Cost Comparison of Highway Rest Area Operations: In-House Workforce versus Outsourcing Methods

Abstract

State departments of transportation (DOTs) typically use one of three approaches to operate highway rest areas (RAs): in-house workforce, method-based contracting (MBC), and performance-based contracting (PBC). State DOTs spend over $600 million annually to maintain their facilities and often outsource their work to save costs. Although some studies have calculated the annual cost of facilities operated by the three approaches, their findings are not directly comparable. The primary objective of this study is to compute and compare the average annual operating cost of individual RA facilities and the cost of RA data samples (average annual operating cost of a group of facilities in a specific year under a specific approach in a state) produced from these three approaches to achieve a cost-effective alternative. To achieve the objectives, research hypotheses were developed which state there are significant differences in the average annual costs produced by these three approaches. For data analysis, 6,248 cost data were collected from 29 states. From those individual cost data, 198 data samples were generated. Data sets were not normally distributed; thus, nonparametric tests were conducted to determine the group differences. The results show that outsourcing costs under the MBC are significantly less, followed by in-house and the PBC in both cases. The difference between in-house and PBC is also statistically significant. As the primary contribution, this paper investigated the MBC approach as the cost-effective option, and DOT engineers can utilize this approach in operating regular RA facilities to save costs. Caution should be taken when using the study findings in other types of facilities. This study suggests that state DOTs can use a cost-effective approach to operate their highway RA facilities for future planning. This study identified MBC as the cost-effective approach when operating regular RA facilities. Transportation professionals can directly implement the study findings to regular RA facilities; however, they should take caution when utilizing the findings in the other two types of RA facilities––welcome center and seasonal facilities––which were not considered in this study because their key features (square footage, annual visitors, and full-time employees) are not comparable to regular facilities. If the agencies have key feature data and they can normalize these features when calculating the average annual cost of facilities, then they can implement the findings for welcome center and seasonal RA facilities as well. In addition, the agencies should be aware of adjusting for inflation and location. Using the cost-effective approach may also reduce RA facility closures in the future, which assists in reducing the shortage of national truck parking issues and decreasing fatigue-related highway accidents.