Texas Department of Transportation
A Report on Engineering Costs at the Texas Department of Transportation
Report Number 97-089
August 1997
Overall Conclusion
The Texas Department of Transportation primarily uses factors other than cost in deciding to contract for preliminary engineering, construction engineering, and engineering design services. Although the Department has significantly increased the use of consultants for preliminary engineering services, the Department rarely contracts for construction engineering services and has no plans to increase contracting for those services. In addition, the Department's method of costing in-house and consultant preliminary engineering projects has flaws that prevent valid cost comparisons and affect data accuracy and reliability. This report and the applicable appendices serve as a guide to determine relevant costs for this purpose.
Although the Department disagrees with most of our findings and recommendations, it is our position that the information in this report on the usefulness and accuracy of the cost data and the cost allocation methodology is entirely consistent with our previous reports. (The State Auditor's follow-up comment can be found on page 19; management's response is on page 14.)
Key Facts and Findings
Although current state law provides that cost is to be the determinant factor in decisions to contract for engineering services, in practice, cost is not the primary factor in such decisions.
Current state law clearly provides that construction engineering should be considered for outsourcing, however, the Department continues to perform virtually all construction engineering in-house.
The Department's cost data has limited usefulness for determining whether the costs of in-house and consultant preliminary engineering are equivalent. The cost data also contains various types of inaccuracies.
The Department's method of allocating indirect costs is not appropriate for comparing the cost of in-house and consultant preliminary engineering services.
Effective September 1, 1997, the Department will be required by statute to achieve a specified level of expenditures to private sector providers for engineering-related services. Cost remains an important factor in outsourcing decisions made in compliance with the new requirement, and the Department is still responsible for ensuring that funds are used in the most cost-effective manner.
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