A new report from the Austin city auditor confirms what many of us knew already—that construction costs often balloon far beyond their original estimates.
The auditor’s review of the Public Works Department, the branch of city government that “designs, manages, and inspects major capital improvement projects,” identified a slew of problems with the city’s construction processes, including:
- Public Works did not reliably follow its quality management process, and has bypassed it in the past, which may negatively affect project cost and quality.
- Public Works did not follow all parts of its change order policy, which may result in unnecessary costs and avoidable project work.
- The City’s initial project cost estimations were often far below actual costs, which affects the reliability of budget and spending information for capital projects.
- The City’s process for assessing contractor performance on capital projects discourages constructive feedback and lacks nuance, which may affect the outcome of future procurement and thus the quality of future capital projects.
Combined, these findings help explain how so many city projects have ballooned in terms of cost. The report offers four examples of recent projects where actual costs have exceeded their initial projections by dramatic amounts. The worst, in terms of percentage increases, was the Shoal Creek Storm Drain Ridgelea Improvement Project which was initially projected to cost around $1 million but ended up costing 700 percent more than originally thought.
Intentional or not, inaccurate project costs like those above are misleading the public into lending their support for these improvements. That’s no way to run government, and corrective actions are needed immediately.