oversight

Comparison of States' Highway Construction Costs

Published by the Government Accountability Office on 2003-11-03.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

United States General Accounting Office
Washington, DC 20548



          November 3, 2003

          The Honorable Peter G. Fitzgerald
          Chairman
          The Honorable Daniel K. Akaka
          Ranking Member
          Subcommittee on Financial Management,
           the Budget, and International Security
          Committee on Governmental Affairs
          United States Senate

          Subject: Comparison of States’ Highway Construction Costs

          In your recent letter to us concerning the impending reauthorization of the
          Transportation Equity Act for the 21st Century, you stated that the return on federal
          investment could be increased through effective cost competition for states' highway
          construction contracts. In this context, you asked that we report on how states
          compare in terms of the cost of highway construction. As agreed with your offices,
          we are reporting to you on whether Federal Highway Administration (FHWA) data
          can help transportation stakeholders understand how states' costs to build,
          reconstruct, and maintain federally financed highways, roads, and bridges (termed
          "constructing highways" for this report) compare. During our review, we became
          aware of significant issues regarding the quality of the data that FHWA collects and
          reports, a topic also discussed in this report. On September 11, 2003, we briefed the
          Chairman on the results of our work, and on September 22 we provided the Ranking
          Member’s office with the briefing slides we prepared. This report summarizes the
          briefing. The slides that formed the basis for the briefing are enclosed.

          Background

          States, with support from localities, are primarily responsible for building and
          maintaining the nation’s highways, roads, and bridges, with significant financial
          support from the federal government. From 1998 through 2001 (the latest years for
          which data are available), all levels of government spent more than $80 billion each
          year for capital construction and maintenance of their highways, roads, and bridges.
          Of this amount, the federal government supplied about $30 billion annually.




                                                 GAO-04-113R States’ Highway Construction Costs
                                                                      1
Highway project costs can differ for a number of reasons. For example, highways
are more expensive to build in mountainous areas than in flat areas. Projects in
urban areas are more expensive than those in rural areas. Projects with bridges cost
more than similar projects that do not require bridges. Compared with smaller
projects, large projects may result in lower unit costs because of economies of scale.
More complicated projects, such as those with a large number of interchanges or
complicated engineering problems, can cost more than less complicated projects.
Other factors that may affect cost are the degree of competition for contracts and
different state design standards.

For each contract exceeding $500,000, FHWA requires that each state, the District of
Columbia, and Puerto Rico (collectively called “states”) provide the agency with data
(called bid price data) on the quantity of materials used and the installed price of the
materials (representing materials, labor, overhead, and profit) from contracts to
construct and maintain roads on the National Highway System.2 States are required
to provide FHWA with this data for seven materials (common and unclassified
roadway excavation, structural reinforcement and structural steels, bituminous and
Portland cement concrete surfaces, and structural concrete), as well as provide the
total contract costs for road and bridge aspects of the contract, and the location of
the project. According to FHWA, the bid price data are limited to seven materials
because the materials are common to all states; therefore, they act as good indicators
for changes in principal work items. FHWA makes summaries of its bid price data,
including a national composite index of all materials on which data are collected,
available to the public in its quarterly Price Trends for Federal-Aid Highway
Construction and in its annual Highway Statistics.3

According to FHWA officials, the bid price data are the only data they collect from
states involving price and quantity, both of which are needed to compare state
highway construction costs. FHWA collects bid price data so that it can use the
national composite index to help (1) monitor changes in the purchasing power of the
federal-aid highway construction dollar, and (2) develop, as one factor, projections of
future highway funding needs.




1
 Most federal funds that states receive to fund their highway projects are apportioned to the states
based on formulas and procedures prescribed by law. With few exceptions, state decisions to
undertake higher- or lower-cost projects do not affect the level of funding they receive. However, to
the extent that states can avoid excessive costs on ongoing projects, they will be able to undertake
additional projects.
2
 The National Highway System consists of completed interstate highways, urban and rural principal
arterials, other strategic highways, and intermodal connectors. The system comprises about 161,000
miles of highway. Although the system represents about 4 percent of total highway miles, it carries
about 43 percent of the traffic (as measured by vehicle miles traveled).
3
    In these publications, FHWA combines the two excavation items and reports on six materials.


