ALC-Highway Commission Review and Advisory Subcommittee

I members in that I know we had a meeting that went longer but it goes with maybe waiting on some folks to to be able to make it in today but now we do have some folks that are waiting to get started outside this room and so what I'd like to do is we will move over chair sees a quorum. I but we will pass over any of the items that require action and we'll just get into the presentation portion of today and then again as the time kind of rolls along we will have some more members of the present so with that I'm gonna go ahead and move to item city on the agenda and we'll start things off with procurement recommendation number five. Can you all hear us on the as in call. And thank you. I remember where this is Erin how can I am the director with state local government with that house thanks again for having is with you this afternoon virtually today to review the recommendation report with respect to procurement and IT. Hi I'm sorry go play good afternoon everybody thanks again for having the originally I'm a manager as a local practice and guide house. one of no we prepared a series of recommendations related to procurement and he under will cover the you're meant that recommendations and I believe will the same process we have previously or director tutor will be fine those and then we'll review the I. see recommendations and have an opportunity for that response well as any question we did it provide the appendix or you just again for some additional background related to impact that around for your reference. Right with that I can get started at their and mentioned I'm gonna talk through the procurement recommendations and as we've done in in a previous meetings will talk about each one separately and and turn it over and then as we get into procure or into IT sorry I will turn it over to Erin to discuss the specific recommendations. And procurement we have two recommendations recommendation five in recommendation six we can start with a recommendation five which is around implementing specific efficiencies as they relate to procurement and purchasing one of the ground ourselves first in some of the key findings and supporting evidence before we discuss the recommendation so there are five key findings here P. R. one point two which was that low bid procurement is viewed by staff of the cultural and and financial necessity P. R. four point one which is that are not take advantage of legislation that allows consideration of qualifications and some forms of procurement. NPR four point two which is that you know alternative contracting methods specifically as it relates to construction have allowed or not to influence contractor behavior. P. R. five point one which is that uh are not is not using data to understand procurement trends and identify efficient practices and and that's not to say that they aren't monitoring tracking that day and not using that in the data and the specific when. And then P. R. five point two which is the equipment and procurement division has minimal authority to facilitate the implementation of any efficient procurement practices that are serviced out through an identification of some you know potential efficiencies when taking a look at some of this purchasing trend announces. So in terms of the supporting evidence you know we know and and least we noticed that that are not between twenty fourteen and twenty nineteen I had levied about twenty million dollars and and disincentives an item deductions that the relates to construction projects but also has awarded forty four million dollars in incentives. That being said the department doesn't necessarily house formal protocols to standardize decision making process around the use of you know the specific strategies as it relates to incentives disincentives as it relates to a a plus the bidding as it relates to land rentals so on and so forth. And and then third as it relates to a procurement of the department spends on average about twenty four point four million dollars on small order purchases and then about twelve point seven million dollars and competitive bid purchases a small order purchases being under twenty thousand dollars and competitive bid purchases being between twenty thousand and seventy five thousand dollars and and it's been out of that average amount per year. That being said as I mentioned before in terms of those key findings of the department of forty doesn't have any formalized policy to identify some purchasing trends and establish some you know specific efficiency like term supply contracts that maybe you'll savings across the entire entire department and again it's not that they're not monitoring and tracking that information it's just that at least at the time of our review were not looking at that data to identify some procurement distances talk about the findings are recommendation six when we get there but moving on to the actual recommendation itself. and this recommendation and is related to implementing you know specific efficiency that relates to certain procurement and purchasing process these so the department itself you know prioritize is cost savings but it does lack the data to demonstrate what works and when and so if they take a look at you know potentially optimizing and standardizing some of the procurement and purchasing procedures that they already have in place they may be able to a more effectively use some of the resources and maximize some cost savings and that that includes within you know construction but also out of that in terms of some anticipated impact by implementing some of these these recommendations there were identifying here that there's a couple directional you know special cost savings from an anticipated impact standpoint so if for any from a construction standpoint. If the department you know that has a more formal process to understand and take a look at some of their changeover policies and the impact of some of those change order policies they potentially could save some money so as an example tech stock changed it's strange order policy where they publicly communicated that they were going to budget left the money to fund change orders and as a result of that they saw some savings of between four and five percent up from before they implement that policy after implementing that policy and when and so you know kind of slim the difference a little bit again because the directional savings if are not was was to implement a similar type of process you know process and and the same for a condition the by the by three and a half percent knowing that are not spends on average about forty million dollars and change orders a fine at three nine percent there could potentially state than one point four million dollars and that's an example of using some of the change order date along with some of their change your policies and some their strategies around you know different procurement and contracting methods could potentially save them some money by harnessing that they that they already have. She also the takes the at the relate to some of their procurement and purchasing policies if again they were out to take a look at they're they're small order purchases for example there competitive bid purchases and try to wide to conduct a spending out that's been identified some potential trends and areas for saving across the entire department they potentially could save get out again according to industry research somewhere between five and twenty percent by conducting that spend the mouse this and at five to twenty percent when applied to the twenty four point four million annual average and small order purchases and twelve point seven million in competitive bid purchases can yield somewhere between one point eight to seven point one million dollars I think the implementation of that new oracle that form that that we talked about that I think a fair amount up until this point I will help facilitate that. And that's actually one of the considerations there wanted to talk about in terms of using that that you oracle platform to help facilitate not only the collection but then the utilization of that data to identify so specific efficiency that they relate to purchasing and procurement. That being said another consideration at that staff to pass the N. expertise may need to be developed you know you can have the platform you can have the data but you know the the post on staff also need the the capacity and and expertise sexual conduct that and I announces and that being said even if they are able to identify some of those deficiencies and trends there may need to be some realignment and responsibility between the district office that and also the division to help ship some of the culture are round purchasing to deliver again the the best value and sort of the and and implement some of the more efficient practices to yield cost savings across the entire department. What we'll talk about the implementation summary and a little bit more detail but just why in in the next slide but one of the call out a couple Leding practices one you know down at the bottom that the transportation construction management working group you know has provided some guidance in the form of this guide book around frameworks to select you know optimal methods for four different you know contracting strategy that the relates to construction projects to ensure that you know if you're using things like lane rentals incentive that incentives eight plus the bedding liquidated damages you know things of that nature when you're looking to you know let your construction project and ultimately award that project to a contractor to be able to then you know strategically approach that collect the necessary data and then evaluate which method yield for the best the best value for the department and and so that you know that that guidance of the and then again as that I referred to this and and the anticipated impact there is some existing research about you know potential cost savings that might occur by taking sort of us spend analysis approach to procurement and purchases across the entire department. Terms of the roadmap there's there's for major steps you're the first one is creating a date at that so it's it's really first when you before you even start to create the date that the it's really trying to understand okay what do you what you trying to focus on as it relates to you know this particular recommendation implementing some efficiencies so some potential focus areas here are taking a look at the procurement spend taking a look at the equipment ownership cost the life cycle cost looking at change orders as a result of construction projects or in relation to the construction projects defined some ways to optimize you know that process and that stand and then also taking a look at some of the alternative procurement of purchasing strategies either let us construction projects and identify the data that you actually want to collect so what's the spend look like by district category sees and take a look at the total amount and that's related to you know those those smaller purchases and and and competitive bid purchases. In accordance standpoint looking at the lifetime cost of the purchase you consider repair from a change our perspective it could be taking a look at you know the specific project a vendor the type of project so on and so forth and then in terms of alternative procurement and purchase strategies you know identifying each of the the the specific strategies you know very explicitly identifying the cost any return on investment impacts the schedule impact fifty so on so forth and then you know really making sure that there you have the right people in place but the right balls to collect that data on the committee that makes sense. Once you have that information then you can start with that assessment of the trends and and there's a number here Sir yes by Trent demand trends the extent that you're using term contracts to collectively bargain agreements. Changes in commodity prices cost estimates in comparison to bids you know project delivery method effectiveness so on and so forth. And you're trying to understand no one of the conditions in which you know these practices are really going to yield results. When you do that then you can start to actually formalize that and develop policies and procedures that you can implement across the department where it makes sense so creating that decision matrix for one certain you know alternative procurement and purchasing strategies are used and then also ensuring that you have the right roles in authority across the divisions to ensure that you know even when you identify those efficiencies that you have the organizational structure to to execute on them and and then from that standpoint it it it really you know bleeds into some change manager activity than implementation activities to actually roll out these new policies and procedures. And then in that last step as relates to monitoring and and re evaluating you know it it is this type of recommendation is is one that that's or lend itself to this continuous improvement sort of approach so that you want to continue to use this data you're collecting to evaluate your policies and procedures as as you move forward determine if there's any revisions and then you know actually consider whether you want to use some of the data to be included in our and our blotter I keep performance indicator monitoring and evaluation dashboard if you well so and an example of that is maybe potential taking a look at change order volume from a broader department wide Senate KPIs and we talked about those performance indicators I think and I in a previous meeting. So with that I'm going to pause and in turn it over. Thank you so. At this point I think we're ready for corrected If you could just go ahead and just recognize yourself for the committee in your recognized to to respond to the recommendations. Okay thank you I'm Laurie tutor the director of the Arkansas department of transportation. And my response today of course you've got that in front of you I suppose and I'm not going to read through that but I am going to focus a little bit on the what we've been working on is our oracle fusion procurement cloud service application. And this is going to we're very excited about this new application this is a I think it's a five year roll out in the first phase at it's a five phase rollout I'm sorry in the first phase of it is due this fall some time and it's going to help with all these things that god house recognized is and needing some improvement at the department as far as our procurement of products and services it will modernize our data collection it will allow us to do date yeah right now we do have all the data but it's on the mainframe it's hard to mine it's hard to use for trained analysis in those types of things to set policies and see how to exactly use our debt you know how to. How to Krasin different policies to take better and. I don't I don't know the word I'm trying to think of it just to try to do better it evaluating our data and sitting policy so that we can save money with our procurement practices we will be able to evaluate beating trans how to improve we'll be able to implement data driven approach is like spend analysis analyze could cycle costing to inform procurement in purchasing decisions and we will be better able to create policies and procedures at the district level that are consistent across the state the first phase of this application is actually scheduled to be implemented this this next month So we agree with their with god houses a recommendation on this one will continue the efforts that we're already in the middle of will continue progress we may need to get when it comes when we finally get this up and running and we get some data to start using I we may need to hire additional personnel and possibly the services of a consultant to set up these trend analysis and things like that to help our staff to learn how to do this better. And of course is always the plan is contingent upon funding in the positions that the legislature allows us to have in the appropriations process. the. Is anyone have Aug other stop right there because that's the need of what I have that if you have anything else you'd like to say I or any questions I can I can address that thank you director at one question I had was on the so the men think it's great that the software is coming