2003 state data shows WI highway overrun costs nothing new

I noted the other day that reporting about cost overruns on Wisconsin highway projects - - troubling as that is - - is nothing new:

So a state audit finds Wisconsin is vastly over-spending on road projects because the estimated costs were low-balled and now we can't pay the bills. 

I find nothing surprising about it: Wisconsin's road-building record has long been a scandal.

Take a look at some 13-year-old+ Legislative Audit Bureau findings I recalled reading that showed massive WisDOT cost-overruns on state highways related to spending on real estate for projects. 

I regret the coding and duplication complications, but you get the picture from the text. 

Perhaps you or I can get a better copy of these pages or the entire report:

                                              An Evaluation

Major Highway Program

Department  of Transportation

Report 03-13

November 2013

Pages 24-25,29

                                              An  Evaluation

Major HighwayProgram

Department  of Transportation

24 • • • o  MAJ OR  H IG HWAY PROG RA M

DOT had not anticipated these projects, which are expected to cost

$828.0 million, in its program schedule and budget. As a result, construction of these recently enumerated projects may not begin for eight to ten years, or the completion of previously enumerated projects will be delayed. Inaddition, DOT may not recommend additional projects to the Transportation Projects Commission for enumeration in 2004.

Program  Expenditures

Major highway program expenditures  totaled

$284.2 million  In

FY 2002-03.

As shown in Table 7, major highway program expenditures totaled

$284.2 million in FY 2002-03 and increased 69.5 percent from FY 1993-94 expenditure levels. Program expenditures differ from amounts appropriated because  of encumbrances and federal  earmarked funds, which are provided  throughout  the State's fiscal year. Construction contracts, which accounted for nearly three­ quarters  of  FY  2002-03 expenditures,  increased  67.9 percent  in the ten years shown. Real estate expenditures nearly quadrupled during  the  same period  and were  the  second-largest  expenditure  category in FY 2002-03.

 Table 7

Major Highway Program Expenditures, by  Type

FY 1993-94 FY 2002-03

Percentage Percentage  Change Change in Constant Dollars

 Construction Contracts

-$-1-20,9-2··1-,0·0-0 --

$2·0-3--,035,000

,--

6-7-.-9"%---------3-·5-.3···%----·----

 Real Estate

11,763,000 43,772,000 272.1 199.9---

(72.9)   --

MAJOR  HIGHWA Y  PROGRAM  11   11   11  a   25

Real estate  expenditures have increased steadily.

 Real estate can represent a significant portion of individual project costs. For example, the STH 12 (Sauk City to Middleton) project involved the purchase of 783.1acres, at a cost of $32.2 million, which was 24.8percent of the project's estimated total cost. As shown in Figure 4, real estate expenditures for the major highway program increased steadily from FY 1997-98 until FY 2001-02.

 Figure 4

Real Estate Expenditures for the Major Highway  Program

(in millions)

$50.0   .---- ----------------------,

93-94 94-95 95-96 96-97 97-98 98-99 99-00 00-01 01-02 02-03

To explain the increase in its real estate expenditures, DOT notes that land costs typically increase faster than the inflation rate overall, and there have been a number of projects in or near urban areas, where land is often costly. DOT has also indicated that because it takes up to 12 years for project development to be completed and construction funding to become available, developers and landowners have time to rezone land for  commercial use,which often makes the land more valuable and increases DOT'spurchase costs.

As shown in Table 8, the number of acres DOT has purchased for the state highway program varies considerably from year to year. Yet despite a significant increase in real estate expenditures since FY 1997-98,DOT's central office does not keep separate records of

MAJ OR HICHWA Y PROG RAM il II m l!l 29

• The cost estimate for the STH 29 (Chippewa Falls bypass) project, which is made up of two separate projects enumerated in 1989 and 1991,increased from $77.2 million at enumeration to $164.0 million in June 2003. While the original design added

two highway lanes next to the existing two-lane highway, the final design relocated six miles of the highway, which required the purchase of considerably more land and the construction of four new highway lanes. Inaddition, five miles more than originally planned were built as a

freeway, which required an additional interchange and two overpasses.Finally, two existing interchanges were expanded, and two new interchanges were added to the project.

• The cost estimate for the expansion of the STH 64 (Houlton to New Richmond) project increased from $55.3million when itwas enumerated in 1993 to $116.5 million in June 2003. While DOT originally planned the project as a four-lane expressway, itlater changed the plan and built most of the project as a freeway,which increased construction costs and required more costly bridges,two additional interchanges, and two additional overpasses.

• The cost estimate for the USH 12 (Sauk City to Middleton) project increased from $64.1million when it was enumerated in 1993 to $129.8 million in June 2003.The increase is attributable to

  $23.0 million in higher real estate costs that occurred because of project delays and the planned upgrade of a portion of the Middleton bypass from a 60- to a 70-miles-per-hour design speed.

• The cost estimate for the USH 53 (Eau Claire bypass) project increased from $99.3million when it was enumerated in 1995 to $145.4 million in  June 2003. The increase resulted from the expansion of an interchange to allow access to STH 93,which was not included in the original project plan.