FHWA Office of Real Estate Services Research Results:
2006 Strategic Vision for the Public Sector Real Estate Profession
August, 2006
I. Project Overview
This section provides an overview of research efforts to analyze and define the future role of Public Sector Real Estate including a brief summary of the current public sector real estate environment, the rationale for the research project, a discussion of the research objectives, and an outline of the methodology utilized to meet these objectives.
A. Current Situation
June 29, 2006 marked the 50th anniversary of the passage of the Federal legislation creating the interstate system.One of the biggest public infrastructure initiatives of all time, the interstate system had significant impacts on our way of life including: 3
Putting most Americans within a few days drive of almost everyone else in the country.
Fundamentally changing the way we move people and freight, including facilitating international trade and turning trucks into mobile warehouses.
Helping to establish new suburbs that sprung up next to highways on the outskirts of our large cities.
Creating a new linkage between urban and rural America.
These dramatic changes in our way of life also had a fundamental effect on the public sector real estate profession, creating a substantial increase in the workload for public sector real estate professionals in support of the development of the interstate system and causing public sector real estate acquisition and relocation activities to touch many more lives. This increase in public sector real estate activity itself became one of the catalysts for the Uniform Act, which serves as the backbone for the public sector real estate profession as we know it today.
Since the interstate highway system was initially developed, the population and vehicle travel demands in the nation have increased far beyond anyone's forecast. Our country's demographics in terms of ethnicity, age, size, and geographic location have changed dramatically. The movement of freight has exploded, and the volume and nature of international trade is far different and continuing to evolve every day. While the initial mission of the interstate system was to connect American cities to each other, the future interstate must clearly help connect America to the global economy at large.
Because of these dramatic and on-going changes, as part of the celebration of the 50th anniversary of the interstate system, the American Association of State Highway Transportation Officials (AASHTO) is sponsoring research through the National Cooperative Highway Research Program (NCHRP) on the future of the interstate highway system. NCHRP Project 20-24 entitled, "Economic Analysis of the Future of the National System of Interstate and Defense Highways," will analyze a number of issues including:4
Demand forecasts for the next fifty years including rural/urban demographic changes, freight and passenger traffic, and the impact of factors such as changes to
Federal size and weight laws, fuel prices, road pricing, international trade, etc.
Analysis of the effort to maintain, support, enhance, and expand the existing infrastructure including such topics as asset valuation, rehabilitation requirements, reconstruction alternatives, and innovative capacity enhancements.
Possible alternative roles for Federal, State, Local, and Public/Private partnerships including an evaluation of the on-going Federal role and the viability of numerous alternative funding options.
In addition to the NCHRP study, the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU) passed by Congress in 2005 authorized two study commissions including:
National Commission on the Future of the Interstate Highway System that will "develop a conceptual plan with alternative approaches for the future of the interstate system for 15-, 30-, and 50-year horizons."
National Surface Transportation Policy and Revenue Study Commission which was directed to provide a conceptual plan — with alternative approaches — to ensure that the U.S. surface transportation system will continue to meet current and future needs, including specific recommendations regarding design and operational standards, Federal policies, and legislative changes.
Just as there is recognition that there is a need to take a step back and analyze the future role and mission of the interstate system, there is a similar need to look at how the changes in user needs and public infrastructure development will affect the public sector real estate profession. This analysis will provide an understanding of the changing infrastructure needs of our country over the next thirty years, the impact of these changing needs on public sector agencies in general, and the resulting impact on the public sector real estate function within these agencies. This analysis will then provide a blueprint or roadmap to the future roles that the public sector real estate function may be expected to play and the steps that must be taken by the profession now, and over the next thirty years, to prepare the profession to execute its changing mission.
Like the interstate system, the public sector real estate profession is at a crossroads of change, and this is therefore an excellent time for such an analysis. Currently, the public sector real estate profession is facing a number of business drivers.These include:
An aging work force: A great number of the individuals working in the public sector real estate field are approaching retirement.Thus, there is need to attract new professionals to the field to keep up with the demand for work to be performed. Whereas in the past these new hires may have joined public agencies, a great majority of new hires into the field with increased government out-sourcing in the last 10 years will likely be recruited by the private sector. However, it is often difficult to recruit new workers into the needed disciplines due to a lack of individuals with adequate background and training.
