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March 30, 2011 - Kathy Caldwell, P.E., F. ASCE testified on Highways and Transit

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Statement of
Kathy J. Caldwell, P.E., F.ASCE
President
The American Society of Civil Engineers
Improving and Reforming the Nation’s Surface Transportation Programs
United States House of Representatives
Transportation and Infrastructure Committee

March 30, 2011

The American Society of Civil Engineers (ASCE)1 would like to thank the Transportation and Infrastructure Committee for holding a hearing today on how to improve and reform the nation’s surface transportation programs. The Society is pleased to present to the Committee our views on investing in the nation’s transportation infrastructure.

ASCE is concerned with the increasing deterioration of America’s infrastructure, reduced investment for the preservation and enhancement of our quality of life, and with the threatened decline of U.S. competitiveness in the global marketplace. In response, ASCE has issued multiple Infrastructure Report Cards on the condition of the nation’s infrastructure that have helped inform the national discussion. More recently, ASCE has sought to advance solutions to the problems highlighted in the Report Card that provide for an improved quality of life, as well as stimulate the economy. Passing a transformative, multi-year surface transportation bill, with significantly increased funding levels will go a long way to creating a surface transportation system worthy of the Twenty-First Century.

As Congress begins the process of developing a comprehensive multi-year surface transportation authorization, and as President Obama discusses the administration’s proposal to invest $556 billion on the nation’s transportation infrastructure, our roads, bridges, and transit systems continue to suffer from underinvestment.

Infrastructure Receives a Grade of “D”
ASCE’s 2009 Report Card for America’s Infrastructure graded the nation’s infrastructure a “D” based on 15 categories (the same overall grade as ASCE’s 2005 Report Card), and estimated that the nation needs to invest approximately $2.2 trillion from 2009 – 2014 to maintain infrastructure in a state of good repair. This number, adjusted for a 3 percent rate of inflation, represents capital spending at all levels of government and includes what is already being spent. Even with the current and planned investments from federal, state and local governments from 2009 - 2014, the “gap” between the actual spending and overall need will exceed $1 trillion by the end of the five year period.

In the 2009 Report Card, the nation’s roads received a grade of “D-”, bridges a grade of “C”, and transit a grade of “D”. With nearly one-third of roads in poor or mediocre condition, a quarter of the nation’s bridges either structurally deficient or functionally obsolete, and use of our long neglected transit system increasing to its highest levels in 50 years, it is not hard to see why the nation’s surface transportation system is in a state of decline. To bring just these three surface transportation categories up to an acceptable condition would require a five year investment of $1.2 trillion from all levels of government, according to ASCE estimates. The results of years of under investment can be seen in unsafe bridges and dams, deteriorating roads and transit systems, and increased congestion. If the nation continues to under invest in infrastructure and ignores this backlog until systems fail, we will incur even greater costs.

Benefits of Multi-Year Surface Transportation Legislation

Money invested in essential public works can create jobs, provide for economic growth, and ensure public safety through a modern, well-engineered transportation system. By improving the nation’s deteriorating surface transportation system both economic and job creation opportunities will be provided, while creating a multi-modal transportation system for the Twenty-First Century. The nation’s transportation infrastructure system has an annual output of $120 billion in construction work and contributes $244 billion in total economic activity to the nation’s gross domestic product. In addition to the significant economic benefits for the entire nation, the Federal Highway Administration estimates that every $1 billion invested in the nation’s highways supports 27,823 jobs, including 9,537 on-site construction jobs, 4,324 jobs in supplier industries, and 13,962 jobs throughout the rest of the economy.

The job creation potential of infrastructure investment is only one contributing factor toward how surface transportation allows for the nation to compete on in the global marketplace. Equally, important are the benefits to the region’s long term growth and productivity. A significant challenge to this economic growth is increased congestion, which contributes to the deterioration of the nation’s infrastructure. Therefore, the importance of freight movement and the impacts of congestion on the nation’s economy must be emphasized.