online and you mention funding from legislature so that that's already taken care of for you guys party set aside what you need for the oracle yes Sir not for which is going to be utilized to create lease this trend analysis and that this been ounces and and that sort of thing right yes Sir we have already the commission is already approved by minute order the cost and it's in our budget to pay for this oracle yes very good in and so my question was on that so the twenty thousand The Not construction bids that are less than twenty thousand small of the small orders is that going to the in flow through the same system to be able to be yes so recognized look that and understand what may be the purchasing differences between the different districts for products that sort of thing vision that working with the twenty thousand the small small purchase orders it will all the it will all go into this new system and data will be mine and to be used to look at exactly what you're talking about to see if there's discrepancies is there's ways to save money if there's policies we need to put in place to stretch her dollars eight it'll do all that for instruct with that allow for both person purchasing that way you could then you take whatever the material is the product is and disseminated amongst the district so with everybody's buying gravel for instance and everybody's buying whatever I mean you know the the value of your dollar maybe more buying in bulk and then disseminate with that allow that to occur it will allow it but we're already doing that are we already do that we by on a supply contract that can be used for you know all year long by different districts usually it's regional you know in some specific you know where it's regionally conducive to use it but yeah we what we already do that somewhat but this will help us do it more and that's part of the twenty they do that with the so some of those purchases of twenty thousand are for products that have already had a contract kind of or degree to amount the end is what you're saying yes and so each one the diff did districts are that maybe spending under the twenty thousand and be part of this number but it's they're buying from a larger agreement that was achieved by the department yes lead times we have a supply contract and they buy from that is dry and hope I meant to your question correctly I do have our equipment and became an officer here today if if Let's not great I don't know I'm looking for is that essentially what happens on the yeah okay thank you all right and that they had not for the but that was a. And then the alternative alternative delivery office said it was news at all what what is that consist of Hey pretty proud of our new alternative delivery office You know we've been given the authority through legislation to do design build and construction manager general contractor work in nets that's different a different way of Of getting a project delivery method the other than design bid build. And so we set up an office because it's so much different than design bid build and it requires so much more pre you know the contracted to write to the specifications you right the way you procure that that delivery method it's all different so we we needed people that were able to get it to be experts in those new delivery methods we sent them you know to other states that are already using these methods to be trained in we've brought in consultants and we've done that and we're in our infancy we've got I think right now we have four people in the office and we we plan to add more as we do more more projects but that way we know it's just it's really hard to get your feet to get off the ground was something like this but we're well on our way we've got two projects already under contract so yeah we're we're doing good thank you see eighty eight I'm not sure who that is. Yes center Stubblefield you're recognized thank you Mr chairman I have just a few questions thanks for being years of security to your thank you have a could you could you give me just a brief definition are explain the construction management general contractor method of procurement sure you go out for letters of interest and then the request for qualifications and you look you know you you figure out what the project is and then you you get a contractor on board based on their prior experience in all of the things that go into pre qualification as far as qualification based okay and so you you get the contractor on board and then you get a what you called an independent cost estimator who comes on board they're also there IT consultant and then you get with this with the contractor they to get under contract any set at the table together and it's usually at the beginning of a design of the design and you work through the design with the contractor and it's really a collaborative process because what happens is our designers are designing this project in the one we did is on highway ten is this after you are chosen the contract we to some to question the presentation that they present yes there well they're they're documentation that they present all the everything that they give us and then they come in and and they give a verbal presentation as well with this with this process not be advantageous for company locked Q. which who has a lot of money. A very elaborate presentation. At which eliminates which is in our state company and any local Arkansas companies from even. Being in the game it's you're exactly right and I had this question asked to me asked me the other day and I said well. You're right key we did have an advantage this time because they've done this multiple times and they know the process we have never done it and if we had used in Arkansas contractor and we didn't know how to do it and they didn't know how to do it that wouldn't be a good combination so yes Q. would Q. it did have an you know in advance because they had experience but we've already talked to the eighty SI in our contractors are local Arkansas contractors in our next projects are going to be smaller and we're going to try to bring them into and learn how to do this but we had to learn on our own first before we can bring in some a contractor that and never done it before to a company like McGeorge doesn't have the expertise to do some of these without you bring them in and. Then educating reminder standing and I've got I'll ask and Joey dean's here from March Arkansas general contractors today but no Sir and art and there was no Arkansas contractors that had experience in general manager general contract. Construction manager general contractor method of beating. Who has the contract on camp road you know he would are there is the project on time yes Sir it just got started. Is it is not over budget not yet. Of. I have one more question ms chairman. This are not not have do not have the capability of doing of. The jobs that we hired carver to do. With all of our doctors engineers and all their expertise. Why do we pay a company like Garver to do the same to ark are dot should have the capability of doing are you referring to the connecting Arkansas program yes okay this that's an easy quick that's an easy answer when the half cent sales tax passed in twenty twelve it was a temporary tax and we did we knew we didn't have the staffing levels to implement that program in if we knew we had two options we could hire more people or we could get this done by consultants we made the promise early on that this money would go back into the economy and there was no reason for us to grow state government hire extra people so we can deliver this program when it was temporary and it has been a excellent decision because we haven't hired additional people and garner has done a good job at it we're we have three and a good job will it do you understand what I'm saying that. It would have not been a good use of taxpayer money if we'd gone out and hired additional folks so that we could have we we had all the work we needed are all the work we could do. Based on our current. Funding levels with the half cent sales tax we hired Garber so that we can deliver that program and not hire additional folks if the if the half cent sales tax fails in November how will it affect the I. thirty crossing in the I forty nine thirty north interchange. It they won't get done okay. That's all I Mr. Thank you US senator rice you're recognized. Something. The last meeting when Got a education or county just registered all the figures of if you can refresh me that got house gave. This tax is a six billion dollar program at the California's six in taxes is five point five. Remember those two in Arkansas is what. We are right now are federal and state construction program is four hundred and forty million dollars a year that's not counting the connecting Arkansas program and and in the presentations we pad which give a lot of information and and realize that is in today's where it says applying policies similar to. Texas transportation department that change your policy you know could save this much or whatever and I I just been wandering in my mind with that much discrepancy of a size program. You've got one more one big model aired you've got a smaller model here and and I think it was made to the last time there's no reason we can all strive recklessness what we're warning more efficiency actions but can and and this. Got houses welcome nature this Later to. Do you feel director. Are these percentages realistic. When you're talking about two programs because I do know when you've got a. Multi billion dollar program versus what we have there there are the dynamics just changing in sometime we we can look at numbers need Mike numbers do what you want to do the need any you got to do something bill to look at I realize that but. The. Is that something that did you all see a concern with trying to be accurate well out my question is okay so when I read this what Texas did was they said we have we're limiting the amount of change orders out in the field. So what did that mean we'd have to look at what that exactly means I don't know what that means what what was it before they started writing it I mean I don't know how to apply this without really without calling taxes seen what they did because you have no idea what limiting and the amount of change orders mean and I don't see in the way we do change orders want to let a contract. Well I mean I'm sitting here thinking that one to leave want to lead a contract you're not you're going to build that project if there's if there's problems with the plan she had to do some change orders we've got to do that we're we're under construction we're going to finish that project there is there's and FOR scene field conditions I don't know how they did that and and. You've got a substantiated mine my concerns again they have to do the best they can do realize but they're it you mention context if there is a lot of contacts be put in the US and I I just want to committee keep that in mind so many verbal so you're in and when you're comparing different models and are you just can't go over the same percentages thanks same day of rights thank you all right thank you. Thank you have any other questions I've got one in its really because it on a comment mean one thing I would say is that Texas some of the bigger states that have larger programs. If they leave. Run a course and found a way to save money there's a model to be followed we do it all the time the state legislature state government you know we see where other states have things working they're the ones that put in the initial dollars to to really data mind find and information create the program and we're picking backing at a fraction of the cost typically on those types of value lead programs in so that's if you if we can and I think this is what got house to stand on speak for them but we should reach out to Texas in see if there's some things that could be applicable you know for what they do there again that they've put the resources behind to figure out the the savings from that we could implement here at NC one thing I I I wanted to. Say he is on the. Therefore we talk about devising a plan for instance on it touch little bit I think on what Senator Stubblefield was getting at for the change orders and trends and insights that sort of thing when you all do that when you plan on doing that what what do you think public comment will look like for that I mean not because I believe contractors will want to have some type of public comment I think mayors county judges folks that are you know participating in the public would one have public comment on how those things renewal what is your process what that implement what change order policy that says we will begin to devise a plan to implement a for a formal framework for practical design value engineering and for the evaluation of change orders for costs savings trends and insights okay with you so as as we're going through these you know there's a lot of things that she that I mean I think it's great they're already started we're kicking him off But there's a lot of things that that haven't started at this point even those that have began what we're just the public input com so that we make sure we're all on the same page and that is something that will work for our you know the the the contractors and other people the state. Well I guess they can begin at the it should begin at the beginning of the process if public input is desired in which and you bring a good point you know that would be a good thing to bring them to the table and talk to them about what we're planning on doing if it's going to change the way we do business think that's an excellent point and and we'll we'll follow that I've already had talks with the. As a new director course the AG seeing folks have reached out to me in there they're very much interested in the collaborative relationship and and I see a great benefit in that and now I I plan to pursue that some glad you mentioned that because I think that's an excellent idea and it's an excellent waited to foster that collaboration with industry in with others county judges. People other people that aren't interested in the roads. All right out can I make one comment though yes ma'am I I feel like possibly my statement about Texas and California was misinterpreted I don't think that I think they have great they probably have some great policies in place and things we can learn from what I was trying to say is there's an economy of scale with the smaller program each email we're a central centrally administered program everything we do is in little rock and then the districts take care of the construction so when it comes to project management the guy that's doing the planning is sitting right next next door to the guy that's doing the design that's over design and so there's a lot of collaboration that we you know that's what I meant that we you know Texas and California they're huge and they're not central they they have many departments all over the state all over their states and so they have to have a more formal project management office to make sure they spend all the money and they and they coordinate all these different offices we're not we're just not like that we're different and that's why all these recommendations have to be taken in the spirit of who we are is our dot in what works best for us not just you know if Texas does it may be a great thing but it may not be a fit for us I'm not saying we shouldn't strive for excellence in anyway former fashion just saying we have to make common sense decisions on how we implement some of these things yeah and and I think to the points about formalization that so that the yes to two people may sit next to each other in their office in two people maybe France in one door down they may not you know with it we don't hang out with that guy are we don't have a good relationship and it's not formalized all those parties can't learn from each other I cation is inform. All then it only benefits those that are involved in this question and formalization allows the public to see what's happening as far as those conversations it I mean that that's what I think we're saying on formalization at least that's the way that they can well once again I'm not saying we should formalize some saying we should I'm just saying that. Looking at what taxes in California this is far as I was talking about program management project management but we do need to formalize some