An increasing emphasis on outsourcing of Uniform Act related work by public agencies resulting in:
A need for private sector partners to build staff capabilities: Initially, many private sector organizations relied on government employees retiring from or leaving public agencies to provide the staffing needed. However, many of these staff are now retiring for the second time from the private sector and the demand for services is becoming more than can be filled by simply relying on retirees from public sector agencies.
A need for public sector staff to develop new skills in contract and project management: Typically, public agency staff may have strong technical skills in their functional area such as appraisal or acquisition, but not necessarily project management experience.
A changing customer base for public sector real estate services, which has less experience with public sector real estate issues: Work is increasingly being done either in large team environments such as in design/build projects where the prime contractor may have limited public sector real estate knowledge, or at the other extreme, more work is also being managed by Local agencies who have limited knowledge of federal public sector real estate requirements because of fewer Federal-Aid projects completed by them.
A lack of understanding and respect for the roles, responsibilities, constitutional protections, and significance of real estate service activities within many Federal, State, and Local Public Agencies: This situation may be due, in part, to the absence of a system that recognizes public sector real estate service providers as professionals.
A general anxiety within the public at large about the impact of eminent domain, a situation compounded by adverse public reaction to the Supreme Court's decision in Kelo v. City of New London 125 S. Ct. 2655 (2005) which allowed the use of eminent domain to transfer land from one private owner to another to further economic development This is coupled with the public's lack of understanding about the protections and benefits afforded to them under the Uniform Act and the U.S. Constitution.
While the public sector real estate community faces a number of challenges, the profession also has an unprecedented opportunity to understand, plan for and prepare itself to be a value added business partner to its customers in the years ahead.Public sector real estate staff has a strong desire to elevate the standards of the public sector real estate profession to levels comparable with the engineering and architectural community with which they work.Likewise, public sector real estate professionals want to be viewed as a valued and equal team member who is engaged and contributing throughout the project lifecycle from inception to completion.
Being able to achieve these goals will require both careful planning now to establish a strategic vision and then precise execution of the supporting forward action.The strategic vision should provide enough structure to act as general guidance for moving the profession forward, while at the same time allowing substantial flexibility to react to the many changes that will occur over the next thirty years, some of which we cannot even imagine today.
B. Research Scope and Objectives
To help establish this 30-year vision and supporting strategic plan for public sector real estate, the Federal Highway Administration (FHWA), in its role as the lead agency for the Uniform Act, initiated a research project to identify the needs and future role of public sector real estate.The purpose of this research effort is to facilitate strategic and future oriented thinking by the public sector real estate community in terms of:
Looking 30 years into the future and predicting the role and environment of public sector real estate.
Determining actions required today and in the near term to ensure that public sector real estate professionals are prepared for and positioned to take on the work that they will be required to do over the next 30 years.
Advocates of formal approaches to forecasting claim that an organization can supplement its effectiveness if it can forecast its environment, anticipate problems, and develop plans to respond to those problems. FHWA wants to look 30 years into the future to identify concepts, capabilities, and technologies that Federal, State, and Local agencies will require to remain efficient, relevant, and productive in the face of changing times. This also applies to the private sector firms that support these agencies to conduct real estate acquisition, relocation, and management activities.
This research effort has a number of objectives including:
Identify opportunities for innovation for public sector real estate.
Identify emerging technologies that will affect public sector real estate.
Identify methods to reduce uncertainty and costs when making technology and new product investment decisions.
Identify ways to expand professional skills by learning from individuals from a broad range of experiences, affiliations, and networks.
Bring dynamic insights to public sector real estate to help with strategic planning and project development thinking.
Create a forum for debate on issues concerned with future trends and needs for public sector real estate.
The scope of this research effort is by definition quite broad and includes:
All public infrastructures (i.e. highways, airports, transit facilities, public housing, parks, flood control and water resources, etc.).