Program Reform and Performance Based Outcomes

The federal surface transportation program should be reformed to ensure highway and public transportation investments achieve national objectives and demonstrate the clear value delivered to the American public. To achieve this goal, a process that integrates the development of performance metrics, implementation strategies, and accountability for progress with federal highway and public transportation investments should be established.

Additionally, ASCE supports a review of existing surface transportation programs to determine how reforms could be implemented to create a smaller, more efficient number of programs. Federal programs should be reorganized and consolidated around specific, overarching national objectives to ensure that planning is more comprehensive and projects reflect that federal role. ASCE supports a new, robust, multi-year surface transportation program that strives to meet these goals:

 Increased safety;
 Improved mobility and mode choice;
 Improved international competitiveness;
 Facilitate interstate commerce;
 Increased employment opportunities;
 Reduced congestion;
 Increased security;
 Improved environmental stewardship;
 Improved incident response;
 Energy conservation.

Currently, most infrastructure investment decisions are made without the benefit of a national vision. That strong national vision must originate with demonstrated federal leadership and be shared by all levels of government and the private sector. Without a strong national vision, the national transportation infrastructure system will not be able to undergo much needed reform.

System Expansion and Intermodality

The nation needs a surface transportation program with flexible funding for highway, transit, and other modal facilities, as well as a strong federal role in freight mobility, in order to compete effectively in a global economy. This should include the creation of a program funded with dedicated revenue to provide new capacity and operational improvements focused on securing safe, efficient movement of freight across all sectors.

ASCE supports the creation of a National Intermodal Transportation System that is economically efficient, environmentally sound, provides the foundation for the nation to compete in the global economy, and will move people and freight in an efficient manner. Freight and passenger rail generally share the same network, and a significant potential increase in passenger rail demand will add to freight railroad capacity challenges. Interstate commerce remains the historic cornerstone in defining the federal role in the nation’s transportation system. ASCE supports the expansion of passenger rail and development of high speed rail but this must be accomplished without detriment to our world class freight rail system.

Support for partnerships among federal, state, and local governments, with various citizens, groups and firms from the private sector, are essential to further develop a truly intermodal system. Therefore, an authorization of the surface transportation programs must provide for a strong federal role in freight mobility and intermodal connectors.

To meet demand, Congress must enact a multi-year surface transportation authorization bill that enhances and improves connectivity across the nation. Congress should be working with the Department of Transportation to address the movement of freight, as well as freight bottlenecks that plague our current surface transportation systems. By relieving freight congestion through capacity building in appropriate corridors, while making smarter, integrated transportation and land use decisions, our nation’s ability to compete in a global economy can continue to grow.

Expediting Project Delivery

ASCE urges increased federal leadership in the creation of strategies to expedite the regulatory process for transportation projects at the federal, state and local levels. The goal must be to allow critical transportation projects to proceed in a timely manner while the less well-conceived projects continue to be filtered out, so the nation’s long-term economic vitality and quality of life will be maintained and improved.

Inefficient regulatory approval processes delay implementation of needed infrastructure improvements. Delays and changes in project scopes increase costs and adversely affect the safety and economic benefits of a project. Federal, state and local regulations that are intended to achieve beneficial individual goals may significantly delay approval due to conflicting stakeholder objectives and have a negative impact on the development and renewal of the nation’s infrastructure. Stakeholder expectations and acceptable outcomes need to be identified early in the regulatory process and integrated into the project effectively.

Additionally, by mandating concurrent reviews and the designating a single administrative agency, the approval process could be improved and shortened.

Furthermore, State and Metropolitan Planning Organization (MPO) planning requirements need to be reconciled with the National Environmental Policy Act (NEPA) process to eliminate redundancy and streamline the decision making process. This should be combined with better coordination of federal agencies in the NEPA process. While NEPA seeks to improve environmental outcomes by enforcing comprehensive disclosure or expected consequences of infrastructure projects, transportation projects often run into problems during the process, creating delays along the way.

