The Agency of Transportation has experienced some mild sticker shock for road and bridge projects this year. And the high cost of materials has contributed to a $16 million overrun.
It isn’t unusual for road and bridge projects to come in over budget. And Secretary of Transportation Brian Searles says the higher-than-expected costs for this year’s capital program are well within the norm.
Still, the state will be paying $16 million more than it had planned for 51 projects put out to bid in 2014. And with transportation revenues already coming in under target, it will complicate an already challenging fiscal climate.
“If you look at the $16 million, there’s about five projects that represent the significant share of that, and they are complex,” Searles says. “There’s a different story for each one; at least two of them have Irene aspects to them.”
More than $5 million of the added costs stem from high than expected expenditures for two bridge projects in Rutland City. Projects in Waterbury, Jay, St. Johnsbury and Waitsfield also came in well over budget.
The $16 million represents a 9 percent increase over original bid estimates, and Searles says the price of materials has inflated costs.
"We base these on historical costs; and sometimes historical costs are good predictors, but more often than not they're not the best predictors, particularly when it comes to commodities like steel and concrete." - Transportation Secretary Brian Searles
“We base these on historical costs; and sometimes historical costs are good predictors, but more often than not they’re not the best predictors, particularly when it comes to commodities like steel and concrete,” Searles says.
Searles says a resurgent construction industry means contractors aren’t as likely to low-ball their bids, just to ensure that their firms will have work.
“As the economy has rebounded, there’s more work. And in some cases contractor schedules have been affected by an actual abundance of work,” he says. “So they maybe aren’t as hungry as they were. Perhaps their schedules are stretched a bit.”
Searles says the $16 million will be spread over two fiscal years. And with an annual transportation budget of about $700 million, he says the agency should be able to absorb the overrun without any serious impact on project schedules.
“You know we’re building that into our assumption that we’ll have some project slippage,” Searles says. “And it’s not a big number when compared to the entire capital program.”
More problematic, Searles says, is uncertainty of federal funding. The federal Highway Trust Fund is scheduled to run dry next spring. Congress has yet to adopt a revenue plan to replenish the fund.
“And obviously, if we don’t have authorization or an appropriation of funds to restore the Highway Trust Fund, once again, all bets are off,” he says.
Despite the overruns, 40 percent of the projects put out to bid this year came in at a cost less than the agency had predicted.