nuts I'm not saying we're not we not and we we can learn from other states as for sure great thank you. I think. We have any other questions any other comments on recommendation number five. Seeing none we do not have any public comments submitted so we'll move on to recommendation number six and you are recognized. Thank you center. So again started up with a key finding as relates to recommendation six which is related to you know implementing a construction contractor performance measurement program. Some of the key findings related to this recommendation our P. R. two point one is that you know the department does have a pre qualification and bonding process however that approximates the likelihood of project completion and doesn't necessarily screen for quality. But again the the department also has standard specifications for construction projects and you know that the the last update was as of twenty fourteen there are some amendments obviously but as of twenty fourteen and they mandate certain performance criteria but again they don't necessarily screen for quality because they they come in to play after in many respects after the the project has led to the contractor. And then the third finding here that there are some you know specific opportunities that exist to improve some existing quality issues. And so in terms of the supporting evidence and taking a look at one of the Federal highway administration reports but we decided they'd identified that the performance bond tech DOT typically I use don't provide any guarantee against contractors marginal quality of work so long as that contractors failures are not large enough to trigger some sort of default so the the really there to protect against the fault but don't necessarily guarantee in a quality of work. And right now the the current policies don't necessarily limit the ability of poor quality contractors to compete for bed but that being said you know the the department in its in its twenty nineteen transportation asset management plan you know identified the poor quality construction it is actually a very high compact risk as it relates to with long term asset management and at the same time the the department does not and again at the time of our review does not or did not formally monitor contractor quality. And so you know as it relates to our our recommendation around implementing you know some programs of construction and contractor performance measurement we believe that the the department and I just need to move my window here may improve project delivery incentivize and reward hi what are boring contractors and encourage low performance to improve. And in terms of the anticipated impact you know we sort this from a couple studies one of the the Federal Highway Administration study that they stopped about earlier but also a national cooperative highway research program of study as well that and also led to some findings when they surveyed a number of the keys I think they they talked to you know fifty two DOT's across the United States and and also in Canada and they looked at about forty three U. S. deities you know performed contractor performance programs. And and based on those those two studies you know that the D. O. T.'s reported that there were improvements or believe that their improvements in safety time to work completion and contractor cooperation by implementing a performance based a contractor performance based system. Now that there definitely some considerations are here you know it the a performance based system may have different impacts on contractors a very. and you know there there is that perception around you know I deal tease ability to be able to implement a yes or a fair and equitable approach to contractor performance measurement and and and both of those by the Speaker of especially the national cooperative highway research program where you know the respondents indicated at least the DOT than even the the contractors the indicated that the abuse would be able to up to design and implement a fair and equitable approach but that being said you know that that that perception exists and and emphasizing more of a quantitative approach could minimize any appearance of subjectivity in scoring and and also that to help you know mitigate some of those perceptions are negative perceptions of such a program in a contractor should I have a clear path to raise or appeal their scores you know to the extent of the department business in this direction. and they're already already some practices in place at our dot that prevent contractors from bidding on project so you know contractors who are in liquidated damages currently are are prevented at least our understanding are prevented from bidding on new projects. What we'll talk about the implementation summary and a little bit more detail. But again just want to highlight a few things from that federal highway administration study and the national national cooperative I read research program study and both provide a framework four you know quantitative performance based pre qualification system and an obvious the out reach that some of these DOT that are implementing you know similar systems can yield you know additional detail and insight as it relates to designing such a program. And you know the. The end and I mentioned this before but you know. Art of of of you know thank you finding here as relates to you know Leding practices but that you know the the study found that that just having a performance based system did not provide any guarantee of a contractors marginal quality work and inspected it decided that you know basically a a a contractor that is able to meet the requirements of a performance bond of low quality contractors the people to meet the qualifications of the of a performance bond at the Benchley the team opportunity in competing for a construction contract kind contract as a contractor with exceptional quality also able to meet that with that performance bond of. So in terms of the the roadmap itself it you know there is a phased approach as four steps and the person is really trying to understand it to get it moving to where the system of of measuring contractor perform all these really to understand you know what are some indicators that that might suggest four might indicate you know or differentiate between at you know poor performing contractor versus the mid level versus an exceptional so some of those might be past performance but this body of work sure there your managerial ability safety record their technical capability their ability to match traffic and you know the public cooperation with not only the department but also other you know stakeholders such as utility company as well as you know potentially their quality assurance program. And so you know once you can identify those those indicators that really identifying the folks it within the department that could conduct those performance evaluations and and how that that work product will be audited and to what extent that will already be part of for example the resident engineers or their staffs you know day to day week to week month to month process how it could potentially be embedded in that and then determine the frequency of that that evaluation. Once you cannot identify the indicators and how the data is going to be collected it's really developing a scoring system at the same time. And so again it is taking a look at some of the study is also taking a look and reaching out to some other DOT's that are implementing a performance based but um uh to understand how they're doing and potentially designing at least you know an initial or prototype methodology scoring. And then potentially discussing the to the extent that you know department wants to move in the in that direction how you know your bid capacities course of your ability to bid on a project might be impacted by such a performance evaluation to the extent that it is not publicizing that prop that and and really engaging you know numerous stakeholders in that process to collect that feedback and then you know putting together at least again a prototype scoring system which then leads into the you know the third step here which is then starting to collect that performance data you know during the construction project but also at the close out of that particular project. And and you know building that full day that the and that that might take time by this is at first you know sort of blushed I data collection after at and then once you you kind of take a look you know look at the data bump that up again the actual you know the the prototype performance management or performance measurement policy you know I understand a yes revoke value waiting that an understanding to what extent it is actually in you know achieving the of no intended objectives and then continue to iterate on that scoring system while you continue to you know bill that that that that. And then from there it's about integrating that within you know the pre qualification system so determining you know at at what threshold will a pre qualification our system applies to which projects will apply to get you know you have to also determine you know a policy for contractor that are new to working with the department because you know not every contractor will have had past experience Starting to implement this policy and then again evaluating on a regular basis regular Kate and to continue to refine that process so that not only is that you know state at they're not big but fair and equitable but also it you know it she the intended outcomes which is around incentivize thing you know quality construction and then potentially at the same time also yielding cost savings you know not only for or the department but for yes this state as well. And with that I'll I'll turn it over. All right thank you in it directly recognized okay thank you yes got house a few questions for clarification. Yes ma'am okay. Sager. Can you hear me yeah Hey again long and talk to you in awhile. It has been a long time ago okay and on you on page seven I think it's the prior slide. The lie before the infant yeah. I got confused you said there was forty three participants in the in the survey that came up with the safety timely work completion in contractor corroboration. But then right above those those little chart says six. Six reporting the T. so that that threw me off a little and I you know because I was looking at that in the report is that can you explain that. So as they relate to the and the H. R. P. study to inform you know the broader announces and findings of that particular study and I was in two thousand nine and and the Federal Highway Administration study in many respects built on that and I was from twenty fourteen day as part of that broader analysis surveyed I believe fifty two DO keys across the United States Canada the NCO journal study that the NC H. R. P. study was fifty two. Survey results okay and and so as it relates to identifying the anticipated impact as we were taking a look at the data to understand what and anticipated impacted look like based on the experience of those DOT's for which they have some very specific and targeted questions across those two studies on a narrow that down to six so this was based on their perception of the impact of implementing their performance based a vendor or contractor performance program and and the states Florida Michigan Oklahoma Utah Virginia and Washington. Okay all right thank you that answer your question director tutor. Well sort of that's okay on I guess I understand but I don't even have the same states written down so that's all right out three would be the study again that I'll be fine I just have a few more Now when we you are talking about the FH Debbie a study and it's mentioned under the leading practices and I know that study is built off the N. C. H. R. P. they use that a lot in that FHWA study but are we talking about fourteen dash oh thirty four performance space contractor pre qualification as an alternative to performance bond is that the study we're talking about is a leading practice. This study can you see it. A Sager three there. Oh sorry I within you I thank you be just one second to confirm that. I can hear this is Erin you said apartment state contractor pre qualification as an alternative a performance bond dated August twenty fourteen yes correct that's correct yeah thank you okay that's the study that secure that your. Two is a leading practice okay. All right this study defines three Turner here's a pre qualification administrative performance based in projects specific we're talking about performance based for this recommendation correct tier two. That is correct okay good. All right there it's three models for each one of these tears and according to the study these models or a combination of processes concepts and terminologies by Florida Ohio in Ontario is that correct. Yeah in terms of the specific model that they had sided recommended or as they relate to the the model that they have described in that particular report yes that it's based on those three DOT okay we understand that reading the report okay good and then at tier two which is the one where to use for a leading practice is primarily the performance modifiers based on Ontario's ministry of change transportation is that correct. I'm sorry directed to dread I kinda lost that okay a tier two model which is what we're looking at for our dot to implement is modeled after them the performance modification factor is modeled after the Ontario ministry of transportation that formula. Yeah and that is one example and that is an example and a particular approach that again you know thinking about you know through this based approach around contractor performance measurement there's a peace around actually measuring the performance and then potentially again as part of this implementation where it makes sense to do so using that type of measurement to potentially modify a bit but you know as as. We kind of discussed in our implementation roadmap there's a number of steps what you get to that point. Credit for the purpose okay so for this for this recommendation you use that FH Debbie's to a study as a leading practice. What other states have implemented this this study and used it to form enough to form their performance based pre qualification. What other states are using this as a leading practice. Well given the fact that the national cooperative you know I research program study that in the H. R. P. study was was so expensive and the Federal Highway Administration built on top of that we were using the the finding that learning they were fairly comprehensive study to inform you know this particular or to help inform this particular recommendation. But the procedures they're lined out and here's Leding practices have they been they have have they been adopted by any state any state DOT. Have have the specific recommendations that those that are cited in the FHWA report benefit and I just wanna make sure understand the correct question correctly and they've been adopted by any state DOT correct. As a leading if this is a leading practice what states have implemented it. Who I don't know that we can necessarily fade away. Can okay. Finally the study report revealed that performance bonds provide no guarantee against the contractors marginal quality of work. is there anywhere in the study I couldn't find it that guarantees that a performance based pre qualification would guarantee against marginal work. Is there a guarantee for that any kind of quantitative. Measurement anything to hang our hat on that if we implemented something like this we would be guaranteed to get quality work. There was not an explicit and and they were fairly clear on that reporter wasn't necessarily explicit quantitative measurement of of you know Sir guarantee your protection against marginal quality work however when and and especially in the the NCRP report when they hold the DOT's and I would say frankly the contractors the vast majority of them believe that implementing such a system would have a positive effect on a number of measures or indicators of quality you know in a including you know safety record in terms and in that including timely work completion cooperation with the department as well as other stakeholders. and so on and so forth and so. From from that aspect when you know when they have had a chance the survey you know that many states and also again a significant number of