Transportation Infrastructure

Each year, the federal government gives the states nearly $20 billion to help build and repair the nation's highways. To meet the nation's transportation needs, states are planning or building large-dollar projects to both replace aging infrastructure and build new capacity. This report discusses (1) whether large-dollar highway projects--defined as costing more than $100 million--experience cost growth, (2) how the Federal Highway Administration (FHWA) approves large-dollar highway projects and agrees to their costs, and (3) how FHWA ensures that project costs are controlled and that federal funds are used efficiently.

GAO found that: (1) cost growth has occurred on many of the large-dollar projects that GAO examined, however, the amount of and reasons for these increases beyond the initial cost estimates on large-dollar highway projects cannot be determined because data to track this information over the life of projects are not readily available from FHwA or state highway departments; (2) as of August 1996, costs on 23 of 30 ongoing projects initially estimated to cost more than $100 million had increased from their initial estimates, while estimates on seven projects had decreased or had remained the same; (3) FHwA's project approval process consists of a series of incremental actions that occur over the period of years required to plan, design, and build a project; (4) FHwA approves the estimated cost of a large-dollar project in segments, rather than agreeing to the total cost of the project from the outset; (5) by the time FHwA approves the cost of a large-dollar project, a public investment decision may have effectively been made because substantial funds will already have been spent on designing the project and the project's estimated costs will have already occurred; (6) while many factors can cause costs to increase, several factors worked together to increase costs beyond the initial estimates for projects in the six states visited: (a) initial estimates are preliminary and not designed to be reliable predictors of a project's costs; (b) initial estimates are modified to reflect more detailed plans and specifications as a project is designed; and (c) a project's costs are affected by, among other things, inflation and changes in scope to accommodate economic development that occurs over time; (7) FHwA has done little to ensure that cost containment is an integral part of the states' project management; (8) FHwA influences the cost-effectiveness of projects by its review and approval of design and construction plans and through daily interaction with state departments of transportation; (9) some states GAO visited have initiated project management practices that focus on cost containment; (10) however, FHwA, has not been proactive in working with states to evaluate these practices and disseminate information on them to help other states enhance their cost management practices; and (11) the debate has already begun on the appropriate federal role in funding and overseeing federal-aid highway projects, particularly those that receive substantial federal funds.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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