NCPA - National Center for Policy Analysis

Contracting Out Infrastructure Projects Saves Money

October 17, 2000

By some estimates, upgrading and repairing roads, bridges, schools, and sewer and water systems is going to cost governments more than $1.3 trillion.

A recent report from the Reason Public Policy Institute looks at the advantages of contracting out to private firms these infrastructure projects.

  • Adrian Moore, author of the report, says that the potential for saving money is only one of the reasons federal, state and local governments turn to the private sector.
  • By signing clear, performance-based contracts, governments can enforce high standards and avoid the bureaucratic hurdles of government-managed efforts.
  • Outsourcing allows governments to attract specialized outside experts and deal with peak demand more efficiently than traditional public-sector arrangements.
  • "Private consultants," Moore writes, "move from one project to another and are exposed to a broader range of complex projects than the traditional public sector employee."

The authors say that cost comparisons are difficult to measure between in-house and privately managed projects. But when saving money is the goal, numerous studies document significant cost savings.

Source: Adrian T. Moore, Geoffrey F. Segal and John McCormally, "Infrastructure Outsourcing: Leveraging Concrete, Steel, and Asphalt With Public-Private Partnerships," Policy Study 272, September 2000; Reason Public Policy Institute, 3415 South Sepulveda Boulevard, Suite 400, Los Angeles, Calif. 90034, (310) 391-2245.


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