contractors how many contract on their perception can I interrupt and ask you have. Correct tutor I mean I understand but we we ask you to provide a response. In that response I mean you gave us one. It would have been very helpful I think for today if you to list your questions with your response so that we they would have had time to do the research know what to answer instead you're asking to go back and tell you the number of contractors in the study they can do that I can do it it's ten okay then just say it I think that would be more beneficial to everyone here because I'm not sure what what we're going towards but I think it be more beneficial for us to get into the response if you've got a couple more questions you want to wrap up but if you know the answer then I would recommend maybe not asking the question that go in and give us the answer will when he said in numerous contractors I just wondered where that was coming from because I didn't see that in the study that's why as I wasn't going to ask that question but I'm through with my questions and I I needed that clarification because in this particular recommendation the Arkansas highway commission and our dot has determined that this would not increase efficiency or enhance quality in construction and if the employment it is our opinion that the result would be the unintended consequence of a substantial decrease in efficiency. Therefore we respectfully decline to implement this recommendation. And. Feels like Christmas. before I get into the reasons I just. I just wanna explain to you what we do with the department I think there's a misconception of what we do no one. Do you need to understand how we operate our business for design bid build and that's what we do the majority of our contracts are design bid build method of delivery. So prospective bidders for highway construction are required to be pre qualified by our dot. In these pre qualifications require satisfactory evidence that they have been regularly engaged in the kind of work that they want to bid on upon and that they are fully prepared within it necessary capital material machinery an expert workers to carry out the contract. This is what's called administrative qualification pre qualification a financial statement and experience record must be furnished on the questionnaire form it must be certified by CPA. The pre qualification is valid for one year from that information the department's fiscal services division establishes a rating contractors are rated for a maximum amount of work they are allowed to to bid on and in ash actually get and it amount of work that they can work on four eight four that peer for any period of time the maximum amount of work considered will include all and finished value of contracts under way. In that if a steady a steady that's a leading practice. Tier one is administrative pre qualification most states do this. This recommendation is asking us to develop a completely different rating system based on past performance in on other factors out in the field on the client they have to do with the contractor and they would be rated on every project that they have okay kicks it's going to be a a big data set and we're gonna rate these contractors and based on that rating and based on what we decide to rate them online we will apply that to that pre qualification amount and will either reduce the amount they can bid on or increase it. So that's what this is about it's about giving them a and mount that they can do it on amount of contract work they can actually be awarded in A jesting that based on some type of rating out in the field be IT man how they manage the project how how many change orders they have how many delays they've had all there's all these different ways of writing. Okay so after contract is contractors pre qualified in their added to our beers list. They can be on projects within the amount allowed that they're allowed if they furnish a bid bond and that guarantees their bid if they decide they do not want to honor that did they forfeit their bid bond that helps the integrity of the bid process that you can't just put a bit out there for something then yank it back because you see that may be left some money on the table or whatever whatever the circumstances may be. But there's another very important thing that we do and this was a break in this was done back in nineteen ninety six and whoever thought of it was brilliant because what it does is is is it effectively does what all this other stuff all of this so the rating would do. But it's a lot simpler in its objective. It's we do not let allow. Contractors theater in liquidated damages which only means that they have gone over the amount of the contract term and there's a two reasons she might be liquidated damages your either too slow you're not putting enough resources on the project or you're not doing a good job and you keep having to go back and redo so that put you into liquidated damages and you can't be on additional work. Well that keeps those contractors that gives them incentive to do quality work not to have to go back and redo and it gives an incentive to put in their free sources on the job not to go over the time allowed. And it's subjective you're either I mean I'm sorry it's objective you're either and now these are you're not there's no how will that the contractor did in this regard this regard to that regarded and you bring in human subjectivity it's it's just what it is you either are you're not. And so this to us is is huge it's a huge step to make sure and it's helped get our projects where they're done on time it's done a lot of things to encourage good performance out in the field. If a contractor is allowed to build their bid they're not any of these there the low bidder it then they have to obtain a contractor's license and a a performance in payment bond they go through a whole nother set of qualifications they have to show the bit the bonding company and a contracting co the contractor license a board. If they're not able to get their bonds at the not it if the bill to get a license then they get then they're it they they don't get the bid and that goes to the second low bidder and this is all only if it's within the engineer's estimate. What's the contract is awarded in construction begins in the field we have construction standards and each one of these construction standards this is our state the. If you can see it's very very detailed and this is this is the go by this make sure we subjectively look at all the work the contractors know what's expected of them and they have to follow this fact that this insurers quality out in the field. There's also special specifications special provisions that are unique to each job and they have to follow those as well. We have disincentives pay we we have incentive pay we have we we were ward high performing contractors and we encourage low performers but we don't do it when it comes to when they can and cannot be it on a project unless there any of these because the subjectivity that would be inherent to a rating system is just it's just there in it it in that study it mentions that. Several times that there's worry about subjectivity in there needs to be every effort not to have it that when you have people involved rating other people. Out in the field in and then the situations that are happening is just almost impossible to figure out how to do that and and biased way at least it would take a long long term a lot iterations to get there. God has mentioned the study. As a leading practice in its performance in payment bonds. It's replacing the requirement for performance in payment bonds or at least limiting the amount that you have to get a performance and payment bond on with the performance based pre qualification system. That's what this study is about because there's cost savings if you don't have to be bonded and the when you're bonded that cost comes down to us of course you know when a contractor bids on a project they have to get a bond that's incorporated corporation there be cost. So this is effective if if we really did what this study is talking about the ultimate goal is to reduce the amount of requirements FOR bonding that we make our dot the surety company for the for the tax payer I mean we would make sure we would be pretty B. protecting the taxpayers investment. And since our daughters wholly funded by tax dollars taxpayers would be taking the risk of possible the fault. Now I know the fault is low but to me being low in default means that our bonding companies are doing a good job the screening these contractors before they're allowed to get a bond to do the job. If the goal is to keep the requirement for performance payment bonds and add and other layer of complexity by adding a performance space pre qualification system this just seems redundant a lot of extra work in a lot of cost for two. For not a lot of return on the dollar. The cost to implement this if we did it right would be that would be significant we wouldn't we are already at capacity level out in the field we would have to hire additional folks in the field to to do these evaluations to get him into the system we would any doubt hire additional folks to validate these these evaluations these ratings we would have to do all kinds of things to set the system up it would take a lot to get the system set up. And the study states that the major costs associated with implementing performance based pre qualification is the cost to state transportation department staff to administer the program. And so there's just I just want you to realize that this is not a small recommendation this is a big this is with mean a big change and a lot of costs to implement. There are so many variables out in the field no project is the same no contractors is saying no R. dot inspectors the same there are many challenges associated with trying to rate contractors out in the field there may be personality conflicts between the contractor superintendents and are not inspectors unforeseen side conditions planners to be room three mediated construction mistakes that will need to be corrected subcontractor problems material supply problems the list goes on and on. And to be able to quantify performance in a meaningful way given these variables would be very difficult to standardize and implement in a fair and unbiased manner it is very it's it's in it's impossible for me to imagine an objective process that keeps the playing field level and the treatment in writing of contractors the same across the state it's just when you have people involved in this type of thing it really gets to be and. Difficult. Competition. We need to we need as many bidders out there that can be it is possible obviously the mega contractors the queue it to the world are always going to get rated higher that's the I mean they've got more resources there unlimited pot thank you they just can they're gonna do a better job but that's not what we want in Arkansas we want competition we one Arkansas contractors to be able to get work as well as the big contractors we won an even playing field we want everyone to be out there working in and and bidding on these projects in a low bid environment. So each state department of transportation is unique each has a different organizational structure in process is different contracting communities different surety companies different laws different regulations everything's different every D. O. T. across the state has a different set of parameters that they're working under in Arkansas the culture is we want to maintain the integrity of the process we want it to be completely objective we feel like that's the best place to be both legally and and and morally for the taxpayer it needs to be objective. Our god is relied on performance and payment bond requirements from the beginning for as long as I can remember that is what we if they can get a performance in payment bond we feel assured that they can perform that work and if they can't they will have the the bonding company will have to step in and take care of that will be fault then the contractor. The R. dot in the commission feel that we have created a system that work is the best of both worlds but we can we've been able to keep it objective and so we have this objective bid process we had the liquidated damages specification that that we we abide by an we have safeguards in place to ensure bidders are qualified and we just feel like where we're at today works it works well and we don't see how this is going to make us any better. Our contracting community is confident right now I've talked to them they think that we minister are being process fairly and they have reached out to me and voice their concerns and I don't blame them for being concerned I was concerned as well when I read this recommendation how can we do this and not be subjected in remove all subjectivity I I think what we already have in place works in its objective and it doesn't. It maybe it needs a tweak here and there but overall it is being we is been a process it is grown year after year we've implemented new and better ways every year and it's a good system. Finally it needs to be said we cannot do what we do at our dot without our contractors we can't deliver projects that's not what we do we we just make sure we get on designed to the best of our ability and we inspect construction but we can't construct these projects we need a good contracting a good solid contracting community and I just want to say that it's it's just very important that we've that they feel like that we are a great state to bid on to bid for projects in and that we get bids on these projects and we don't limit competition. Any no this L. on the services recommendation seems well that's a good idea right but if you really think about what it would take to implement it. I mean it's really really think about all the moving parts. I I just hope that each one of you will see how is not a good a good fit for Arkansas it's not a good fit it won't increase efficiency. And as I say that with with the utmost respect I understand that god house they did their bit they did a good job looking through all this but this study does this. Eight anyway I'll just leave it there I've I've that I've talked to medication of got him in he he represents Cassian company which is a bonding company park Estes of the exact of the Arkansas asphalt paving association and Joey dean of the Arkansas general contractors because I think it's important this is so important you don't need to just hear from me you need to hear from the other side of the table the contracting industry any need to hear what upon what bonds really are all about because they do a lot that we don't even know they're doing they're taking care of a lot of things that behind the scenes we don't know because that's wired default rates so low so it that all stop I don't know if you want to ask me questions now or later I just have one just one question for got house because it seems a lot of this is going to be sent around the bonding was that part of your recommendation or was it just part of the report I didn't see it pulled out in the implementation roadmap is doing away with the surety bonds is that something that you all were driving towards making a recommendation of. A no center that was that was not a we were recommending to read on okay alright thank you what so. I agree I think it's objective ET would be what would be critical if you're going to have this type of program in place I I I I agree one hundred percent. in and I think that's where your pitfall is I mean I would say that I would have thought that a lot of this information is being gathered. As the project is continuing on by you know who ever we are not has overseeing the project right I mean that going I know I know I don't know much about what happens but let's just take the bridge project to have the fault in the you know the poor and all this other stuff there was someone that was measuring as everything went along and they found this cold joint right so there is you the measurements I think or taking place so I'm not sure that I understand the manpower need when it's already happening maybe it's how they reported you know the XO. My five miles a doctor any complains all the time about how much you have to input as you're seeing a patient now as opposed when he practice thirty years ago I I I get that there's some additional time restraints. I guess for me my take