Page 2                                     GAO-04-113R States’ Highway Construction Costs
Summary

FHWA’s database allows for comparisons of an individual state’s costs over time but
does not allow for comparisons between states. In addition, FHWA has concerns,
which have not been formally disclosed to users, about the quality of the data.

Comparing States’ Construction Costs

FHWA’s database containing its bid price data allows for comparisons of an
                                                                                       4
individual state’s costs over time but does not allow for comparisons between states.
Costs are tracked by state, according to an index value that is assigned quarterly.
Each state received an index value of 100 for the base year (1987). If one state’s costs
in the base year were twice those of another state, both would have an index value of
100 for that year, and the difference in those costs would not be shown, thus
preventing a comparison.

In addition, FHWA officials told us that the bid price data do not contain details to
determine why costs appear to differ either between states or within a state. They
told us that the installed cost of materials could vary significantly, for example,
because the quality of the materials or the installation specification (e.g., smoothness
of the surface) could be very different. FHWA’s bid price data do not contain this
information.

FHWA is considering whether to discontinue collecting bid price data because of the
(1) apparent limited use of the data, and (2) level of effort to collect data that
apparently is not extensively used. In commenting on a draft of this report, FHWA
noted that it hired a consultant to evaluate the usefulness of the data to stakeholders
and to explore potential alternative approaches to gathering information that could
be used within FHWA. FHWA also commented that it recently partnered with the
American Association of State Highway Transportation Officials to survey all state
departments of transportation on the extent of use of the published price trend data
and alternative ways that FHWA could gather these data (such as using data that are
being collected by states for their internal use).

We contacted 12 states, the Bureau of Transportation Statistics, and several industry
associations about the usefulness of the bid price data. Generally, they told us they
do not use the data. For example, a few states told us that they maintain more
complete data, and FHWA’s data are not compatible with their own. FHWA
estimated that it takes states, in total, about 975 hours annually to report the bid price




4
 In 2002, the Washington State Department of Transportation surveyed states on the costs to build a
1.02-mile interchange whose design the department believed was universal to all states. Reported
costs ranged from $4 million to $26.7 million, based on 25 states reporting. See the enclosure to this
report.


Page 3                                   GAO-04-113R States’ Highway Construction Costs
data (based on reporting by 37 states), or an average of about 6.5 hours per state per
quarterly report.

Quality of FHWA’s Bid Price Data

FHWA’s quality control procedures on its bid price data are limited. It receives the
bid price data either electronically or on paper from the states, and FHWA officials
then input the data into their database. FHWA officials told us that they
intermittently review submitted data for obvious errors and completeness and follow
up with states for correction. However, they said they do not follow standard error-
checking procedures, such as those contained in departmental guidelines, for
reviewing state submitted reports.5 They also told us that they have no procedures
for verifying the keypunching of data made by their data entry staff. An FHWA
official told us that FHWA is reluctant to invest time and money into improving the
quality of its data until it decides whether it will continue to collect the data. While
we agree that any substantial investments in time and money may not be warranted if
FHWA ultimately decides to discontinue collecting bid price data, following standard
error-checking routines would increase FHWA’s knowledge about the quality of its
data and the extent to which its concerns should be communicated to data users.

FHWA recognizes that it has problems with the quality of its bid price data.
According to FHWA officials, underreporting and, to a lesser degree, inconsistent
reporting are the biggest problems affecting data quality. Regarding underreporting,
we examined data in the database for 3 years, 2000 through 2002. We found that the
                                                                        6
database did not contain data for seven states for 1, 2, or all 3 years. In addition, we
found instances in which states that received relatively more highway funds from
FHWA reported far fewer contracts (and contract amounts) than states that received
significantly fewer funds from FHWA, suggesting that states that received more funds
may be underreporting.

