New Audit Faults TXDOT Culture Despite Finding Some Areas of Improvement

May 26, 2010

TxDOT also presented “misleading information regarding the magnitude of cost savings or cost avoidance that can be attributed to regionalization,”

Sen. Kirk Watson said a new management audit released during a Texas Transportation Commission workshop today revealed few surprises about the state of the agency.

The agency initiated the $2 million management audit after last session’s Sunset review, with the goal of improving efficiency. The commission received the 628-page report for review today. Agency staff intends to address the report’s findings at a special-called meeting in early June, said agency spokesman Chris Lippincott.

The report revealed little to those who deal with TxDOT on a regular basis, Watson said.

“When it comes to necessary reforms, there always seems to be a fight, probably because of the culture and leadership issues described in the report,” Watson said in a statement released this afternoon.  “It’s time to strip TxDOT back to the engine block and rebuild it as an agency that can effectively serve Texas in this century.  My experience working with Chair Delisi, and our conversations regarding these issues, lead me to believe she intends to begin this significant, essential process.”

One early passage in the report is particularly telling when it comes to agency culture and the complexity of addressing the agency’s challenges:

“Conversations with TxDOT’s senior leaders reveal a deep-seated belief that TxDOT is doing all the right things and that criticisms leveled against the organization will decline when TxDOT is better able to demonstrate to people how right the organization is. While this belief might be understandable – in context of the organization’s culture and people’s individual commitments to the work they are doing – it is counter to meaningful self-examination and redirection of the organization. This does not mean that leaders in the organization are not initiating change. Rather, it means that the way change is undertaken and the nature of the changes undertaken are driven out of the long-standing viewpoints and operating models.

“Meaningful adjustment in TxDOT cannot occur without leaders who understand and accept that the organization’s performance and management is not meeting expectations. TxDOT requires leaders who truly believe that the world has changed and that TxDOT also must change. The leadership also must conceptualize what that future organization should look like and should do, and must successfully motivate staff to go that direction. Furthermore, the leadership needs to bring management discipline to the organization in ways that may go counter to the existing culture and to their own perceptions of their roles and value in the organization.”

The Grant Thornton audit also was critical of the agency’s recent restructuring efforts, which were intended to consolidate existing divisions and create regional service centers. Those regional service centers were intended to provide a broader view of agency needs, shifting employees from project to project and to decrease downtime for individual employees.

The audit praised the concept of shared services and improved operating procedures but noted the timelines for the rollout were arbitrary and inconsistent, lacking clear objectives for successful implementation. Pushback from the field also reduced the reduction of field personnel from 762 full-time employees to 466 full-time employees.

TxDOT also presented “misleading information regarding the magnitude of cost savings or cost avoidance that can be attributed to regionalization,” according to the audit. TxDOT claimed that regionalization saved $90 million in savings due to staff reductions in FY 08, before the regional plans were finalized and before staff was moved. And the audit of claims that regionalization was the cause of $39.4 million in avoided maintenance costs. Other savings also were added.

As of last February, TxDOT projected savings of $251 million over the next two years, with claims of actual savings totaling $203 million over the last two years. “Because of the way TxDOT is tracking regionalization activities and savings, it is unclear what will be the actual savings resulting from the effort,” according to the audit.

The full audit is divided into two parts. The first part includes recommendations on agency structure, business processes and employee compensation. A second section reviews how the individual units within the agency are performing and includes recommendations for improvement.

The audit can be found here.