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Blind spot: DoT not tracking highway overruns, delays

Dec. 13, 2011 - 11:58AM   |  
By SARAH CHACKO,   |   Comments
The southernmost end of Interstate 49 stops at Highway 71 in Mississippi, just north of the state line in Arkansas.
The southernmost end of Interstate 49 stops at Highway 71 in Mississippi, just north of the state line in Arkansas. (Shane Bevel / (Shreveport, La.) Times)

The federal government spends about $40 billion a year on state highway construction, yet for the vast majority of projects does not track how many are over budget, how much money goes toward cost overruns, or whether the record is getting better or worse.

The result is a patchwork pattern of planning lapses and design errors that sends some states back to the federal government for more money again and again, a Gannett investigation shows.

The government stepped up scrutiny of "major projects," defined as greater than $500 million, after Boston's disastrous Big Dig. That road and tunnel project, completed in 2007 after almost two decades, ran more than $12 billion over budget.

But major projects are only a small piece of the federal highway program. In 2011, a typical year, just 87 of 136,000 federal highway projects qualified as "major," according to the Federal Highway Administration (FHWA). They accounted for $1.6 billion in allocated funds, or less than 5 percent of all federal highway investment.

Federal Highway Administrator Victor Mendez says his agency monitors state highway programs through division offices in each state. But it is the state transportation departments (DOTs), not the federal agency, that are ultimately responsible to manage, inspect and monitor highway and interstate projects, even though the federal government funds 80 percent of most of those programs.

"The buck stops with the state DOT," Mendez said in an interview. "That's the bottom line."

But Kenneth Mead, who was inspector general for the U.S. Transportation Department from 1997 to 2006, said it shouldn't be that way. A longtime advocate for strengthening the department's oversight, he'd like to see the department collect performance data and post it online.

"Ultimately, if the feds are writing these checks, what comes with that is the responsibility to report on what use that money is being put to," Mead said in an interview. "Who are the stellar performers and where are we having serious problems?"

Gannett filed Freedom of Information Act requests to get construction costs for 21 federally funded highway projects across the country. About half wrapped up within 5 percent of the original contract cost. Others had significant cost overruns, delays or both:

• Reconstruction of Interstate 287 in Westchester County, N.Y., is more than two years behind schedule and $78 million, or 14 percent, over budget. Still underway, construction so far has cost taxpayers $621 million, more than $72 million per mile.

• In Louisiana, roughly eight miles of a 36-mile project to extend Interstate 49 from Shreveport to the Arkansas border are largely complete at a cost of $96 million — 9 percent over budget. Overruns include a $2.5 million mistake calculating how much dirt would need to be removed, adding labor, equipment and disposal costs. The highway abruptly ends at the Arkansas line with no connector in sight until at least late 2014.

• Two projects, one ongoing, to rehabilitate 18 miles of I-295 in south New Jersey are a combined $22 million over budget — or about 15 percent. Project managers underestimated the amount of asphalt and other materials needed, failed to factor in the need to reconstruct a bridge deck and had unexpected extra work to remove pavement.

• Work on 26 miles of U.S. 30 in central Ohio was completed in 2008, nearly a year late and $12.8 million over budget, or about 13 percent. The day before groundbreaking, $700,000 was added to the contract because the cost of replacing any wetlands destroyed during construction wasn't included. Redesigning bridge piers added $595,000.

• A new freeway south of Reno, Nev., expected to be complete in June 2012, six months late, is $32 million over budget, or 8 percent. Half the extra cost came after the contractor discovered rock it had hoped to crush and use for road material was unsuitable. FHWA concluded the state failed to adequately study the area's geology, but still covered 90 percent of the added cost.

å A project to widen I-10 in Tallahassee, Fla., saw two sections come in more than 10 percent over budget. A third was more than 2 percent over. Of the $11.5 million in overruns, nearly $2.4 million went to level shoulders for temporary travel lanes not contemplated in original designs; more than $1.3 million went to protect Lake Jackson after erosion controls failed; and nearly $1 million was spent after the amount of unsuitable soils that had to be removed turned out to be 26 times higher than initially thought.

States' authority

The state-level approach to tracking the cost and schedule performance of most federally funded highway projects takes on added significance with all the money that has been invested in stimulus programs over the past two years.

The Highway Trust Fund's main source of revenue is the federal gas tax, which has held steady at 18.4 cents per gallon since 1993. Since that time, cars have become more fuel efficient, the cost of energy and materials has skyrocketed, and the added number of cars on the road has sparked greater funding needs. The fund cannot meet the demand, the Transportation Department's inspector general said in recent reports.

An analysis done earlier this year for the American Association of State Highway and Transportation Officials (AASHTO) found just over half of state contracts ran over budget and 45 percent finished late. The worst-performing state, which was not identified, finished only 13 percent of its projects on budget. The study, the most exhaustive available by any public or private source, looked at 100,934 contracts from 2001 to 2010 in the 39 states that volunteered to participate.

FHWA's Mendez said in a statement that it would be "misleading" to draw conclusions about cost and schedule performance from AASHTO's study.

