AUSTIN — Independent audits of management and business operations of the Texas Department of Transportation are nearing completion.

The Texas Transportation Commission had its first look at the draft findings in a presentation from the auditors, Dye Management Group and Deloitte Consulting, last week.

“This provides an excellent opportunity to step outside our department and take an objective look inside to see where we can improve,” said Ric Williamson, commission chair.

State law requires TxDOT to contract for an independent audit of its management and business operations during 2007 and every 12 years thereafter. The timing is to coincide with the agency’s sunset review cycle.

The sunset process was established by the Texas Legislature in the 1970s to provide for greater openness in government decision-making and to improve government accountability. The Texas Legislature reviews each state agency once every 12 years to look for potential duplication of other public services or programs, and considers new and innovative changes to improve each agency’s operations and activities.

The audits — which have cost more than $3.5 million — are divided into five separate units: transportation funding, contracting/project delivery, consumer services, management and support operations, and field operations.

Draft executive summaries of the audits are available on TxDOT’s Web site, www.txdot.gov.

Highlights of the findings and recommendations from each of the five audited units include:

Transportation Funding

The state’s ability to finance transportation needs through traditional sources (state and federal motor fuels tax) is a risk. This is due to erosion of the motor fuel tax by inflation, more fuel-efficient vehicles that weaken the link between highway use and revenue, and risks to future federal funding. Texas should transition from the motor fuels tax to a vehicle miles traveled charge over the next 20 years. The department should continue to pursue comprehensive development agreements and toll pricing at levels that would fund mobility.

Contracting and Project Delivery

Numerous operational strengths were identified in the way TxDOT manages contracts and projects, but there are several recommendations on ways to improve. While it is difficult to detect, the potential for collusion among contractors should be treated with a higher priority. To deliver transportation projects in the most effective and efficient manner, TxDOT should evaluate the design-build approach as a delivery method of all appropriate projects. The audit notes that the construction of State Highway 130 in the Austin area is being developed by TxDOT using design-build and calls the department’s ability to provide support and flexibility necessary for projects like SH 130 an operational strength. It appears TxDOT does not have a formal system in place to properly evaluate whether baseline project completion schedules are accurate and aggressive enough to accelerate project completion as intended by incentive/disincentive clauses in contractor contracts. Comprehensive development agreements represent an opportunity for TxDOT to meet the state’s transportation demands. TxDOT needs to undergo a business transformation to move from traditional project delivery to the incorporation of CDA projects.

Consumer Services

The auditors recommend TxDOT proceed with development and implementation of an automated routing system for oversize/overweight loads. TxDOT should work with the Texas Department of Public Safety to determine whether a common customer approach between vehicle registration (TxDOT) and driver licensing (DPS) is a practical solution. TxDOT should work with DPS to develop a common vehicle identifier for vehicle inspections and TxTags. There are opportunities for greater use of the internet to provide vehicle titling and registration services. TxDOT should better coordinate its call center functions. Travel and tourism programs should remain housed within TxDOT.

Management and Support Functions

TxDOT needs a faster, more efficient process to procure professional services related to CDAs. TxDOT should initiate a plan to recruit and retain employees with the technical and professional skill sets related to CDAs. A compensation analysis will serve as the basis for any recommendations the department chooses to make to the legislature or other key decision makers. TxDOT is not using performance measures to effectively manage its operations in all areas. The department should continue its efforts to create effective key performance measures, and there should be a system developed that can track and monitor performance in all areas.

Field Operations

TxDOT should place a greater emphasis on sharing information, resources and certain business functions. It should consider functional areas where consolidation makes good business sense. Escalation of material costs in recent years has dramatically increased construction costs. Standardizing and strengthening cost estimating controls can help reduce the risk of cost overruns. TxDOT districts should continue to develop formal processes to track and monitor consultant performance. More time is now required for obtaining environmental clearance not only due to changes in laws, polices and procedures and heightened sensitivity to risk but also because of high turnover of reviewers. TxDOT needs to ensure that District-level CDA project management and oversight are prepared for the flexibility and speed of construction afforded by the CDA process. Districts are experiencing increased difficulty allocating qualified inspectors to the appropriate projects. TxDOT should evaluate its current practice of using only TxDOT inspectors. Districts have experienced difficulties associated with recruiting highly skilled personnel. While TxDOT cannot meet private sector salaries, it should position itself more competitively to retain and recruit high performing, experienced personnel.