away from this recommendation would be because what I would like to see I mean I I'll just say I'll talk to commissioners that have disparaged contractors that we have on jobs when I've called about. Their jobs but there is to your point no grading system so they're at them and it's all subjective at that point in regards to the feeling or what's happened and contractors. For me you mean that the cheapest person for me to go work on you know my house is me but I am not the highest quality and I am not the fastest and I am not many many things maybe it shouldn't be part of the I guess what I'd like you to consider look at maybe it shouldn't be part of the the actual bid process but. Just in the qualifications process of you I think these folks should be graded to some degree I think we should know who is a good high performing contractor and I would argue that there's a lot of benefit in my opinion to a smaller contractor in this situation they're more nimble you know if that the odds given example if I'm gonna use electricity and I'm going to call the one man show I'm not going to call the biggest you know elector company in the in the in my district and so for them to be able to have measured in singing performance would be valuable to a small contractor because where they may not be able to make up for the bells and whistles and presentation they can buy their history and their performance and what they've been able to do it so again I get the objectivity being a big concern but I do think there would be some value in looking at doing some type of grading system so we can see what performance is that in in my perspective because it benefits the small companies more so than large because they're able to do things more efficiently than than some of the larger organizations that are out there least that's my perspective just a minute history and I I get theirs apples and oranges from contractors for road working contractors for that are like Trish ins but I do think there's some similarities release that's what my small contractors tell me but what do you do you have any thoughts on may be allowing looking at. You know some way that these folks can be be graded on their job so that they know league will announce that we've tried to do that ourselves if you look at this report we ask for me all you know we don't know what we were asking for an eighties between two needs to be change but we know we ask is that over budget what is the time when to supposed to start wants is to stop so we can try to measure a particular project applying that to a contractor think is also also that able could really how light some of those that are you achieving well for the state. I'm I'm not a hundred percent okay so. On my on my studies on performance based. You know there's there's several different variables that you look at not just one right. So they may make a mistake out in the field. that would that obviously would be one but there's so many others that you look at you know there according to this if you put in there are best poor performance based pre qualification system. That's where you would need additional people the kids but not right let's just let's just scrap the idea of pre qualification okay but but I mean I would like to know how are contractors performing I think from some of the conversations I've had they would like to know how they're perceived to perform to. in so that you're you're saying though. Okay that no one's grated at the end of the job you know what I mean in that grade if if there is a great washes and disappears so long as an on and liquidated damages they bid on to the next job Ford and Ford and Ford so you could have. A contractor this to be truly late they over schedule they move but they never wanted to liquidate damages but you know again I've I've had some talks with commissioners that explain me these contractors exist and there's no way to stop them under what we have right now from continuing on dragging out projects getting over budget so long as they don't going to liquidate you know liquidated damages okay so are you are you suggesting we rate contractors but just rate them not use that rating to limit bidding I think in the beginning that's where you start the process yes is is a rating system you know keep your liquidated damage and again at. Your liquidated damages approach in place but as you gather the information and fine tune it and I think it's very very useful at some point in the future for our dial again I will I mean I just. I'm going if I'm going to hire a contractor I'm gonna based on reviews just like all of this right now will go on Amazon and FOR looking between three project are you know products we're going to buy the highest rated one right if they're within a few dollars of each other we're going for the highest rated one. You can't do that in a little bit world that's and and I'm saying in the beginning I don't think it should be punitive to the process put together the information what what is the downside to to gathering and grading and at least retaining that information so it's public you know as public information everybody can see it we understand when someone's behind when someone's on schedule want someone to visually behind with someone to visually over budget but right now we can't see any of that because there is no grading there is no public evaluation of how that project went out okay I see what you're saying and let me offer this why don't we have some discussions with with AG city talk to the contractor see if that something they would like to see us employment. In in and not be a formal not a real formal I mean we we have to be careful we still have to be very careful yeah I wouldn't want anything that to be subjective but I thank you and may I will do say that let us at least talk to the contracting community see how they feel about that. And then let us look at to see if we did do something like that wasn't used to influence whether we gave a contractor bid or not I want to make that clear that we would not do that. It just to have that information I guess a feather in the cap of that contractor thank you to good writing I don't know what it would be used for except for. Just for knowledge But you know we could look at that and see if the contracting community can give us some insight into that and to see if that would put a huge burden on our field personnel we can look at that for sure. Thank you. Senator Hendren you're recognized for a question. I thank thank you Mr chairman and out there to XP excuse magnets on this but if you have a project that is a bridge or whatever are you required by law to always take the lowest bidder can you because of other criteria not take the lowest bid. Well. Chris are you familiar with a **** but I won't get into that normally okay design bid build the lowest responsive bidder which means a name I mark off all that we have to take a little bit okay that's what I thought and I understand the challenge at that because then basically read a qualified you're not to participate in the process and there's not any recognition because I know in the school world you have the ability to say this bit is lower but were more comfortable with this contractor for very so objection objective reasons and and not take the low bid. and speaking of schools and grading and and evaluating one of the more controversial bills that I past several years ago was grading schools a B. C. D. F. and I know some of our folks here Stiller absent about that but the fact is when we had testimony last week from superintendents about the success of the PLC's that professional learning communities without fail everyone used as an example they went from a D. school to the school sees cool to in a school and that was a way that they could demonstrate to the community that they had improved and I will tell you the biggest objection to that criteria was it they're so different you got large schools big school small schools real school city schools minority population schools there's no way a grading system can be fair and someone argue that it's there still some down sides and maybe some unfairness but for the most part they took all those things into effect they came up with the process that makes this taxpayers more aware of what's going on in their community and I guess I don't understand why first off we would ask the contractors if they're okay a we're the ones paying the bills to the contractors about these projects as opposed to establishing the criteria something as simple as safety record I mean of a contractor over the last ten projects AS had four people killed that's something that might not to be documented somewhere for on time completion rate or under budget completion rate I don't understand why we can establish a basic criteria to and then at some point use it as a tool in your evaluation process when you start having the close calls on on projects I mean is that just outside of our ability well. He all hinges on the pre qualification amount and so they get pre qualified based on those objective measurements I told you. And then they can bid within that amount. Other than that you know if they can get bonded taking if it if they do all the things they need to do. So if you have a contractor though the project after project after project you have challenge after challenge after challenge the next project comes around so small so long as they meet the pre qualification criteria absolutely no harm no foul with regard to previous record. That's correct. But. Well okay so you're talking about grading public schools which are a public entity right there there taxpayer funded in their in their an entity we're we're talking about. Rating a private firm not not turn the performance of the firm well I know that it is the duty paid for by the taxpayers rye but but what I'm saying what I'm trying to say is. What are you gonna do with that I mean we ought we can do that we can definitely do that but we in will have that if but we have to figure out how to do that yeah I agree now that in a. Responsible way you know I mean I don't I don't know the answer and I've got some folks here and maybe they can answer that question better but I just don't understand that the difficulty in establishing some objective performance criteria with regard to job completion okay for safety experience for budget are we talking about let center Dismang said that we we come up with a way of rating contractors based on their past performance and not use it against them and I agree with senator DISMANG that's a good starting point for so in certain that but but again the the idea here there is not just to do it for the sake of doing it it's doing it so we can make better decisions at the state government level about and also encourage contractors to perform if they know that they're gonna be identified as a sub par contractor for performance time after time after time I would I would say that private industry is going to be motivated to improve which isn't a win for the taxpayer's so I guess there's a lot of I I again with his I think you're probably right until we learn for sure we're doing it correct to to based eligibility or betting criteria on that is probably too far but to not do anything with regard to evaluation of performance I I I think to me as an engineer that's what we doing business every day as we find ways to evaluate so we can improve. Well as I said I'm willing to look into that and see how we can do we can accomplish that and do it in a way that's fair and is objective as possible but. We have to be careful that we don't put too much burden we're already stretched so thin out in the field so we're going to have to do it in a simple manner if we do it and we'll have to talk to see what are the what are the things that we need to look at I mean I'm not even. You know what is that look like what is it going to look like what is it going to be used for our are you going to use it who's going to use it. Are you get are we gonna come back one day and say okay now we're going to use this against you are we gonna put it you know what what is it for was this what this is going to help us to. And that's those are the questions we have to figure out is it meaningful is it going to mean something because we can't use it we still have to do bid all we can do under the laws the way they are now is to say okay you can't bid on more than ten thousand dollars if you don't shape up we're going to we're going to take that down to five and you know you're just not going to get the work you can't beat on the work that's what we can do. And so. Io N. into take those subjective ratings that. Is hard as we try to not make him it's going to be a very difficult task and to apply that to our pre that's the only way to limit those contractors from BT. Thank you and want one thing I want to. Say is I'd I think the upside for the department at least in my view point anything for the contractors it creates an even playing field as a product or as a project is being implemented across the state so if if everyone's kind of grading by the same system as the four S. as the progress case law even to your point you're saying there may be a cop that personality conflict there may be a or whatever going on it takes a lot of that out of could potentially take a lot of that out of the the process because everyone be using a formalized process in and have the evaluated project as it moves through you know to do completion and so that that would to me even again even if you don't use it. of initially for you know awarding contracts it does allow again all the contractors know what to expect and it's not a different situation based on who you have because they're all utilizing a formalized you know the subjective system to evaluate the project to completion with that I'll turn it over to I'm not sure who seat twenty four is. Well. All right senator Chesterfield you're recognized. Thank you A my question is for the the for guy house is there some mechanism in place were about other states have evaluated work. Sir I do I didn't is there a process that other states have used we value wait work. To evaluate the the work of the contractor contractor. Yes yes there are in a and you lose I do you have examples of that evaluation of those evaluations. They send for the the to report that we reference in the recommendation I'm saying do you have a list of what they look for. When they evaluated the Warner tech evaluation criteria. IT already happened I don't know if they included that I can't hear you. Sorry I just went up you yet so and I think that the articulate that they look at a combination of factors right obviously project completion on time completion on budget completion but they also look at managerial ability they look at the safety record and and so you're just looking at a group of of indicators that if it's on time check was the work completed dissatisfaction check so that's what you're talking about is that impossible then madam director of transportation here in Arkansas is it impossible for you to do. This goes the way this reads of course you can make real high level at criteria or you can do more did detailed I'm just saying if if what this committee wants is a checklist of did they do the work on ten did they completed where they within budget check check check with that that make it impossible for you now our second is there a clause that clause in most of the contracts that you have already No Way clawback clause that is if they don't do the work that particular time do you take money away from the contract if they don't do it up to specifications can you can you call back money from the contract there's reduction in the unit price for the amount we pay if they don't bring it. To a certain standard and my final question is is There are a huge number of end of entities that are capable of doing this work. And there he a huge entity is their huge number of entities able to it contractors able to do this work well it depends on the type of work okay yeah there's. You know the bigger jobs there's less contractors that are available that can do the work of course the smaller jobs there's there's more in a just depends on what the job is a six but when we completing big projects like the thirty crossing perhaps how many contractors would you estimate or available to even look at that country I'll just in just a few. And you have to realize that those huge projects like that or at least thirty crossing was qualification