We also found data inconsistencies. For example, about 19 percent of the data for
2000 through 2002 were for a year other than the one being reported on. Most often
these incorrect data were for the previous year. FHWA officials told us that, for the
                                             7
most part, states submitted these data late. Instead of omitting the data, FHWA
officials told us they included the previous year’s data to add robustness to the data
reported for the reporting year and because the information for the prior years had
already been disseminated. Among other problems, we found a $7 million contract
erroneously included in the database as a $7 billion contract, thus potentially skewing
some information (but not the unit costs for the six materials reported) for that state.


5
 Guidelines for processing statistical data are available in The Department of Transportation’s
Information Dissemination of Quality Guidelines and the Bureau of Transportation Statistics’ Guide
to Good Statistical Practices in the Transportation Field.
6
 The one state that did not report data for all 3 years told us that it was too much trouble. Three other
states we contacted told us that they made data available to FHWA’s field office, which compiled it for
reporting purposes. We did not attempt to verify whether the states reported the data or how FHWA
processed submitted data.
7
    We did not attempt to determine when these data were submitted.


Page 4                                    GAO-04-113R States’ Highway Construction Costs
With the exception of the erroneous $7 billion contract amount, we did not attempt to
trace the data back to the states. Therefore, we cannot say whether the state
incorrectly reported the data for the problems we found or whether the data were
                               8
entered incorrectly at FHWA.

FHWA has not formally disclosed its concerns with the quality of the bid price data
when it reported these data in its Price Trends for Federal-Aid Highway
Construction or Highway Statistics. An FHWA official told us that he believes that
most state departments of transportation and other users are aware of the bid price
data flaws because this information has been provided informally to many
stakeholders over the years and state departments of transportation use the
published summaries primarily to cross-check other state highway construction cost
data. After we raised this concern, an FHWA official said that FHWA is considering
how to advise states and other users about the quality of the data that it is reporting.

Conclusions

As we were examining the use of FHWA’s bid price data to determine whether it
could be used to compare states’ highway construction costs, FHWA officials alerted
us to their concerns about the quality and usefulness of its bid price data. We agree
with FHWA that it is wasteful to collect and disseminate data that is not used.
However, there may be other state construction data that FHWA could collect that
would be useful to stakeholders. Until FHWA decides whether it will discontinue,
supplement, or supplant bid price data collection, the quality of the bid price data
that FHWA reports to the public could be improved through use of more systematic
quality control procedures, such as through standard error-checking routines and
keypunching verification required by departmental guidelines.

Recommendations for Executive Action

In order to determine whether continued federal and state efforts to provide and
analyze state construction cost data are warranted, we recommend that the Secretary
of Transportation direct the Federal Highway Administrator to determine whether
the bid price data collected by FHWA is useful to transportation stakeholders and, if
not, to discontinue collecting the data. Further, we recommend that the Secretary
direct the Federal Highway Administrator to determine whether it would be useful
and feasible to collect and disseminate other state construction cost data that could
supplement or supplant FHWA’s bid price data.

While FHWA continues to collect and disseminate bid price data, we recommend that
the Secretary direct the Federal Highway Administrator follow departmental
guidelines for systematic quality control procedures, such as standard error-checking
routines and keypunching verification, to improve the accuracy of the data reported.




8
 In commenting on a draft of this report, FHWA told us that the state reported the $7 million contract
amount as $7 billion. The state did not respond to our requests for information.


Page 5                                   GAO-04-113R States’ Highway Construction Costs
Finally, until the quality of the bid price data is improved, we recommend that the
Secretary of Transportation direct the Federal Highway Administrator to disclose its
limitations in any published distribution of the data.

Agency Comments and Our Evaluation

We obtained oral comments on a draft of this report from the Department of
Transportation. The department did not provide an overall opinion about our draft
report or directly comment on our proposed recommendations. The department
commented that in situations where data is provided by nondepartmental sources
such as states, the department’s options for ensuring the accuracy of the original
source data are limited. In these situations, departmental guidelines emphasize
disseminating information to users about data quality, the department’s processing
methods, and analysis methods. Exploring ways to ensure the accuracy of data
submitted by others, such as states, was beyond the scope of our effort. Therefore,
we cannot comment on whether the department’s options are limited or whether
cost-effective means and incentives exist to better ensure data accuracy and
completeness. However, the department’s comment that its guidelines emphasize
communicating to users about data quality suggests that it agrees with the proposed
recommendation in our draft report (and included in this final report) that it disclose
the limitations of its bid price data in any published distribution of the data.

