The Oregon Department of Transportation (ODOT’) has a big management problem: huge cost overruns on highway mega-projects. Just three Portland area highway projects—The Interstate Bridge Replacement, the I-5 Rose Quarter freeway widening and the I-205 Abernethy Bridge have chalked up cost overruns totaling $4.8 billion in just the past five years.
ODOT commissioned a “strategic review” which failed to identify the scale or frequency of these cost overruns as a major problem.
The consultant team ODOT hired to perform the strategic review comes from a firm largely dependent on ODOT for consulting work on these same mega-projects. The consultants are conflicted because they make more money when ODOT has cost-overruns, and stand to lose business if they’re publicly critical of a big client.
These conflicts are accentuated by the revolving door between top state DOT management positions and highly paid consulting gigs. The strategic review was led by ODOT director Kris Strickler’s former boss—who now works for a firm billing $80 million for its work on the IBR.
An independent study published by the Brookings Institution shows that excessive reliance on consultants is a major contributor to high costs, and Oregon’s costs are double the national average.
Just as in 2016, prior to the last big transportation package, ODOT hired a consultant to whitewash its management credibility to convince the legislature to increase its funding.
ODOT’s own description of the review is a tool to burnish the agency’s image, especially for the Legislature, rather than say, reduce costs. The strategic review offers mostly vague recommendations about “improving management” and giving the agency “new tools,” but contains no specifics that identify the causes of cost overruns, or any idea of how the proposed recommendations will do anything to actually lower project costs.
ODOT’s Strategic Review: A rush job to burnish the agency’s reputation
The Oregon Department of Transportation has a problem. It is asking the Legislature for billions of dollars in additional resources, but has badly mismanaged its existing funds, neglected basic maintenance, and racked up a record of prodigious cost overruns on mega-projects. In an effort to convince the public and the legislature that it has turned over a new leaf, and merits being trusted with billions more in public resources, the agency has sought an external whitewash of its management. On March 13, the Oregon Transportation Commission heard a report from its “strategic review” panel, a group of consultants charged with offering advice on how to improve agency operations. The group’s advice is touted as an example that of how ODOT is dealing with concerns that it routinely blows through budgets for mega-projects, short-changes basic maintenance and overspent federal funds.
As ODOT Director Kris Strickler told the Oregon Transportation Commission at its March 13, 2025 meeting.
The real value in the effort behind doing this review was to . . . obviously to demonstrate the recognition that we have areas where we need to improve . . . and we have ask ourselves the hard questions . . . and . . . to demonstrate, legislatively, that there is an inward look, to the things we know we need to improve on.
(Emphasis added)
It is clear that the objective of the “strategic review” was more to change perceptions and burnish the department’s image than it was to control costs. ODOT’s own slide describing the objectives of the effort makes this clear–the agency wanted the work done quickly, and to solidify the agency’s position as having “recognized credibility.” The reason for the rush job: ODOT was in a hurry to have something to show the Legislature that it could be trusted with additional billions of dollars.
A review panel with profound and pervasive conflicts of interest
A closer look at the consultant group chosen to prepare the strategic review shows that is a compromised and conflicted lot. The panel was organized by WSP, a consulting firm with nearly $100 million of other contracts for ODOT projects–it can hardly afford to alienate senior ODOT managers who are its clients. It is led by former WSDOT director Paula Hammond (now a paid consultant at WSP) who was ODOT director Kris Strickler’s immediate supervisor for years, and who was deeply involved in the failed Columbia River Crossing (now revived and re-christened the Interstate Bridge Replacement Project). She’s hardly likely to criticize her own protĂ©gĂ©, her own project, and one of her firm’s largest current clients.
The panel members consist of mostly former state DOT directors who now work as consultants. Two of the six members are employed by WSP, which, as noted above, has significant financial interests in ongoing ODOT projects that are controlled by current ODOT managers.
In addition, these hand-picked consultants have a profound conflicts of interest: their firm makes more money from projects that run over budget, they also are loathe to criticize publicly their clients (state DOTs) on whom they are reliant for business. These dynamics are accentuated by a revolving door between senior DOT management positions and highly paid consultant jobs, many of which explicitly involve currying favor with state DOTs. The revolving door is institutionalized at the highway boosters trade organization, AASHTO (the American Association of State Highway and Transportation Officials), which serves as a fraternity for state DOT directors, and a lobbyist to get them more money (and fewer restrictions). DOT directors nearing the end of their career know that they can parlay their connections into a lucrative consulting gig with one of the large engineering consulting firms.
Panelists ran agencies with massive cost overruns and management problems
Each of the people selected for the ODOT strategic review comes from a state with at best a checkered past when in comes to managing construction costs. In an agency where the number one financial problem is huge cost overruns on a handful of mega-projects, there is no acknowledgement that this is a problem, no recommendations for actually managing or reducing project costs, and the selected consultants have long track records of their own cost overruns.