Some states do deliver projects on budget or even under, according to AASHTO's findings. California, Georgia and Texas made or beat budget on as much as 85 percent of their projects, according to the AASHTO report. These and other high-performing states spend more time analyzing costs, identifying potential risks and closely tracking progress, AASHTO said.

FHWA encourages states to adopt such proven practices but does not have the power to require them to do so.

"As long as state departments of transportation work within the law, FHWA does not have the authority to mandate that states adopt specific best practices," King Gee, associate administrator of the FHWA Office of Infrastructure, said in a statement. "States manage these programs — not the federal government."

FHWA also can't withhold money from states that are poor performers; federal highway funds are distributed based on a formula.

AASHTO shares best practices among its members but argues states should not be forced to adopt them. Each state has unique factors, such as climate, terrain and laws, said AASHTO President Kirk Steudle, who is Michigan's transportation director.

"None of us are afraid of measuring our performance," Steudle said. "We are concerned about a national one-size-fits-all measurement that doesn't fit all."

Federal reviews

In response to Boston's Big Dig fiasco, Congress required states to submit and annually update detailed project management and finance plans for "major projects" more than $500 million. According to FHWA, of 11 major projects completed between 2001 and 2011, seven finished at or below the initial cost estimate. The same number were completed on time or faster than initially scheduled.

But some projects that might qualify to be on that list aren't. FHWA considers New York's 8.6-mile Interstate 287 project, now at $621 million and counting, "a collection of projects," so it doesn't rate the extra scrutiny. An investigation by The Journal News in White Plains, N.Y., revealed that work repeatedly went over budget and past deadline due to poor planning and lax oversight. The contract for one phase was changed more than 70 times.

After an independent probe, Gov. Andrew Cuomo in November called for sweeping changes in the way the state designs, contracts and oversees New York's publicly funded construction. Those management reforms are similar to what the FHWA recommended, Mendez said.

Also not on FHWA's major projects list: a 36-mile extension of Interstate 49 in Louisiana, estimated at $622 million. The state divided I-49 work into 11 segments, each costing under $100 million, to accommodate the funding stream, according to FHWA spokeswoman Cathy St. Denis.

For projects that don't hit the $500 million level, FHWA negotiates stewardship agreements with each state that spell out what role FHWA officials at division offices in the state will play in reviewing plans and offering input on design and construction practices. State transportation directors say an FHWA representative frequently sits in on weekly or monthly planning and status meetings.

When a highway contract needs to be changed because of an unexpected cost, in many cases the state DOT must get approval from an FHWA division office.

Gannett's review of hundreds of change orders for 21 projects found nearly all were approved. State transportation officials say that's because they typically discuss with FHWA officials whether a change order meets the project's specifications before it is submitted.

If a request is questionable, "generally it won't ever become a change order because at the project level the project staff would say that's not something that we'd compensate them for, or it's part of the contract requirements already," said Russ Touchberry, assistant construction engineer for South Carolina DOT. Twenty-nine change orders approved for a project to resurface a 15-mile stretch of concrete on I-385 between Columbia and Greenville increased costs by $4.1 million, or 9 percent over the original contract.

Mendez said he believes states are doing better at managing their highway projects, but he acknowledged he did not have data available to prove that.

"A lot of the projects I go visit are ahead of schedule," he said. "I know we're making an effort."

Joe Comé, assistant inspector general for highway and transit audits for the U.S. Transportation Department, declined an interview request from Federal Times, but his staff said the office is pushing FHWA to better track project costs.

And so are some lawmakers.

House Transportation Committee Democrats want to tie federal highway funding to broad performance goals, which could include cost and schedule performance, and publicize states' cost and schedule performance on projects.

House Highways and Transit Subcommittee Chairman John Duncan, R-Tenn., is interested.

"I like things like that — giving people more money for doing things better or faster and penalizing people if something goes wrong, or if a project runs late or over budget in some way," Duncan said in an interview. "I'm all for performance-based provisions being in the bill, and we have discussed it."

The next transportation authorization bill is an opportunity to strengthen the federal role in oversight, said Mead, the former inspector general. A bill awaiting a full Senate vote would allow projects that adopt innovative project delivery methods, as certified by the Transportation secretary, to receive full federal funding.

"They're talking about a new surface authorization, and we hear jobs, jobs, jobs," Mead said. "But I think there ought to be discipline to this."

schacko@federaltimes.com?subject=Reader Question">Sarah Chacko and Steve Watkins report for Federal Times. Jorge Fitz-Gibbon reports for The (Westchester, N.Y.) Journal News. Contributing: Jonathan Bandler of The (Westchester, N.Y.) Journal News; Jeff Burlew of the Tallahassee (Fla.) Democrat; Jeremy Rosen of the (Cherry Hill, N.J.) Courier-Post; Russ Zimmer of the Media Network of Central Ohio; Ron Barnett of The Greenville (S.C) News; and Jeff DeLong of the Reno (Nev.) Gazette-Journal.

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