Surging building costs delay road construction

News Orlando Sentinel April 10, 2006
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Road construction costs have been rising so much lately that even dirt isn’t cheap anymore. The spike in expenses is causing Florida and other states to delay the construction of highways, increasing traffic congestion, the Orlando Sentinel reported.

According to engineers, reconstruction from the eight hurricanes that have hit the U.S. since 2004, combined with a population boom in Florida, is forcing road builders to compete with construction companies for workers, equipment and materials. Surging fuel prices, China’s demand for concrete and steel and the reconstruction of Iraq are also pushing U.S. road-construction costs higher, the Sentinel reported.

“It’s certainly been challenging,” said Lowell Clary of the Florida Department of Transportation (FDOT). “We plan for cost increases but this has been a situation that a lot of events have come together all at one time.”

Until 2004, highway material costs were steady with a 12-year average increase of only 1.8%, according to the Bureau of Labor Statistics. Concrete is up to 36.2% a unit, from $550 in 2003 to $749 last year. Prices for reinforced steel and asphalt have also risen, according to FDOT. A cubic yard of dirt cost an average of $4.96 in 2003, and was up to $7.24 in 2005, an increase of 46%.

Florida has 8,000 projects in various stages in its five-year program, but was forced to defer 62 of them when its highway budget came up about $1 billion short, Clary said.

Seven projects were deferred in the booming Miami-Dade County, totaling $140.6 million, the Orlando Sentinel reported. Ricky Leme, a process server, usually sits in bumper-to-bumper traffic in an area where one of the projects has been postponed. He said that delaying the work would only increase congestion.

“They should get on it now,” said Leme. “This is screwing up everybody’s work. Right now, it’s taking about a half-hour to get to the freeway.”

With an extra $3 billion to $4 billion from tax revenues coming in this year, lobbyists at Floridians for Better Transportation—a group created by the Florida Chamber of Commerce and the Florida Council of 100, a pro-business organization—are pushing for an additional $1 billion to be earmarked for transportation, the newspaper reported.

“It seems to be a fairly common-sense objective in my book,” Doug Calloway, president of Floridians for Better Transportation, said. “[Florida’s] progress is inextricably linked to transportation projects.”

Florida seems to have taken the brunt of the surging prices. About 1,000 new residents move to the state everyday, with their vehicles clogging traffic at rates that outpace Texas and California, Calloway said.

The problem has prompted transportation officials elsewhere to consider new ways to cut costs, including better ways to court contractors bidding on jobs because the number of contractors bidding on jobs has decreased, according to the Sentinel.

“So often the government is asked to work as a business, but no business would build an expansion in five years if it was going to cost twice as much,” DOT Secretary Denver Stutler said.

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