Infrastructure costs in the United States have been a topic of discussion for many years, with comparisons showing significantly higher costs when compared to other countries. A recent study presented at the Brookings 13th annual Municipal Finance Conference shed some light on the reasons behind these high costs. The study, titled “Procurement and infrastructure costs,” highlighted the role of state transportation department capacity in driving up project-level costs.
Will Nober, an economics doctoral student at Columbia University, along with Zachary Liscow, a professor at Yale University, and Cailin Slattery, an assistant professor of business and public policy at University of California-Berkley, presented the findings of their study at the conference. According to Nober, the capacity of a state Department of Transportation (DOT) plays a significant role in determining the costs of infrastructure projects. Federal data confirmed a trend of shrinking state DOT workforces over the past few decades, leading to a reliance on outsourcing and the hiring of expensive consultants.
The study also found that procurement practices play a crucial role in managing infrastructure costs. States that maintain procurement practices such as releasing detailed project plans and price estimates were able to lower costs compared to states with less transparent practices. Extensive bidder outreach to construction contractors also proved to be effective in reducing costs. Nober emphasized that competition among contractors is key to bringing down costs, highlighting the importance of effective procurement strategies.
The high costs of infrastructure projects in the U.S. can be attributed to a variety of factors, including a protracted permitting process, citizen lawsuits, lack of innovation, and political pressures. The study pointed out that state DOT workforce shortages have forced agencies to outsource work that was previously done in-house by experienced engineers. This shift towards hiring consultants has contributed to the rise in infrastructure costs, as noted by both state officials and construction contractors surveyed for the study.
The authors of the study believe that understanding the impact of state transportation department capacity on infrastructure costs is crucial for making informed policy decisions. By identifying the factors that drive up costs and implementing effective procurement practices, states can work towards reducing infrastructure costs. The ability to manage and execute projects efficiently is key to lowering costs and ensuring that infrastructure projects are completed within budget.
The study sheds light on the complex relationship between state transportation department capacity and infrastructure costs in the U.S. By addressing workforce shortages, implementing transparent procurement practices, and fostering competition among contractors, states can work towards reducing the high costs associated with infrastructure projects. The findings of the study provide valuable insights for policymakers and industry stakeholders looking to tackle the challenge of high infrastructure costs in the United States.