DOT Defaulting - what if?

[kalvado]

What if a DOT got liquidated? Would all the roads be demolished?

Demolition costs money - a lot of money - and brings nothing in return except angry mobs of locals. 
Very worst-case scenario of general bankruptcy on all levels is roads left as-is with no support or maintenance. Eventually, roads would deteriorate, bridges would start failing... Oh, wait!

[Roadgeekteen]

What if a DOT got liquidated? Would all the roads be demolished?

Demolition costs money - a lot of money - and brings nothing in return except angry mobs of locals. 
Very worst-case scenario of general bankruptcy on all levels is roads left as-is with no support or maintenance. Eventually, roads would deteriorate, bridges would start failing... Oh, wait!

I think an angry mob would form either way.

[HighwayStar]

DOT default would look like an accelerated version of the neglect that many places already have.
Most states have cut rest areas out because they are too broke, usually they are abandoned for a time before being torn down entirely (and even then I suspect the demolition is only because they are an attractive nuisance).
Highways unmaintained, grass not cut, snow not removed, etc. Any construction project in progress would be a particular mess, with traffic stuck on whatever detour existed at the time of the shutdown.
How long it would last is hard to say, if its a limited scale crisis the Fed would likely step in and fix it. But if it is a widespread crisis that the Fed cannot print its way out of anymore then it would likely last until things were sorted out on a broader level, which would be a long time.

[kphoger]

Any construction project in progress would be a particular mess, with traffic stuck on whatever detour existed at the time of the shutdown.

Really?  I figured funding was secured before construction started.

[Rothman]

Any construction project in progress would be a particular mess, with traffic stuck on whatever detour existed at the time of the shutdown.

Really?  I figured funding was secured before construction started.

Hm.  Makes me wonder if oversight would bring things to a halt (e.g., EICs having to stop work).

[kalvado]

Any construction project in progress would be a particular mess, with traffic stuck on whatever detour existed at the time of the shutdown.

Really?  I figured funding was secured before construction started.

Hm.  Makes me wonder if oversight would bring things to a halt (e.g., EICs having to stop work).

Issue of cash flow vs funding. It may be in place, but cash for those payments isn't yet collected as taxes.
Inflation, which can become an issue in case of more global economic breakdown
Cost overruns, especially in erratic situation with uncertainty

Just first few things coming to mind

[jmacswimmer]

Most states have cut rest areas out because they are too broke, usually they are abandoned for a time before being torn down entirely (and even then I suspect the demolition is only because they are an attractive nuisance).

Where are some recent examples?  I do agree this was a big budget-slasher back during the Great Recession - VDOT, for example, closed roughly half their rest areas statewide, but they all reopened within a year after public outcry and have remained open since.  I'd also note that most toll roads (and former toll roads) in the northeast have done a great job rebuilding & modernizing - granted they've mostly been P3's since the developer can keep plaza revenues as their return, but still.  VDOT has also been targeting some of their busiest rest areas for full rebuilds in recent years (example: Ladysmith on I-95), so they seem to have learned their lesson in the value of rest areas since the Great Recession.

[Rothman]

Any construction project in progress would be a particular mess, with traffic stuck on whatever detour existed at the time of the shutdown.

Really?  I figured funding was secured before construction started.

Hm.  Makes me wonder if oversight would bring things to a halt (e.g., EICs having to stop work).

Issue of cash flow vs funding. It may be in place, but cash for those payments isn't yet collected as taxes.
Inflation, which can become an issue in case of more global economic breakdown
Cost overruns, especially in erratic situation with uncertainty

Just first few things coming to mind

I don't see cash flow vs. funding as an issue, for the reason kalvado mentioned.  The contractor should be all set up to the award amount, at least, and construction inspection would be in the same boat.

But yeah, OOCs would be an issue.  And, like I suspect, if the Apocalypse did happen, DOT employees would be sent home, which is where the oversight requirements would be violated and the contractor may not be able to pull down their due because of it.

[HighwayStar]

Any construction project in progress would be a particular mess, with traffic stuck on whatever detour existed at the time of the shutdown.

Really?  I figured funding was secured before construction started.

