Procurement and Infrastructure Costs

Abstract

Why is it so expensive to build and maintain U.S. infrastructure? In this paper we conduct a survey of infrastructure 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 drives costs. We correlate the survey practices with a new, detailed dataset of project-level infrastructure 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. 

Keywords: infrastructure costs; procurement; bidding

JEL Classification: R42, L38, D44, H54, H57, L91, O18, K40, H83