Good Practice Tools and Techniques Roundtable
On June 22, 2005, the committee convened a meeting to discuss organizational and operating models used by other federal agencies and other governmental organizations with mission responsibilities similar to those of Reclamation to identify good practice tools and techniques. Representatives of the U.S. Army Corps of Engineers (USACE), the Tennessee Valley Authority (TVA), and the California Department of Water Resources (DWR) participated in the discussion.1 The focus of the discussion was the facility development and management practices used by these organizations. More specifically,
What expertise is needed to develop and manage facilities and infrastructure?
Are human resources functions centralized or decentralized?
How autonomous are regional and subregional offices in setting policies and procedures and making facility and infrastructure decisions?
How are policy and procedures developed and documented?
How are engineering services organized and provided?
What is the impact of environmental requirements and how are they addressed?
How and when are engineering services outsourced?
How are budgets for facilities and infrastructure developed and what are the sources of funding?
How are customers involved in the budget planning process?
U.S. ARMY CORPS OF ENGINEERS
USACE’s civil works mission is very similar to Reclamation’s. The main difference is that Reclamation’s operations are focused in the western states and USACE operates throughout the country. Reclamation has more of a focus on providing water for irrigation and USACE has a greater emphasis on flood control and navigation. Both organizations have had major construction programs to develop dams and waterways and are now responsible for the operation, maintenance, and recapitalization of these facilities.
USACE is composed of 41 districts each having a fairly high degree of autonomy. The districts are organized into 8 regions. Current mission requirements are driving USACE toward more uniform policies, procedures, and service to customers by reducing autonomy. For example, in order to move drawings and plans among regions, the format and nomenclature of computer-assisted design and drafting applications need to be 100 percent consistent. Pressure to downsize the organization means that USACE may not be able to have all disciplines and expertise needed in every district, which will result in shifting of work and personnel. The movement of work and personnel within the organization will require consistent policies and procedures to work effectively and to avoid instituting reductions in force in one area while simultaneously increasing staff in another. The prevalence of family structures with two wage earners makes it more difficult to geographically move people to implement reorganization. Standardized procedures facilitate the organization’s capability to work together from dispersed locations.
Headquarters staff has shrunk from about 1,500 to about 750 today. This reduction has been accomplished by shifting responsibilities to the field. For example, policy is now developed by communities of practice in the field rather than by permanent headquarters staff. This has the advantage of having policy developed by the people who will have to implement it.
Personnel recruiting is generally decentralized, although many regional office are assuming a greater role in order to balance staffing and workload across the region. The recruitment and selection of regional division chiefs in each district (e.g., chiefs for real estate, planning, engineering, and construction divisions) is undertaken with the personal involvement of the respective headquarters discipline chiefs. This is done to
ensure consistency throughout the corps. The whole point of USACE is to have technical competency, but at a certain level of the organization, technically competent staff is not sufficient. The corps also needs people with strong leadership capabilities.
USACE uses centralized guidance with local implementation. Projects are developed locally by district offices that interact with the sponsors and other local stakeholders. Projects are developed by teams with the necessary technical expertise, which may include the construction trades, engineering, botany, biology, social sciences, economics, resource management, project management, and other kinds of expertise needed to undertake the complex and varied projects assigned to the corps. This works better than projects undertaken by discipline stovepipes (e.g., planning, engineering, and construction) that do their work then pass the project on to another discipline. There is an increasing emphasis on ensuring that the people with technical expertise also have leadership skills. This is accomplished through career development and training programs for technical personnel.
Project management plans are developed at the beginning of projects. The sponsors play a significant role in developing the project scope and execution plans. Sponsors also participate in contractor selection panels. Some more sophisticated sponsors participate in the design process.
USACE also relies on contractors to achieve its mission. All construction work is contracted. Seventy-five percent of the engineering and architecture for military construction is undertaken by contractors. USACE believes that it needs to undertake 25 percent of the work in-house in order to maintain the expertise necessary to effectively select and oversee contractors. In the last 10 years the percentage of in-house engineering for civil work dropped from 95 percent to about 54 percent. This drop is due in part to fluctuations in workload as well as to a reduction in the number of federal employees. USACE is in the process of undertaking an A-76 review and competitions for information technology (IT) and civilian works operations and maintenance (O&M). The IT initiative is being undertaken as a single contract for the entire corps so that regardless of the outcome, IT services will be more uniform across the agency. O&M contracts will be site-specific.
