Reports Business Person of the Year

Mr. Fix-It: 2012 Virginia Business Person of the Year, Philip A. Shucet

Shucet revived VDOT and rescued The Tide

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In the final months before Norfolk’s light rail system opened last year, then Hampton Roads Transit President and CEO Philip Shucet and three of his senior staff met each morning at a coffee shop on Granby Street in downtown Norfolk. Donning yellow construction vests, the four men hashed out progress on construction of The Tide, a 7.4-mile light rail system connecting some of the city’s largest employers and major landmarks.

Some mornings the discussions were louder — and more “expressive” — than others, recalls Shucet, and café patrons getting their morning cup of joe were privy to the complications inherent in a major construction project. “It made one fellow particularly uncomfortable,” says Shucet. “But then you say, ‘Who’s paying us for this work? Well, the taxpayers. It’s the people coming into the coffee shop, right? If they can’t hear us, then there’s something wrong.’”

Shucet’s insistence on transparency has earned him a reputation as a straight-shooting problem solver who can transform public agencies and get things done. “A public-sector turn-around guy” is the way U.S. Sen. Mark Warner, a former governor, describes him.

Shucet used his leadership skills a decade ago as commissioner of the Virginia Department of Transportation under Warner to restore public confidence in the agency and overhaul its on-time and on-budget performance. More recently, he is credited with turning around The Tide, a project mired in poor management, cost overruns and public mistrust. 

“He’s very much a straight shooter,” says Barry Bishop, executive vice president of the Greater Norfolk Corp., a nonprofit coalition of Norfolk businesses that work together to boost the city’s competitiveness and quality of life. “He never makes promises that he can’t keep. He’s certainly a reformer who’s not afraid to make tough decisions. And I don’t know too many people who have more energy than Phil.”

Since opening in August 2011, The Tide’s daily ridership numbers now are twice as high as projected, and discussions are under way to expand light rail into Virginia Beach and to other points in Norfolk, such as the Norfolk Naval Station. 

Under Shucet’s leadership, the nightmarish project became a point of pride for the city, the smallest in the country to build a light rail system. Because of his no-nonsense insistence on transparency, accountability and problem solving — qualities that likely saved The Tide — Virginia Business has named Shucet its 2012 Virginia Business Person of the Year.

A tough beginning
In many ways, Shucet’s task leading HRT was similar to his role as VDOT commissioner. He found both agencies lacking in transparency, suffering from poor employee morale and drowning in projects that were over budget and behind schedule. However, a key difference was the infrastructure. VDOT understood its business, recalls Shucet. “HRT knew public transportation and how to deliver bus service and run a small ferry,” says Shucet. “They didn’t have any idea, frankly, of how to build a large project. Why would they? They had never done it before. It’s understandable.”

“As a result, the situation of that one construction project called The Tide was absolutely the worst I’ve seen in 40 years.”

By late 2009, two years after construction began, the project budget had ballooned multiple times, reaching $340 million ― more than $100 million above the original estimate of $232 million. The scheduled opening was behind by 18 months. Worst of all, cost overruns —known within the agency as early as 2007 — were kept secret from the HRT board, Norfolk City Council and the federal government, according to a report by the Office of the Inspector General at VDOT, which Shucet commissioned soon after taking over the project.
HRT staff even kept an “in-house” budget, separate from the one presented to the public, according to the audit. Consultants hired to assist in managing the project didn’t help, says Shucet, and cost the city an extra $23 million.

Eventually HRT’s CEO Michael Townes retired under pressure from the board. Then the agency turned to Shucet, hoping he could bring the same managerial magic that had transformed VDOT. Shucet technically remained an employee of his transportation consulting business and was paid $40,000 per month to head up the Tide project.

Shucet’s first course of action was to lift the veil of secrecy. “We made it really clear that we weren’t going to hide information anymore,” he says. “We made it really clear that it is a public project paid for by the public with taxpayer money, and we had an obligation and a duty to be open about our business. No matter how bad it was, we had to be open about it.”
This transparency was crucial to restoring public confidence. “One of things he realizes is transparency and openly dealing with problems gets public and political buy-in to the solutions,” says Virginia Transportation Secretary Sean Connaughton. “Phil is the go-to guy whenever there’s a problem in transportation in Virginia.”

In his first three weeks on the job, Shucet and HRT worked to come up with a trustworthy estimate on The Tide’s cost, which came to $338 million. The project’s final cost was $317.6 million.  “I think those first 30 days went a long way to say, ‘We’re going to approach this differently here,’ ” recalls Shucet.

Meanwhile, he fired the outside consultants and created a project management team in house, changed some of HRT’s senior staff and worked within existing contracts to add more accountability between the agency and contractors.

NewsSoon, the project was on track again. Transparency became part of the culture. An online dashboard showed HRT’s progress on certain metrics. The agency uploaded 50,000 pages of materials onto the Web. Toward the end of the project, Shucet started the daily meetings over coffee with managers to keep the project moving forward. “When you’re trying to finish a construction project, there’s always some issue you’re dealing with,” says Shucet. “There’s always something you said you were going to do that doesn’t quite go the way you planned. But if you’re talking about it every day, then you know what the issues are, and you always know what you need to do to address them.”

That included delaying The Tide’s opening from May until August as it finished safety enhancements that had been added back into the project. The previous leadership had removed the enhancements from the original budget. “I wasn’t sure the [Tide] was ever going to get off the ground,” says Harry T. Lester, president of Eastern Virginia Medical School, of the project before Shucet took the lead. “He took the time and got it right … It’s all about leadership. He’s clear; he’s direct; he’s transparent. He’s honest, and he’s really smart.” 

