Soo Locks Project Cost Estimates Skyrocket
New estimates for the Soo Locks project in Michigan were released at the end of last month, revealing the project could cost double or triple the original estimated cost. Lawmakers say that the increase is due to inflation, labor costs and supply chain issues.
According to The Detroit News, the U.S. Army Corps of Engineers is still working on an updated cost estimate but have briefed members of the Michigan delegation. A final figure could reportedly come in as high as $3 billion, which is more than triple the initially authorized $922 million for the project in 2018.
Michigan Senator Debbie Stabenow expressed “deep frustration” over the new costs, noting that last year she worked to “lock down” the rest of the funding needed to complete the projected from the bipartisan infrastructure law and other spending.
“In fact, by getting the money up front, the Army Corps told me that they could save money and cut about two years off the construction time,” Stabenow said.
“Now, because again, it's all related to supply-chain issues and all the other associated costs, labor issues, now it's going the other direction. Hopefully, the supply chain issues get fixed here sooner rather than later, and we'll begin to be able to see some ways to cut costs.”
NEW: $1.1B Soo Locks project could cost more than triple the original estimates— Chad Livengood (@ChadLivengood) May 26, 2022
Inflation, labor and supply chain constraints causing the cost of a new shipping lock to soar
https://t.co/wQLSIakQ9f via @nannburke & @detroitnews
U.S. Representative Jack Bergman said that he anticipates that Congress will have to reauthorize the project for a higher amount, adding that he blamed a “bad equation” that led the Army Corps to provide an incorrect project estimate.
“In addition to inflation and the rising costs of everything from tools and equipment to personnel, the Army Corps made miscalculations in the original cost estimates — making the total cost of the project far higher than originally thought,” Bergman said in a statement.
According to Bergman, the industry estimates for construction were “significantly” higher than the government’s estimates, with the Army Corps learning of the cost issue after the bidding process closed in January for the third phase of the project.
Currently, measures to aid the project could potentially be covered in the Water Resources Development Act that will be voted on by lawmakers this summer. This could enable construction to continue under the existing authorization through fiscal year 2025, providing some flexibility for the project.
“The last thing we want is to have to come back later down the road and have to reauthorize again, so that's why we're looking at the flexibility here to be able to keep the construction going,” Stabenow said.
“We recognize that funding a larger amount for the New Lock at the Soo is a challenge that could potentially result in schedule impacts,” said Soo Locks Spokeswoman Carrie Fox. “The Corps of Engineers is partnering with industry and federal partners to find collaborative solutions aimed at addressing the impact to the costs of our programs and projects.”
The Army Corps is currently bidding out final phases of the project, while crews are working on wrapping up the first phase of work and continuing phase two. Phase two, which involves reinforcing concrete approach walls, began last summer and will take a couple years to complete.
“We are accounting for those changing market conditions, to include materials, equipment, and labor,” Fox said. “In order to be responsible, the U.S. Army Corps of Engineers is in the process of delivering to Congress a new cost estimate for reauthorization consideration.”
“One way or another, the new lock is going to get done,” Stabenow said.
In June 2018, Michigan announced its promise of $50 million toward the massive project which would expand the historic Soo Locks—which allow ship traffic through the St. Mary Falls Canal between Lake Superior and Lake Huron. The decision came after a study published by the Department of Homeland Security in 2015 revealed that a shutdown of Poe lock, the largest of the four locks at Soo, would limit the shipping of iron and essentially halt all steel production in the Great Lakes region.
First opened in 1855, the structure consists of four locks total, but only the two larger locks are in use by passing ships; the proposed project would replace the other two with one new lock the same size as the Poe, 100 feet wide by 1,200 feet long, to accommodate larger vessels. At the time, the project was estimated to cost $875 million.
In the fall, the Army Corps allocated $32 million for some design and pre-construction work, which included deepening the upstream channel.
The following year in March, the Army Corps of Engineers proposed spending more than $75.3 million on the locks in 2020 and announced that the project had been included in the fiscal year 2020 president’s budget request to Congress.
At the end of the month, the Corps held an open house in Detroit to update its current and upcoming projects, including the Soo Lock project’s construction status. While primary construction was reported to begin in spring 2020, work to prepare the shipping channels for renovations is estimated to bring in over 1,000 quality jobs over the next decade would begin that summer.
Through the combined commitments made by the state and USACE, taxpayers were also informed that they would save an estimated $30 million, accelerating the project's completion likely by one year. In addition, the new Soo “Super Lock” would also allow the maintenance on the other two locks any time of the year, instead of prolonging the repairs until the next winter shutdown.
