Inflation weighs on new infrastructure projects


Inflation is taking a heavy toll on infrastructure projects across the United States, driving up costs so much that state and local authorities are postponing projects, cutting others and redefining their needs.

The price of a foot of water pipe in Tucson, Arizona: up 19%. The cost of a ton of asphalt in Huntington, Massachusetts: up 37%.

Price hikes are already diminishing the value of a $1 trillion infrastructure plan that President Biden signed into law just seven months ago. This law included, among other things, an increase of approximately 25% in funding for regular highway programs for the states.

“Those dollars basically evaporate,” said Jim Tymon, executive director of the American Association of State Highway and Transportation Officials. “The cost of these projects is going up 20%, 30%, and just erasing 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 build a new bridge over the North Platte River came in at $35 million this spring, 55% more than an engineer’s estimate of State. The offer was rejected and the project delayed.

“If this inflation continues as it is, we will have to move projects from one year to the next, to the next, to the next,” said Mark Gillett, chief engineer for the Wyoming Department of Transportation.

In the western mass town of Huntington, a 1.5-mile stretch of road will not be completed this year after a 37% spike in the price of liquid asphalt raised the cost of paving of a mile at around $140,000. The city receives $159,000 a year in public funding for its roads, said Highways Superintendent Charles Dazelle.

“Right now, a mile of road is a year. It doesn’t do anything else,” Dazelle said.

Inflation has affected the entire US economy. Fuel, food and housing costs all skyrocketed. Consumer prices jumped 8.6% in May from a year ago, the highest rate since 1981, according to the US Department of Labor.

But the prices of key materials in infrastructure construction have risen again. Asphalt and tar mixes rose 14% in May from a year ago, according to data from the Federal Reserve Bank of St. Louis. Prices for fabricated steel plate, used in bridges, rose 23%, and ductile iron pipe and fittings – used in waterworks – rose nearly 25%.

When Tucson, Arizona launched the first part of a four-phase water main replacement project in September 2020, an iron pipe cost $75 per foot and a gate valve cost $3,000. When the most recent phase was submitted this spring, pipe costs had risen to nearly $90 per foot and gate valves to nearly $4,100.

“The bottom line is, we’re doing less work for the same amount of money,” Tucson chief water engineer Scott Schladweiler said.

Tacoma, Wash., is also changing some of its planned water main replacements due to rising costs.

“Some of them are delayed, some of them are reduced, and that forces us to re-evaluate some of the budgets that we have established,” said Ali Polda, chief engineer of the city’s water department.

Utilities will have to choose between reducing work and passing the costs on to customers, said Michael Arceneaux, acting CEO of the Association of Metropolitan Water Agencies.

“Ultimately it will be the taxpayers who will suffer,” he said, “because the projects have to get done and the funding will have to come from the taxpayers.”

Inflation hit construction materials like asphalt and road tar which rose 14%, according to national figures, with even higher costs in local markets (Herald file photo by Angela Rowlings).
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