Nearly two-thirds of transit agencies in the United States contract all or part of their operations to private providers. For example, a city might invite bids for a road construction project, or hire a company with its own fleet of buses and drivers to implement its public transportation plan. A public transportation contract is the agreement that covers the manifold details of these projects and defines everything – terms, responsibilities and liabilities as well as standards of service and safety.
A project covered by a public transportation contract can be as small as the installation of a speed bump or as large as a continental railroad network. Most are somewhere in the middle, and all require careful planning in order to be completed satisfactorily, on time, and on budget. Risk management in this context refers to a systematic process of identifying, assessing, and controlling the risks that could potentially affect the completion of a project. It is a specific way of conducting a project that includes proactive efforts to identify, mitigate, and control risk.
The Michigan Department of Transportation (MDOT) has developed policy approaches to its public transportation contracts, which can address specific project objectives that conventional contracting methods cannot achieve. These innovative contracting methods (ICMs) include:
- Integrating services like design, construction, operation and maintenance into a single contract
- ‘Best value’ bid selection, which considers qualitative factors in addition to price
- A flexible approach to project scope which allows the scale of a project to be adjusted to available funds
Over a period of years, MDOT found success in the application of risk management best practices to ICMs. In order to develop standardized guidance for risk management, they conducted research to document the industry’s risk management best practices. MDOT used the results of the study to create comprehensive guidance materials, tools, templates, and training documents for use by project managers to help them learn the best application of risk management strategies.
MDOT continues to expand its use of innovative contracting methods to improve project delivery and risk management. As of October 2023, MDOT had identified several potential projects that will utilize these methods, including:
- I-75 Modernization Project : Aimed at reconstructing and widening I-75 in Oakland County to enhance safety and reduce congestion
- US-131 Improvement Project : Focused on upgrading US-131 in Kent County to improve traffic flow and safety
In addition to state contracts, the federal government offers grant programs potentially providing billions of dollars to states for transportation and infrastructure needs. These funding opportunities and MDOT’s value-driven methods help ensure the success of resilient and sustainable infrastructure construction in the state of Michigan.
Transportation contract law is a uniquely specialized area of legal practice. The experienced attorneys at August Law have been representing transportation industry leaders and public transit authorities for decades, including the Wayne County Airport Authority and Suburban Mobility Authority for Regional Transportation (SMART) of southeast Michigan.
Our Michigan transportation lawyers have the experience to help your organization conduct successful projects from start to finish. Contact us for more information or assistance with seeking, securing or managing a government transportation project.