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U.S. Bridge, Highway Contracts Slump

Tuesday, September 2, 2014

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State and local government awards for highway and bridge work have declined by nearly 14 percent in the first half of 2014, compared with the same period last year, a new analysis shows.

State and local governments awarded $29.8 billion in highway and bridge work between January and June 2014, compared to $34.6 billion during the same time period in 2013, when adjusted for material costs and inflation, according to an American Road & Transportation Builders Association (ARTBA) analysis of data from McGraw Hill.

Phill G. McDonald Bridge
Eric Sakowski / highestbridges.com

The pipeline for bridge and highway work has slowed, but West Virginia has three projects, including the Phill G. McDonald Bridge, up for bids until Sept. 9.

Worse, ARTBA says, the slowdown continued into the summer construction season, when state and local governments put out most of their awards.

Trust Bust

One culprit, according to ARTBA, is uncertainty over the future of the federal Highway Trust Fund.

Although Congress approved a stopgap spending measure for the fund shortly after ARTBA released its analysis, the U.S. Department of Transportation and other advocates have been disappointed at Congress's failure to secure a multiyear appropriations package, and the uncertainty over federal transportation funding persists.

The $10.8 billion measure, signed into law Aug. 8, will expire in 10 months.

At least 35 states were warning of project delays or cancellations on the eve of the law.

CBO Warnings

Meanwhile, in June, the Congressional Budget Office (CBO) reported that the Highway Trust Fund, which channels some $50 billion a year in grants through state and local governments, had spent $52 billion more than it took in in the last 10 years. The CBO said that gap would grow to $167 billion from 2015 to 2024 at current rates.

ARTBA Chart
ARTBA

Half of U.S. states are awarding fewer bridge and highway contracts than they did a year ago. Contract activity in five other states was flat.

And in August, the CBO projected: "Beginning in fiscal year 2015, CBO projects, revenues credited to the highway and transit accounts of the Highway Trust Fund will be insufficient to meet the fund's obligations."

Widespread Slowdown

Meanwhile, the construction slowdown is widespread, with 25 states awarding fewer highway and bridge contracts by June 2014 than they did a year ago, according to ARTBA. Awards were up in 21 states and Washington, D.C., and programs were fairly flat in five states, either up or down within five percent.

Contract awards are a leading indicator of future work in the industry as projects get underway.

Detailed data by state and mode is available as part of ARTBA’s market subscription reports.  For more information, contact ARTBA’s Lital Shair.

   

Tagged categories: Bridges; Construction; Contracts; Federal Highway Administration (FHWA); Government; Government contracts; Roads/Highways

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