Investments in DOT staff can lower project costs

By Chris McCahill

State transportation agencies, like other public and private organizations, have struggled with limited workforce capacity. DOT leaders have long been concerned about staffing shortages and their ability to retain quality employees, especially in response to increased funding provided by the IIJA. A new study crystalizes that concern, finding that the staffing issues faced by DOTs may be costing states in the long run by driving up the price tag on highway projects. Investing in more and higherquality staff can help avoid delays and associated cost increases. 

The study authors surveyed more than 400 people, including procurement officials in all 50 states and contractors in 47 states. They also collected data on DOT employment and project costs for each state. Here is one of their key takeaways: 

States with (perceived) higher quality DOT employees have lower costs. A state with a neutral rating has almost 30% higher costs per mile than one that rates the DOT employees as moderately high quality, all else equal.”

The study notes that the number of people in state highway positions across the U.S. decreased by 20% from 1997 to 2021, even as public sector employment rose. And while 90% of surveyed officials said their agency was at least moderately understaffed, those with the largest drops in employees are more likely to feel understaffed. 

Survey respondents indicated the main reasons for a project to have a cost overrun (Source: Liscow et al. 2023)

According to respondents in more than 75% of states, changes in project scope are the most common reason for cost overruns. Survey responses clarified this has a lot to do with the contracting process. One mentioned “vague or unclear contract plans,” and another explained: “Bad or unclear specifications or contracts breed uncertainty, which contractors will factor into their prices as risk.”  

Interestingly, agency capacity fell low on the list of perceived cost drivers, especially among procurement officials. However, contractors in 17% of states felt it was an issue. Moreover, the data show a direct correlation. Among other cost drivers, contractors also pointed to agency planning in 57% of states and burdensome administrative processes in 20% of states.  

Respondents overwhelmingly think that state DOTs are understaffed,” the study concludes. “And low staffing and low quality correlate with higher costs. Weaker state capacity could increase the use of consultants and the number of times projects must change after being bid, which also correlate with higher costs.  

Photo Credit: Nicolas J Leclercq via Unsplash , unmodified. License