On Dec. 20, former President Donald J. Trump signed an approval of funding, totaling $75.3 million for the design and construction of a new lock. According to SooToday, the U.S. Senate approved the funding the day before Trump signed.
The $75 million approved was reported to go toward deepening the upstream channel, wrapping up the design of upstream walls and furthering the development of the new lock’s design.
At the time of the announcement, the MacArthur Lock was closed for the season, and was receiving critical repairs. Poe was also closed for the season, but both were scheduled to reopen by late March. According to the Tribune, the Corps indicated that the Soo Locks project could be finished by 2027, or as late as 2030.
In February 2020, the Corps announced that Trade West Construction Inc. would begin deepening the upstream approach channel in the spring. At the beginning of May, dredging equipment started to arrive for the first phase of the project.
A few months later, in May, construction officially kicked off for the project and was reported to involve the widening and deepening of the upstream approach channel to a depth of 30 feet above the decommissioned Davis and Sabin Locks. Work is anticipated to complete by November later this year.
Following the winter break, construction on the project resumed in April 2021, with the Corps reporting that the project was on schedule as construction resumed on phase one and preparations began for phase two. At the time, Trade West Construction, Inc., and joint venture Kokosing-Alberici had already begun moving equipment to the site.
Once completed, the new passage will reportedly be able to accommodate 1,000-foot lakers—a common transport for Minnesota- and Michigan-based taconite shipping to steelmakers. According to Star Tribune, the Soo Locks are responsible for $17.4 billion in economic activity every year, with over 80 million tons of cargo passing through.
Although, the new lock is expected to provide $77.4 million in annual benefits and benefit-cost ratio of 2.32 at a 7% discount rate.
In June, President Joe Biden’s 2022 federal budget plan proposed $480 million in federal funding for the construction of Michigan’s Soo Locks. The funding was a large chunk of the $595 million Biden has proposed for projects within the Army Corps of Engineers, Detroit District.
At the same time it was noted that the Soo Locks project had acquired roughly 25% ($241.6 million) of funding for the project’s development. If approved, however, Biden’s proposal of $480 million for the project would increase the percentage of acquired funds to 78% or $721.6 million of the $922 million project total.
Although Biden’s proposal outlined $595 million for projects within the Army Corps of Engineers, Detroit District, for high water studies and monitoring, beach nourishment, harbor dredging and flood risk management, among others, the budget also included $6.793 billion in discretionary funding for the U.S. Army Corps of Engineers Civil Works Program overall.
The budget is the largest annual budget ever proposed for the Army Corps.
In November, officials announced that the project was on track to reach completion by 2030. A news conference was held at the National Museum of Great Lakes in Toledo, Ohio to update on the lock system’s progress, with port authority leaders from Toledo Monroe, the Detroit District Army Corps office and the head of the steamship company that uses the locks.
“Having a new Soo Lock that has the same dimensions of the Poe and able to accommodate those largest freighters on the lakes will give us a great deal of resiliency and the ability to increase the time periods in which we do necessary repairs or maintenance or rehabilitation throughout the year,” said Lt. Col. Scott Katalenich, commander of the Army Corps of Engineers’ Detroit District at the conference.
According to Katalenich, the project consists of three phases:
“But we are optimistic that with good weather, we may be able to beat that,” Katalenich said.
The new Soo Lock will reportedly be 1,200 feet long and 110 feet wide, with the creation of 1,200 jobs annually. Port authority leaders from Toledo and Monroe at the event also stressed the importance of the project in regards to the ongoing supply chain disruption.
At the beginning of the year, it was announced that the nearly $1.5 billion project had been fully funded thanks to additional funding from the bipartisan infrastructure bill, using $479 million of the U.S. Army Corps of Engineers’ $561 million received funds for the fiscal year in Michigan and on the Great Lakes.
According to the release, this funding could also put the project ahead of schedule by as much as two years and is one of the largest amounts ever budgeted for a single Army Corps construction project in one year. The new lock is currently in Phase 2, with the Phase 3 construction of the lock chamber expected to be awarded in spring 2022.
At the time, the Soo Lock was closed until late March for critical maintenance and due to the federally regulated operating season. The winter period is used to perform upkeep, such as inspections, structural repair and seal replacement, concrete repairs, dewatering system maintenance and floating plant maintenance.
According to the Army Corps, the second year of upstream channel deepening for the new lock completed in mid-December, excavating about 150,000 cubic yards of Jacobsville sandstone to deepen the north canal enough for the 1,000-foot ships that will use it. This deepening work will resume in the spring.
Stabilization of the existing upstream approach walls was also completed, with an onsite concrete batch plant being installed with 26 coffer cells and 13,000 cubic yards of concrete. The work on the upstream approach walls will also continue next season.