RALEIGH, N.C. — The North Carolina Department of Transportation has reached an agreement with a road contractor and the federal government to pay for repairs to a stretch of Interstate 40 between Durham and Chapel Hill that was improperly built.

The cost of the estimated $18.6 million project will be borne by the federal government, DOT and the project contractor.

The contractor on the project, Granite Construction of Watsonville, Calif., has agreed to pay $3 million for repairs while the federal government will pay about $14.4 million. DOT had estimated the project could cost between $18.4 and $30 million, but now expects the final cost to be about $18.6 million.

In addition, DOT is currently in negotiations with the private engineering firm of HNTB, which conducted inspections on the project. The final settlement with HNTB is expected to result in significant payment as well.

In 2005, the Department of Transportation discovered that expansion joints in a 10.6-mile stretch of I-40, running from the Durham Freeway west to U.S. 15-501, had been improperly constructed in the concrete pavement repaving and expansion project. As a result the pavement prematurely started to crumble and form potholes.

Concrete from the entire 10.6-mile stretch of roadway must be removed and replaced with asphalt.

An investigation by Transportation Secretary Lyndo Tippett found a number of state DOT employees were at fault from 1999 through the completion of the project in 2004. Many of the employees, Tippett said, have left the department but those who remain would be subject to suspension, demotion or firing, he said.

Tippett said that he identified several organizational concerns and that procedures are being revised and roles redefined. The changes include requiring contractors to provide stronger warranties on pavement and other major project elements and requiring DOT employees to oversee inspections for major projects to ensure accountability. About 10,000 employees work for DOT's Division of Highways.

I-40 was constructed in Durham County in the 1980s, and workers later added a lane to each direction and covered the original lanes with a 3-inch concrete layer. It carries more than 150,000 cars and trucks every day.

Construction is expected to start no later than spring 2007. Work will be done at night and other non-peak travel times in an effort to minimize the inconvenience to I-40 travelers.