Privatization and state transportation services : a qualitative study

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Montana State University - Bozeman, College of Business


The major purpose of this paper was to interview and report the attitudes of individuals who are currently involved with highway transportation in the State of Montana regarding privatization of certain Montana Department of Transportation duties or services. The in-depth interviews explored the topic of privatization and individual opinions on the reliance on private enterprise, market forces and competition for providing public services. Personal interviews were conducted with thirteen carefully selected individuals. At the time of the interviews, each individual was involved in one of four areas of highway transportation; one, private sector engineering or consultant design, including consulting, road design, bridge design or traffic design. Two, current or past employees of the Montana Department of Transportation in the areas administration, maintenance or engineering. Three, general contractor representation; and four, relevant transportation experience through a higher education institute. Preparation for the interviews was based upon a substantial review of literature, including privatization plans from the Commonwealth's of Virginia and Massachusetts, as well as the states of Idaho, Washington, Oregon and Iowa. Privatization plans written by the Montana Contractors' Association, the Providence of Alberta, Canada, the City of Great Falls, Montana, and private organizations such as the Reason Foundation were also reviewed. In addition, related materials from the Providence of British Columbia, Canada, the U.S. Department of Transportation, the U.S. Department of Labor, the State of Kansas and numerous reports from private consulting firms were reviewed. The main conclusions of these interviews are: (I) There is no one specific definition of the term privatization. (2) There is no clear indication financial savings would occur if the overall mix changed. (3) There would be no savings from any change in the public and private sector mix with regard to buildings, equipment or land. Moving personnel or labor more toward private sector may be a short-term cost saving, but long-term savings are unclear. (4) MDT should be responsible for determining the increase, decrease or maintaining the level of privatization. (5) There is significant room for improvement in oversight of some of the privatization areas. (6) There is a great deal of confusion over how MDT evaluates the success or failure of privatization or private sector performed services or projects. (7) There is a high level of satisfaction with the current mix of private and public sector work with regard to privatization. The recommendations based upon this study are: (1) Maintain the current mix of contracting out or outsourcing for the areas of construction and maintenance. MDT should investigate increasing the amount of outsourcing and re-direct MDT design as project review and oversight for possible improved performance in the area of consultant design. (2) Additional educational and training opportunities should be investigated. (3) MDT should determine levels of privatization without being encumbered by political forces, either internal or external. (4) MDT needs clearer and more communication, both internally and externally, describing the processes of oversight of projects.




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