but I thought it was I just as we look at all of this about the it the valuation if this committee wants an evaluation that consist of did you do the job didn't come in on time did they come in under budget that is a simple measure it is a simple measurement how do would you already do that. We don't do it formally but I will say that. Even if you don't think it's helpful if it's helpful to get them off your case wouldn't you think that would be better to do. Hello. It would be helpful but don't forget there's another side it's S. us I am saying that you've got to live with this legislature. I I making any sense on it you may consent okay just just thought I'd throw that out there says we will beat this one to death it is a simple checklist do the checklist and let's move on all right thank you. Representative Davis you're recognized for a question. Died in seat forty eight. All right Representative you're recognized. Thank you chair but as usual of my good Senator Bruce seated may still sees it all is is that simple Senate just for you just stated director tutor I I have to believe and know that they're already a lot of these things internally of not formally happening with the highway department in terms of the department transportation skews me in terms of your measurements and how you look at past forms who've done contracts and how they have performed of so now to formally put that in the form of a document or a check list it as you go for it did just take the data that you have in formalized into a document it is becomes a record and then that record becomes a part of as you go forth formally we can look at the public you look at and others can look at it is not in a lot of additional work is just taken that work that you are the. Information that you pretty much have in putting in a format for public consumption. Okay a report simply report is just that's all it seems to be it does seem to be Senate just did a great job in making this is simplest possible without creating a whole lot of work in a whole lot of other strained type of movement I see that way now what do you see well I see that were completely off of the recommendation as far as what they recommended that we do which is. This this isn't we're not talking about the recommendation anymore we've moved on to maybe something simpler. A simple report what do you interpret recommendation to be to implement some top of rating to adjust their pre qualification amount that would it just how much they can bid on that was the recommendation nine as I understood well as I read it it it it was not a mandate recommendation it was a to me of conceptual on contextual type of recommendation meeting you could not have to do it word for word you could take what they recommended and do what Senate Chesterville has basically simplified to a document that would satisfy is what the public would want to see it would also provide a measure made a record of what they have done a performance record so we've we still would not be ignoring got house it just may not be doing exactly what they see. But we're still going we're moving in that direction of. Measurement of performance and making sure that is recorded so that we could Analyze it and use it as we go for and you and you may qualify decisions based upon performance I mean if someone see if somebody hits safety issues there were extreme because there's a concept called. Responsible low bidder or response so there is some in in in your your B. docks you also reserve the right to accept refuse so there is some rights of you it ain't just a little be so eight a there you can get a little be it from someone that you deem to be your response and you can make a determination based on that so you have some flexibility at your behest now if you so all of this I think you have already I think you have this to present to provide us what we need. I think you do. Thank you. Hope that help is with. Thank you Representative in and I'm just so we can go back to the report I think what if we do decide to take this up and have in another we've got some of the tests may make changes question some. But if you look at their implementation roadmap that may be where we we keep back in on how to move forward so you know the first is exactly what everyone's been talking about past performance manager ability safety record that was the kind of their initial thresholds to be looked at the development of the scoring system and then a track performance so if you were to stick with one two and three and stop on number four you know that at some future point that I think. I think you hit all the notes that everyone was talking about while still staying away from something that you're hasn't it with right now which is the pre qualification standards so in in one thing I'd and I'll give this to you after the meeting but we on on the state level and there was all this procurement work that was done and I think you reference couple time to chill you know kind of go by the Arkansas procurement we do allow this actually recommend this by legislation and through rule that performance based be utilized and so I can give you the the sections on that so that you have it so you do have the latitude if you are following Arkansas procurement law on there some guidelines in place already about thresholds that we recommend for state agencies and so that maybe just yes useful to be able to look at it in the future again I don't think that's were headed today but it'll be useful that we need to remember that we have federal regulations we have to follow on lo bit as well. Thank you very much. I do not see any other questions we're gonna move on to recommendation number nine the in a part of information technology. And I have a quick I'm sorry actually I need to stop at. We haven't had any this yet but so we do have a public comment we have Matt Cassian from the cash company. I will say that since. Since the committee has decided to back off of a suggesting their pre qualification amount. Based on a rating that completely changes the conversation. So that that in itself is put this into another ram a different place to be thinking so I don't know if all of this is going to be helpful now that that's no longer on the table yes Sir yes menacing answered to to his point I mean I I think you're gonna make some comments about your the bonds we've already that was not a recommendation that was being made I think it was in the report but not a recommendation was actually being made by got house was never referenced in so I've we welcome any testimony like provided like recognize yourself for the committee. Thank you very much my name's Matt Cashin of your little rock independent insurance ensure the agent just as a qualifier of a past national president of the national association surety bond producers past eight president of the independent Durrance agents of Arkansas's current vice chair the contractors licensing board and have been a sure the industry instructor and curriculum writer for over thirty years thank you for director tutor for her leadership an out reach to include sureties as a stakeholder in this process my comments are gonna be geared at at that the department or guide house. but they are geared at this study that guide house bases recommendation six off of and. The problem I have with recommendation sick I mean with the with the study and and I'm not about the study since it came out because it is a direct attack on surety bond just by the title performance based contractor pre qualification as an alternative dish performance bonds not as a way to improve quality. And so from that premise the information in here or is is a bit skewed The six year old recommendation relies heavily on that national center report from two thousand nine so just to be clear we're talking about eleven year old data and within that data it's very limited in its scope although it's presented in such a way that the construction community nationwide is overwhelmingly in favor of performance based evaluation contract award. When you dig into the data you realize that that survey was in nine U. S. highway contractors not nine thousand nine nine hundred not ninety nine nineteen just nine and with the presence of Mister Estes from a a PA and Mister dean of ADC you're probably going to be able to hear much broader sampling of contractors opinions towards towards this particular process of an. In actuality this report from two thousand fourteen validates with the surety industry what I do the report says the average DOT default rate on their construction projects AS point four six percent less than one half of one percent of construction contracts going to default. my thirty nine your personal history of executing bonds to the highway commission or map of Arkansas contractors is zero percent of all right. In other words the unseen services that the surety industry provides in the background is actually working. We do pre qualified we are the gatekeepers we're the ones who are allowed to discriminate. State agencies can't discriminate everybody's of taxpayer these are taxpayer funds everybody has a right to access to the. But not everybody's qualified to have access to them that's where we come into play in when we make a mistake we pay. Senator your regular reference about you know going online and you know about some of the higher rating may be paying a few dollars more if you make a mistake what happens you're out the money you got a by again that's not the case with performance bond involved case in point DOT had recently default a contract an out of state contractor for abandoning the contract. And it was the sureties you step forward in offered to and the and the DOT except that skews me I've been around this so long as to call on the highway department that the DOT accepted this completing contractor I happen to know who the completing contractor is a happen to know who the surety is while I was not the agent on the bond for the defaulting contractor I do rep represent that you're ready and health facilitate that marriage of a completing contractor in the DOT. And I can say that the price the sureties going to pay to have a job completed and honor the obligation under their bond is substantially higher than with the state is going to play under the contract the contract will not go over budget will not go under budget it's a contract set quantities it's that unit prices in certain qualities over run yes they'll have to be paid for at the agreed to price if quantities under run. They will be paid for at the agreed to prices there's really not budget overruns or under runs like we traditionally think of Another issue I have with the Federal Highway report is the basic lack of understanding a surety yeah and just just to be clear going to serve just what yeah we we are not in favor they are not in favor of doing what was sure the bonds and I think the report and thanks big for themselves for thank you for components of the report that they were pulling out in regards performance based you know grading which we went through and you know have a lot of consumers a shipment that's an even if you look at the recommendations there's no comment about security bonds and it it really focuses in on this pre qualification ninety you know of again just like immunity if you are electors in your house they burnt down you and I and the next week so but yes so if you just be as concise we get thrown more big I understand let me circle back real quick to the pre qualification and because that seems to be the issue the pre qualification services at the surety industry under takes a very similar and even more extensive than what is recommended recommended in the various reports by federal hot we we do all those things we look at the equipment utilization their access to skilled labor their access to resources yes we look at the financial information we look at who they subcontract with we look at past performance they do get graded on every job is called the profit margin in those poor quality contractors don't last is stick around very long in fact the majority of the criteria used in the federal highway study we do that every day because we're monitoring the contractors entire pole portfolio of work not just focusing solely on what is being done on the highway department wiki we take into account everything they've done. The report itself is going to reduce competition and we saw that today in the leggings I don't know if you see with that the department of seven job this morning had a total of seventeen meters on cross all seven jobs only five from Arkansas this afternoon nine projects and eighteen bettors to print per job except one job didn't have any bidders at all. This report itself says performance based evaluation limits competition so I'm not in disagreement in trying to evaluate contractors they or evaluated every day by our department on the job yes there's room for improvement mistakes are made the people involved and he just happens the like any business or entity there's always room for improvement but it's still my belief that are DOT and Arkansas highway construction community is really trying to do the best I can every day on every project we have quality in Arkansas recommendation six only address of quality quality quality I believe we have call we got a quality department with quality leadership we've got a quality expect book we have quality roads that continue to be improved to meet the needs of our people we have quality contractors with quality employees that risk their lives every day. And if you want to go to a grading is safety record how do you grade a contractor who loses to employees on one job in one day. Horrible. But it was caused by a log truck that lost its load. It has nothing to do with the contractor. Twenty one injuries to fidelity's one log truck highway sixty five Clinton. isn't No Way the contractor's fault he was behind concrete burial how do you grade that the bottom of the grading is that it becomes it some level subject if I may say is a smooth road senator you may say it's a rough road I'm I say it's a great bridge you may say it's a horrible bridge. Who draws the line. What biases and prejudices do they bring to that process which will open the department up to criticism as there are circles right now who go after the department and feel like they favor out of state contractors for example but anyway I'll be happy to answer any questions and get out of the way thank you very much. Thank you for taking time and also being a first public comment or so. Very much I do have any questions seeing none again thank you for your comments state and take time be here A next up is park Estes. Yes Sir a as you make your comments just if you need a recap a summary I think where we are that we we don't really have something yeah I appreciate that appreciate the opportunity ladies and gentleman to be able to be here today and since we've kind of gone off in a different direction you know I've got about two and a half minute prepared statement and most of it is going to be very were done to to what director tutors said what medication is said so you know I could. Maybe just explain who I am kind who I represent and hit a couple of highlights and then we'll be done with because I know you have a lot of ground cover and I just took up a lot of time doing that so again my name is park as to some the executive director of the Arkansas asphalt pavers sociais shin my association has a hundred ten companies we represent over seven thousand employees across the state of Arkansas I'm I'm speaking on behalf of the association and and its members right now not not on the personal side and your opinion is that are not currently has a mechanism to tools in place that fairly and objectively procures bids for jobs that let contracted trust me of my members thought or had a problem with the way they do it right now they would have heard about it you know we just think that the recommendation as we understand it would not be in the best interest of our dot contracting industry and more importantly the tax paying public which ultimately we all work for at the end of the day. we believe that race rating system based on the premise suggested such as delays dances sit disincentives Sir will be subjected nature and even with the best intentions ultimately would be reduce competition increased cost which we heard about that more than one. we also believe that the system that's in place right now to your work