Abstract
The author compares winning bids on state and federal highway maintenance projects in Colorado between 2000 and 2011 to determine whether federal prevailing wage and disadvantaged business enterprise regulations are associated with increased construction costs. The effect of the Davis-Bacon Act is evaluated when average wage rates prevail for almost all workers involved in highway maintenance for most of the period of the study. The federal minimum for work completed by disadvantaged businesses is 10%. The goal for Colorado exceeds this minimum by two to three percentage points. Summary data indicate that federal projects are more expensive than state projects, but projects funded by the federal government are also larger and more complex. Regression results indicate that, with controls for project size and complexity, no statistically significant difference is found in the cost of federal and state projects. Results also indicate that federal regulations are not associated with reduced bid competition, an important determinant of project cost.
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