EmailEmail
PrintPrint
Rising costs put brakes on plans for road repairs
Monday, August 11, 2008

Local road and bridge projects are falling victim to soaring prices for energy and construction materials.

Pennsylvania Department of Transportation officials have estimated they'll need to come up with an unbudgeted $9.2 million just in the local engineering district for automatic price adjustments built into highway construction contracts.

The special provisions will reimburse contractors for record prices they're paying for diesel fuel and liquid asphalt for work already under way in District 11, covering Allegheny, Beaver and Lawrence counties.

PennDOT will make up the difference by delaying, modifying or canceling a like amount of future road and bridge projects, officials said.

Specific work in the Pittsburgh area that will have to be sacrificed because of the runaway energy costs has not been determined, they said.

While District 11 has done its math, other engineering districts are still compiling information for PennDOT's Highway Administration Office in Harrisburg, so no statewide costs are available for contract price adjustments. But there's reason to believe the situation is the same elsewhere, and the cumulative impact on PennDOT's budget could exceed $100 million.

"As costs go through the roof, there has to be a day of reckoning," PennDOT spokesman Rich Kirkpatrick said. "We're working hard, figuring what to do."

The situation promises to grow worse.

PennDOT added a provision just last month to cover equally soaring steel prices, so those cost impacts have yet to be felt for products ranging from guide rail and sign structures to reinforcing bars and bridge beams.

The additional outlays from the state's $3.6 billion Motor License Fund are coming when road-building costs are growing at an annual rate of 12 percent and PennDOT revenues are dropping because of lower fuel sales.

When contractors bid on jobs, they base prices on current and projected costs of materials. To keep a so-called level playing field in bid competition, and because of the long period between bidding and project completion, PennDOT makes provisions to cover extraordinary price fluctuations that affect the construction market.

In District 11, for example, those provisions have kicked in on the $67.5 million widening and "missing ramps" project at the Interstate 79-Parkway West interchange, work that got under way in the fall of 2006 and won't be completed until mid-2009.

The low bidder, Balfour-Beatty Construction Inc., has already qualified for $1.1 million in extra payments for liquid asphalt, whose cost has jumped from $369 a ton when it bid to $735 a ton today, and $490,000 for diesel fuel, whose cost has doubled to more than $4 a gallon and which is consumed voraciously by construction equipment like bulldozers doing excavation.

Those extra payments have automatically increased the Parkway West contract from $67.5 million to $69.1 million.

Other major adjustments locally have included an extra $1.5 million to a joint venture, Trumbull Corp. and Lindy Paving, for the two-year rehabilitation of I-79 between the Ohio River and the I-279 junction in Franklin Park. A total of 300,500 tons of asphalt are being used in that project.

"People will be seeing fewer roads paved," said Vince Tutino, president of New Castle-based Lindy Paving and a director of the Pennsylvania Asphalt Paving Association. "The scary part is that nobody knows when this is going to end or how this is going to be fixed."

Lindy was paying $328 a ton for liquid asphalt delivered in tanker trucks in July 2007. The cost today is more than $600 a ton, enough to produce about 20 tons of asphalt.

"It also takes energy to heat the aggregate, heat the asphalt and sand, operate the plant, truck asphalt to the job site, and run the pavers, shuttle buggies and rollers. And, right now, we're paying $4.70 a gallon for diesel," Mr. Tutino said.

Last year, when PennDOT District 11 paid a total of $1.2 million in diesel and liquid asphalt adjustments, the extra expenditure had only a small impact on the highway program. But $9.2 million thus far this year has made a major difference.

"All projects currently under way will be completed," District 11 Executive Dan Cessna said. "You don't have to drive very far to see that a lot of good work is being done. But as we move forward, we'll have to prioritize projects. There are no new resources coming available, so we'll have to take [$9.2 million] from next year's budget."

Mr. Kirkpatrick said in anticipation of the contract escalation clauses costing more, PennDOT already has delayed some resurfacing work across the state.

"We've been losing substantial purchasing power over a number of years," he said. "While PennDOT's mission is to minimize the impact on motorists, at the end of the day, we can't spend more than we collect. These are very difficult times."

PennDOT finished the 2007-08 fiscal year on June 30 with $119 million less in revenues than it estimated it would have, a reflection mostly of lower fuel sales due to high gasoline prices and, therefore, less fuel tax revenue. It anticipates a similar shortfall in the current year.

The American Road & Transportation Builders Association, an industry group, said higher construction costs and lower revenues are hurting employment as well as resulting in fewer projects.

The total number of highway and bridge construction workers nationwide fell by 2.4 percent in May, compared with May 2007, meaning 5,300 fewer jobs, from quarrying stone to operating highway equipment.

Joe Grata can be reached at jgrata@post-gazette.com.
First published on August 11, 2008 at 12:00 am
Featured Homes
Featured Rentals