The report is based on surveys filled out anonymously by nearly 9,000 employees and on interviews with dozens of state, business and local officials.

The employees said the department wastes money and time because upper managers change priorities, sometimes daily.

They said that projects drift for years, that low-level workers fear political consequences if they express new ideas, and that better leadership could shave years off the time it takes to finish major projects.

"Imagine two guys in a garage full of car parts, with a black curtain that splits the garage in half," said one engineer in the Preconstruction section of the highway division, which handles planning and design, among other functions. "These guys have to build a car by passing notes to each other from either side. That's Preconstruction."

State Transportation Secretary Lyndo Tippett said Wednesday night that the report provides an honest look at the department which will help make it a better organization.

"You don't know how you look until you get your picture took," Tippett said.

The department, which has a $3.8 billion budget, hired McKinsey & Co., an international management consultant, to evaluate the agency. The department agreed to pay McKinsey $1.1 million for an evaluation and an additional $2.5 million for help in making changes. The review came as the department was losing credibility with state legislators, who control funding for the agency.

"What they really need over there is a couple retirement parties," said state Sen. Clark Jenkins, a Tarboro Democrat who spent 10 years on the N.C. Board of Transportation and leads legislative committees that watch over the department and control the purse strings.

The report recommends broad changes in the way the department's managers think, plan and act. It recommends steps to recruit and keep top workers, and it calls for the department to be more transparent and to finish projects faster and more cheaply.

The report also recommends the department work with the legislature to tie new funding to meeting its goals.

Last week, department officials briefed lawmakers on progress toward making changes. The legislators said they were generally pleased with what they heard.

The consultants wrote that the department does have some advantages. Employees are proud to serve and tend to respect their direct supervisors. The department has support from both internal and external leaders to change, according to the report.

Tippett said the consultant has already helped the department find ways to be more efficient that could save $50 million.

"Our motive from the outset was to take a good organization, which DOT is, in my opinion, and make it better," he said. "I think what we've done with hiring this consultant is something unheard of in state government."

Much of the document is written in a dense, jargon-laden prose. One disclaimer repeated on several pages cautions: "This material, while thorough, does not represent the totality of our transformation capacity building or contribution."

According to the report, another problem the department faces is that department policy keeps salaries low, which makes it difficult to hire or keep talented employees. At one 200-person branch office, nine job candidates in three years turned down job offers because of low salary. Several managers often don't interview individuals with excellent experience and credentials because they know the department can't afford them, according to the report. New engineers see the department as a "back-up employer."

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