Caveat Emptor: Customers vs. Citizens.” The Public Manager,Vol. 24, No. 3 (Fall 1995), pp. 11–14.
Moler, Steve. U. S. Department of Transportation, Federal Highway Administration.“Colossal Partnership: Denver’s $1.67 Billion T-REX Project.” Public Roads,Vol. 65, No. 2 (Sep/Oct 2001).
T-REX Project:Transportation Expansion Project. 2006. http://www.trexproject.com/.
T-REX Fact Book. About T-REX. 2003. http://www.trexproject.com/.
Van R. Johnston, PhD, is a professor of management and policy at the Daniels College of Business, University of Denver. He can be reached at email@example.com.
Wendy Haynes, PhD, is the graduate program coordinator and professor of public administration at Bridgewater State College, Massachusetts, and former first assistant IG for megaprojects for Massachusetts. She can be reached at firstname.lastname@example.org.
Claire- Lauren Schulz is a graduate student at the Daniels College of Business, University of Denver. She can be reached at email@example.com.