At Least They’re Thinking About Incentives

In an editorial (link via Combest), the Post-Dispatch argues that MoDOT is exposing Missouri drivers to too much risk by allowing contractors to inspect their own work on the reconstruction of highway 40.

The reason is obvious: Contractors have a financial incentive to approve their own work. Do-overs raise costs, and contractors face penalties if a project isn’t completed by deadline. Inspectors working for the contractors know this. Honest though they may be, they also know the financial interests of their employers.

This isn’t a complete picture of the financial interests of the contractors. If contractors cut corners to meet the deadline and put drivers at risk, they also put their business at risk. How many people would hire a contractor who built a bridge that fell into a river? According to the previous Post-Dispatch article covering MoDOT’s change in inspection policy, Jim Ernzen, an Arizona State University professor and director of the Del E. Webb School of Construction, compared inspections from previous projects to inspections from the highway 40 reconstruction:

“We found very little variance,” he said. “These guys realize no matter how fast they get the project done, if they don’t do it correctly, they don’t get the next job.”

Bingo. If a company is really worried about its long-term financial interests, it won’t do a shoddy job. In the end, the contractors really do have the proper incentives.