The department also suggested that the report recognize FHWA’s recent efforts to
determine if collecting bid price data should continue. We added this information to
this final report. The department also provided a number of technical and clarifying
comments, which we incorporated where appropriate.

Scope and Methodology

To identify whether FHWA collects information on states’ highway construction costs
that could help it and other stakeholders in overseeing federal-aid highway programs,
we contacted officials in FHWA and the Bureau of Transportation Statistics in the
Department of Transportation. They identified FHWA’s bid price data as the only
                                                           9
data set that included both quantity and cost information. To understand the nature
of the bid price data and their uses, we interviewed officials in FHWA’s Office of
Program Administration; reviewed data collection forms and instructions; reviewed
FHWA documentation on how bid price data are compiled into reports; and reviewed
the primary public summary of the data in Price Trends for Federal-Aid Highway
Construction.

As part of our work to determine how FHWA’s bid price data help it and other
stakeholders understand how states’ costs to build federally financed highways
compare, we (1) examined how FHWA ensures the quality of its bid price data, (2)
tested the quality and reliability of the data, and (3) asked selected stakeholders


9
FHWA also requires that contractors provide it with certain labor cost information. However, an
FHWA official believes that few contractors submit this information.


Page 6                                  GAO-04-113R States’ Highway Construction Costs
about their perceptions of the data’s usefulness. Regarding how FHWA ensures the
quality of its bid price data, we discussed with FHWA officials in its Office of
Program Administration how the data are submitted to FHWA and how the data are
entered and maintained in the database. We also discussed quality control
procedures, such as ensuring accuracy and completeness of data submissions and
ensuring accuracy of data entered into the database. We also contacted four states
for which FHWA’s database did not contain any contract information for 2000, 2001,
or 2002, to ask if they had submitted data. These states were the District of
Columbia, Kentucky, Minnesota, and New Hampshire. Finally, we reviewed
departmental guidelines for processing statistical data: The Department of
Transportation’s Information Dissemination of Quality Guidelines and Guide to
Good Statistical Practices in the Transportation Field.

Regarding testing the quality and reliability of FHWA’s bid price data, we obtained
electronic files from FHWA for 2000, 2001, and 2002. Our tests focused primarily on
checking

   •     contract award dates, to make sure they fell within the year in which they
         were being reported (e.g., that all contracts in the 2000 database had a start
         date within 2000);

   •     contract award amounts for apparent extreme (high or low) amounts; and

   •     the number of contracts reported by each state in each year, to see if they
         were relatively consistent from year to year and to see if some states had not
         reported any contracts for at least 1 year.

We then discussed the results of our tests with FHWA officials. When we found
examples of incomplete data or inaccurate data, we did not attempt to determine
whether states submitted incorrect data or whether FHWA incorrectly entered the
data into its database.

Regarding understanding the usefulness of FHWA bid price data to transportation
stakeholders, we contacted private associations, state highway officials, and federal
agencies. We discussed the practical applications, if any, of the FHWA bid price data.
The private associations we contacted were the Association for the Advancement of
Cost Engineering International, American Road and Transportation Builders
Association, and American Association of State Highway Transportation Officials.
We contacted the state departments of transportation in California, the District of
Columbia, Hawaii, Illinois, Kentucky, Louisiana, Minnesota, Nevada, New Hampshire,
North Dakota, Ohio, and Wyoming. We selected these states because (1) they
represented states with either a large, medium, or small number of contracts in the
database, or (2) we were contacting them anyway about whether they had submitted
bid price data from 2000 through 2002. The federal agencies were the Bureau of
Transportation Statistics and the Congressional Research Service.




Page 7                               GAO-04-113R States’ Highway Construction Costs
Finally, we reviewed recent reports by the Department of Transportation’s Office of
                                                           10
Inspector General and by us on FHWA cost oversight issues. We conducted our
work from July through October 2003 in accordance with generally accepted
government auditing standards.