for our daughter is objecting to it is fair that addresses quality consistently across the state through the or not specification book. Also to hit on the bonding we're confident the performance and payment mom process adequately addresses the quality of contractor that the report is concerned with our not APA have always partnered to deliver the best asphalt paving product possible utilizing most current technology available and we find a better way to build a project or better way to produce an asphalt mixture we collaborate together incorporated into the specification book so just in closing I just want to emphasize that it's important understand as win stated more than once there's there's many issues and circumstances that can arise during the job that or they're out of the contractors control the could unfairly alter a contractor's performance score so therefore on behalf of our membership in the seven thousand boys plus the cross the state one reiterated A. P. A. and its members do not agree with implementation of the bidding process that could easily become subjective in our opinion would limit competition or a would increase overhead with a measure without a measurable return on investment and with that I'll close and be happy to take any questions if there's any thank you Sir do we have any questions when we are getting bare bones so the it thank you for your time today thank you for your time and then Joe dean. Yes Sir if you just represent you recognize yourself for the committee and welcome to make your comments thank you so much I'll also be brief my name is Joe eating I want the Arkansas chapter of the associate general contractors of America we're look locally known as age you see Arkansas. And I wanna offer my opinion on on the rate rating system are members specifically those in the highway road and bridge construction industry have a symbiotic relationship with the department's transportation are not depends on a strong dynamic effective in experience contracting industry to deliver a timely in quality product for taxpayers and travelers conversely are dot depends on the industry In the industry the depends on our our dot for projects to compete for this doesn't mean that we always agree on everything because we don't there are effective an existing processes to be worked through to resolve any issues or or disagreements that may arise on occasion. In this particular situation we are very much in agreement. we think the procurement process is effective to ensure a quality product product and efficiency director tutors done a good job explaining their process is Mister Cashion is further explained the extreme vetting process that's used in bonding to ensure that only quality contractors get the opportunities to to bid. We feel this rating system is redundant we feel it's unnecessary and would likely make the procurement process more subjective in less objective. This is a good for our dot is not good for the industry does not good for the taxpayer it's been discussed but I'm gonna say it again every single project is different with its own there is both expected and unexpected it can be whether utilities landscape obstacles the economy access to labor traffic material supply chain or even a pandemic all these things just aren't equal which makes the process but board will two opinions flawed scoring personnel interpretations of performance and it's just not a good idea. you know essentially. What this does would put our dot as a judge jury and executioner over the in industry they're already safeguards in place to ensure quality and I can assure you that the contracting industry want nothing more than to of produce core quality projects. it would promote collaboration and are not doesn't want that power. Thank you. Thank you for your time. I want to any to circle back up to recommendation number five I think that's one that there's a lot of places are not sorry taken some steps And so at this point I just like to express interest for that to be considered with dance recommendation and the next meeting and then on this recommendation six I will go ahead and state that there's interest from subcommittee to move forward specifically with the items one two and three on the importation road map in regards to a grading system related to contractors. All right and that brings us to information technology and I. T. recommendation number nine and with that I'll turn it back over to got house did you all out I think a cut someone off minute ago if you had some comments. Earlier at that. Ninety nine okay thank you. You're good you yes thank you do you want to go through each I think recommendation on its own or shall we go through all three of them and review them. For me it the mass director director it would be okay if they went through each three or would you rather respond after each one I agree it's just assume they go through all three okay yeah we'll do all three then and then come back to questions and then are not response okay something thank you. Thanks and I'll start and then and discuss some of the findings and then turn it over to Erin to discuss a recommendation so they're three recommendation here and yeah I keep focus area recommendation nine was around building a governance structure to help guide art are not thank you dispensed. To the finding here one we found it with eighty two dot one that are not has not developed at least at the time of the review of governance structure to ensure that IT investment support business objectives manager price risk and need external stakeholder needs. and then the second one two dot two was around I'm overseeing enterprise architecture and from what we understand at the time of the review that there was no over arching enterprise are enterprise architecture or blue to standardize organized in a line you know the the the department's IT infrastructure and solutions again with the business goals and. So in terms of supporting evidence you know we found during our review that that are not continues to increase the size investment and and had done so at least from a budgetary standpoint from nine point two million in fiscal year sixteen to approximately twenty three point five million this fiscal year twenty. With some of the operating expenses and equipment costs being the biggest budget driver so the the department definitely is investing in I he as a way to help you know manages operations that being said a review by a third party consultant in protect that the department had had brought on revealed that there is an unfair decision making process and no IT governance for these expenditures so the the budgets increasing the investment increasing but it's not clear that there is a centralized government structure to direct those investments and then at the related to the actual architecture you know of their you know IT infrastructure it is by load organizationally in the foreground with responsibility residing with each of the divisions and district that quote unquote primarily on their respective IT platforms and solutions. I'll talk about recommendation of the findings of the recommendation ten and eleven and then turn it over to the second recommendation here it's about implementing amend termite the initiative the can optimize a business operation so thank you one dot one is one of the two key findings here and and you know the department appears to be a pro approaching its datacenter modernization you know in basis but without a formal integration plan. And the department has at least preliminarily at the time of this particular review identified software needs but those efforts to align purchases across the department hasn't been universally implemented and so that you know the the the department definitely it is moving in a new direction and specially with you know the higher than U. I. T. director there and and they have prioritize from a date at the end point needing to look at some of their infrastructure and some of their software is looking at their mainframe upgrade and the oracle implementation and and and also operating against some of their you know storage and server infrastructure and so they prioritize that that being said you know that there's still some work so right now the department deploys about two hundred sixty three five or applications and has about three over three hundred I databases and and there's an unknown amount of data the court locally on on staff computers. and again that there is not that formalized program beyond some of those infrastructure upgrades to to address you know these applications and the databases and potential ways to sort of rationalize and streamline that that number and that the data. and so you know those those internal strategic planning document that they have you know revealed that there is that you know lack of alignment between those that IT application purchases and and you know because there are so many databases out there and they're not potentially connected and there's an unknown about the data that there is poor data quality and their difficulty act that thing accessing data. We did note that in in fiscal year nineteen that there were you know several instances in which there was you know some significant I can spend but the IT department or division was not involved you know up front in the decision making around the purchases. And then I lastly recommendation eleven is developing some of those necessary colors to establish you know IT is that back to business partner and that's a little bit of a longer term recommendation and there to keep finding that that are related to this two three which is that the department at least at the time of the review did not have a service catalog and defined service level expectations so it was not clear at the time you know what services the IT division will deliver when and and house support is actually distributed. And and second yes secondarily at that relate to the I. T. division and and and being able to support the business but they they have you know meet them stride obviously in establishing a project management infrastructure to ensure that effective delivery of IT projects but at the time of our review was was still very much in its infancy. So some of the supporting evidence again the internal strategic planning document that that they had repealed lack of clarity around some of the services that that IT offers there did not appear to be any service level agreement around you know when I. T. would deliver specific services or performance against poster you know I service level agreement. Well I I did mention this before they they you know they have restructure the right department so that does include that project management office but at this point or at least that appointed the review they had not adopted a warm all set of project management standards or protocols to help drive that liberty. And with that I'll turn it over to a hearing to discuss the recommendations. Okay with respect to recommendation number nine we're are not I teacher the the plan is to that was right on track and calling out the need it for implementation of an IT governance structure at the necessary objective are not eighty investment through a hundred and fifty five percent between two thousand fifteen and two thousand twenty and or I guess actually that the state by the year twenty twenty and their investment than ninety continue to grow it'll be it will be critical to lay the foundation for a decision making around I he brought purposes and project that involves across on tional group are not but not with though no ninety not engineering locked the earth now across the the the business unit to represent the area is. From an impact perspective governance separately yield increased capacity performance and improved business out and when you think about how that actually happened really done by ensuring that a product that is got repaired or projects require aligned with the core competencies of the IT division so I he is there to represent themselves and say that they are capable of supporting the things that is being purchased. that they are within the standards that are set by the the the division on the ice ET and and that they are a manageable level of risk and that again the alignment with the business impact and of the agency. We think about consideration on good governance requires top down for an active engagement so you really want leadership because the patient in the IT governance program it requires active tracking of requests and communications related to performance so you want to be able to show people what is actually happening once you that you put governance in place you've got to be consistent and you have to have processes in place to support those kinds of things and again it could be as high coupling that with department wide business goals as well as I see called if the bill is a few things can't be in conflict that's really the objective of standing up and IT governance structure. Without a word and mostly get over the implementation summary for each of the applies and will focus on implementation and of that with respect the leading practices there are well documented forces or IT governance that and I will or the most widely adopted ID governance framework on an earlier on the internet and find many many documents and approaches in plans actually implement those framework and you know they are available by general consumption by are not eighty. The. Of an implementation that those map there really three key activities the first is the latest round work on and then establishing a governance structure and creating finally and and act using a government that now. So we know that in the two thousand nineteen thirty to plan a call for implementing a governance structure and we would suggest that are not evaluate the current IT model there Kerr ninety model so they need to understand what where they are and where they to be they want to be centralized meeting all I see it live within the IT division and authority nobody else is providing for procuring IT services those distributed database the honor of talking about for the current state assessment on they wouldn't live other places they would be strictly with with held by a Yankee division they could also be decentralized in which case the central AC would manage some activities and other would support their own and then finally federated federated is very complex approach and really it is focused on like much larger operating models much larger institutions like the white government for you have very different business units trying to solve the Miller challenges and so they I and do and shared framework but not technology. We would also suggest that are not that the goal for the structure that they want to adopt and then get by and from others on that approach so you know if there if they are decentralized now do they want to be centralized and you know get some from by and make sure that everybody agrees that up for their head and then evaluate their most common framework so again we talk about all that and I feel the MMI is the ability of maturity in model and integration and basically it's really a great way of evaluating their actual maturity four icy maybe a good place to start and then think about one of the other as of the framework actually adopt. And bill want to work on establishing a governance structure that would start with identifying numbers so again we talked about having and leadership at a copy agency the metal participate in the process and and again we're the objectives that is make sure that I understand what business needs are the business team understand what I he is capable of achieving and reporting and that they have shared goals and recognize their shared challenges a leading practice or government this to make I that I and and of this frankly is to make the I the leader part of the executive team and again as of late but this is on that alignment instead of making I the you're like a report entity really help get them art of of the executive engagement and and problem solving and then once the government team is the term that it'll be important the document responsibility will that engagement outputs and inputs or decision making and who and what the government lied so we affiant fuerte purchasing data management project portfolio decisions all of the things. Amend promo creating an executing a governance roadmap this is really no putting that government model work in name means involving