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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