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WRAL Investigates: DOT paid for free advice

Posted May 19, 2008
Updated May 20, 2008

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— Riddled by delayed and botched road projects and criticized for its inefficiency, the North Carolina Department of Transportation paid millions of dollars for a report last year that offered some recommendations it got at no cost nearly a year earlier.

That's according to Kathryn Sawyer, executive director of the American Council of Engineering Companies of North Carolina.

"Where project delivery was concerned, I do think we had given them recommendations that could have been acted upon that wouldn't have required that level of expense," Sawyer said.

But the DOT says that ultimately, the savings from the changes implemented as a result of the $3.6 million study will make up for the report's cost.

In May 2006, the ACEC, a member organization of engineering companies, paid to bring experts and transportation department officials from Florida, Missouri and Virginia – states that lead the nation in transportation project management – to find ways to help North Carolina become more efficient and successful when it comes to finishing projects on time.

"Missouri, at the time we put together this think tank, was over-delivering their program. They were going into their next year’s set of projects because they had been so successful in meeting their goals," Sawyer said. "So obviously, they were doing something right."

Among the think tank's findings were needs to improve productivity, use key performance indicators and increase accountability – an area in which Sawyer said North Carolina needs improvement.

In the other states, like Missouri, a project deadline is locked in place. If it is not met, project managers are held accountable, Sawyer said.

"(Project managers in North Carolina) had goals, but if they didn’t meet them, then (the goals) were moved," she said. "If a project was not completed, they just moved the date to where they thought it could be completed next."

Those three recommendations were along the ones more than a year later in a 472-page report from international management consultant McKinsey & Co.

"(The think tank is) something that we provided as a resource in being a partner and delivering the program here in North Carolina," Sawyer said. "And for that not to be adequate, that there had to be a higher price tag associated with recommendations in order for them to be given the validity, it’s frustrating."

None of the ACEC's recommendations, except for one to form a transportation leadership team, was implemented during the year's time before the DOT hired McKinsey.

Sawyer said she does not think the DOT took those findings seriously and used money that could have gone into road projects to pay for the McKinsey report.

"By sitting still, our hole is getting deeper, because of inflation," she said. "I would have rather seen that money go into the actual delivery of the transportation program."

Acknowledging the ACEC think tank had good recommendations, Roberto Canales, DOT deputy secretary for transit, said McKinsey's report was also much more comprehensive and went far beyond project delivery, Canales said, looking at other aspects of the DOT, including recruitment and staff retention.

The DOT is not disregarding the ACEC recommendations, Canales said, but is going through a process to implement some of them.

"I think the transformation effort in the McKinsey diagnostic helped us put a motor behind some of those ideas and efforts and helped us accelerate them," he said.

Ultimately, the savings from the changes will make up for the report's cost, he said. For example, from its findings, he said, DOT has been able to cut two years off delivery of bridges and has implemented programs to streamline delivery of projects.

Canales also said the report has provided DOT officials knowledge of what employees, motorists and others in the industry think about the department.

"We've learned different things about their needs and about how they think we should interact with them. But we've also learned where we might become more efficient," he said. "It told us where the potential problem areas are."

However, the DOT's not acting on free expertise has Rep. Ty Harrell, D-Wake, a member of a legislative transportation committee, questioning why the DOT did not better utilize the free expertise.

"If the Department of Transportation is ignoring free advice from other departments of transportation … then we really need to investigate why," Harrell said. "The Department of Transportation paid (millions) for the McKinsey report, and that’s not the accountability we need with taxpayers’ dollars."

Like Sawyer, Harrell is frustrated by the DOT, saying that even with the McKinsey report, he has not seen any substantial results.

"Well, I've seen a PowerPoint presentation that's saying they're going to start doing better," he said. "But the clock is ticking, and the taxpayers' dollars are being burned as we're waiting around."

"We have a broken DOT, and I think a lot needs to be retooled," Harrell added. "I think they're trying to make the best efforts out there, but we need to really look at how the department is being run."


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  • Dr. Dataclerk May 20, 2008

    DOT is doing a great job.

