Cost Comparison of Highway Rest Area Operations: In-House Workforce versus Outsourcing Methods

Abstract

State departments of transportation (DOTs) typically use one of three approaches to operate highway rest areas (RAs): in-house workforce, method-based contracting (MBC), and performance-based contracting (PBC). State DOTs spend over $600 million annually to maintain their facilities and often outsource their work to save costs. Although some studies have calculated the annual cost of facilities operated by the three approaches, their findings are not directly comparable. The primary objective of this study is to compute and compare the average annual operating cost of individual RA facilities and the cost of RA data samples (average annual operating cost of a group of facilities in a specific year under a specific approach in a state) produced from these three approaches to achieve a cost-effective alternative. To achieve the objectives, research hypotheses were developed which state there are significant differences in the average annual costs produced by these three approaches. For data analysis, 6,248 cost data were collected from 29 states. From those individual cost data, 198 data samples were generated. Data sets were not normally distributed; thus, nonparametric tests were conducted to determine the group differences. The results show that outsourcing costs under the MBC are significantly less, followed by in-house and the PBC in both cases. The difference between in-house and PBC is also statistically significant. As the primary contribution, this paper investigated the MBC approach as the cost-effective option, and DOT engineers can utilize this approach in operating regular RA facilities to save costs. Caution should be taken when using the study findings in other types of facilities.