ODOT hired a panel of six consultants to conduct this “strategic review” of its management. Four of the panel previously served as directors of state transportation departments in Louisiana, Michigan, Nevada, and Washington. Every one of these states has had serious cost overruns on major projects, none has managed to be a model of efficient management or a responsible steward of public investment. It’s unclear what expertise that this panel brings to helping Oregon solve its cost overrun problems when they continue to be endemic in every one of these states.
Louisiana. Louisiana is not a model of good management—according to the state Department of Transportation and Development. As local media reported in February of this year, the department has serious problems in budget and project management. An internal review of the agency that maintains Louisiana’s roads and highways has found it too often allows construction to go past deadline and over budget, has flawed internal communication and lacks a good process for selecting projects, among other problems. . . .
“Delays in project timelines, cost overruns, and incomplete or poorly executed infrastructure projects occur frequently,” the report says. Policies and procedures are inconsistently applied throughout the agency, and a lack of internal coordination “frequently results in fragmented decision-making that delays projects,” the report says.
Panelist Shawn Wilson was secretary of the Department from 2016 to 2023, in addition to holding senior positions for years before that.
Michigan. Panelist Kirk Steudle brings his experience as Director of MDOT, a position he stepped down from in 2018. Despite a huge increase in borrowing fueled spending. Michigan roads are still falling apart faster than they are being repaired. Michigan decided to borrow massively against future state and federal transportation revenues and use that to finance a number of highway projects. It tripled the amount of debt owed by MDOT between 2019 and 2024, from less than $1.1 billion to almost $3.3 billion. Despite the surge in revenue, which enabled almost doubling state highway construction spending, road conditions have continued to deteriorate. Last year, news reports concluded:
 . . . state spending on road and bridge programs nearly doubled between 2015 and 2023, jumping from $2.9 billion to $5.7 billion a year, . . . Michigan’s roads and bridges are crumbling faster than agencies can repair them, and the problem is expected to compound over time without significant new investments.
Nevada. Nevada faces the similar cost overrun problems, and apparently has no solution to them. A few months ago, in December, 2024, the Nevada Department of Transportation cancelled the proposed widening of Interstate 15 in Las Vegas that would have been the state’s most expensive highway project. The reason: significant cost-overruns. The Las Vegas Review Journal reports:
“Ultimately the lack of financial resources to support the anticipated cost of construction, which just in general speaking is several billion dollars,” NDOT Director Tracy Larkin Thomason said during last week’s NDOT Board of Directors meeting. When announced in 2022, the project was estimated to run between $1.6 billion and $3 billion, with that figure ballooning to between $1.8 billion and $5.6 billion as of last summer, according to NDOT.
Washington. Washington is Oregon’s partner in the Interstate Bridge Replacement Project, and its much ballyhooed “Cost Estimate Validation Process” has done nothing to predict or limit huge cost overruns on that project, which has grown from $4.8 billion to $7.5 billion, and for which WSDOT is delaying releasing another, higher estimate–as much as $9 billion–until after the Oregon and Washington legislatures adjourn. As in Oregon, an obsession with costly megaprojects has led to poorly maintained  roads. The Washington Policy Center reports:
The Reason Foundation has published their Annual Highway Report which ranks each state based on fourteen performance measures. Washington State comes in at 47th, down one place from their 46th place ranking the year before. In the “maintenance disbursement” and “capital  and bridge disbursement” categories Washington was at the very bottom of the list in 50th place. For “rural interstate pavement condition” Washington ranked 44th, and for “urban arterial pavement condition” only slightly better at 43rd.
Washington is facing serious budget problems because of megaproject cost overruns. The Urbanist reports:
Washington State highway expansion plans are billions over budget and soaking up resources from maintenance.
Each of these panel members has a lot to explain about their states’ poor performances in managing costs and maintaining their road systems. Indeed, making excuses for these failures may be their chief qualification for their work for ODOT.
The Panel offered largely meaningless advice
A quick look at the summary of the panel’s recommendations shows that it is actually a collection of management buzz-words and undocumented assertions.
In order to actually make a difference, a consulting project needs to do four things well:
- Identify the problem
- Analyze the causes
- Specify a solution
- Measure progress
Unfortunately, from the standpoint of eliminating cost overruns or even managing the costs of major projects, the “strategic review’ does none of these things.
First, it does not identify that the $4.8 billions of dollars of cost increases that just three major project have experienced in the past five years constitute a problem. If you don’t acknowledge or quantify a problem, you can’t solve it.
Second, the strategic review doesn’t flag any of the causes of the cost overruns that ODOT is experiencing. Conspicuously, the strategic review has a slide (#5) listing what it calls the agency’s strengths, but no comparable slide identifying weaknesses. If you don’t identify specific causes you can develop a solution.
Third, the strategic review offers only a vague mish-mash of actions, mostly reorganizing, adding unspecified new “tools,” vague procedural changes and “improving communication.”
Fourth, nothing the strategic review recommends has concrete measurable outcomes that it expects to be different, or against which progress can be measured.
