Inflation taking bite out of works projects
Value of infrastructure law has been diminished
price of a foot of water pipe in Tucson, Arizona: up 19%. The estimate to build a new airport terminal in Des Moines, Iowa: 69% higher, with a several-year delay.
Inflation is taking a toll on infrastructure projects across the U.S., driving up costs so much that state and local officials are postponing projects, scaling back others and reprioritizing needs.
The price hikes already are diminishing the value of a $1 trillion infrastructure plan President Joe Biden signed into law just seven months ago. That law had included, among other things, a roughly 25% increase in regular highway program funding for states.
“Those dollars are essentially evaporating,” said Jim Tymon, executive director of the American Association of State Highway and Transportation Officials. “The cost of those projects is going up by 20%, by 30%, and just wiping out that increase from the federal government that they were so excited about earlier in the year.”
In Casper, Wyoming, the low bid to rebuild a major intersection and construct a new bridge over the North Platte River came in at $35 million this spring – 55% over a state estimate. The bid was rejected and the project delayed.
Prices for some key materials in infrastructure construction have risen dramatically. Prices paid to U.S. manufacturers of asphalt paving and tar mixtures were up 14% in May compared to last year, according to data from the Federal Reserve Bank of St. Louis. Prices
for ductile iron pipes and fittings – used by water systems – were nearly 25% higher.
Officials at Des Moines International Airport were counting on the federal infrastructure money to replace an aging terminal with a modern structure. Four years ago, a new 14-gate terminal was projected to cost about $434 million and be open by 2026. By this spring, the cost had soared to $733 million.
That’s more than the airport can afford, even with the federal aid. So officials are planning to break the project into phases, building just five new gates by 2026 at a cost of $411 million.
Low bids for a series of bridge repairs along Interstate 55 in St. Louis came in at $63 million this year, 57% over the budgeted amount.
Though Missouri forged ahead with this year’s highway construction projects, inflation “will take a bite out of the future,” state Department of Transporthe
tation Director Patrick Mckenna said.
Public water systems across the country also are straining under inflation.
When Tucson, Arizona, launched the first part of a four-phase water main replacement project in September 2020, ductile iron pipe cost $75 a foot and a gate valve cost $3,000. When it bid the most recent phase this spring, pipe costs had risen to nearly $90 a foot and gate valves to nearly $4,100. The city is now determining what other projects it can afford and which ones have to wait.
Tacoma, Washington, also is altering some of its planned water main replacements because of rising costs.
“Some of them are getting delayed, some of them are being reduced in scope, and it’s forcing us to reevaluate some of the budgets that we’ve set forth,” said Ali Polda, principal engineer in the city’s water department.