Building a Bridge to Safety and Savings

By Susie Eaton Hopper

Dan Miller researches the economics of construction costs

Daniel Miller was at work in his graduate student office in Heller Hall when he heard that the 35W bridge had collapsed. He rushed to his girlfriend's apartment above Seven Corners just off the West Bank campus, where they had a bird's eye view of the rescue efforts.  

Miller's adviser, University of Minnesota Economics Professor Patrick Bajari, expects his students to get close to the market they are studying. That's why Miller says it was necessary to immerse himself in the bridge construction industry to better understand what he was researching.  
"I needed to know how to build bridges," he says.  

While different from the bridges Miller is studying for his dissertation, the 35W bridge has given him insight into bridge construction-- literally in the University's backyard. On several public tours he has been able to ask engineers and contractors questions about the process and progress of rebuilding.
The problem Miller tackles in his dissertation has to do with "incomplete" construction contracts. In the construction world, contracts are comprised of a specific number of specified tasks. The more unknowns  --  changes and real-world contingencies  --  are involved in the tasks, the more incomplete the design is considered. Contracting for a complex project that is guaranteed to shift under your feet is, to put it mildly, challenging.

The 35W bridge project is an example of incomplete design because construction began when only 20 percent of the design was finished. Amazingly, the project came in not only months ahead of schedule but under budget. Boston's Big Dig is another prominent example of incomplete design, but one that was well over budget and suffered from massive delays and charges of substandard materials, fraud, and inadequate supervision of subcontractors.

Examples like these help Miller put context on his research. Miller studied a data set of California bridge bids to see whether construction work was done by contractors or assigned to subcontractors and how that choice impacted costs. Miller's research will draw factual conclusions about potential cost savings and best practices.

He was awarded a 2008-2009 Graduate School Dissertation Fellowship for his work. Further, his empirical studies could provide an important set of ideas with implications far beyond "nerdy academic conversations," Bajari says. He believes that Miller could become one of a handful of top-notch empirical researchers in that arena.



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This page contains a single entry by cla published on November 25, 2008 11:59 AM.

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