VDOT Privatizes Management of Traffic Control Centers

VDOT traffic management center in Hampton Roads. Photo credit: VDOT.
VDOT traffic management center in Hampton Roads. Photo credit: VDOT.

by James A. Bacon

The McDonnell administration is tapping Serco., Inc., an English firm with international traffic management experience, to take over Virginia’s five transportation management centers. The six-year deal, announced yesterday, will be implemented as a public-private partnership in a $355 million contract. Thirty-two firms had responded to the state’s Request for Proposal.

Serco will operate Virginia’s five transportation operations centers — in Northern Virginia, Hampton Roads, Richmond, Salem and Staunton — as a consolidated system rather than separate geographic programs.

As highways become increasingly “smart,” or embedded with cameras, sensors, message signs, traffic light actuators and reversible tolled lanes and HOV lanes, the job of managing them has become increasingly complex. Serco manages traffic monitoring and control systems as far afield as Glasgow, Sydney and Hong Kong.

Said Governor Bob McDonnell:

The Commonwealth sought innovation from around the country to deliver the best technology solutions to maximize our transportation system. Virginia is a leader among state departments of transportation in providing real-time traffic information to motorists, and we wanted to build on that reputation. We will use technology more effectively to better manage congestion, freight movement, incidents, severe weather related incidents and traveler information.

Virginia’s traffic-management system includes nearly 900 cameras, 500 electronic message signs and more than 1,000 road sensors.  One of Serco’s jobs will be to maintain and improve the reliability of those devices. The company also will manage traffic signal systems, emergency response and traveler information.

“It takes all tools and methods, including technology, operations, and first-class communication systems, in addition to maintenance and construction to make our highway system operate as smoothly as possible,” said VDOT Commissioner Greg Whirley.

Bacon’s bottom line: This appears to be a welcome development. Installing and operating intelligent transportation systems is hardly cost-free but it does represent a major strategic alternative to building more roads and highways. VDOT’s traffic management systems are sophisticated operations (see “Swapping Smarts for Asphalt“) but they probably can be improved upon. Serco can draw upon best practices from its global operations to manage Virginia’s system more efficiently.

A pedestrian example is the management of traffic signals, cameras, sensors, message signs and other devices in the field that go on the blink with some frequency and need continual attention. Serco touts it’s web-based, proactive management system, eWatchman, “which ensures maximum availability of road-side infrastructure.”

However, there was not enough information in the governor’s press release to evaluate the economics of the deal. How much does the $355 million contract compare to VDOT’s internal cost for administering the traffic management systems? Will the public-private partnership save money? If not, will Serco make significant improvements to the system? Even more fundamentally, what performance metrics will Serco be held accountable to achieve, and what is the Return on Investment for additional state dollars spent?

A VDOT “request for information” document, written in January 2012, expressed the hope that the cost of the project would fall “within VDOT’s current budget” for operating the five traffic operations centers, or about $25 million to $35 million per year. “It is expected that this will occur through the delivery of significant operational efficiencies together with potential revenue-generating opportunities.”

The Serco contract will average almost $60 million a year, about twice that number. What happened? Was VDOT simply unrealistic about what it would cost to implement the contemplated improvements? Was the project victim of mission creep? There is more to the story than was released to the public. Inquisitive minds would like to know.

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6 responses to “VDOT Privatizes Management of Traffic Control Centers”

  1. larryg Avatar

    I think three things:

    1. – VDOT is more and more recognizing that adding infrastructure alone is not leveraging your existing infrastructure in more cost-effective ways.

    2. – VDOT is buying into the idea that traffic and congestion is something to be “managed” as much as it is something to try to build more capacity for.

    3. – In order to deploy this system, the company is going to have gargantuan opportunities to place sensors – that will collect mega info that in turn can be “mined” to generate things like real-time traffic maps that will be a boon to “connected” GPS units – as well as SmartPhones apps.
    that in and of itself could prove to be a lucrative endeavor and I’m wondering what the agreement is with VDOT. Who owns that data and who can sell it ?

  2. shaunalex Avatar

    I love Smart Transportation Systems and I’m really hating these PPPs. Most of the Public-Private partnerships favor the party with the sharper contract writers.