a committee to address the different areas that that you're crying governor to it would be thinking about reporting requirements that you're actively communicating with stakeholders the property agent the and then finally thinking through the performance metrics and the communications around. What the government in issuing and what IT is achieving through the governance model. One. Number ten is to implement the mid term IT initiatives but not my business operation so really this is aimed at helping the department takes that that will protect them and help them optimize operations so you know thunder was saying from a current state perspective there are you know. Three hundred the databases what the date is that they're not necessarily fully documented and hundreds of popular application so there's risk associated with having all of those and there's additional costs probably associated with all of those in to alternately we're suggesting that the department inventory data systems and applications and evaluate the purpose for each of those along with the rest for final the I. T. divisions ability to support those and any duplication. So with respect the impact of this rationalization project obviously you can expect some cost savings we reviewed a report that quoted of Arnold this indicating that application rationalization that prop that the inventory and thinking about the needs of the applications you have combined with the business process automation can yield an average of twenty percent off eating here if you acquire that you are not two thousand nineteen bandit five point three million rationalizations that they've are got a little over a million dollars just the ninety you know nineteen alone. The management we documented has already they the agency about six hundred thousand dollars obviously we would affect that if we you know collapse some of those databases and the need for those does not just the database itself at the hardware and the personnel that go along with the those that are required to support them and then they that better data quality can be normalized health the department with analysis and reporting and public information we talk a lot about the availability of data or trends evaluation for public information There's one recommended. We've been talking about are tied up in to normalize data and being able to produce those would not be in any way and make sure that the different thing of course is often the same thing about a particular data that. And then also finally this rationalization project should reduce the risk to the department related with for example proper producers doing look back on it related A licensing if they find unlike the software they will come back to the department and ask them A or life and costs or whatever period of time that that offer has been operational it should also reduce the security risks associated with with with applications that may not be fully inventoried or managed it and frankly the same is true for hardware so important to really have a full Her view of your your ID affect understand what your security red and and frankly about the very rich all of the. The permit consideration perspective it's worth noting that some up front investment is really likely necessary the purchase and configuration of a tool to support this rationalization is is a valuable effort on imagine that all of those different data sets and frankly. The databases and then the data within them we're talking about you know millions and millions of rows of data and having a tool to help analyze that and begin to rationalize that normalizes that then be really important and the same is true for those application so having a tool to help the poor that inventory classification is is really important it sounds like the department has already begun to work with the consultant on the efforts to actually do the inventory and classification if there is probably a new effort beyond just their day to day work and they're doing today to go through that Asian and assessment after. An international of the Senate is likely to require terminating some applications in the which means that that there's going to need to be if the communication and change management around getting by in the stakeholders for each of those you you adopting a new approaches and turning off the application. I don't get implementation here's a look really focused on leading back to the focus on the last hole at where the he's are are providing open data portal you'll recall that one of our early only a recommendation the public that a construction project so when we when are not to get to the place of having rationalized normalized data they should be able to those that they announced in an open data portal for example that would help with the the function and actually Corning around the construction project on their website but also in it is then application developers the opportunity to build solutions for them as well and publish the if you know that the. A big trend over the last ten years or so that you know ACT acceptable open data means that thanks technologists out in the world are not providing that data and making it useful as well and not all of the department. Implementation roadmap there are three key that here one is to build an inventory and applications and databases number two is to assess the applications and databases from that and one four eight and then finally number three will be developed a target date so with respect to building the application inventory in the database inventory are not so determines the early data governance an application standard so what we need here at the saying that they should work with that government being we just talked about to think about one in state could be thinking about the rest expense application portability that you know portfolio need that they're going to have for each application and then infant for the applications and databases and indicate each of that or the standards we talked about and discussed the date anything applications with the colder the value wait necessity an impact and then review the materials that they have reached the debate that there's nobody documentation for them to make them more difficult to maintain in the long run the also need to classify each by their function within the court what is that the then with respect to assessment of the inventory think about this is developing any thank you and executing a boring method for each application and the day today again the thinking boring and FOR availability or ability to support it so in other words and the IP team actually he thought I thought on that thing what the security risk might be at the floor at any other rest is after recovery for example total cost of ownership is there duplication this application functionally doesn't serve the same purpose as something else that already exist and the point is going to have to be applied to every single application and everything will database and every day that that is the it is a out of. The band so let it go through the the proper though the long run constituting the north reduction typically are are described as being worth it by industry standards. And then finally are not will need to set a target date and develop a plan and execute against that for the very or application so one thing identified standard one thing about the application the are not governance team and I see you will need to determine the high level data architecture thinking about how to structure data for optimal access and use the German and and state for each and every application and so when we talk about in state we're talking about on that the application and need to be re engineered doesn't need to be migrated to something else or the data within it need be migrated to something else some things will be continued as they are and then something will just need to be eliminated. Finally the implementation for each application and ask for me to be executed right though it one thing that you do the inventory you do the assessment you make them determinations about what we're gonna do with it and then you actually go about retaining re engineering migrating or continuing as is each of the I'm used to it's also worth noting that the department should maintain that inventory that inventory is not a one time deal every time you add an application every time you affidavit that is to go into that inventory if the but the purpose all those kinds of things for long term tracking this is a this is a life long IT Project it's not a one time deal otherwise you gonna to repeat it and if you and if they go through the process of doing it the first time and then maintaining it than than you know the process to be avoided and the rest that are associated with having on rationalize application and the data will improve their occurred or with with total one. Okay wow one. This is number eleven just to development of the three pillars to establish A fee and effective business partner the black recommendation is really hi and the few things that we've talked about already the building governance and the reading to a place of having them standards and building processes around the. so weird when we need it doesn't talking about establishing more formalized I. T. project management and IT service management framework coupled with the tools that will enable that that those function so when we talk about it might the service management framework really thinking about how does the entity response to an incident how do they handle or an outage for example if the outage can't get the same out it happens over and over and over again how to the address that how do they release new things and for the environment other they handle the doctor recovering does not on duty those are the kinds of functions of an IT service management office and when you found out those functions and you found out more formalized eight the project management you should get better customer service better customer satisfaction more transparency and better more operation more effective operation or the I. T. program. so you know we we talked here. I know full well there's the forty two percent and the twenty six percent we talked about this twenty six percent versus percent measure before where entities that have more mature project management processes happen and to have about a twenty percent cost saving persons those that have less mature PM infrastructure so I want to labor that one but with respect to the forty two percent here from an impact perspective you get forty two percent of your business colleague from an icy perspective to say that you have reviewed business often you're not a cop center and then you know you're doing things right because typically I think if you of the conflict and turn at the port and the rather than a business partner that delivering business value and review thing that that's all Then from a consideration perspective we think implementation implementation should focus on delivering a developing and catalog that's really a menu of services and and I'm having a request tracking capabilities so you know here's the menu your hair here's how you order at don't they're being when FOR the department division I see division we believe project management of this implementation effort across thank you projects to be considered and finally building awareness and buying from apartment they called there's will be important right now there are people that are able to procure thing themselves there are you know different channels to reach the technology support and so going through the process of having people order from the service catalog might be a few different approach than there used to taking and the thing to take from communication and training to get people to adopt you the new way of ordering. Leding practice perspective IT service management framework for well documented and training is widely available including I deal with is you know the basis for the sector department of information resources and that that Indiana office of input in office of technology easy for me today service management three months that we represent our recommendation and and frankly the other widely accepted or I feel is widely accepted across industry both from a government of public sector perspective and commercial sector perspective on the entities and that we talk about here with respect to X. of the I. R. and any an office the technology they have published materials that are doctor who uses two healthy and up their offices and procedures as reference points and and frankly there are lots of A again published materials all over the public sector that and work are not in the. Implementation perspective let's and talk about the the three pillars here which are establishing a baseline standards and policies electing appropriate software and tools and then establishing a long term idea and plan. With respect to the baseline standards and policies we want to understand I dentistry and identified the framework that will support IT project management and FOR risk management from A PM perspective are not so the value eight different project and portfolio management framework for the different kinds of work so there are lots of of entities that leverage waterfall and it's kind of a more traditional project management not the agile is you know kind of a weird thing in the industry that is really good for product development duration may object think that have kind of a quick turnaround that need a lot of customer interaction and by and and then there are a lot the hybrid versions that try to combine that with the review the rest of the day with them. So then one identified the tools of the fourth down so their and when I say cool I don't necessarily need a software tool I mean the actual like documentation kinds of tools that will support that the specific processes again input and output those kinds of things we referenced the Texas department of information resources PM light as one example again not widely available through the internet they also have a more comprehensive project delivery bring framework that has a very exhaustive list of things to do and that that the date and and sample documentation. So the trainer internal like you thought how to use the tools and processes and help other divisions that all the office pool. I management include things like how to we've already talked about that very argument on going going through my notes but Klay you're trying to the. The meeting and and if the interest of time for everybody the only to enter the the only to create standards and for it but I think them and apply performed better than those so you're not documenting in Munich hating them don't need to thanks for example the only to say for example you know you can expect us to create a new user in twenty four hours one two created the. Created and completed the form so the idea here is to build a service catalog that menu that we were talking about and say this is what I can do these are the the list of the things that the IP division and support this is what you and the That the turnaround time you can expect from us this is how will before you I need to the requirement that we need back from you in order to make that happen. The next step is to identify the school before the activities so we talked about adopting at that this extreme where they're locked with software tools that report different ITS and framework we understand that the department. Has been through the process of procuring a and IT picketing with them oftentimes the might be getting the number larger are part of a larger I he as an system and are not value we standing you that pool you do more than getting and adopt the larger idea and framework provided the recommendation that through. Then finally the ones that a roadmap for reading once they're AT T. and and I yes and if the bill is to be so thinking about the growth areas the training that them to be required for those sentimental value wait demand and incorporating demand the new capabilities over time into that service catalog that menu and ordering the future and then providing the appropriate change management programs as they move forward another words every time they they put in a new capability into the permit that along every time they can figure the IPS and tools to do something else that allow for Dr grant for example they're going to want to make sure that their end users within the department to