N.C. Auditors: More Transportation Cost Monitoring Needed in State

Mon November 20, 2006 - Southeast Edition
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RALEIGH, N.C. (AP) North Carolina’s Transportation Department can do better at estimating cost increases for building roads and mass transit, the state auditor said Nov. 7.

State Auditor Les Merritt’s staff conducted a performance review of the DOT’s highway program, including an examination of the Transportation Improvement Program (TIP). The rolling six-year plan sets priorities among more than 3,600 projects totaling $11.8 billion.

While the TIP isn’t a budget document, cost details for individual projects are difficult to evaluate and need improvement, the review found. Cost overruns range from 10 percent over TIP estimates to approximately 300 percent more than original cost estimates. In addition, inflation rates applied to the latest TIP — through 2012 — are understated, the review said.

“The department’s performance management plans for selected staff do not contain specific fiscal responsibility for controlling project costs,” the review said.

The review suggested that the estimates in TIP include a cost range based on certain contingencies.

The state highway program also does not have standardized reports that show why project costs vary as contractors perform the work, according to auditors.

In response to a draft of the review, Transportation Secretary Lyndo Tippett said many of the recommendations would be considered, including more proactive planning costs by the agency’s chief financial officer.

The review also re-examined for the first time in eight years the Highway Trust Fund, a dedicated source of revenue primarily to build urban loops, widen four-lane intrastate highways and improve secondary roads. The fund also is now used for road maintenance and public transit.

A portion of fund revenues has been transferred annually to the state’s general operating fund since the fund was created in 1989. Auditors, however, calculated that $526 million more has been transferred than was originally required under the law to balance the budget since 2002.

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