  • oldschooltarheel May 20, 2008

    "We have a broken DOT, and I think a lot needs to be retooled," - ya think? This is in spite of having the highest gasoline tax in the southeast, no? Functional illiterates & crooks running the joint. BTW - not "cart blanch" (blanch is what I do when local/county/state guvmints propose tax increases in this Dimmocrat blue state) but "carte blanche" (meaning "unrestricted authority" as often weilded by Dimmocrat re-distributionists who KNOW they know what's best for the functionally illiterate citizenry). Interestingly its use is often indicative of a Chapel Hill education - be one the look out for it next time your yard gets mowed.

  • patrick85ed May 20, 2008

    Guys the state contracts out most all of its design work and the designers have carte-blanch when it comes to their whims. I do not see why most of you seem suprised at the level of waste in the system, no state government office wants to have strict oversight of how much money was spent and what it was spent on because if they did then the yearly budgets would continually go up and down rather than what we have now which is a continually rising budget number.

  • ObamaMustGo aka NCcarguy May 20, 2008

    Bendal....I will agree with you on the gas tax thing...that's a TERRIBLE idea! a few dollars saved over the summer month's will delay, or eliminate construction on MUCH needed projects that would ultimately cost the taxpayers many, many more times what the savings are now....!!!

  • john60 May 20, 2008


    I also work in the industry, and it's a fact that NCDOT contracts out nearly half of their design work to PEF's. That includes the design-build contracts, btw. For large projects like the Outer Loop, etc, it's closer to 75%, and when we're talking preliminary design and document preparation on large projects, that % is close to 100%. There's also the units such as Hydraulic, Traffic Control and Structures that hire PEF's for their specific jobs on an "as needed" basis, but they are also contracting out about half of their work too, even for small projects like bridge replacement.

    DOT did cut back contracts to PEF's a few years back due to that budget shortfall, but it's picking up again as the funding builds back. That is unless they suspend the state gas tax like some politician is suggesting...

  • Armando de Cabana Boy May 20, 2008

    LOL!!!!!! You have to laugh or you just may cry. You get good advice for free and sit on it a year before paying millions for the same advice....And still haven't acted on it. Typical DOT. Your tax $ hard at work. NOT!

  • ObamaMustGo aka NCcarguy May 20, 2008

    Bendal, I'm not sure where you are getting your FACTS...I WORK in that industry, and had to find a job in a different field becuase DOT wasn't putting out enough work to keep the private guys busy. A LOT of firms in our area NOW are starting to look at the potential of hiring people, but ONLY because of the potential emormous amount of work that will happen with the outer loop.....I think you are WAY off base!

  • john60 May 20, 2008

    NCCarguy, consultants already are handling about 48% of NCDOT's design work. There has been so much growth in giving PEF's (private engineering firms) DOT work, in fact, that some very inexperienced firms have gotten contracts for projects beyond their abilities, and more established firms are no longer taking state work because they're too busy already.

    If you look at Virginia and Florida's DOT's, they are basically rubber stamps for the consultant firms. Their construction costs are through the roof because the consultants take the attitude of "get it done the first time, as fast as possible" to maximize their profit. There's little redesign to reduce costs or impacts; "it meets standards" and "why are you questioning our professional judgement?" are their battlecries.

    Want to privatize DOT? Sure, other states have done it, but be careful what you wish for.

  • Seeminglyopposed May 20, 2008

    Wayne1961, you must be a DOT employee. Just because you have over 500 more pages doesn't mean nothing but we paid how much per page? And for what? The bottom line, they were going to pay for this report without a page being printed, then what? Remember once again, DOT was going to pay 3.5 million for someone to SIT DOWN and tell them without any paperwork. Just like you paying someone to tell you about building you a home, you pay them 100-150 dollars, and you sit and say okay, here is your check. But you have only heard about this home, but pray tell they don't have to build it, because they have told you about it. Tell me would you be very happy? Nope, because that would be your money.

  • ObamaMustGo aka NCcarguy May 20, 2008

    Govornment run agencies are ALWAYS going to be flawed by the fact that deadlines, and budgets aren't a reality. I can't WAIT until these same guidelines are what we deal with for healthcare!