2009 Public Officials of the Year

Interview

Q&A: Pete Rahn

Pete Rahn (full profile) is one of the country's most innovative transportation officials. As New Mexico's transportation secretary, he signed the first long-term warranty on a highway project in U.S. history. Now, as Missouri's transportation director, Rahn is creating new models of contracting for highway work. Governing Staff Writer Josh Goodman talked with Rahn about his willingness to take risks in the conservative field of transportation, what's wrong with how the public sector works with the private sector, and how to restore confidence in government's ability to manage big projects. Here is an abridged and edited version of the interview:

How did you get interested in public service?

I've been interested in public service from a very early age. I was student body president at New Mexico State University. I served two terms as a county treasurer in San Juan County, New Mexico. But in the mid-1990s, I was an insurance agent. I was the vice president of a nice-sized agency in San Juan County. And I had worked for a candidate who ran for governor. He was a friend of mine and lost the primary by 800 votes statewide. Gary Johnson was the successful candidate, and the Johnson team approached me and wanted me to help them. I turned them down several times. I had been involved in that campaign strictly because I was supporting a friend. Eventually, though, they convinced me that Gary was the right person, and I supported him.

After he won the general election, I was asked to serve in the administration. And I said, only as a cabinet secretary because I have a job that pays well. I got this phone call that said, "OK, we have tourism and we have highways left, what would you like?" I asked a bunch of my friends who had been involved in politics and they all said, "Stay away from the highway department; whoever gets associated with that is ruined." Then, I had one friend who was a state legislator and he said, "If you want to have fun, take tourism. If you want to make a difference, take the highway department." So, I chose the highway department.

I thought I would do that for four years. I did that for eight years and absolutely loved it. I don't buy lottery tickets. But I remember it was the summer of 2002 and I knew my time at the department would be ending by the end of 2002 because Governor Johnson was term-limited. And the Powerball hit like $300 million. Everybody was buying lottery tickets, and I went in and bought one ticket. Everybody was talking about how if they won the lottery, "You're not going to hear from me. You're not going to see me the next day." I remember thinking, "If I won the lottery, I wonder how much I'd have to pay the next governor to keep this job."

I absolutely believe in what you can do at a department of transportation. You can impact every person in your state every day. You can impact them negatively, or you can impact them positively. That really is a challenge that gets me excited every morning when I wake up.

You were an unusual pick for DOT because you weren't an engineer. How did you envision your role as something more than someone who designs bridges or highway interchanges?

I think that it's like almost any organization that relies on some specialized talent to function, whether it's an engineering organization or a medical organization or whatever. The farther up in management you go, the less you need of that particular experience because management is really something different than being an engineer.

It's about managing your organization, motivating people and staying focused. It doesn't mean being an engineer is negative. But at the time you run a department of transportation, if you're trying to be an engineer as well as a manager, you're probably going to fail. Being a non-engineer at the DOT in New Mexico — that broke a mold. There were a lot of people there who thought that wasn't how it should be. We had a great run. Eight years later, the New Mexico Highway and Transportation Department was the star of state government.

One of your biggest projects in New Mexico was called "the Big I." What was that and how did you make it work

The Big I was the reconstruction of the interchange of I-25 and I-40 in Albuquerque. It's right in the heart of Albuquerque. It's the way that people got around. We needed to reconstruct the interchange. It created huge backups in almost every direction. The way it got its name, the Big I, is that from the air it looked kind of like the CBS eye — the logo of CBS. The engineers were telling me that it was going to be a four-to-six-year project.

As I'm talking to my engineers, I tell them I can't believe it has to take that long. And I said, "If you wanted to impress me, you'd do it in two years." That, all of sudden, became the task: How do we take a four-to-six-year project and deliver it in two? It's amazing when you go through this for the first time, so many people were predicting failure, that it couldn't possibly be done in two years. But when you start with the intention of doing something a certain way, it becomes your focus and it becomes a team effort. It's phenomenal what a group of people can do. We didn't rebuild it in two years. We rebuilt it in 22 months and three weeks. We beat the deadline on it. It was a signature project for the department

It's things like that — setting these challenges up — that's the fun of being a manager. When you're doing it in the public sector it can be high-risk, but it can also be high-reward. The public can perceive your organization totally differently when you can pull off something they didn't think you were capable of. That's the same way the I-64 project is working in St. Louis.

Explain what's happening with that project. You took two gutsy risks on I-64. There was the decision to completely shut down sections of the road while it was under construction. And the twist you put on the "design-build" construction technique.

I-64 is sort of this main street for the entire metropolitan region. It is this critical corridor that is 80 years old. What we were dealing with was this 10-mile stretch that had 32 bridges, and nearly every one of them was a Condition 3 or 4. The next step with condition 3 is you have to close the bridge. It was a worn-out corridor. When we were looking at options, I was being given the same kind of numbers I was being given in New Mexico — six to eight years to rebuild this corridor.

You can picture highway construction. You build it in phases. Let's say you rebuild two miles at a time. You're creating the same kind of backup continuously — the backup is just being created at different points along that roadway. You're talking about six to eight years of having huge frustrations from the public about the traffic in the number-one-used corridor in the region. Working under traffic is dangerous to your employees. You can count on the likelihood of some fatalities in a construction zone. It's a difficult circumstance.