The Federal, State, and Local agencies, and other Federal-Aid partners responsible for planning, developing, and maintaining this infrastructure and the public sector real estate function within these agencies, which supports development of this infrastructure.
Private sector partners performing public sector real estate work in support of these government agencies.
Within the public sector real estate community, the research incorporates a variety of roles, functions and activities including:
Real estate planning.
Real estate's role in the human and natural environment including stewardship and oversight activities.
Appraisal.
Mapping, surveys, and legal descriptions.
Acquisition.
Relocations.
Property management.
Utility accommodations.
Outdoor advertising control.
Disposal.
Eminent domain.
FHWA research in preparation for this study suggested that combining forecasts from different methods and from independent experts improves accuracy. One perfect model is seldom applicable in management and social sciences. A variety of perspectives, interests, and techniques is highly desired. Combining points of view helps assure forecast correctness by evening-out biases and including diverse information and outlooks.
To this end, FHWA asked each of its three research contractors to conduct independent research projects, following a general scope but utilizing its own independent research approaches. The work of each of the three research teams will then be synthesized and integrated and the best ideas from each of the three teams carried forward into the second phase of the research effort.
This report summarizes the research work performed by one of these teams.
C. Research Approach and Methodology
The research approach included the following tasks:
Identifying external and internal forces that affect Federal, State, and Local agencies responsible for planning, developing, maintaining, and operating infrastructure for public benefit.
Assessing the impact of these external and internal forces on the operations of the agencies.
Identifying the resultant impact on the public sector real estate functions within these agencies and the private sector partners performing real estate activities for the agencies.
Identifying the roles the public sector real estate community will need to perform to meet the needs and requirements of the various Federal, State, and Local agencies.
Defining vision statements that specified the anticipated roles of public sector real estate 10 years in the future and 30 years in the future.
Developing a mission statement and a set of strategic objectives in support of the anticipated role of the public sector real estate community 10 years from now and 30 years from now.
Defining an action plan consisting of a number of short-term and long-term initiatives to prepare the public sector real estate community to achieve its proposed mission.
More specifically, rather than extrapolating into the future from the past, the research will answer the following questions:
What are the implications for the public sector real estate community given the continuing changes in the role of government and the private sector in how public infrastructure is designed, built, operated, and the methods used here in the United States and internationally?
What is the preferred future role for the public sector real estate function from the perspectives of its customers including its peers, partners, and the public at large?
What are the types of products and services that will be of most value?
What is the continuum of likely program roles for the public sector real estate function in the future?
What staffing, skill mix or other organizational changes will be required within the public sector real estate community?
Understanding the external forces affecting public sector real estate
The public sector real estate community is impacted by the same general external or outside forces that have confronted government agencies and private companies of all types, as well as by a series of forces that are specific to the planning, design, construction, maintenance, and operation of infrastructure for the public benefit. These are economic, social, cultural, policy, and technology driven forces. Identifying these forces and determining their implications for the future role of public sector real estate is very important within the context of ownership, delivery, management, and operation of public infrastructure.
Examples of external trends include the demand for business-like or performance-oriented government. Other external forces include the tremendous growth in travel demand, the backlog of infrastructure needs, and the dramatic increase of real estate (right-of-way) cost as a proportion of project cost.
Understanding internal forces affecting public sector real estate
Internal forces are impacts that are specific to the public sector real estate community. These internal forces include the age, structure or length of tenure of the work force, and the civil engineering-oriented values of transportation agencies and other customers with which public sector real estate staff often work. Other factors include on-going cost and environmental-driven changes in how transportation and other infrastructure projects are designed and built, on-going changes in the products and services the various Federal, State, and Local agencies provide, and personnel and other rules within the public sector which can limit the application of human resource and organizational development best practice.
Recognizing evolving business practices of agencies (FHWA, other Federal Agencies, State and Local agencies)
Business practices of the agencies supported by the public sector real estate community are changing, and newer, varied roles are emerging. An example of change includes an increased emphasis on project management, and as a result, the engagement of the real estate function in project cost control and project cost management.