Marcus Jones, Norfolk’s city manager, says Shucet was able to get the right people in place and encourage them to figure out solutions to the project’s obstacles. “He’s able to listen. That’s one of the key attributes to leadership that sometimes gets lost. He was able to build a team of professionals, individuals that have a track record of getting the job done.”


A success story
Although Shucet was in the serious business of handling public money, those who have worked with him say part of his success is his ability to relate to other people and to not take himself too seriously.  Jones, who saw Shucet every morning at the local YMCA, says, “Sometimes you get into a situation where it would be an ‘us versus them’ mentality. He never allowed it to get to that. It was always just, ‘How can we get this done?’ ’’

Shucet’s playful personality, in fact, could get him in trouble. As opening day approached, Shucet announced that if ridership reached more than 75,000 on the first weekend, he would take the “Killer Omelet Challenge”, which required eating a 12-egg omelet and eight pancakes at Charlie’s Café in Norfolk. The agency estimated ridership had exceeded that goal. During the challenge, Shucet fell two-and-a-half pancakes short. “There are some days I wake up and say, ‘Come on, you know you could have shoved down those last pancakes.’ I kept my commitment. I tried. I didn’t make it, and I won’t be revisiting that challenge,” Shucet says.

Since its debut, The Tide has continued to beat ridership estimates. On many recent weekdays, rail ridership exceeded 6,000 trips, more than double the 2,920 planners had predicted.
The Tide features 11 stations with access to major Norfolk landmarks and businesses, including Norfolk State University, City Hall, MacArthur Center, Newtown Road, Harbor Park, Sentara Norfolk General Hospital and Eastern Virginia Medical School.

HRT’s GoPass program has contributed to The Tide’s popularity. Employers can pay a flat fee so that their employees can ride for free. GoPass participants include Old Dominion University, EVMS, NSU and Norfolk Southern. 

The Tide not only removes cars from Norfolk streets but also could affect economic development and land use decisions in the city.

In fact, The Tide has been so successful that Norfolk City Council has instructed city staff to explore the possibility of extending light rail to Norfolk Naval Station.  In addition, 62 percent of Virginia Beach voters passed a referendum in November encouraging the Virginia Beach City Council to “use all reasonable efforts” to support the financing and development of bringing The Tide light rail into Virginia Beach. “[The City of Norfolk] was willing to take a chance on a multimillion project that we know we’re going to pay about 25 percent of the cost on,” says Shucet. “That investment has been made. Right now … the way to capitalize on that investment is to smartly extend it.”

From a history degree to VDOT
NewsShucet landed his first transportation job after graduating from Virginia Tech (then called Virginia Polytechnic Institute and State University) with a degree in history. Shucet began working with the West Virginia Department of Highways, which was looking for someone with writing skills. “It just so happened that position was inside the design division where all the pocket protector guys were … the engineers,” says Shucet. “I learned so much from those folks, and I really learned an appreciation of what highway design was all about.”
After 12 years in the department, Shucet went to work for the Arizona Department of Transportation. He then worked at the international engineering firm Michael Baker Corp. in Pittsburgh, where he was president of two of its business units. An employee at the Arizona Department of Transportation floated his name when Virginia was searching for a new VDOT commissioner.

His stint as commissioner earned him the nickname “Mr. Fix-It,” with his leadership applauded by both parties in the General Assembly.  Warner recalls finding the transportation department a disaster when he became governor in 2002. “It had been politicized; there wasn’t good financial accounting. It was a mess,” says Warner.

Shucet cut employees, improved on-time and on-budget performance and reduced the six-year transportation plan by one-third, injecting realism into the commonwealth’s construction projects. In 2001, only 21 percent of the department’s projects were completed on time, and 50 percent were on budget. When Shucet left state government in 2005, 82 percent of the projects were delivered on schedule and 88 percent were on budget.

“He wasn’t afraid to share bad news,” says Warner. “If you are the governor or you’re chairman of the Appropriations Committee, [a lot of people in state government] want to tell you what you want to hear. He was willing to tell you what the truth is, and that earns you a lot of respect.”


Out of the spotlight
Earlier this year, Shucet left HRT to focus on his transportation consulting business in Norfolk. Current clients include mostly private transportation construction and engineering companies. He’s also advising the city of Chesapeake on its Dominion Boulevard bridge and roadway improvement project. “A lot of it is advising companies who are interested in pursuing public-private partnerships, about specific projects or about strategies in general, as well as developing some of my own ideas on some projects that I think could move forward,” Shucet says.

These days Shucet makes his mark on the commonwealth’s transportation system from behind the scenes, but he doesn’t hide his belief that public and private solutions are needed to ease congestion in the region and around Virginia. “I certainly support any reasonable efforts to increase public funds for transportation, but I’m not thrilled with this debate that says it has to be one or the other, or that it has to be taxes or tolls,” says Shucet. “Why not let a private company invest in a project where they believe they can make a return through tolls, if doing so frees up public money for other projects where the private sector would have zero interest?”

While best known for his ability to reform public agencies, Shucet admits he prefers working in the private sector. “I enjoyed the public work. There’s no question I learned a lot from it,” says Shucet. “I’m frankly much more comfortable in the private sector where risks are taken with private money rather than public money.”

While wishing not to share his current clients, Shucet admits that his goal since launching his own company in December 2008 was to be a part of moving 10 transportation projects to construction in 10 years. According to those who have worked with him on transportation projects, it doesn’t seem out of the realm of possibility.

“Both in public service and private practice, he’s really left his mark on Virginia,” says Connaughton. “He’s been involved in helping reform our transportation program as well as deliver projects that are going to have impacts for generations to come.”


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