While the development and implementation of transportation infrastructure projects in an efficient and environmentally sound manner is crucial to the nation, expedited environmental reviews of high-priority projects must be considered on a more frequent basis. The Environmental Stewardship and Transportation Infrastructure Project Reviews executive order, put in place in September 2002, has proven itself to be an effective program in expediting projects, while taking the proper environmental factors into account.

Design-Build

Another way to expedite project delivery on some projects is through the use of the design-build contracting. This involves the design and construction of a project through a single contract, thus shortening the standard process of design-bid-build, which involves two separate contracts for the design and construction of a project.

In 1996, Congress authorized all federal agencies to employ the two-phase selection procedures for design-build projects as a way to speed completion of relatively simple projects in the Federal Acquisition Reform Act (FARA). Under a design-build contract, the design and construction phases are performed under one contract. The design-build selection process may be based on a negotiation with one or more contractors or a competitive process based on some combination of price, duration, and qualifications. Design-build contracts often are awarded on the basis of best value, considering each of these factors. In the initial phase, the agency uses the qualifications-based selection (QBS) process to select the contractor who will write the scope of work for the project.
The Federal Highway Administration (FHWA) has undermined the intent of FARA, however, by adopting without congressional approval a one-phase design-build process that makes the project award on the basis of price and that evades the QBS requirements of the first phase of the FARA system.

The design-build method has some advantages. It reduces the owner's administrative burdens by putting the entire project into one overall contract. This means there is little need for the owner to coordinate among the various project contractors and subcontractors. The project delivery time is generally reduced and cost may be as well, and there is an opportunity for construction engineering and techniques to be considered earlier in the project. This will lead to better project solutions. Finally, design-build also may simplify the implementation of project changes during actual construction.

A number of possible disadvantages also have been asserted which can generally be mitigated with a good contract and procedures. In some cases there is no firm project cost established until construction is well under way, requiring diligent cost review. Under lump-sum or maximum-cost contracts, overall project quality may suffer from the pressure to produce a profitable operation by the design-build project team. Unless provided for in the contract there are few checks and balances available to the owner (this can be provided by an independent architect or engineer in design-build as well as traditional design-bid-build or other project delivery systems), leaving the owner in the dark on design and construction problems that may greatly affect the cost and timing of the project.

Simply put, the design-build process is not suitable for every construction project. ASCE urges Congress to direct the Federal Highway Administration to follow the 1996 law in which Congress authorized all federal agencies to employ the two-phase selection procedures for design-build projects as a way to speed completion of projects.

Sustainability

Sustainability, livability and resiliency must be an integral part of improving the nation’s infrastructure. The design, construction, and maintenance decisions we make today will be our legacy to future generations. By applying the principles of sustainable development, our infrastructure will continue to contribute to economic prosperity and social well-being, while at the same time protecting and enhancing the environment and our quality of life.

The Obama administration’s shift toward livable communities contains many transformative ideas that can improve quality of life. However, this shift should only be made in the context of a program funded to first maintain our current transportation system in a state of good repair as the built environment supported by that system evolves.

The usage of context-sensitive design solutions allows for a transportation system that is tailored to the community it serves, due to the involvement of all stakeholders. When considering the context, issues such as funding feasibility, maintenance feasibility, traffic demand, impact on alternate routes, impact on safety, and relevant laws, rules, and regulations must be addressed.

As an example, context-sensitive design solutions are defined in the project development process, which attempts to address safety and efficiency while being responsive to or consistent with, the roads natural and human environment. It addresses the need for a more systematic and all-encompassing approach in project development and allows for the flexibility that state and local government desire. By applying the flexibility of context - sensitive solutions when selecting transportation projects, the interest of both the federal government and local communities can be protected, while creating safe and efficient systems. Additionally, by ensuring transportation projects fall in line with community values, potential delays can be avoided.

