Procurement and Infrastructure Costs

Infrastructure costs in the United States are high and rising. The procurement process is one potential cost driver.

In this paper, we conduct a survey of procurement practices across the 50 states. We survey both employees at each state department of transportation (DOT) and the road builders that win contracts to build and maintain roads.

With this survey, we are able to create a new dataset of procurement rules and practices across the United States and understand what actors on the ground think drive costs. We then assemble a new dataset of project-level infrastructure costs. We correlate the survey practices with our new, detailed data on costs.

We find that two important inputs in the procurement process appear to particularly drive costs: (1) the capacity of the DOT procuring the project and (2) the lack of competition in the market for government construction contracts.

About the Law and Economics Workshop

Michigan Law’s Law and Economics Workshop provides an opportunity for faculty and students from across the University to engage with cutting-edge law and economics research by leading scholars on a wide range of legal and policy topics.

Professors J.J. Prescott (jprescott@umich.edu) and Ed Fox (edfox@umich.edu) organize the workshop. If you would like to receive workshop announcements, please contact Alex Wroble (arwroble@umich.edu) and ask to have your name added to the workshop’s email list.