    Agree that VDOT needs investment in these systems, and there are several region-wide efforts involved with coordinated emergency ops. My fear is what happens in 6 years, when the low-bid firm’s contract is up, and a new vendor needs to be found who is also the lowest bidder, and they have to make use of the original vendors hardware and software, or re-do it all themselves. Sounds like a big waste of $ looms.

    WTH can’t VDOT just do this themselves??

  3. larryg Avatar

    re: WTH

    probably because VDOT does not want to hire permanent employees to staff new functions that will trend it back to the biggest govt employer in Virginia.

    of course, the other thing is that VDOT does not have expertise in many of these areas which are more and more NOT related to the basic function of road building but the brave new world of sensors, databases, computer models and data-mining.’

    VDOT made a hash of the financial analysis of the Pocahontas Parkway because they had no real in-house expertise capable of performing a legitimate analysis for a prospective toll road.

    again.. that’s an aspect of transportation that has gotten behind designing infrastructure, turning dirt, putting up traffic signals, etc.

    Now days, traffic signals are sensors and computer networks – not just red, green and yellow light bulbs.

    but your sentiment is widespread as I think most folks would rather see VDOT do it and if we are going to have tolls – let VDOT do them not for-profit companies.

  4. shaunalex Avatar

    “..VDOT made a hash of the financial analysis of the Pocahontas Parkway…”
    Agreed, but wasn’t a consultant behind that? A Tysons-based international behemoth with a well known initialed name?

    The consultants who did the Express Lanes math haven’t fared much better yet.

    VDOT has staffed those smart centers internally since they were built, going back some time to the one built across from the Pentagon in Arlington.

  5. larryg Avatar

    No.. I think the initial version of Pocahontas was a VDOT-only deal and version 2 they were “rescued” by the international “behemoth” that had much more experience in financing toll roads.

    VDOT does traffic projection studies very differently than private companies that do what is called an “investor grade” analysis.

    With the Pocahontas Parkway -VDOT wildly overestimated the projected traffic and the rescue company re-did it for a 99 year timeframe and I suspect did it as a favor in lieu of their other ongoing negotiations for HOT/Express lanes.

    The Express Lanes have a much better chance of succeeding in my view because Transurban uses a much more conservative projection model.

    re: staffing the centers – the problem is that the centers need to be integrated as a single operation and VDOT generally operates as “districts”.

    As an example, we recently had traffic signals converted to a computer sequenced network and the folks that did it were VDOT folks from NoVa – not VDOT folks from Central VDOT.

    It just makes more sense to contract out because it lets one organization do it, let them hire/fire the help they need when they need it rather than VDOT adding permanent career folks that may or may not be the talent they need in the timeframe they need it.

    there are parts of VDOT that are organizational dinosaurs. They’re still treating roads as if they are fixed physical assets rather than a living, dynamic transportation network.

    Our local district has shown utter disdain for the need to synchronize the lights especially at rush hour. For years, a decade, they insisted that the only solution was more roads then last year, we had the lights synchronized by folks outside the district – and the improvement was immediate.

    I think VDOT can grow as an organization under the right circumstances but I believe the top people at VDOT have little confidence in meeting that challenge so they contract out.

  6. larryg Avatar

    re: ” Most of the Public-Private partnerships favor the party with the sharper contract writers.”

    that’s an excellent point and I do hope VDOT did and does use consultants to do PPPs.

    and that goes to my point about real time traffic data which is exceptionally valuable – and could conceivably pay for the infrastructure used to collect it.

    who owns that data and who sells it ? At the very least, VDOT should share in the revenues if they don’t already own it outright.

    re: ” Serco will operate Virginia’s five transportation operations centers … as a consolidated system rather than separate geographic programs.”

    this tells you the tale of VDOT’s geographic district structure which is based on 1922 Congressional boundaries.

    A major step forward would be to align them with MSAs or Va Planning Districts but that would take an act of the General Assembly whose members jealously view their VDOT “districts” as theirs and not state taxpayers.

    But even writing new boundaries would not fix the problem if those new districts still operated in similar provincial modes.

    How do you plan and operate modern computer-networked transportation systems that ignore VDOT district boundaries?

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