An additional way to produce a more sustainable transportation infrastructure system is the use of life-cycle cost analysis principles in the design process to evaluate total projects costs. When the cost of a project is established only for design and construction, the long-term costs associated with maintenance, operation, and retiring a projects are overlooked. As infrastructure is built or rehabilitated, life-cycle cost analysis should be performed for all infrastructure systems to account for initial construction, operation, maintenance, environmental, safety and other costs reasonably anticipated during the life of the project, such as recovery after disruption from natural or manmade hazards. Additionally, owners of the infrastructure should be required to perform ongoing evaluations and maintenance to keep the system functioning at a safe and satisfactory level. Life-cycle cost analysis, ongoing maintenance, and planned renewal will result in more sustainable and resilient infrastructure systems and ensure they can meet the needs of future users.

Expanding Infrastructure Investment

Despite increased funding levels in TEA-21 and SAFETEA-LU, the nation’s surface transportation system requires even more investment to meet the documented needs. For this reason, ASCE supports a variety of revenue streams for infrastructure investments, including an increase in the motor fuels tax, indexing the motor fuels tax to the Consumer Price Index, and eventually transitioning to a vehicle miles traveled system. ASCE supports a reliable, sustained user fee approach to building and maintaining the nation’s highway and transit systems. Establishing a sound financial foundation for future surface transportation expansion and preservation is an essential part of any authorization.

Since the motor fuels tax was last increased in 1993, the purchasing power has been reduced by nearly 55 percent, between 1998 and 2015, according to the American Association of State Highway and Transportation Officials. Raising the motor fuels tax to meet the documented system needs will ensure the near term viability of the Highway Trust Fund. Additionally, the National Commission on Fiscal Responsibility concluded that an increase in the motor fuels tax would reduce the deficit, because the Highway Trust Fund would not need another infusion of revenue from the General Fund.

In the long term, with the affects of increased fuel efficiency and alternate fuel technologies, other methods must be explored outside of an increased motor fuels tax in order to sustain a viable Highway Trust Fund in the long term. A mileage-based system for funding surface transportation programs needs to be further studied, and the recommendation of the National Surface Transportation Infrastructure Financing Commission, calling for a transition to a vehicle miles traveled (VMT) fee system, must be fully explored. A large scale demonstration project, to follow up on the work done in Oregon, should be undertaken to determine the practicality of such a program.

ASCE supports innovative financing programs, such as the use of Public-Private Partnerships, Build America Bonds, expansion of TIFIA, and an infrastructure bank, for transportation projects. Innovative financing techniques can greatly accelerate infrastructure development and can have a powerful economic stimulus effect compared to conventional methods. This has been the approach in many states where expanded and accelerated transportation investment programs have been successful.

Strained state and local government budgets, combined with increasing demand, have led to the implementation of public-private partnerships (PPPs) in several states and localities. The injection of private capital into public works, however, has drawn some criticism from stakeholder groups and raised the need for a set of guiding principles for these projects as they are planned, implemented, and maintained. While PPPs are a method of project financing, they do not replace direct public funding of infrastructure projects and they should only be used when the public interest is protected.

The innovative programs in SAFETEA-LU have been a good start, but more needs to be done to expand their scope, and new programs or approaches must be introduced. We must find new and innovative ways to finance the critical transportation infrastructure needs of the nation, because relying solely on the traditional sources of funding no longer works. However, financing alternatives cannot replace a public commitment to funding. Financing by any technique does not supplant the need for adequate user fees or other funding sources to eventually pay for projects.

Conclusion

Surface transportation infrastructure is a critical engine of the nation’s economy. It is the thread which knits the nation together. To compete in the global economy, improve our quality of life and raise our standard of living, we must successfully rebuild America’s public infrastructure. Faced with that task, the nation must begin with a significantly improved and expanded surface transportation system. A surface transportation authorization must be founded on a new paradigm; instead of focusing on the movement of cars and trucks from place to place, it must be based on moving people, goods, and services across the economy. Beyond simply building new roads or transit systems, an intermodal approach must be taken to create a new vision for the future.

ASCE looks forward to working with the Congress as it develops robust surface transportation authorization legislation which is founded on a strong national vision, adequate funding and new technology, and creates an integrated, multi-modal national transportation system.