Brookings
·
Published
August 5, 2024
Why does building and maintaining highways in the US cost so much?
Leans Left
Research
·
U.S. Economy
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Summary
- Comfort Oshagbemi and David Wessel at Brookings examine why the U.S. spends substantially more on transportation infrastructure compared to other countries, highlighting limited state DOT capacity and over-reliance on consultants as key cost-drivers.
- The authors argue that limited competition and insufficient bidder outreach in the market for government construction contracts contribute to higher infrastructure costs in the U.S., and increasing bidder outreach and improving project planning can significantly reduce these costs.
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.
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.”
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.
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.
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.
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.
Original Read Time
9 min
Organization
The Brookings Institution
Category
Israel-Gaza War
Political Ideology
Center Left