USACE does not have a central organization for technical expertise such as Reclamation’s TSC. Most of USACE’s design work is done in the district offices. Many senior engineers are located in headquarters, but the corps relies on a matrix of centers of expertise at the regional offices that provide services for all districts USACE-wide. For example, there is a hydropower design center in Portland that does all such work or reviews hydropower work undertaken by the districts. Current pressures in mili-
tary construction are to strengthen the regional offices, and this is likely to follow for civil works.
The corps’s five laboratories are now operated as a single lab system with headquarters at Vicksburg, Mississippi. Research is funded through military and civil works projects. There is also some direct funding for more basic research. Work is also undertaken in cooperation with universities. To some extent, the labs are competitive with those in the private sector, but for the most part they have unique, world-class capabilities. The corps partners with Reclamation for some research, although the level of this cooperation has diminished in recent years.
USACE has developed environmental operating principles. The current approach includes environmental consideration from the beginning of design. This approach may add to the first cost of the project but saves money in the long run. Project sponsors who pay a portion of the total costs sometimes resist including environmental mitigation features that increase the costs, but the corps helps them understand that this is part of the current method of executing projects.
USACE tries to use innovative contracting approaches within the bounds of federal regulations. Overall, about 40 percent of USACE construction is now design-build—more so for military construction than for civil works projects. An advantage is achieved in being able to overlap design and construction schedules. There is still some question about the extent to which this can be done on dams and related facilities. The limited number of contractors in this arena is also a factor. The corps also uses a lot of indefinite delivery/indefinite quantity contracts that help build long-term partnering relationships with contractors.
USACE develops its annual budget much like any other federal agency. In the end, the appropriated budget is about 80 percent proposed by the administration and 20 percent is added on by Congress. The current civil works budget is about $5 billion. All projects are undertaken with appropriated funds, but they are not implemented until sponsors secure their matching contributions where necessary.
TENNESSEE VALLEY AUTHORITY
TVA’s mission is to generate prosperity for the Tennessee Valley. There are three goals: provide low cost, reliable power, support a thriving river system and environment, and support economic development. These goals encompass requirements for maintaining navigation and flood control, established in the initial TVA legislation. TVA is both a power producer and a power marketer and operates as a federal corporation.
TVA has an annual budget of over $7 billion and is the nation’s larg-
est public power provider, serving 8.5 million residents and 650,000 businesses and industries. In addition to its ratepayers, the TVA has many public and private stakeholders that are affected by how TVA manages the Tennessee River and TVA facilities and infrastructure. TVA is fully funded by its ratepayers; it has not received any federal appropriations since 1999. As a regional natural resource manager, TVA sells power to 158 local distributors and serves 62 industrial and federal customers directly. TVA has about 33,000 megawatts of capacity with a mix of hydro, coal, nuclear, wind, solar, and methane power generation.
At the direction of Congress, TVA is currently transitioning its organization from management by a three-member, full-time board of directors and a chief operating officer to a nine-member, part-time board with a chief executive officer appointed by the board. It is too soon to determine how this change will affect operations.
TVA operates in a 40,000-square-mile watershed and provides electricity to an 80,000-square-mile service area. The incongruity of the environmental impact area and the service area means that there are some ratepayers who are not stakeholders. TVA is the watershed manager and has congressionally mandated environmental stewardship functions whose costs are part of the operating expenses and are included in the rates charged for power. The 12 watersheds that feed the TVA dam and reservoir system are managed by teams that work with local stakeholders to control erosion and maintain water quality.
TVA works closely with USACE headquarters and its Cincinnati-based regional office. Legislation that established TVA makes it responsible first for flood control and navigation, which must be met before generation of electricity. TVA owns locks that are operated by USACE, requiring a close relationship to plan, construct, maintain, and rehabilitate the lock system. TVA also provides assistance to USACE for modernization of USACE generating facilities.
TVA’s River System Operations and Environment group is organized into five functional units, including resource stewardship; environmental policy and planning; research and technology applications; river operations; and business services. Administrative functions, such as human resources, are centralized.
TVA has just over 12,000 employees, down from about 50,000 in the 1980s. It moved out of the construction business in 1988, resulting in a massive reduction in force. TVA staff are federal employees but not part of the civil service. All design and construction is now undertaken by contractors that have long-term partnerships with TVA.
River Operations has an annual budget of about $170 million. About half of the budget is for O&M and about half is recapitalization of the aging infrastructure. The average age of TVA facilities is 65 to 70 years.