                                         _ _ _ _ _ _

As arranged with your offices, unless you publicly announce its contents earlier, we
plan no further distribution of this report until 30 days after the date of this letter. At
that time, we will send copies of this report to congressional committees with
responsibilities for highway issues; the Secretary of Transportation; the Federal
Highway Administrator; and the Director, Office of Management and Budget. We will
also make copies available to others upon request. This report will be available at no
charge on GAO’s Web site at http://www.gao.gov.

If you or your staff have any questions about this report, please contact either James
Ratzenberger at ratzenbergerj@gao.gov or me at guerrerop@gao.gov. Alternatively,
we may be reached at (202) 512-2834. Key contributors to this report were Jay
Cherlow, Hiroshi Ishikawa, Jennifer Popovic, Robert Parker, and James
Ratzenberger.




Peter Guerrero
Director, Physical Infrastructure Issues

Enclosure




10
 See, for example, our recent reports: Transportation Programs: Opportunities for Oversight and
Improved Use of Taxpayer Funds, GAO-03-1040T (Washington, D.C.: July 22, 2003); Federal-Aid
Highways: Cost and Oversight of Major Highway and Bridge Projects—Issues and Options, GAO-
03-764T (Washington, D.C.: May 8, 2003); and Transportation Infrastructure: Cost and Oversight
Issues on Major Highway and Bridge Projects, GAO-02-702T (Washington, D.C.: May 1, 2002).


Page 8                                GAO-04-113R States’ Highway Construction Costs
Enclosure




   States’ Highway Construction Costs



                    Briefing for the Chairman
             Subcommittee on Financial Management,
              the Budget, and International Security
            Senate Committee on Governmental Affairs
                      September 11, 2003




Page 9                  GAO-04-113R States’ Highway Construction Costs
Enclosure




                                                               Objective



   Our objective was to determine whether Federal Highway Administration
   (FHWA) data can help transportation stakeholders understand how states’
   highway construction costs compare.

   During our review, we became aware of significant issues regarding the
   quality of the data that FHWA collects and reports. This topic is also
   covered in this briefing.




                                                                               2




Page 10                       GAO-04-113R States’ Highway Construction Costs
Enclosure




                                                           Background




      • States, with support from localities, are primarily responsible for
        building, reconstructing, and maintaining the nation’s highways,
        roads, and bridges (termed “constructing highways” for this
        briefing).

      • From fiscal year 1998 through 2001, the nation spent more than
        $80 billion each year for capital construction and maintenance on
        its highways.

      • Of this amount, the federal government provides nearly $30
        billion each year to states and local governments to help build
        and maintain highways.


                                                                                  3




Page 11                          GAO-04-113R States’ Highway Construction Costs
Enclosure




                                                                    Background


          • FHWA officials identified one database that FHWA maintains--bid price
            data--that contains both materials quantity and price data, both of which
            are needed to compare construction costs across states.

              – FHWA requires that states provide it with quantity and price
                information (bid price data) for contracts on all federally financed
                highway projects costing more than $500,000 on the National
                Highway System. FHWA collects this information under its general
                oversight authority.

              – FHWA collects this information on the (1) installed costs (materials,
                labor, overhead, and profit) of seven materials (common and
                unclassified roadway excavation, structural reinforcement and
                structural steels, bituminous and Portland cement concrete surfaces,
                and structural concrete), (2) total roadway and bridge contract
                amounts, and (3) location of the project.

              – According to FHWA, the bid price data are limited to seven materials
                because the materials are common to all states; therefore, they can
                act as good indicators for changes in prices of principal work items.

                                                                                        4




Page 12                               GAO-04-113R States’ Highway Construction Costs
Enclosure




                                                                 Background


          • FHWA collects bid price data to

              – monitor changes in the purchasing power of the federal-aid
                highway construction dollar and

              – use as one factor in developing projections of future highway
                funding needs.

          • FHWA makes a summary of this information available to the
            public in its quarterly Price Trends for Federal-Aid Highway
            Construction and in its annual Highway Statistics publications.

