"Radical cost control" helps Missouri DOT deliver projects under budget, on schedule

Cost-saving programs saved taxpayers $91 million in past year

News MoDOT June 14, 2007
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Across the country, transportation departments are delaying or canceling highway improvements as rising fuel and materials costs bite big chunks out of construction budgets. In Missouri, meanwhile, the state department of transportation is delivering record amounts of road improvements under budget and on schedule.

This is made possible by "radical cost control"--a series of cost-saving programs developed at MoDOT that are paying dividends. Over the past six years, while many transportation departments were experiencing costs 17% to 20% over budget, MoDOT has delivered $5.3 billion in road improvements that came in only 0.3% over budget.

"I'm very pleased with the cost savings we're seeing," MoDOT Director Pete Rahn said. "This demonstrates our commitment to getting a full dollar of value for every dollar we spend."

In the past year alone, these measures have lowered costs 7.4% under budget, saving taxpayers $91 million.

"When I used to tell other states what we're doing to control costs, they said we were crazy," MoDOT Chief Engineer Kevin Keith said. "Now they're asking us how we do it."

MoDOT's radical cost controls include:

Practical design -- Projects are designed to fit specific needs, without the frills. "Sometimes all the extras simply aren't necessary to provide the needed improvements," Keith said. "We examine every detail of every project and trim the fat where we can, without ever compromising safety." Practical design has saved nearly $500 million over the past three years that has been reinvested into additional improvements.

Keeping bids low -- Highway contractors who bid for MoDOT construction jobs must deliver great value at the lowest possible price. "We ask contractors to sharpen their pencils and give us a great bid," Keith said. "If they're too high we reject them and bid all over again until the price is right." Nearly $234 million in projects were rebid in the past two years.

Road closings -- Keeping driving lanes open can slow repair work and cost the taxpayers millions in additional project costs. "When practical, we're willing to shut down a road if it means getting it done quickly and saving money," Keith said. MoDOT has closed 136 roads for construction over the past two years, trimming costs and completing those projects an average of 30% faster.

Contractor innovation -- MoDOT asks highway contractors to propose innovative solutions. Using alternate materials, coming up with improved designs, working off-hours, closing lanes or routing traffic, MoDOT is always interested in proposals that will improve a project or save money. Last year, this effort saved $3.7 million on 17 projects. "Our contractors do great work and have good ideas," Keith said. "We want their help to come up with the best possible improvements."

Slashed administrative costs -- Over the past several years MoDOT has reduced direct administrative costs to only 2% of its annual budget. The savings go right back into highway improvements.

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