Road to Ruin: Use of costly highways consultants has skyrocketed.

If you love the feeling of cruising down a brand-new stretch of highway, the last few years have been full of good news for you.

And if you’re in the business of designing and overseeing the construction work on those highways, well, these are banner years indeed.

If you’re a taxpayer on the hook to pay for that roadwork, though, the picture isn’t quite as pretty.

While the drop in oil prices is sure to take its toll, roadbuilding in Saskatchewan has been booming lately. The Ministry of Highways and Infrastructure (MHI) had record high budgets in 2009 and 2010, and every budget since has been larger than 2009’s record-breaker.

MHI’s budget climbed 12.2% between 2009 and 2014, which is fairly impressive. But to see truly astounding growth, you need to focus on the consulting side of the roadbuilding business.

MHI’s spending on consultants skyrocketed over that same period, from $12.1 million in 2009 to $61.3 million in 2014 – an increase of 404%. Last year’s $61.3 million payout accounted for over a tenth of the total budget. (Those dollar figures, by the way, were obtained via a freedom of information request filed by the CCPA – they aren’t otherwise publicly available.)

That prompts the question: why is the cost of consultants growing at thirty-three times the rate of the budget itself?

The vast majority of those consultants’ fees go to transportation engineers: the experts who design, oversee, and troubleshoot roadbuilding projects. Until relatively recently, Highways and Infrastructure had a sizable in-house team of transportation engineers and related staff. Following a government decision to outsource its work, that branch of the ministry has dwindled – its size fell by about half from 2007 to 2012.[1] Private consulting firms like AECOM and EBA have filled the gap, at a premium price.

Through another freedom of information request,[2] the CCPA obtained 33 of MHI’s engineering contracts. These contracts listed hourly rates for private workers, which were compared with the hourly rates from the collective agreement that covers MHI employees.[3]

The results were striking. Even using the “fully-burdened” cost of public employees – which includes a premium to account for benefits, vacation pay, and other costs outside their wages– they were far less expensive than their private-sector equivalents. [4] (All comparisons below use the fully-burdened costs of public workers).

The contrast is especially evident amongst the support staff that engineering firms supply. In the reviewed contracts, engineering firms billed from $64 to $85 per hour for a draftsperson. Costs for an public service draftsperson ranged from $21.91 to $34.58 per hour. Private surveyors cost $65 to $90 per hour; a public surveyor from $20.67 to $27.45 per hour. Rates for private administrative and clerical staff were $62 to $88 per hour; their public equivalents typically cost from $20.67 to $32.02 per hour. Altogether, private workers in these three fields were from 1.9 times to 4.3 times costlier than their public equivalents.

Cost comparisons amongst higher-level engineering jobs are trickier. Since senior public engineers are out of scope, their hourly rates are not disclosed. And given the extremely wide array of private-sector job titles, lining up exact public counterparts is often impossible.

Still, there are a few telling examples. One private engineering firm valued its interns and summer students at $84 per hour. A ministry-employed Assistant Project Manager – a high-skill position responsible for managing a worksite – cost a little over half that much. Their hourly cost was $45.19 – assuming they had over 5 years’ experience.

Another example: a ministry-employed Senior Project Manager (a job restricted to experienced professional engineers) is out of scope, so only their current monthly rate is available: up to $9,936 for full-time work.[5] The same amount would pay for just 55 to 70 hours of work by a private Senior Project Manager, whose hourly rates were from $140 to $180.

Cost comparisons like these go a long way towards explaining the soaring consulting costs borne by the Ministry of Highways and Infrastructure. They also suggest a clear course of action: restore transportation engineering to an in-house function of the ministry.

Until we do, it will be a rough road for the province’s finances.

Taylor Bendig is a Researcher for the Saskatchewan Office of the Canadian Centre for Policy Alternatives. 

[1] This freedom of information request was made by the Saskatchewan Government and General Employees’ Union, which shared the records with the CCPA-SK.

[2] Since all of the contracts received through freedom of information date from 2012, in-scope public employee wages listed in this article use the rates effective Oct. 7, 2012.

[3] Joe Couture, “Highways work goes private; Will lead to Regina, Saskatoon lab closures.” Regina Leader-Post, April 11, 2012, p. A1.

[4] Fully-burdened costs were supplied by the Compensation Branch of the Saskatchewan Public Service Commission. Fully-burdened costs for in-scope staff include an extra 18.1%. For out of scope staff, an extra 19.3% is included. Hourly rate ranges were also supplied by the PSC (except for the Assistant Project Manager wage, which is based on the pay rate of the last MHI employee with that job title). “Consultants’ hourly rates may cover some operational costs other than the employee’s wages and the company’s profits; however, many costs are accounted for through other charges. Although exact arrangements varied by contract, consultants billed separately for costs such as vehicle mileage, meals, accommodation, travel, use of specialized equipment, subcontractors’ fees, and consumable supplies. A 5% to 10% administration cost was also often applied to the cost of materials.

[5] Public service job posting ENG000986. https://govskpsc.taleo.net/careersection/10100/jobdetail.ftl Accessed March 11, 2015.