That depends on a number of factors and conditions. I suppose if the contractor got the entire sum in advance they might keep working, but if it is the more typical project that lasts years, has successive cost overruns, is not paid entirely in advance, etc. then that would be a different matter.
Also keep in mind some states have their own crews that do various work, so that would stop in place.

[HighwayStar]

Most states have cut rest areas out because they are too broke, usually they are abandoned for a time before being torn down entirely (and even then I suspect the demolition is only because they are an attractive nuisance).

Where are some recent examples?  I do agree this was a big budget-slasher back during the Great Recession - VDOT, for example, closed roughly half their rest areas statewide, but they all reopened within a year after public outcry and have remained open since.  I'd also note that most toll roads (and former toll roads) in the northeast have done a great job rebuilding & modernizing - granted they've mostly been P3's since the developer can keep plaza revenues as their return, but still.  VDOT has also been targeting some of their busiest rest areas for full rebuilds in recent years (example: Ladysmith on I-95), so they seem to have learned their lesson in the value of rest areas since the Great Recession.

There is a thread for this somewhere.
Toll roads are not really comparable, since those are for profit enterprises, while rest areas were intended to be provided for the public good.

[kalvado]

Any construction project in progress would be a particular mess, with traffic stuck on whatever detour existed at the time of the shutdown.

Really?  I figured funding was secured before construction started.

Hm.  Makes me wonder if oversight would bring things to a halt (e.g., EICs having to stop work).

Issue of cash flow vs funding. It may be in place, but cash for those payments isn't yet collected as taxes.
Inflation, which can become an issue in case of more global economic breakdown
Cost overruns, especially in erratic situation with uncertainty

Just first few things coming to mind

I don't see cash flow vs. funding as an issue, for the reason kalvado mentioned.  The contractor should be all set up to the award amount, at least, and construction inspection would be in the same boat.

But yeah, OOCs would be an issue.  And, like I suspect, if the Apocalypse did happen, DOT employees would be sent home, which is where the oversight requirements would be violated and the contractor may not be able to pull down their due because of it.

Well, where are the award money and what they are? Are they sitting in DOT account for duration of (possibly multi-year) project, pre-paid to vendor, or what?
I would expect budget allocation to be just that - an allocation from future money; progress payment to vendor coming at certain intervals are funded by on-going taxes, and DOT having authorization to spend - and perform those progress payments -  is actually a fiscal plan, not a stack of $100 bills in governor's office.
So if the hell brakes loose, taxes no longer cover spending, and current authorized spending has to be cut (or funded by commercial credit/IOU if possible). 

[Rothman]

Any construction project in progress would be a particular mess, with traffic stuck on whatever detour existed at the time of the shutdown.

Really?  I figured funding was secured before construction started.

Hm.  Makes me wonder if oversight would bring things to a halt (e.g., EICs having to stop work).

Issue of cash flow vs funding. It may be in place, but cash for those payments isn't yet collected as taxes.
Inflation, which can become an issue in case of more global economic breakdown
Cost overruns, especially in erratic situation with uncertainty

Just first few things coming to mind

I don't see cash flow vs. funding as an issue, for the reason kalvado mentioned.  The contractor should be all set up to the award amount, at least, and construction inspection would be in the same boat.

But yeah, OOCs would be an issue.  And, like I suspect, if the Apocalypse did happen, DOT employees would be sent home, which is where the oversight requirements would be violated and the contractor may not be able to pull down their due because of it.

Well, where are the award money and what they are? Are they sitting in DOT account for duration of (possibly multi-year) project, pre-paid to vendor, or what?
I would expect budget allocation to be just that - an allocation from future money; progress payment to vendor coming at certain intervals are funded by on-going taxes, and DOT having authorization to spend - and perform those progress payments -  is actually a fiscal plan, not a stack of $100 bills in governor's office.
So if the hell brakes loose, taxes no longer cover spending, and current authorized spending has to be cut (or funded by commercial credit/IOU if possible).

Remember that federal projects are funded through reimbursement and we are talking about projects already in construction that has been obligated.  So, in essence, yes, the funds are in an account somewhere.