Identifying future roles for public sector real estate by identifying and understanding the impact of emerging requirements for customers' success
By analyzing the following questions, the emerging roles of public sector real estate can be identified:
- What are the emerging business activities of the Federal, State, and Local agencies which public sector real estate supports?
- What are the business requirements for the real estate functions and disciplines to support these activities?
- What are the future opportunities or needs for the public sector real estate community to provide services through its programs that will enable government to be most successful?
Through this approach, the future needs for public sector real estate was identified from the perspective of determining what roles will add the most value for the partners, customers and the stakeholders. Put in a different way, what roles do the Federal, State, and Local agencies, their end customers, and the public at large need the public sector real estate community to play in order for real estate's customers and stakeholders to be most successful?
The research team worked with experienced public sector real estate stakeholders through brainstorming sessions to answer and analyze the above questions. This stakeholder team consisted of ten (10) individuals who represent a cross section of public sector real estate professionals.The members of the stakeholder team have a minimum of ten (10) years experience in public sector real estate and related fields. The stakeholder team members are either current employees and/or have prior experience with FHWA, the Department of Housing and Urban Development, National Park Service, two state departments of transportation, the U.S. Army Corp of Engineers, and large Local Public Agencies.
The stakeholder team met via web cast for three (3) two-hour meetings from December 2005 to March 2006 to provide input to the research effort. The stakeholder team also met for a fourth meeting via web cast in early April 2006 to review and comment on the initial draft of the research report.
A detailed literature search complimented the brainstorming sessions. The literature search, which was intended to develop topics and ideas to jump-start the brain storming process of the stakeholder team, focused on three areas:
External trends or forces affecting the world and the nation generally, such as growth of developing nations, continued globalization of the economy, demographic changes in the United States population, and the expected role of technology.
External trends affecting government agencies directly such as the new SAFETEA-LU legislation, potential changes in the Federal role for funding transportation projects, and the increased use of public/private partnerships to finance and develop infrastructure projects.
Internal forces affecting parent agencies such as agency performance management strategic initiatives.
Appendix A provides a list of the various resource materials reviewed by the research team as part of the literature search. The literature search focused on research regarding potential future events. These future forecasts included those that are anticipated to occur in the near future — the next 10 years, to those that are expected to happen in the relatively distant future — the next 30 years, and the period in between.
Research conducted by various organizations, construction groups, and universities clearly identified activities anticipated to occur within the next 10 years. Activities 30 years out in the future consist of a mix of research by various organizations, and a lot of research conducted by professional futurists - people whose main work is to anticipate and detect early signals of change, and anticipate the outcome in the future.
The research team then utilized the input from the brainstorming sessions and literature search to identify the anticipated changes or impacts to the various Federal, State, and Local Agencies, and the resultant impact on the public sector real estate community supporting these agencies.While recognizing that any changes and the resultant impacts on public sector real estate will take place over a 30 year continuum, the research team, for ease of analysis, chose to look at two snap-shot points in time: 10 years in the future and 30 years in the future, and develop detailed vision statements for each of these timeframes.
Using these two vision statements, the research team then developed an overarching mission statement for the public sector real estate function designed to support its changing role across the 30-year period.The team then devised two specific actions plans:
A short to intermediate term action plan designed to support the public sector real estate community in executing on the 10-year vision statement and meeting the near-term requirements of its customers.
A longer-term action plan designed to support the public sector execution as it grows towards and begins to execute the 30-year vision statement.
Each of these action plans was then validated with the stakeholder team and adjusted based on their input and feedback.
The remaining sections of this report provide a summary of the findings and recommendations of this research project as follows:
Section II. Vision Statements. Based on the stakeholder team brainstorming sessions and the literature search, this section documents the internal and external forces anticipated to affect the Federal, State, and Local agencies over the next 30 years and the resultant impact on the role and mission of the public sector real estate function.
Section III.Strategic Plan. Based on the Vision Statements, this section proposes a mission statement for the public sector real estate function; a set of strategic goals to support this proposed mission statement and two action-plans to execute the strategic plan: a short to intermediate action plan and a long-term action plan.
3 "AASHTO: The Interstate is 50".
