Why does building and maintaining highways in the US cost so much?

Overview:

This article was written by Comfort Oshagbemi and David Wessel at Brookings.

• The high cost of infrastructure in the U.S. is partly due to the limited capacity of state departments of transportation (DOTs) and the over-reliance on consultants.
• Limited competition in the market for government construction contracts also drives up costs.

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Key Quotes:

• “A one standard deviation increase in state capacity (measured by state DOT employment per capita) is correlated with 16% lower costs.”
• “An additional bidder on a project was associated with 8.3% lower costs, approximately $460,000 for the average project.”

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What They Discuss:

• U.S. infrastructure costs three times as much on a per-mile basis compared to other upper- and middle-income countries.
• State DOTs report severe understaffing and an over-reliance on consultants, leading to higher costs; a one standard deviation increase in consultant use is associated with 20% higher costs per lane-mile.
• A lack of competition in the bidding process for government construction contracts further increases costs; enhancing bidder outreach can reduce costs by 17.6%.
• The performance of individual engineers significantly impacts project costs; replacing a high-cost engineer with a median-cost engineer can reduce costs by 5.3% per mile.
• Better planning and providing more bid details are associated with lower costs, while frequent change orders due to poor planning lead to higher expenditures.

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What They Recommend:

• Increase the staffing capacity of state DOTs to reduce reliance on costly consultants.
• Enhance outreach efforts to potential bidders to increase competition and lower costs.
• Focus on better planning and providing detailed project information to minimize costly change orders.
• Invest in training and capacity-building for state engineers to ensure more consistent and efficient project management.

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Key Takeaways:

• High U.S. infrastructure costs can be mitigated by strengthening state DOT capacities and encouraging competitive bidding.
• Proper planning and detailed bidding information can significantly reduce project costs.
• Addressing staffing and competitive challenges can lead to substantial cost savings on infrastructure projects.

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This is a brief overview of the article by Comfort Oshagbemi and David Wessel at Brookings. For complete insights, we recommend reading the full article.