DATE: September 23, 2021
TO: Boston Region Metropolitan Planning Organization (MPO)
FROM: Matt Genova, Transportation Improvement Program (TIP) Manager
RE: Draft Programming Policies to Address TIP Project Cost Increases
This memorandum outlines a three-pronged approach to addressing the issue of cost increases for those projects funded using the Boston Region MPO’s Regional Target funds. These policy interventions are based on work conducted by the TIP Project Cost Ad Hoc Committee over six meetings from June 3, 2021, to September 2, 2021. This committee is comprised of nine MPO board members and was established by the board in April 2021 in response to significant cost increases for projects previously selected for funding by the MPO in the TIP.
Projects may be selected for funding by the MPO at any stage of design. This means a significant number of projects are first placed on the TIP having only been approved by the Massachusetts Department of Transportation’s (MassDOT) Project Review Committee (PRC), the earliest possible stage at which a project may be selected for funding.
In the sample of 50 projects selected for funding by the MPO since federal fiscal year (FFY) 2016, projects saw the largest cost increases when advancing from PRC approval to 25 percent design, with a median cost increase at this stage of 28 percent. While costs still tend to increase later in project development, these increases are more modest. The median increase when advancing from 25 percent design to 75 percent design is 15 percent, and the median increase from 75 percent design to 100 percent design is nine percent. The earlier in design a project is selected for funding, the greater the uncertainty with respect to its final cost.
The MPO should require that projects submit 25 percent design plans and obtain an updated cost estimate from MassDOT based on these plans prior to being selected for TIP funding. This policy would apply to all projects considered for funding by the MPO, including those programmed in the MPO’s Long-Range Transportation Plan.
Coupled with this higher programming threshold, the MPO should make three complementary policy changes:
Interactions between project proponents and the MPO are largely focused on the development of each year’s TIP. During the early stages of TIP development in the fall and winter, the most engaged proponents tend to be those who have projects being scored and considered for funding. Proponents of projects that have already been programmed in the TIP tend to interact with MPO staff and the MPO board the most when a concern has arisen about their projects’ cost or schedule. Project proponents are not required to attend MPO meetings at any point during their projects’ life cycle in the TIP. MPO staff’s interactions with MassDOT Highway District staff are mostly concentrated during early TIP development in the fall when MPO staff are sourcing new projects to be considered for funding.
In the absence of regular, established check-in points between all parties, project-related issues often only rise to the surface at MassDOT’s annual TIP project readiness meetings in February. While this information is useful, the timing allows the MPO only six or seven weeks to find solutions for any project cost or schedule issues that come to light before the new TIP must be drafted. Given the limited amount of time at this stage, it is difficult for all parties to exchange high-quality information so that informed programming decisions can be made for the new TIP. The lack of ongoing project monitoring also means that MPO staff and the MPO board may not know when a project’s scope has changed.
In the event that project proponents do not meet the requirements for engagement in the TIP process, the MPO board may elect to make changes to a project’s status, such as delaying the project to a later FFY or removing the project from the TIP.
Projects are only scored by the MPO when they are under consideration for new funding. No action is taken to reconsider projects when they experience a cost change of any magnitude.
Without a formal mechanism to reconsider projects that have significant cost changes, the MPO has historically maintained its funding commitments to all programmed projects. This includes covering any cost increases and accommodating scope or schedule changes without a great degree of scrutiny. Funding cost increases across the board limits the MPO’s financial capacity to program new projects. In the absence of a formal, clear, and transparent policy, any enforcement action taken on a project for a cost increase could be considered arbitrary or unfair.
Cost Per Point for MPO-Funded TIP Projects (FFYs 2016–26)
FFY = federal fiscal year.
In addition to the above policy interventions, the TIP Project Cost Ad Hoc Committee has discussed other miscellaneous programming practice adjustments. Recommendations for addressing each of those topics are below.
The MPO’s current practice for applying an inflation rate to project costs mirrors that of MassDOT and meets the minimum rate recommended by the Federal Highway Administration. A four percent cost premium is added to a project’s base cost beginning in the second programming year of the TIP, with an additional four percent added each following year (eight percent in year three, 12 percent in year four, etc.). This inflation is not compounded.
