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Audit: North Carolina DOT Wasted $152.4M in Construction Overruns

Wed March 12, 2008 - Southeast Edition
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RALEIGH, N.C. (AP) The North Carolina Department of Transportation is wasting tens of millions of dollars in taxpayer money, operates on “hunches” and lacks a fundamental understanding of how to assess internal problems, state auditors said Feb. 7.

The agency spent $152.4 million in unnecessary construction costs on delayed highway projects during a three-year period ending in March 2007, according to the State Auditor’s Office. The study reviewed 390 highway projects completed during the time span and found that 40 percent missed their start construction date by more than 12 months.

Those delays directly contributed to cost overruns through inflation, and the agency isn’t fixing the problems because it “lacks a fundamental understanding of how to organize data and analyze a project’s problems to make improvements,” state auditors said in the report.

“DOT is a multibillion-dollar state agency that appears to operate on hunches and intuition rather than hard data analysis,” State Auditor Leslie Merritt said in a statement.

Merritt said that while it’s reasonable to assume there will be problems with major construction projects, taxpayers expect the transportation department to learn from past projects.

Auditors said DOT management can’t pinpoint its own inefficiencies because the agency doesn’t have an easy way of reviewing its own performance data. In some cases, the necessary data is missing. The report also said the department doesn’t have meaningful or reliable performance objectives.

In a lengthy response, Transportation Secretary Lyndo Tippett said he agreed with the data assessment and has established a team to examine the department’s data use and expand efforts to develop performance objectives.

However, on other aspects of the audit, Tippett disagreed.

Tippett said it’s extremely difficult to predict a project’s start date in the early development stage because there are so many unknowns, including public involvement, project impacts and environmental reviews.

Tippett also said his agency has been working in past years to improve some inefficiencies identified by the audit, including problems in the permitting process and management oversight.

Other aspects were out of the agency’s control, Tippett said, pointing to overruns caused by increases in asphalt and fuel prices, and delays due to lack of funding.

“I am confident that the improvement processes we have already developed and the work that is currently ongoing will continue to improve our delivery of transportation projects, programs and services to the taxpayers of North Carolina,” Tippett wrote.

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