          • FHWA’s report shows how much an individual state’s costs have
            changed over time (for the materials reported) and
            shows national price trends for the reported materials.


                                                                                    5




Page 13                            GAO-04-113R States’ Highway Construction Costs
Enclosure




                                                Scope and Methodology


          • We examined the availability of data collected by FHWA to make
            state-by-state comparisons of highway construction costs.

          • We discussed FHWA’s bid price data with transportation
            stakeholders regarding the usefulness of the data for
            understanding highway construction costs.

          • We discussed the quality of the bid price data with FHWA and
            with state departments of transportation and performed reliability
            tests.

          • We reviewed recent products by the Department of
            Transportation’s Office of Inspector General and by GAO on
            oversight of cost issues related to federally financed highway
            projects.

                                                                                    6




Page 14                            GAO-04-113R States’ Highway Construction Costs
Enclosure



                                           Comparing States’ Construction
                                              Costs Using Bid Price Data


          • FHWA’s database that contains its bid price data allows for
            comparisons of an individual state’s costs over time but does not
            allow comparisons between states.

              – The database assigns each state’s costs an index value of
                100 for the base year, 1987. The index value of 100 may
                represent different levels of costs for different states, thus
                preventing any comparison.

              – In addition, FHWA officials told us that the installed cost of
                materials can vary significantly, for example, due to the
                quality of the material or the installation specification (e.g.,
                smoothness of the surface). FHWA’s bid price data do not
                contain this information.



                                                                                      7




Page 15                              GAO-04-113R States’ Highway Construction Costs
Enclosure



                                           Comparing States’ Construction
                                              Costs Using Bid Price Data



          • In order to collect data that would allow meaningful insights,
            FHWA would have to be able to identify the factors that have the
            greatest ability to explain cost differences (e.g., understanding
            differences due to labor costs, different specifications for
            materials, and topographic conditions).

          • In addition, the benefits from collecting information on factors that
            influence highway construction costs would have to be weighed
            against the costs and feasibility of collecting it.




                                                                                     8




Page 16                             GAO-04-113R States’ Highway Construction Costs
Enclosure



                                                            Usefulness of Data



          • We contacted 12 states, the Bureau of Transportation Statistics,
            and several industry associations about the usefulness of
            FHWA’s bid price data. They told us they generally do not use
            these data. For example, a few states told us that they compile
            more extensive and complete cost data for their own use, and the
            information requested by FHWA is not compatible with their own
            systems.

          • FHWA has estimated that, annually, it takes a total of about 975
            hours for states to report bid price data, based on 37 states
            reporting on a total of about 1,300 contracts each year.

          • FHWA is considering whether to discontinue collecting bid price
            data because of the (1) apparent lack of use of the data and (2)
            level of effort to collect the data. FHWA has not set a date for
            making this decision.


                                                                                    9




Page 17                            GAO-04-113R States’ Highway Construction Costs
Enclosure



                                             Quality of FHWA’s Bid Price Data




          • Regarding data quality, FHWA officials are concerned about the
            reliability of the bid price data primarily as a result of underreporting and,
            to a lesser degree, inconsistent information contained in its database.

          • Regarding underreporting, FHWA officials believe that states do not
            report all contracts over $500,000 for projects on the National Highway
            System, but they have not attempted to determine the extent of
            underreporting.
              – We found that 7 states did not report any contracts for 1 or more
                years during the 3-year period we reviewed, 2000-2002.
              – We contacted 4 of these states. One told us that submitting bid
                price data was too much work. The other three states told us that
                they supplied cost information to FHWA state offices, who compiled
                it for inclusion in the database. (We did not attempt to verify if
                information was provided to FHWA or how FHWA compiled it.)



                                                                                             10




Page 18                                GAO-04-113R States’ Highway Construction Costs
Enclosure



                                    Quality of FHWA’s Bid Price Data



            • We also contacted 8 states that reported information to
              FHWA for each of the 3 years, 2000 through 2002. Six of the
              states told us that they believe that the information in
              FHWA’s database includes all information required to be
              reported. The other two states told us that FHWA state
              offices compiled information from the states and they did not
              check on the information included in the database. (We did
              not attempt to verify the information submitted by states or
              how FHWA state offices acted on it.)