Although projects funded by the MPO have historically seen costs rise at a rate higher than four percent per year, this rate should remain unchanged at this time. The policy interventions outlined above are designed to prevent significant cost increases for projects funded by the MPO. Therefore, the MPO should implement the above recommendations, assess their effectiveness, and then consider revisiting the inflation rate at a later date if cost increases remain a challenge.
Historically, the MPO has allocated all of its available funding to projects in every FFY. This practice was suspended during the development of the FFYs 2022–26 TIP due to significant cost increases for programmed projects, which prompted the formation of the TIP Project Cost Ad Hoc Committee. The MPO agreed to hold these funds until the committee finished its work and the board adopted a new set of programming policies. The use of these funds will be determined during a forthcoming TIP cycle.
The MPO should resume its practice of fully allocating all available funding in each FFY of the TIP. As noted above, the policy recommendations outlined in this memorandum are designed to limit the scale of project cost increases. Given that, the need to retain unallocated funds in any given FFY should be reduced. Programming a project in the TIP provides a valuable signal to the project proponent and MassDOT that design work should continue. Fully allocating available funding maximizes the MPO’s ability to keep projects moving through the TIP process towards construction—the ultimate goal of all TIP-related policies. Furthermore, leaving funding unallocated signals to proponents that the MPO may provide financial leeway in the event that project costs rise. A central goal of all of the above policies is to discourage cost increases, not to suggest that cost increases may be accommodated.
While the policies outlined in this memorandum represent a significant departure from recent MPO practices, the MPO should not shy away from implementing these policies as soon as is feasible. Rolling out these changes in unison during the FFYs 2023–27 TIP cycle will help to establish a common baseline of expectations for all stakeholders. The MPO can assess these policies as they are implemented, retaining the option to adjust them later based on the extent to which these policies are working as intended and on the evolving needs of the board.
Should the MPO desire to move forward with the committee’s recommendations above, a vote may be taken at the September 23, 2021, MPO meeting to release these recommendations for public comment. During this time, feedback can be gathered from regional stakeholders including current and prospective project proponents, advocacy organizations, partner agencies, and the public. This feedback may be reviewed by the committee and the full board before the MPO votes to endorse any final policy changes.
The Boston Region Metropolitan Planning Organization (MPO) operates its programs, services, and activities in compliance with federal nondiscrimination laws including Title VI of the Civil Rights Act of 1964 (Title VI), the Civil Rights Restoration Act of 1987, and related statutes and regulations. Title VI prohibits discrimination in federally assisted programs and requires that no person in the United States of America shall, on the grounds of race, color, or national origin (including limited English proficiency), be excluded from participation in, denied the benefits of, or be otherwise subjected to discrimination under any program or activity that receives federal assistance. Related federal nondiscrimination laws administered by the Federal Highway Administration, Federal Transit Administration, or both, prohibit discrimination on the basis of age, sex, and disability. The Boston Region MPO considers these protected populations in its Title VI Programs, consistent with federal interpretation and administration. In addition, the Boston Region MPO provides meaningful access to its programs, services, and activities to individuals with limited English proficiency, in compliance with U.S. Department of Transportation policy and guidance on federal Executive Order 13166.
The Boston Region MPO also complies with the Massachusetts Public Accommodation Law, M.G.L. c 272 sections 92a, 98, 98a, which prohibits making any distinction, discrimination, or restriction in admission to, or treatment in a place of public accommodation based on race, color, religious creed, national origin, sex, sexual orientation, disability, or ancestry. Likewise, the Boston Region MPO complies with the Governor's Executive Order 526, section 4, which requires that all programs, activities, and services provided, performed, licensed, chartered, funded, regulated, or contracted for by the state shall be conducted without unlawful discrimination based on race, color, age, gender, ethnicity, sexual orientation, gender identity or expression, religion, creed, ancestry, national origin, disability, veteran's status (including Vietnam-era veterans), or background.
A complaint form and additional information can be obtained by contacting the MPO or at http://www.bostonmpo.org/mpo_non_discrimination.
To request this information in a different language or in an accessible format, please contact
Title VI Specialist
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