The tragic collapse of the Interstate 35W Bridge has created substantial challenges for the people of Minneapolis. First is the challenge to complete the recovery effort. But then there will be the importance of mobilizing quickly to rebuild this critical artery as efficiently as possible. Minnesota Gov. Pawlenty (R) has already asked his congressional delegation for “prompt assistance to cut through any red tape at the federal level.” The loss of this major route from downtown should not cause the residents of Minneapolis to endure a needlessly lengthy bureaucratic rebuilding project best exemplified by both the dismal response to Hurricane Katrina and the insufficient effort to rebuild the Gulf Coast. Moreover, people should not be re-victimized by using this tragedy as an excuse to raise taxes.
There are at least three case studies in which we find that, with the application of the appropriate emergency powers, innovation and the right incentives, an emergency project like the I-35W Bridge can be safely completed in record time and at the least cost to the taxpayers.
Solutions for Faster Bridge Building at Lower Costs and Enormous Savings to the Economy and to the People at Large
If the lessons in the following case studies are applied in Minneapolis, they will save an amazing amount of time, and for the Minnesota economy, they will be an enormous benefit without compromising safety.
CASE NO. 1: I-10 RECONSTRUCTION AFTER NORTHRIDGE, CALIF., EARTHQUAKE
Within seconds, the Northridge earthquake (6.7 on the Richter scale) in January 1994 reduced the overpass bridges of Interstate 10 to rubble. I-10 was one of the most heavily trafficked freeways in the nation, a major avenue for commerce and commuting. Gov. Pete Wilson’s (R) office estimated that each day I-10 was not rebuilt cost Los Angeles $1 million in unrealized productivity, gas, delays and shipping costs.
Lesson 1: Emergency Powers for a Governor Can Expedite Recovery. The California Government Code confers upon the governor emergency powers, including legal authority to suspend burdensome regulations for the duration of the emergency. Gov. Wilson was advised that repair of the bridges to restore use of I-10 would require two years and two months because of the extended public hearing requirements imposed by law. The governor promptly suspended the operation of these requirements.
The Big Lesson: Incentive Contracting Can Speed Performance. Gov. Wilson added a bonus/penalty condition to the bridge reconstruction bidding: For each day in advance of the agreed upon completion date, the winning bidder would receive a bonus of $200,000 (substantially less than the $1 million estimated economic cost suffered for each day I-10 was closed); and for each day that the contractor was late, the contractor would incur a penalty of $200,000.
The winning bidder, CC Myers, Inc., made almost as much on the bonus as he did on the bid — and I-10 was restored to public use not in two years and two months but in two months and two days. The job was finished 74 days ahead of the June 24, 1994, deadline.
The result: A reduction in time of approximately 85% from what was initially estimated and an economic savings of $59.5 million dollars.
CASE NO. 2: OAKLAND BRIDGE RAMP RECONSTRUCTION PROJECT, CALIFORNIA
In April 2007, a gasoline tanker truck crashed into a ramp in Oakland that connected the East Bay to San Francisco, forcing drivers to take a slower commute. Bay Area residents planned for a lengthy inconvenience, as the repairs were expected to take 50 days and cost more than $5 million. However, effective incentives offered by the state led to a far more efficient outcome than anyone expected.
Lesson 2: Serious Problems Merit Serious Response. Within 24 hours of the accident, the federal government approved emergency reconstruction money, and the state soon settled on a design plan. The winning contractor was, again, CC Myers, Inc. CC Myers had workers and equipment on the scene 15 minutes before the actual contract was signed. Shop drawings were approved in hours, not months, and state inspectors were flown to Stinger Welding to oversee quality control. From the start, Mr. Myers had his crew working 12-hour shifts around the clock.
Big Lesson Redux, Incentives Produced Speed. The California Department of Transportation estimated the cost of repairs at $5.2 million and a total time of 50 days, setting a deadline for completion of June 26. It promised a $200,000 bonus for every day short of this deadline, not to exceed a total of $5 million. The highest bid was $6.4 million, while CC Myers’s Inc’s bid was less than $900,000.
The result: The repairs were completed in 17 days — almost three times faster than the original estimate and at a bid more that $4 million under budget. Total payout by the state was $667,000, more than the $5.2 million estimate because Mr. Myers collected the full $5 million bonus, a small price to pay for such a rapid recovery.
CASE NO. 3: I-15 CORRIDOR RECONSTRUCTION PROJECT OUTSIDE SALT LAKE CITY, UTAH
In the mid 90s, the interstate system near Salt Lake City, Utah, was in need of serious reconstruction in light of the growing traffic demands of a burgeoning population. The project posed a major challenge because it included the construction or reconstruction of 130 bridges and three major junctions with other interstate routes, the largest-ever interstate reconstruction project. The expected time for the project was originally slated to be 10 years. However, the project needed to be finished before the upcoming 2002 Winter Olympics, just six years away.
