“Independent” Audit of Oregon DOT Looks More Like Agency PR

The Oregon Department of Transportation has been under fire for its embarrassing management failures. Most damaging was the revelation last year that the agency lied about the carbon reduction impact of a big $343 million transportation package it was pushing. The package failed to pass.

Now ODOT is trying again to convince the state legislature to expand its budget. As part of that effort, Governor Kate Brown ordered an independent audit.

But the audit, conducted by McKinsey and Company, looks more like an orchestrated attempt to restore ODOT's image than an honest evaluation of its performance, reports economist Joe Cortright. Writing at Bike Portland, Cortright points out that McKinsey went to extraordinary lengths to obscure information that makes the agency look bad:

This is an agency that’s been repeatedly plagued by cost-overruns and management failures on major projects -- we’ve listed a series of them below. There are plenty of examples to choose from, but unquestionably, the poster child for ODOT incompetence is the Pioneer Mountain-Eddyville/Highway 20 project, a five-mile highway in the Coast Range between Corvallis and Newport. The project, announced in 2004, was supposed to cost $110 million and take four years. After a series of mis-steps -- including illegal pollution, firing a contractor, demolishing four-partially built bridges, and repeatedly re-designing the project -- it was finished in 2016 at a cost of more than $366 million. It’s ODOT’s most expensive single project.

You might think that the agency’s biggest project, especially one that went a quarter of a billion dollars over budget, and was delayed for years, might draw the attention of auditors. But you would be wrong. Look as hard as you like and you’ll find exactly one reference to it in the McKinsey report, buried in the footnote to a statistical chart on page 25 (see below).

And here’s what’s remarkable about that: McKinsey’s chart shows how much ODOT projects were over or under budget. And this chart excludes Pioneer Mountain/Eddyville.

This would be rather like the White Star Line reporting the on-time arrivals of its ships traveling between London and New York with a footnote saying “This data doesn’t include the indefinitely delayed arrival of RMS Titanic.”

Bad as this is, it’s actually worse: McKinsey’s footnote says: “This excludes US20 Pioneer Mtn-Eddyville project (Overall performed 27% higher than $140M original authorized amount).” This statement is Orwellian double-speak on at least four different levels. McKinsey has (1) mis-stated the actual original project cost estimate–which was $110 million, not $140 million; (2) omitted the actual final cost of $366 million, (3) implied (but not stated) that the actual total cost was $177.8 million (i.e. 140+27%), and (4) described a cost overrun as performing higher.

The initial cost of the project (from its Draft Environmental Impact Statement), and its final cost (from press accounts and ODOT reports) is a matter of public record. You can find both with a Google search in a couple of seconds. But McKinsey apparently could neither report the correct cost of the project, nor bring itself to use the word “overrun,” in its report. These two decisions illustrate how McKinsey, rather than revealing and fairly examining ODOT’s problems, is actually complicit in minimizing them.

Other examples of misleading and incorrect information can be found throughout the report, Cortright says. ODOT's exercise in saving face cost taxpayers $1 million.

More recommended reading today: The Transportist shares a study that looked at whether bike-share is indeed "contagious." And Buffalo Rising shares historical photos of an Olmsted-designed park that was mutilated to save drivers a few minutes.