4 ms·

Why don't cities/counties in-source repetitive maintenance and construction tasks? I'd expect that a county has sufficient need to build roads that a small con

by lumost 6y ago

Why don't cities/counties in-source repetitive maintenance and construction tasks? I'd expect that a county has sufficient need to build roads that a small construction crew + equipment could be kept on staff for road work.

zanny 6y ago
Because there are now structural incentives put in place by lobbyists to prevent public engineering. Everything has to be contracted and red taped so the bribers of politicians can inject themselves into the taxpayer money pipeline. Its in the same hilarious inefficiency ballpark as medical. Both are built on the foundations of what should be a public service being parasitized from all sides by regulatory capture.
chance_state 6y ago
>I'd expect that a county has sufficient need to build roads that a small construction crew + equipment could be kept on staff for road work. Not so sure about that. Filling pot holes? Sure, and they already do that in-house. But building roads must be far less common.
- jjk166 6y ago
  Let's say a county is a 15 mile by 15 mile square with a square grid of streets spaced on average 1000 feet apart. That would be 2370 miles of road in the county. Assuming a lifetime for that road of 35 years, they need to replace 68 miles of road per year which works out to about 1000 feet per day. At $1.5/.32 miles, they would be spending $881K per day on road replacement. If a county run crew could cut 10% of this cost out, and 50% of that was used for labor, they could employ 198 people at 80k per year on average. A paver capable of paving 1000 feet of 24 foot wide road per day costs approximately 60k. Assuming 10% of cost savings went towards capital equipment, they could purchase 52 such pavers per year. For a more reasonable but still quite liberal budget of $1 million per year of capital equipment financing and maintenance payments and salaries of $200k for 40 employees, that 10% cost savings would allow the county to pocket $22 Million per year. Even if the streets were spaced on average 1 mile apart, that would still be 100 feet per day, and the 10% cost reduction would be $3 million per year. This does not include new construction or regular maintenance of roads, nonetheless other construction projects. Only very small or sparsely populated counties should have any trouble justifying the expense of an in-house construction crew.
kungtotte 6y ago
That doesn't always work out cheaper. The sanitation department here needed to replace 80 meters worth of pipes and first went to the in-house construction crew and was quoted a cost of 250,000 SEK (~$25K USD), then shopped it around town and a contractor could do it for 80,000 SEK (~$8K USD). It usually takes longer too. They replaced a pipe in the street in front of my parents house and it took them one month to complete the job, whereas contractors typically take less than a week start to finish for that length of road.
- lumost 6y ago
  Those prices are almost an order of magnitude less than what we'd see in the US ( often due to upgrades etc. that accompany such projects ). Right now there isn't much incentive for multiple contractors to setup and be efficient in a given town - heavy equipment is expensive to move, so the TAM of any given construction crew is likely limited to a 1 county radius. Based on the math in this thread it's unlikely that many towns need more than 1-2 crews, and the incentive is minimal for that crew to negotiate a fair price. In the example where there is a public crew for most work the contractor always needs to underbid the public crew, and the city/town has influence on the costs of the public crew as there are no middle men and capex can be amortized over long periods. Most public projects in the US lack this "price ceiling".

by lumost 6y ago

zanny 6y ago

Because there are now structural incentives put in place by lobbyists to prevent public engineering. Everything has to be contracted and red taped so the bribers of politicians can inject themselves into the taxpayer money pipeline. Its in the same hilarious inefficiency ballpark as medical. Both are built on the foundations of what should be a public service being parasitized from all sides by regulatory capture.

chance_state 6y ago

>I'd expect that a county has sufficient need to build roads that a small construction crew + equipment could be kept on staff for road work. Not so sure about that. Filling pot holes? Sure, and they already do that in-house. But building roads must be far less common.

jjk166 6y ago
Let's say a county is a 15 mile by 15 mile square with a square grid of streets spaced on average 1000 feet apart. That would be 2370 miles of road in the county. Assuming a lifetime for that road of 35 years, they need to replace 68 miles of road per year which works out to about 1000 feet per day. At $1.5/.32 miles, they would be spending $881K per day on road replacement. If a county run crew could cut 10% of this cost out, and 50% of that was used for labor, they could employ 198 people at 80k per year on average. A paver capable of paving 1000 feet of 24 foot wide road per day costs approximately 60k. Assuming 10% of cost savings went towards capital equipment, they could purchase 52 such pavers per year. For a more reasonable but still quite liberal budget of $1 million per year of capital equipment financing and maintenance payments and salaries of $200k for 40 employees, that 10% cost savings would allow the county to pocket $22 Million per year. Even if the streets were spaced on average 1 mile apart, that would still be 100 feet per day, and the 10% cost reduction would be $3 million per year. This does not include new construction or regular maintenance of roads, nonetheless other construction projects. Only very small or sparsely populated counties should have any trouble justifying the expense of an in-house construction crew.

kungtotte 6y ago

That doesn't always work out cheaper. The sanitation department here needed to replace 80 meters worth of pipes and first went to the in-house construction crew and was quoted a cost of 250,000 SEK (~$25K USD), then shopped it around town and a contractor could do it for 80,000 SEK (~$8K USD). It usually takes longer too. They replaced a pipe in the street in front of my parents house and it took them one month to complete the job, whereas contractors typically take less than a week start to finish for that length of road.

lumost 6y ago
Those prices are almost an order of magnitude less than what we'd see in the US ( often due to upgrades etc. that accompany such projects ). Right now there isn't much incentive for multiple contractors to setup and be efficient in a given town - heavy equipment is expensive to move, so the TAM of any given construction crew is likely limited to a 1 county radius. Based on the math in this thread it's unlikely that many towns need more than 1-2 crews, and the incentive is minimal for that crew to negotiate a fair price. In the example where there is a public crew for most work the contractor always needs to underbid the public crew, and the city/town has influence on the costs of the public crew as there are no middle men and capex can be amortized over long periods. Most public projects in the US lack this "price ceiling".