Opinion: Major projects and ODOT’s financial crisis

Joe Cortright tells Oregon Transportation Commission that ODOT's cost management failures, not fuel efficiency, caused its budget crisis. — Joe Cortright tells Oregon Transportation Commission that ODOT’s cost management failures, not fuel efficiency, caused its budget crisis. Photo courtesy Andi Schwartz

🎧 ODOT’s Cost Crisis: Billions Over Budget, Years Behind

Joe Cortright shares his testimony to the Oregon Transportation Commission

For the record, I’m Joe Cortright, Director of City Observatory. Today, I want to address the major projects item on your agenda.

Joe Cortright

ODOT’s budget crisis has essentially nothing to do with increasing fuel efficiency, which has a negligible impact on revenue. Instead, the real crisis stems from ODOT’s systemic inability to accurately forecast and manage the costs of major projects. Major ODOT projects routinely run double or triple their original cost estimates, costing us billions. Given the massive commitments, ODOT is bordering on financial insolvency.

The department routinely fails to estimate costs accurately, fails to manage those costs once started, and has created an environment where everyone — staff, consultants and contractors know ODOT will simply add more money later. This leads to artificially low initial estimates.

And tragically, this commission makes these problems worse by moving ahead with projects for which it doesn’t have full funding.

The Abernethy Bridge Project: A case study in rewriting history

Look no further than the Abernethy project, where today you are being asked to allocate an additional $130 million to address liquefaction around bridge piers.

ODOT staff recently told the Legislative Oversight Committee that the original I-205 estimate was just a “slapdash” figure that couldn’t be trusted. That is a rewrite of history. As directed by House Bill 2017, the department spent $12.5 million over six months on a cost-to-complete study before the project was approved by this commission. Consultants advanced the design to 15-25% — the exact same stage the Interstate Bridge is in right now — and estimated the cost at $248 million.

As you know the price tag has tripled to more than $815 million and project completion will now likely take until 2030 — five years behind schedule.

Systemic Failures: The Interstate Bridge Project

The same pattern plagues the Interstate Bridge Project. You have already spent $270 million on consultants. The Environmental Impact Statement took two years longer than promised, and the Interstate Bridge Replacement Program (IBR) delayed the cost estimate by two years, during which it more than doubled to nearly $15 billion. Now, the plan is to drag construction out into the late 2040s, while building an additional $1.2 billion into the budget just for consultant oversight. The longer the project takes, the more money they make.

A misleading staff report

Finally, your staff’s report on major projects fundamentally understates your actual liabilities. You actually have published cost estimates that show several projects will cost much more than shown here. The 2024 estimate for the I-205 Phase 2, is $800 million and the Newberg Dundee Bypass is $950 million, both are characterized as “greater than $500 million.” Your 2025 cost estimate for the Boone Bridge is $725 million, triple the “greater than $250 million” shown. Alarmingly, the report entirely omits the Interstate Bridge project entirely, hiding Oregon’s share of about $10 billion in unfunded costs. This is more evidence of the misleading staff work that is the underlying cause of the major project financial crisis.

What ODOT staff showed:

The real financial liability is much greater

Conclusion

Commissioners, you cannot solve a problem you refuse to admit you have. ODOT’s primary financial problem is its inability to manage major project costs. You must pivot your energy toward solving this internal management crisis if you hope to address ODOT’s budget problems.