U.S. Infrastructure Projects Cost Way More Than They Should, Explained

by Panos Prevedouros, PhD, FixOahu, April 7, 2014

The Atlantic Cities magazine published a condensed analysis of seven main reasons that explain why U.S infrastructure project cost more than elsewhere. They are:

1. Davis-Bacon Laws: Passed in 1931, the Davis-Bacon Act mandates that laborers for federal public works projects receive local prevailing wages. (+22%)

2. Project Labor Agreements: In 2009, President Obama signed an executive order mandating that contractors for federal projects exceeding $25 million sign Project Labor Agreements, which guarantee the hiring of union workers. (+13~15%)

3. 'Buy America' Provision: For decades, this provision has discouraged projects from being built with manufactured goods made outside the U.S. Obama strengthened it in the 2009 stimulus package to include projects besides just highways. (+10~500%)*

4. Lengthy Environmental Reviews. (+10~25%)*

5. Transportation Alternatives Program: Everyone can agree that walking trails, complete streets, historic renovations, landscaping, and bike lanes are public goods, but should they be paid for with highway fund money? This is the current policy of the FHWA. (+5~20%)*

6. Administrative Costs: Currently, U.S. transportation revenue is like a boomerang, going from the states to Washington and back. Naturally, this process adds bureaucratic costs. (+10%)*

7. Toll Bans: Although tolls exist along some stretches of interstate, they are generally not permitted by the federal government. This has stripped the government of a key revenue source that could be used for repairs, and for cheaper borrowing. (+10~50%)*

Note: (*) Author's estimates.

SOURCE: 7 Reasons U.S. Infrastructure Projects Cost Way More Than They Should