Back on Track: Patrick McKenna

When Patrick McKenna was appointed Director of the Missouri Department of Transportation (MoDOT) eight years ago, it was something of a poisoned chalice.

Years of deferred maintenance and dwindling resources had left the Show Me State’s crumbling road network at crisis point. Things were so bad that there were no funds to maintain or repair 41,800 out of the 54,700 kilometers of highways, while 250 bridges a year faced closure because they were deemed unsafe to cross.

"That was the financial situation I walked into," McKenna tells The CEO Magazine from his Jefferson City office. "The department was effectively forced to abandon all these roads and there was no plan to get us back on track."

The budget for capital expenditure he inherited was US$325 million, to manage a system with replacement costs of about US$160 billion.

"That’s like if your home had a leaking roof, cracked foundations and nothing worked because all the bad weather was blowing in," he says. "The extraordinary efforts of the MoDOT team had masked the problem, but it was running away from them."

A Colossal Task

Missouri has the seventh biggest highway network in the country, and that doesn’t include the nearly 160,000 kilometers of county roads and city streets. It also ranks seventh for the number of highway bridges (10,424). In terms of revenue from its road network, however, it comes in 48th place – mainly due to its historically low fuel tax.

Perhaps the most pressing issue McKenna faced was the state of the bridges, with over 185,000 square meters of deck in urgent need of replacement.

But, before he could begin formulating a recovery strategy, he had to win some hearts and minds. He remembers: "My biggest challenge was making people aware of just how bad things were, and a lot of them were very surprised.

"There was a great deal of public mistrust because, in the early 1990s, there was a big capital plan that was supposed to come with a 10-cent gas tax increase, but that got whittled down to six. No inflation was built in so it was doomed to fail from the start and it was eventually abandoned."

Transforming Transportation

McKenna had been brought in after impressing state officials with his transformative work as Deputy Commissioner of his home state New Hampshire’s Department of Transportation. That too had been a daunting challenge.

"New Hampshire is a very tax-conservative state. It has ‘Live free or die’ on its license plates, which gives you a sense of its culture," he explains.

"That was my first foray into transportation. There was a lot of long-term debt incurred by the turnpike system. We restructured all of that, brought travel times down considerably and found a model where we were generating free cash flow at a rate that could sustain the renewal of the system.

"As it turned out later on, Missouri was a similar state with no advanced public policy on increasing revenues with inflation, which was killing its ability to do very basic work."

Before his time in New Hampshire, he spent 13 years in Washington DC, latterly as CFO at the United States Senate.

McKenna is also a former President of the American Association of State Highways and Transportation Officials, where he’s currently Chair of the Committee on Safety, which is tasked with finding ways to reduce road fatalities by changing driver behavior.

"My background is a little atypical for running a transportation agency, as I have two finance degrees and I’m not an engineer by trade," McKenna explains. "I came into this industry at a point where financial expertise was needed as we had significant backlogs of projects and programs, and effective asset management was needed for every aspect of infrastructure.

"The United States did amazingly well at funding and building infrastructure 50–100 years ago, and it really benefited the economy. But in the last 30 years, we’ve done a pretty lousy job of keeping pace. So our parents and grandparents did good work in looking after it, but then we took a couple of generations off, and that held back the economy."

A Radical Five-Year Plan

That had certainly been true of Missouri, so McKenna wasted no time in instigating a radical solution to transform the state’s transportation capabilities and nurture a culture of support and inclusion.

"On my first day, we didn’t even have enough money to match the federal resources that had been pledged in a five-year, US$1.6 billion capital plan," he recalls.

"We then increased it by US$2.5 billion in 30 days right out of the blocks, to match the federal funds and take advantage of some great work in the United States Congress to pass the FAST Act. There were some financial risks, but we were paying down debt and using balances in the road fund far more aggressively to create a more robust plan."

Less than a decade later, McKenna’s tactics have helped dramatically expand the capital program by a factor of seven to an extraordinary US$14 billion, with the state considering implications of emerging technologies such as smart highways and advanced electric vehicle charging stations.

"Public policy makers in Missouri, led by Governor Parson, increased motor fuel tax significantly and are investing general revenue that’s helped us draw in additional federal funds," McKenna says. "We’re using debt conservatively, but we’re tapping the capital markets to fund additional capital improvements and putting out more work than at any time in our history.

"Right now we have approximately US$3.8 billion of open contracts with US$2.1 billion still to execute in 1,500 construction projects all around the state. The MoDOT team continues to meet every challenge to execute the plan."

Trusted Partners

Part of the success has been down to private sector partnerships that have both expedited road and bridge upgrades and boosted quality benchmarks.

One example is a 32-kilometer section of highway between the cities of Columbia and Kingdom City that had featured a particularly badly functioning interchange for the current traffic volume.

"We put it out to tender and were blown away by the winning design," McKenna says. "It moves out all the local traffic and adds four times the pedestrian capacity we’d proposed. The private sector design competition brought innovative ideas that the public sector alone may not have found, and the traveling public is the winner.

"It was a combination of Jacobs Engineering and Millstone Weber, a construction firm out of St. Louis, so we have extremely talented people working on delivering a historic capital program that also represents astounding value."

McKenna partners with the most sought-after private companies, including leading civil engineering design consultants EFK Moen, who worked on major projects in St. Louis and St. Charles.

"We’re cooking on all fronts right now," he says with a smile. "Some 4,206 projects have been completed in the past 10 years for US$10.5 billion, which is US$536 million under budget. And 94 percent were on time. That’s a record that’s hard to match, and is a testament to the public-private partnership and progress by policy makers in Missouri."