I saw I-64 as the opportunity for Missouri's DOT to do what the New Mexico DOT had done with the Big I, which was to really change the public's perception of it as an organization. It was not just MODOT. The metropolitan transit group had an expansion of its light-rail line that had gone 16 months over schedule and $140 million over budget, and it had really soured the region in believing that government was capable of pulling off big projects. There was huge skepticism as we were talking about doing anything on I-64.

We were looking at our options. Using traditional methods, we could have gotten the construction time down to five to six years, but it would have been a lot more expensive. So we invented the model that has become the I-64 model. It isn't just the closure piece, but the way we did design-build.

My experience when I was in the private sector, after having left the secretary's job in New Mexico, had been with a construction-products company. I got to work on the other side of the table on a design-build team. I'm watching how this works and I'm realizing that DOTs are far, far too prescriptive in design-build. They really kind of smother the creativity that could come out of this process. My perception was that design-build was really just draw-build. The DOTs were still making all these decisions. They said you can design it, but you have to design it according to our specifications. The end result is that it doesn't look any different than if we had drawn it ourselves or we had designed it ourselves.

I believed when I came into the Missouri job that design-build offered a lot of creativity, and I wanted to take advantage of that. What we did is we said we want a firm to design it and build it. But, instead of us telling you what we want, the scope of the project, and you telling us the time and money, we turned it around and we said, "Get this done in this period of time and we're willing to pay this amount of money — now you tell us what you're willing to give us for that amount of money in that amount of time. And, you can use any adopted specification of any DOT in the country. It doesn't have to be a MODOT specification. It can be any specification adopted by any DOT in the U.S."

I have to tell you, internally that was a huge battle. I had our engineers coming to me and they're going, "This is horrible! What if someone proposes to build a bridge out of Popsicle sticks?" And I said, "I'm not aware of that being an adopted specification anywhere in the country. And I guess if they propose that, they probably wouldn't get the job." But it was this huge battle internally to give this kind of freedom. The end result was we got ten and a half miles of what we wanted and a $535 million cost, which, according to the metropolitan planning organization, was $165 million too low.

You're right, the decision to actually shut the road down was very much high-risk. But, by doing that, by shutting the road down, we could rebuild five miles in one year. We could shut down five miles, reconstruct everything in it and have it back open in one year and then shut down the next five miles the next year. People didn't have faith.

Also, there were all kinds of predictions that we were going to lock down the entire region, that there would be massive gridlock, that this would cause all sorts of problems. We had done lots of traffic analysis, and it was our conclusion that there was plenty of capacity in the St. Louis region to deal with traffic that was coming off of I-64. We included in our specifications for the contractor that we did not just hold them responsible for their traffic control around the project, but we said you're responsible for regional mobility. That meant that the Gateway Constructors team ended up throughout this whole period working with us constantly to make sure that every time they made a change it was well coordinated and that we could work with the entire region to make them aware of what was going on and when it was happening.

As a result, all of these dire predictions of what was going to happen never, ever materialized. The project now is very popular in St. Louis and hugely successful as a construction project as well as a public project. Our commitment is to have the second half open by December 31 of this year.

You've had a creative approach with contractors going back to New Mexico, where you had the nation's first long-term warranty on a highway, State Route 44. What else have you learned about managing private-sector partners?

The traditional way of doing DOT contracting is we design it, we give it to you to build and we have to catch you doing something wrong. If, in the process of building this, someone builds it incorrectly, if we didn't catch it at the time of construction, it's the taxpayer holding the bag. I think that when you give contractors more leeway, you let them bring their experience and ideas to the table, instead of only relying on what the public sector has generated from our experience, which tends to be a very conservative approach. We miss out on the most recent design concepts that are never even considered because we say, "That's not how we do business."

If you give contractors the ability to use their ideas, then you have to make them responsible for the outcome. You make them responsible for the outcome either through long-term warranties or some sort of performance condition on the contract. Everybody wins. Normally, that will produce the best contractor, the one that has the most on-top-of-it team and it produces great value for the public.

We in the public sector tend to be so afraid of failure that we don't want to risk anything. What ends up happening is we end up with 1-0 records. We have no losses, but we have very few wins. I believe in the 9-1 record. I believe that every once in a while, the public is willing to allow you to fail, if you can give them nine wins to every failure. The public will understand that. They're smart. They understand what's going on. They will trust you when you can produce nine wins and one loss.

And what lessons have you learned in communicating with the public?

If you look at the success of the projects that we've just been talking about, the success of those has hinged on exceptional public information programs. We threw the kitchen sink at St. Louis. We used every conceivable method to communicate. We're tweeting. If someone came up with a way to communicate with even niche markets, we implemented it. That to me is the key to successful projects like this. You have to over-inform the public. It's critical.

We would have failed horribly without an exceptional public information program in St. Louis or in Albuquerque or on New Mexico 44. On New Mexico 44, that was a 118-mile construction zone. You actually drove up when you got to Bernalillo and you reached a sign that said, "Construction zone next 118 miles." And it was true. If you're going to have that big of an impact on the public, you darn well better be telling them what those impacts are going to be before they happen.