Procurement and infrastructure costs

From a new NBER working paper:

Infrastructure costs in the United States are high and rising. The procurement process is one potential cost driver. In this paper we conduct a survey of procurement practices across the 50 states. We survey both employees at each state department of transportation (DOT) and the road builders that win contracts to build and maintain roads. With this survey we are able to create a new dataset of procurement rules and practices across the U.S. and understand what actors on the ground think drive costs. We then assemble a new dataset of project-level infrastructure costs. We correlate the survey practices with our new, detailed data on costs. We find that two important inputs in the procurement process appear to particularly drive costs: (1) the capacity of the DOT procuring the project and (2) the lack of competition in the market for government construction contracts.

That is from Zachary Liscow, Will Nober, and Cailin Slattery.  And how about these apples?:

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 htat rates the DOT employees as “moderately high quality,” all else equal.

Garett Jones, telephone!


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