WASHINGTON — A tennis court in West Virginia is still unfinished after more that a year. An airport project is taking on a million dollars more than anticipated. After asphalt prices rose, this year, less miles of Alabama’s roads will be repaved and the cost to build a dog pound doubled.
Surging costs for building materials, disruptions in supply chains, and worker shortages across the country are leaving many infrastructure projects unfinished, delayed, or over-budget. The White House is trying to make rebuilding our country’s infrastructure one its key selling points to voters before the midterm elections.
Biden has been touring the country, holding events at bridges and ports that he believes will be better with the $1.2 million infrastructure bill. However, rising costs and a shortage of workers means that local governments looking to receive some of these funds might get less for their efforts. This forces them to reconsider the goals of what they want to do with the money.
Cal Markert, county manager for Jefferson County, Alabama (which includes Birmingham), said that the prices are “just unbelievable”. He stated that the prices of construction bids for projects are “shocking”.
Prices rose 8.3 percent in April in comparison to a year ago. This is the highest rate of inflation in 40 years. The construction industry has been hit even more by inflation. Since the outbreak of the coronavirus pandemic, the cost of building materials and other supplies has risen by more than 20% over the past year. This is a 70% increase. Prices for key materials such as iron, steel, and softwood lumber have almost doubled, along with diesel fuel that is used to power trucks and construction equipment.
Builders are also having to wait up to a year to get certain materials and products, such as fasteners, roofing material, and insulation. This is due to supply chain disruptions, and because the demand exceeds supply, local officials and builders say.
In many areas, there is a shortage in construction workers. This problem predates the pandemic but has become more severe as the labor market tightens over the past year. An industry trade group, Associated Builders and Contractors found that there were 400,000 vacant construction jobs, which is almost twice the level before the pandemic.
All these constraints are present as state and local officials begin to plan how they will spend the federal money that is coming their way.
“In the short term, we can expect that construction delivery costs will remain very high.” Anirban Basu is the chief economist for the builders trade association. This is a deeply problematic issue from a policy standpoint. The question is, will the taxpayer be able to generate a substantial rate of return on their investment given that the construction dollar they have now doesn’t purchase nearly as much as it did a few years ago?
At a briefing last month with reporters, Transportation Secretary Pete Buttigieg stated that inflation and worker shortages are “very real problems”. Federal officials work with local project planners to improve the flow of raw materials as well as address worker shortages through training programs.
Buttigieg stated, “Certainly that creates additional pressure, and that’s something we’re going need to monitor closely. Manage.”
Administration officials claim that the bill will reduce costs in the long-term by funding projects to improve seaports, railway lines, broadband internet, and weatherizing housing.
“In the current environment that we’re currently in, I mean. Nobody is going to be affected by high prices,” stated Mitch Landrieu who oversees the White House’s infrastructure planning. “You’re going see it across the board for some while a president fights every single day to lower inflation cost.”
However, local governments are having trouble managing the increasing costs.
Markert stated that infrastructure costs in Jefferson County have increased by between 30 percent and 50 percent. This has forced the county to reduce plans and defer projects until next year. He said that the county received bids to build a new road and that asphalt mix costs had risen from $45 to $70 per ton. This would increase the cost of each mile by $30,000
The county is now planning to replace 60 miles of roads instead of the 100 that it originally planned. This will push the remaining miles forward until next year or beyond, Markert stated. He said that there are other projects at risk, such as upgrades to sewer wastewater facilities and a dog-pound, whose price has more than doubled.
The county is currently analyzing which grants it can apply for under federal infrastructure law. Markert stated that if the current trend continues, any money it gets won’t go as far.
“Now, you can only make six-tenths to a mile of roads with what you used to be able to build,” he said. He said that the purchasing power has dropped dramatically.
Morgantown, West Virginia is currently investing $10 million in a $50m project to extend the runway and create a commercial park. Mayor Jenny Selin stated that the cost of this project has increased by 20%. Although the city hopes that some money will come from the infrastructure law, it is difficult to budget for the rest of the project because of volatile prices.
Selin stated, “When you are trying to finish a project, and you apply for grants, then you realize that the grant you applied for isn’t going enough to cover what you need, that’s when things get tough.”
Morgantown’s smaller projects have been stalled due to higher costs and supply chain disruptions. It has taken the city over a year to get the material it needed to refinish its neighborhood tennis court. It had to wait for months to obtain a material that can be used under playgrounds to protect children against serious injuries if they fall. In the meantime, it had to lay wood chips.