Many of the units have not been modernized since they were first constructed. A power train modernization program was started in 1991. Fifty-one units have been updated; 41 units are still to be modernized, with completion scheduled for 2015. This is the only major capital program within River Operations. The program has been and can still be the target of budget reductions that extend the schedule. The extended recapitalization schedule results in additional O&M requirements to keep the units operating. Staff recommend project priorities based on broad budgetary constraints set by the TVA board.
About half of the employees in River Operations are skilled craftspeople, including electricians, machinists, and operators. In the last 3 or 4 years there has been a transition to multiskilled craftpeople to increase staff efficiency in a more automated environment. The transition involved a reduction in force through attrition, retraining of the existing workforce, and hiring of new multiskilled employees. New multiskilled hydro technicians receive about 30 months of training. The transition has not been without problems, but it has been aided by having detailed procedures in place. The workforce can be shifted across TVA to accommodate fluctuations in requirements. The modernization program is being undertaken by contractors under blanket agreements who bid on individual tasks.
As noted above, River Operations employs about 300 craftspeople. There are about 200 engineers, and the others are administrative. Civil, electrical, and mechanical engineers are in a central design group. Engineering support can also be obtained from other divisions—for example, cable engineering from the nuclear power division—or outsourced. There are also some contract employees who operate under TVA supervision. All TVA design engineering is based in Chattanooga. The water resources engineers, e.g., hydrologists, who operate the river system are located at the forecast center, which operates 24/7. Automation allows TVA hydro plants to be staffed 8/5.
Outsourcing decisions are based on availability and economic factors. TVA has developed outsourcing procedures consistent with union agreements for craftspeople and engineers. TVA is also shifting inventory requirements to suppliers and contractors.
TVA undertakes cooperative research programs with the Department of Energy’s Oak Ridge National Laboratory (ORNL) in energy and water resource development. Some of the research is funded by TVA and some through grants from other sources. ORNL often uses TVA facilities for demonstration projects, which provide benefits at no cost to TVA.
At one time, TVA undertook international marketing of its expertise. The current policy is to respond to international requests for assistance when funding is provided.
TVA has the problem of an aging workforce, with missing generations in the middle. This makes succession planning and the maintenance of corporate knowledge difficult. TVA has initiated an engineering and scientific graduate progression program that outlines a developmental progression with on-the-job training and course requirements. The training imparts a combination of general and discipline-specific information, as well as TVA-specific procedures. An internal board determines when personnel are ready to progress to a higher level. The procedure was developed in conjunction with the engineer’s union.
TVA recently undertook a comprehensive study with its stakeholders (federal, state, business, recreation, environmental, and natural resource organizations) to set priorities and revise reservoir operating plans. All aspects of reservoir operations were put on the table for the stakeholders, many having divergent priorities, to assess and make recommendations. Beginning with TVA’s mandate for navigation and flood control, the stakeholders addressed the various recreational, environmental, and economic interests to develop operational priorities. After 2 years, a comprehensive operation plan was developed with the support of TVA and all its stakeholders. This plan redistributes both the risks and benefits of river system operations. TVA is conducting extensive monitoring to determine the effects of the new policy and will make adjustments if unexpected, unacceptable impacts are identified.
TVA undertakes some innovative contracting, such as performancebased contracts that link fees to schedule, safety, environmental, and other specific outcomes. The application is generally for large contracts that are used across TVA. Because the river operations aspect of these contracts is relatively small, the achievement of River Operations performance measures typically has minimal effect on overall contract performance.
CALIFORNIA DEPARTMENT OF WATER RESOURCES
DWR has about 2,500 employees, which is smaller than USACE and TVA. DWR has different constraints but faces many of the same issues. DWR’s mission is to manage the water resources of California in collaboration with others to benefit the state’s people and to protect, restore, and enhance the natural and human environment. Over 50 percent of DWR’s personnel are assigned to the State Water Project (SWP), which covers much of the same geographic area as Reclamation’s Central Valley Project (CVP) but is smaller and serves more urban customers. SWP includes 17 pumping plants, 8 hydroelectric plants, 30 storage facilities, and 693 miles of canals and pipelines. Energy requirements to pump water in the project make it the state’s largest energy consumer. It is also the fourth largest power producer in the state.
Through its safety of dams program, DWR is also a public safety and regulatory agency responsible for 1,250 dams in the state. The safety of dams program also performs an oversight role in new construction. The Division of Flood Management is a public safety agency focused in the Central Valley as the nonfederal sponsor for federal flood control projects. DWR also provides water resource planning assistance to local governments and administers statewide electricity contracts.
