Skanska expects to complete a $271-million Triborough Bridge deck replacement in November.
In the weeks leading up to the one-year anniversary of the collapse of the Interstate 35W Bridge in Minneapolis, workers installed the last of 120 pre-cast segments comprising the main span of the $234-million replacement structure, and were on track to have traffic flowing across the Mississippi River by mid-September.
That such a major structure could be replaced so quickly is “nothing short of miraculous,” says Bob French, chief operating officer for Flatiron Constructors, which teamed with Manson Construction and FIGG Bridge Engineers on the fast-tracked design-build project. “Everyone—contractors, agencies and others—has been pulling on the same rope, immediately addressing any issue that might impede progress,” French says.
Although state departments of transportation sought to assure nervous motorists that their roads and bridges were safe in the weeks following the I-35 W bridge collapse, the suddenness of the disaster confronted them with a large and potentially expensive reality check. “Nobody wants to be responsible for another Minneapolis,” says Mike Lembo, a senior vice president for Skanska USA Civil, which is performing a scheduled $271- million, 480,000-sq ft deck rehabilitation on New York City’s Triborough Bridge, and a $243-million design-build replacement of the twin, 2.5-mile-long Escambia Bay Bridges in Pensacola, Fla.
But the combination of rising fuel and material costs, declining fuel-tax revenue and budget shortfalls has hamstrung many state maintenance programs. “The must-have/must-fix maintenance projects are moving forward,” says Jerry Harder, president of PCI Civil Construction, which is building the 1.64-mile, $106-million widening of I-275 in Tampa and the $118-million I-4/SR 408 interchange in Orlando. “It’s the wish-list projects that are not getting financing.”
With no major increase in federal assistance likely to arrive before a new administration takes office in Washington, and a new Congress takes up what will likely be a contentious debate over the successor to SAFETEA-LU, it is up to states to cobble together their own financing for maintenance programs. Pennsylvania is borrowing $350 million to expedite repairs on more than 400 bridges, and Missouri’s legislature expedited approval of its Safe & Sound Bridge Improvement Program, a 30-year design-build-finance-maintain plan to replace or rehabilitate more than 800 bridges. Massachusetts Gov. Deval Patrick (D) in April signed a $3.5-billion bond bill that allows the state to use its $1.6-billion bond investment to leverage $1.8 billion in federal funds to rebuild roads and bridges.
Larger, more complex bridge and highway projects that have dedicated funding are moving forward, giving most contractors and construction management firms a healthy backlog to work from. Still, the ongoing cost escalation of fuel, steel and other materials has them keeping a close watch on their own balance sheets. “No matter how carefully you watch the markets and supply trends, you still have to guess right,” says Jim Moynihan, chief executive officer of Balfour Beatty Infrastructure Inc. “If you don’t bid smart, you risk losing a large percentage of your profit.” Moynihan worries that some contractors, particularly smaller ones, may be deliberately sacrificing profit for the sake of survival. “They’re not looking long-term or ensuring that the financing for complex jobs is in place,” he says. “By bidding very low, they’re risking performance problems and claims simply to keep money coming in.”
With funding sources certain to be part of state and federal transportation debates, alternative project delivery and funding mechanisms are once again in the spotlight. Design-build now is firmly established in most state DOTs’ procurement toolboxes as a means of maximizing the value of available dollars. Major projects include Balfour Beatty’s $330-million contract to add toll and non-toll lanes along a 7.9-mile stretch of the 281 North Toll highway near San Antonio, and Granite Construction’s $230-million reconstruction of 9.6 miles of I-15 in Ogden, Utah.
“It’s a great alternative to having to cope with rising costs during a two-year design process,” observes Granite Senior Vice President Jim Roberts. “Markets where design-build work is healthy and predetermined financing is in place have not yet been hurt by short-term issues.”
Public-private partnerships (P3s) also are gradually gaining favor via projects such as the $1.4-billion collaboration between Fluor Enterprises and Australia’s Transurban to finance, design, build, operate and maintain 14 miles of high-occupancy toll (HOT) lanes on the Capital Beltway outside Washington, D.C., and Florida DOT’s planned 10.5-mile extension of I-575 in central Broward County. Despite the allure of ready cash to jump-start projects, however, states remain wary of P3s. PCI’s Harder explains that unlike design-build, which had a relatively short learning curve among DOTs, P3s have different financial components, participants and extended time frames of 30 to 40 years. “States are also concerned about losing control over infrastructure and that something could fall through the cracks and compromise public safety,” he adds.
Tom Barron, executive vice president of Parsons Transportation Group Inc., believes momentum for P3s will build as more success stories are recorded. Parsons is part of the team selected for the Missouri bridge improvement program, “the kind of project that, if successful, will be examined and adopted by other states,” Barron says.
Perhaps the most pervasive influence on the transportation market has been the surging price of fuel. According to the U.S. Dept. of Transportation, cumulative highway vehicle miles traveled for the first six months of 2008 dropped 2.8%, compared with the same period last year. That decline is putting a squeeze on motor-fuels-tax revenue for the Highway Trust Fund.
At the same time, public transit ridership is rising. Estimated transit trips totaled more than 5.5 billion for the first half of 2008, up 4% from last year’s first six months, the American Public Transportation Association reported. July was Amtrak’s busiest month in its 37-year history, with ridership of 2.75 million. For the first nine months of the railroad’s 2008 fiscal year, passenger volume climbed 11%, to 23.7 million.
Transit’s sudden popularity has fueled speculation that more urban areas will push for new or expanded transit systems. Barron notes that a record number of projects are already in the New Starts pipeline. SAFETEA-LU authorized $6.6 billion in New Starts funding through fiscal 2009, according to the Federal Transit Administration. In July 2007, a Government Accountability Office report cited a significant “future demand” for transit projects that will likely continue over the next several years. “If funding issues can be sorted out in the next federal transportation bill, this will be good market,” Barron says
Activity is already strong on both coasts from the $3.8-billion, two-mile-long first phase of the Second Avenue Subway in New York City to the 8.5-mile, $631-million Mid-City/Exposition Corridor and the six-mile, $898-million Metro Gold Line Eastside extension projects in Los Angeles. Meanwhile, Houston recently broke ground on the first phase of its three-mile East End Corridor extension, one of five new light-rail lines totaling 30 miles scheduled to be in service by 2012. And work also is under way on the 11-mile, $220-million Mid-Jordan Light Rail line to serve southern suburbs of Salt Lake City.
For the transportation sector, the watchwords for the remainder of 2008 and early 2009 appear to be “hold on,” as the economy sorts itself out and battle lines are drawn for the next federal transportation bill. “If states can pass individual budgets that appropriate money for transportation, we will have weak but sustainable public-sector market,” Granite’s Roberts says. “The big questions are what will happen to the federal highway bill and can the trust fund stay solvent. It’s all very tentative.”
Regardless of the outcome of the November elections, Skanska’s Lembo is hopeful that the need to rebuild the nation’s transportation infrastructure will trump partisanship. “Many organizations are emphasizing the number of jobs that transportation funding will create-something that’s very important in the current economy,” he says.