Innovative financing Virginia DOT plans to expand use of PPP on projects in the suburbs of D.C.

After years of steady gains fueled by record funding levels, departments of transportation across the U.S. face lean times ahead. With funds from the 2009 American Recovery and Reinvestment Act largely spent and most states grappling with declines in revenue, the impact of the economic downturn is hitting the transportation sector hard.

Highway and bridge construction starts nationwide could drop to $50.2 billion in 2012 from a peak of $58.2 billion in 2010, according McGraw-Hill Construction estimates.

For some states, the cuts would be severe. “Construction awards have averaged $1.2 billion over the last five years in Missouri,” says Kevin Keith, MoDOT director. “Over the next five years, it will be $600 million—that's lean times.”

Like many DOT directors, Keith is learning to live with less. This year, MoDOT moved to cut staff by 1,200 and close 131 facilities to free up $117 million for its capital improvement program. “We're focusing every dollar we can on keeping Missouri's roads and bridges in as good a condition as we can,” he adds.

In New York state, tight budgets come at a crucial time for aging infrastructure. More than 6,000 of the state's roughly 17,400 bridges are structurally deficient or functionally obsolete, according to NYSDOT. In addition, numerous roads and bridges suffered damage from Hurricane Irene in August. “We're in a situation where, if the funds aren't there, we may have to look at closing some roads and bridges,” says Joan McDonald, NYSDOT commissioner.

McDonald sees challenging times as an opportunity to pursue alternative solutions. The state has limited experience with alternative delivery methods, but those options could gain traction in light of its funding challenges.

Design-build has been met with some resistance in the past. However, in October, the state awarded a $14.1-million design-build contract for reconstruction of bridges and six miles of road damaged by Hurricane Irene. Halmar International, Pearl River, N.Y., with design partner McLaren Engineering Group, West Nyack, N.Y., was the best-value team selected. Work is expected to take up to five months and be completed by February.

Further, state lawmakers are considering the use of public-private partnerships to fund projects.

Innovative Financing

“Creative financing, creative delivery methods and making hard decisions on what gets done are what's necessary in this environment,” McDonald says.

Virginia DOT expects to expand use of PPP to address some of its capacity issues, particular in the suburbs of Washington, D.C. Following in the steps of the ongoing $2-billion, 14-mile high-occupancy toll-lanes project on Interstate 495, VDOT is pursuing plans to add 29 miles of HOT lanes along the I-95 corridor.

VDOT is working with a consortium comprising Melbourne, Australia-based Transurban and Irving, Texas-based Fluor Corp. on the three-year construction project, which could break ground as early as spring 2012.