Correlating Disadvantaged Business Enterprises Participation with Highway Project Performance

Abstract

The Code of Federal Regulations (CFR) 49 Part 26 discusses the participation of disadvantaged business enterprises (DBEs) on a state department of transportation’s highway, transit, and airport contracts. Any highway or airport project exceeding the contract value of $250,000 should have a DBE program. Generally, the statute states that no less than 10% of the authorized funds are to be expended with DBEs. Due to this requirement, the prime contractors bidding for state DOT-owned highway contracts have recently set aside some percentage of work for DBE firms. There have been no empirical studies conducted to determine the impact of DBE participation on the cost and schedule performance of these projects. Therefore, this study will focus on determining the impact of DBE participation on the cost, schedule, change order, and construction intensity performance of highway projects. The study hypothesizes that the involvement of DBEs will improve the cost and schedule performance of the highway projects. To test the hypothesis, the authors collected and analyzed data from 109 recently completed highway projects from the Nevada Department of Transportation (NDOT). The study’s results show that the schedule growth of projects that involve DBEs are significantly higher than projects that have no DBE participation. However, the change order growth of projects that involve DBEs is significantly lower than projects that have no DBE participation. The authors are collecting more data to determine the reasons for increased schedule growth and decreased change order growth on DBE-participating highway projects.