Spike in City Costs Found in Denver

Chuck Plunkett of The Denver Post recently broke a story entitled “Spike in City Costs Found in Denver“, which details rising costs and mismanagement by the city’s Public Works Department. The entire story is worth a read (available here), below are a few highlights:

While renovating offices that house the Denver Elections Division, the Public Works Department reached into its pockets a dozen times to cover unexpected costs, increasing payments to a contractor by 74%, from 1.6 million to $2.8 million…

The Denver Post found $14 million in costs brought on by ‘change orders’ during the past two years (which) is small in relation to the more than $300 million in contracts. But the costs came at a time when Denver’s budget has been hammered by the poor economy and a series of cost-cutting measures have reduced city services…

Of Public Works contracts in 2010, 26 required change orders. Their value grew by an average of almost 17% [emphasis added]… Those increases sound out of line to city officials in Aurora and Colorado Springs, who characterize change orders above 10% as too high.

The Denver Post also found that Public Works is not able to comprehensively track its change orders, though officials say they hope to install software that can do so this year. The department says a review of each file — page by page — remains necessary if officials wish to determine the extra cost that change orders represent…

Plunkett posted a follow-up post (available here), where he discusses using Colorado’s Open Records Act (CORA) to acquire and comb through the data for this story.

Reason Foundation supports using contracting, privatization and public-private partnerships to provide more cost-effective public service delivery, but doing so with appropriate oversight can be difficult. To see how other cities are using the aforementioned policy tools, and more, see Reason Foundation’s Annual Privatization Report 2010: Local Government Privatization section.

Harris Kenny is a state and local government policy analyst at Reason Foundation, a non-profit think tank advancing free minds and free markets.