            • Finally, we found instances in which states that received
              relatively more highway funds from FHWA reported far fewer
              contracts (and contract amounts) than states that received
              significantly less funds from FHWA, suggesting that states
              that received more funds may be underreporting.




                                                                                 11




Page 19                         GAO-04-113R States’ Highway Construction Costs
Enclosure



                                         Quality of FHWA’s Bid Price Data




          •   FHWA officials are also concerned about the accuracy of its bid
              price data.

               – They told us that they review the submitted data for obvious
                 errors and return the data to states for correction.

               – They told us that they do not follow standard error-checking
                 procedures, such as those contained in departmental
                 guidelines, for reviewing submitted reports. An FHWA official
                 told us that FHWA is reluctant to invest time and money into
                 improving the quality of its data until it decides whether it will
                 continue to collect the data.




                                                                                      12




Page 20                             GAO-04-113R States’ Highway Construction Costs
Enclosure


                                           Quality of FHWA’s Bid Price Data


          •   We found a number of inconsistencies in FHWA’s database for the
              years we examined (2000-2002). Among other things:

               – About 19 percent of the data included for any one year was for a
                 year other than the one being reported on.
               – Most often, these incorrect data were for the previous year and
                 were submitted late, according to FHWA. FHWA officials told us
                 that they included the previous year’s data (1) to add robustness to
                 the data reported for the reporting year and (2) because the
                 information for the previous years had already been published,
                 rather than adjusting previous years’ results.
               – We found other obvious inconsistencies, such as data reported for
                 1900, 1906, and 1921 in the 2000-2002 period.
               – We found one instance where a $7 million contract was entered
                 into the database as a $7 billion contract, potentially seriously
                 skewing some of the results for that state.

          •   We did not attempt to determine whether the states submitted incorrect
              information or whether FHWA incorrectly entered it into its database.
                                                                                        13




Page 21                              GAO-04-113R States’ Highway Construction Costs
Enclosure



                                        Quality of FHWA’s Bid Price Data




          •   FHWA’s Price Trends for Federal-Aid Highway Construction and
              Highway Statistics do not disclose FHWA’s concern about its
              data.

          •   An FHWA official told us that most state departments of
              transportation are aware of the flaws with its bid price data and
              use it primarily as a comparison with other data they maintain.




                                                                                    14




Page 22                            GAO-04-113R States’ Highway Construction Costs
Enclosure



                                                    State Study of Highway
                                                       Construction Costs

          •   Although FHWA’s bid price data cannot presently be used to
              compare states’ construction costs, a 2002 Washington State
              Department of Transportation (WSDOT) study sheds some light
              on this issue.

              – WSDOT asked other state departments of transportation to
                provide cost information for constructing a highway
                interchange that it deemed would be universal for all states.
              – Some costs, such as right of way acquisition, were not
                included because they vary depending on project location.
              – WSDOT provided the design specifications and quantities to
                be used for each material.
              – WSDOT received responses from 24 other states.




                                                                                   15




Page 23                           GAO-04-113R States’ Highway Construction Costs
Enclosure



                                                       State Study of Highway
                                                           Construction Costs


          • WSDOT found:

              – Reported costs ranged from about $1 million to $8.5 million
                per lane mile.
              – The median reported cost was about $1.6 million per lane
                mile.
              – Five states reported costs significantly higher than other
                states—ranging between about $3.1 million and $8.5 million
                per lane mile. (See fig. 1.)

          • We did not assess the reliability of the data reported in the
            WSDOT study.




                                                                                     16




Page 24                             GAO-04-113R States’ Highway Construction Costs
Enclosure



                                                     State Study of Highway
                                                         Construction Costs
  Figure 1: Cost to Build a Lane Mile of a Specified Type of Highway Interchange
  in 25 States




                                                                                   17




(545039)




Page 25                           GAO-04-113R States’ Highway Construction Costs
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