DWR staff has a wide variety of expertise, giving it broad capabilities to address water management issues. Like other organizations, maintaining this expertise is a growing problem. Part of the reason is that the large construction projects that supported development of the expertise are no longer being undertaken. The last large project, the coastal aqueduct, was in the mid-1990s. Another is attrition of older, experienced personnel. The average experience of a typical DWR journeyman engineer has gone from about 20 years to a little over 2 years. Experienced personnel are brought in on a contract basis to work with DWR staff. This is effective in helping to mentor and train younger engineers. Consulting engineers are also employed for specific expertise and for design review boards.
It has been difficult to adapt personnel classifications and staffing levels as the organization transits from design and construction to O&M. There are very few nonengineers at the management level because engineers can migrate from technical areas to nontechnical areas to obtain promotions but nontechnical personnel cannot migrate to technical areas.
DWR now does between $30 and $100 million in construction work a year. All construction work is undertaken by private contractors. The contracts are administered and the work inspected by DWR staff. DWR has a small soils and concrete laboratory for construction support, because work undertaken by private laboratories has turned out to be of poor quality.
DWR is part of the state civil service system, which has a centralized personnel office. The rigidity of civil service regulations makes maintaining the necessary core competencies more difficult. DWR will need to find new ways to work with the system and have more flexible approaches, such as matrix management, to address these issues.
There are five field divisions with approximately 100 employees each to operate and maintain the system. There are also four districts for water resource planning and local government assistance. There is a centralized control center that can operate the whole project, but operations are still conducted at the division offices. The control center is located in the same building as Reclamation’s Central Valley Project control center. The trend is toward centralization.
Each field division has a group of about 10 engineers who troubleshoot problems and direct O&M efforts. The headquarters engineering group works on review of proposed encroachments, corrosion analysis,
and safety of dams issues. There is a centralized design and construction group with about 200 engineers, architects, cost estimators, and specification writers. Almost all of the design work for DWR’s $30 million annual construction budget is done in-house. The organization has limited contracting ability, and state regulations preclude the application of design-build projects. Personnel in the field act as the owners of the facilities and as customers for project services, suggesting alternative solutions to the engineering problems but relying on engineers from the central design centers for project designs. This assures that the end product works for the facility operators.
The era of new large projects in California is over. New projects will be in the form of system modifications and improvement. These projects may require even greater planning, engineering, and construction skills than building new dams, and they will require a significant capital investment. The intertie between Reclamation’s Delta-Mendota canal and DWR’s Central Valley canal is an example of this type of project and of the increasing need for Reclamation and DWR to coordinate efforts to manage water in California. This project builds on established relationships at the interconnected and joint-use facilities in the system.
DWR funds are from water contractors who repay bonds and O&M and engineering expenses and who play a role in overseeing DWR’s O&M activities. Convincing customers that they are being charged a fair share of the costs can be difficult at times. A 5-year strategic plan is the vehicle that expresses the need and timing for recapitalization projects.
DWR is starting to do some benchmarking of operations as well as of design and construction costs. Finding a benchmarking partner with a similar structure and processes and identifying appropriate metrics is difficult. Power and pumping plant operations seem to be much more amenable to benchmarking than do irrigation operations.
DWR addresses many of the same environmental issues addressed by Reclamation, such as counts of endangered fish species in the Sacramento Delta. Sustainability is becoming more important, and environmental issues are being incorporated in all design decisions. Environmental design expertise is generally provided by consultants. DWR is part of the CALFED process,2 and many of the issues apply to DWR operations.
Another environmental concern is the elderberry beetle, which lives in elderberry bushes. Conservation measures include a no-cut exclusion zone 100 feet around each elderberry bush. There are lots of elderberry bushes along waterways, making maintenance very difficult if not impossible. To address these issues, DWR is convening a series of interagency workshops with USACE, the U.S. Fish and Wildlife Service, the Water Quality Control Board, and others to develop short- and long-term solutions.
DWR, as the sponsor for the federal flood control project, is responsible for 1,600 miles of levees. It inspects the levees, and except for about 200 miles it maintains itself, relies on local Reclamation districts to undertake the needed maintenance. It is also responsible for the bypass channels and weirs that operate the channel system. It is faced with an infrastructure more than 50 years old and growing maintenance costs. In many areas, maintenance costs exceed initial construction costs. Maintenance costs and potential liability have significant impacts on the state’s general fund. California is considering creation of a flood control authority that can assess beneficiaries of the system fees to cover the cost of maintenance and the cost of the potential liability.