Lesson 3: Using the ‘Design Build’ Model to Reduce Time. Facing these challenges, the leadership of then-Gov. Mike Leavitt (R) and Tom Warne, the then executive director of Utah Department of Transportation, chose to use the “design build” model of construction. Design build is a model in which one firm provides all of the aspects of a project — planning, design and construction — with its own employees or subcontractors. As a result, projects contracted under the design build model are often completed faster. Using this model, the schedule for the I-15 corridor project was reduced from 10 years to 4.5 years.
The Big Lesson Once Again, Incentives Produced Faster, Better Construction. The contract for the project included incentives of up to $50 million for timely completion, quality and traffic maintenance. As a result, Wasatch Constructors, the company who won the bid for the contract, was able to complete construction in just more than four years. Construction started in April 1997 and was completed in May 2001 — before the Winter Olympics and ahead of the revised 4.5-year schedule and $32 million under budget.
The result: A time savings of almost six years (from an initial estimate of 10 years to a revised schedule of 4.5 years, and then 5 months ahead of the revised schedule) and a cost savings of almost $32 million dollars. (Sources: U.S. DOT Federal Highway Administration; Website of Tom Warne, former executive director of Utah Department of Transportation; Leah L. Culler, “I-15 Surplus Yields Hefty Refund,” Deseret News, Oct. 16, 2001; Zack Van Eyck, “Road Industry Taking Note of Design Build on I-15,” Deseret News, Aug. 2, 1998; and Design Build Model.)
Leading Our Leaders to the Right Solutions
The lessons are clear, as these cases prove. Yet, already some in Minnesota are calling not for unleashing American ingenuity but instead for more taxes to feed the same failing bureaucracies.
Their answer is to further punish Minneapolis drivers by raising the gasoline tax. This knee-jerk reaction is precisely what happens when the right lacks an effective vocabulary of solutions to compete with left-wing tax-and-spend policies.
Raising taxes to spend on bureaucracies — which in all three cases were the main impediment to a safe, efficient and speedy rebuilding effort in the first place — is exactly the wrong answer.
(To better understand a government trapped in a world that fails and our deep need to transform it into the world that works be sure to watch at “FedEx versus Federal Bureaucracy” on YouTube.)
The Wall Street Journal published an excellent op-ed this weekend on how privatization has been creatively used in states to rebuild and repair aging roads and bridges.
Returning to ‘Can-Do’
John McQuaid, the coauthor of a study of Katrina’s devastation in New Orleans, captures the parallels of New Orleans and Minneapolis in a Washington Post analysis. McQuaid’s powerful commentary is titled “The Can’t Do Nation: Is America Losing Its Knack for Getting Big Things done?” I commend it to you as a thoughtful first step in understanding what is happening in American government at every level.
“The bridge disaster also reflects a broader and more troubling problem. The United States seems to have become the superpower that can’t tie its own shoelaces. America is a nation of vast ingenuity and technological capabilities. Its bridges shouldn’t fall down.
“And it’s not just bridges. Has there ever been a period in our history when so many American plans and projects have, literally or figuratively, collapsed? In both grand and humble endeavors, the United States can no longer be relied upon to succeed or even muddle through.”
In all tragic events, there is hope — as in every challenge, there is an opportunity to lead. It is my hope that elected leaders will gather the experts, best practices and information needed to both guide and advise them to successfully complete the rebuilding of the I-35W Bridge as quickly as possible. With the right leadership, government can work in the best interest of the people with the highest level of quality of service, with the least inconvenience and at the lowest cost to the taxpayer.
Next time you are stuck in traffic due to a never-ending road construction project, send an e-mail to your senators, member of Congress, governor and state legislators to educate them about these case studies that prove both the power of incentives and the fact that government can be moved to the world that works.
P.S. — Just two weeks ago, American Solutions offered a six-hour workshop on moving government from the world that fails to the world that works. More than 1,000 people have seen that intense introduction to fundamental change. You can see it at AmericanSolutions.com. If you would like to help bring about the transformation of government from the world that fails to the world that works, sign up to host or participate in the American Solutions workshops on September 27 and 29.
P.P.S. — Never underestimate the media’s ability to distort a relevant historical reference. I have referred to the war on terrorism as the “phoney war.” “Winning the Future” newsletter readers will remember when I wrote this why the 1939-40 World War II comparison to today is important to winning the war on terrorism. You can read it here.
P.P.P.S — American Solutions will be holding six free workshops at the Iowa Ames Straw Poll on August 11. I will also be signing books and taking pictures at the American Solutions booth.