In short, the strategic review panel doesn’t identify cost overruns as a problem, and doesn’t propose any meaningful solutions. The panel exists mainly to try to convince the Oregon Legislature (and a skeptical public) that ODOT is somehow changing for the better. Rather than solve the problem of cost overruns, the role of these consultants is to divert attention from the real problem, create the appearance that something is being done, and actually helping the state DOT to cover up or minimize the role of cost overruns.
Keep in mind this report was prepared largely by WSP, a contractor with significant conflicts of interest. This is exactly the kind of report one should expect from a consultant who makes more money when the state experiences cost overruns on mega-projects. Big engineering firms like WSP don’t make money from fixing potholes or repaving failing roadways. They don’t even make money from run of the mill highway engineering tasks, like bridge maintenance or safety improvements. Instead, they make their money on big ticket mega-projects, where consulting fees run into the tens of millions of dollars, and where constant cost overruns are actually good for their bottom line.
Exactly paralleling a famous Dilbert comic, ODOT has hired a consultant, who has come back with a report saying, “You need to focus on your core competency—as luck would have it, your core competency is giving money to consultants.”
Consultants are a big part of the cost overrun problem
While ODOT’s strategic review panel did not look at the big drivers of cost in state highway construction projects, a recent study published by the Brookings Institution did exactly that. It found that one of two key factors explaining high costs was excessive reliance on consultants.
. . . there is broad agreement that state DOTs have become more understaffed and that reliance on consultants drives up costs. Survey respondents attribute a lack of details in project plans to both a lack of time or experience of DOT engineers and the use of consultants. When there is not enough specificity in the plans the risk to the contractor increases, increasing bids. Moreover, whenever the scope of a project changes this initiates a costly and time-consuming renegotiation process. Survey respondents agree that such changes are a major contributor to costs.
States that flag concerns about consultant costs have higher costs—a one standard deviation increase in reported consultant costs is associated with an almost 20% increase ($70,000) in cost per lane-mile. States where contractors and procurement officials expect more change orders have significantly higher costs: one additional change order correlates with $25,000 in additional cost per lane-mile at the mean.
Frequent change orders could directly lead to higher costs through delays and costly renegotiation; they could also be a downstream symptom of poor administrative capacity at a state DOT—many contractors reference poor-quality project plans made by third-party consultants. . . . A lack of capacity at the DOT can hurt the quality of project plans, either from under-staffing in-house or from outsourcing to consultants with limited institutional knowledge and misaligned incentives.
Zachary Liscow, Will Nober and Cailin Slattery, Procurement and Infrastructure, July 11, 2024, Brookings Institution. (Emphasis added)
The Brookings study shows Oregon costs road construction are much higher than in the typical state. It found that Oregon costs were almost double the national average for common road repairs. According to the Brookings Study, Oregon’s average cost of resurfacing a lane-mile of road is about $600,000 (Table B-6) which is more than double the $226,000 median state expenditure. Oregon is among the ten most costly states for this benchmark road maintenance measure.
Oregon plainly relies heavily on consultants. Its three largest projects in the past decade have produced more than half a billion dollars in consulting fees
-
- $110 million for I-5 Rose Quarter Freeway Widening consultants
- $192 million for Interstate Bridge Replacement Project consultants
- $200 million for Columbia River Crossing consultants
Deja Vu all over again
This isn’t the first time ODOT has trotted out a conveniently timed consultant report purporting to burnish the agency’s tarnished reputation for poor management skills and practices. Nine years ago, just prior to the 2017 Legislative Session (and the previous big transportation package), ODOT offered up the results of a million-dollar report it had prepared by McKinsey, the global consulting firm. On the eve of the 2017 session the Oregonian reported:
Lawmakers central to crafting a transportation package have stressed the importance of this review, saying ODOT needs a clean bill of health before another spending package can be agreed upon. . . . The governor ordered the review in 2015 after negotiations to reach a massive transportation spending package collapsed. Brown has said she’s “committed” to implementing the suggestions that come out of the final report, which is due to land on her desk at the end of February. A spokesman said Brown looks forward to improving the transportation agency.
(emphasis added)
The substance of the McKinsey report–which was kept secret until its release was forced by a media public records request—focused on largely meaningless or trivial indicators such as “average time needed to process purchase orders.” One part of the report purportedly addressed the agency’s ability to bring projects on time and under budget. McKinsey presented this graphic, showing the variation between initial and finished costs for a series of mostly small projects.
There’s a striking omission, as revealed in the fine-print footnote: McKinsey excluded data for the Highway 20 Pioneer Mountain-Eddyville project. This $360 million project, the single most expensive project that ODOT had then undertaken, had a 300 percent cost-overrun, which the McKinsey report both failed to report correctly and which it described as “performed 27 percent higher.”
Today, no one in ODOT makes any mention of the recommendations or results of the McKinsey report. The continuing epidemic of cost overruns on major projects indicates that it had no effect on ODOT’s ability to predict or control costs. Then, as now, the purpose of the report was just to create a public impression that the agency had fixed or was fixing its chronic mismanagement problems.
