Sneak Preview: FHWA To Evaluate State Cost Estimation Procedures

January 9, 2013 | By Jerry Ashworth | Post a Comment

(The following was excerpted from an article in the Single Audit Information Service.) Federal Highway Administration officials plan to review each state’s cost estimating procedures by May 2013 to ensure that states are obligating funds for American Recovery and Reinvestment Act highway infrastructure projects based on best estimates of project costs, in response to an audit by the Department of Transportation Office of Inspector General.

FHWA oversees $27.5 billion in Recovery Act funding for some 13,000 highway infrastructure projects nationwide. Because of the extensive costs involved for highway projects, FHWA was conservative, and in some cases inconsistent, in estimating the costs of these massive projects. As a result, funds remain unspent and the agency plans to reobligate $25 million per year in recovered Recovery Act funds for allowable project costs until Sept. 30, 2015. Other Recovery Act projects sunset Sept. 30, 2013.

The audit found that while FHWA took steps aimed at ensuring states met the statutory deadline for obligating Recovery Act funds, it did not consistently encourage states to use FHWA’s cost estimating guidance. “Insufficient attention to cost estimating increased the likelihood that states overestimated some project costs, which could lead to leaving Recovery Act funds unspent” when the Recovery Act expires, OIG said. “Expired funds would run counter to the Recovery Act’s intent that states use the funds to the fullest extent to spur economic activity.”

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