A Value Propostion for Bridge Projects

Structural Engineer, June 2008, Craig Finley, P.E.

What’s the message to those of us in the bridge construction industry? The taxpaying public and their representatives are willing to spend money for safe, functional bridges, but only if we build them in the most economical and efficient manner possible.

Times may be tough everywhere, but we’re still building bridges in the United States. The American Road and Transportation Builders Association (ARTBA) estimates that the value of construction on domestic bridge projects increased nearly 14 percent to $23.2 billion in 2007. This followed increases of 7 percent in 2005 and 38 percent in 2006. ARTBA predicts that growth will continue in 2008, though more slowly, at about 3 percent.

At the same time, recession concerns, the housing slump, rising energy and labor costs, and building material price inflation are conspiring to drag down the entire construction sector. Perhaps most alarming, state government revenue—a key driver in the bridge construction market—is dropping.

According to the Rockefeller Institute of Government, state tax revenues across the nation decreased by 4.3 percent during the fourth quarter of 2007. Robert B. Ward, deputy director of the Institute, said, “States are experiencing a classic nutcracker effect. Costs are rising sharply just as revenues falter. The result may be a squeeze on states’ ability to fund services.”

One effect of this financial pinch is that some state departments of transportation are stretching project budgets over multiple years. This can result in delayed payments to the contractor and, in essence, require the contractor to provide temporary “financing” of the project. The contractors, in turn, can become skittish about bidding on projects or ratchet up prices to compensate for a potential hit—which means less competition and higher project costs.

What’s the message to those of us in the bridge construction industry? The taxpaying public and their representatives are willing to spend money for safe, functional bridges, but only if we build them in the most economical and efficient manner possible.

This dynamic is a driving factor in an increased interest in innovative project delivery, including value engineering, public-private partnerships, and creative contract terms, including design-build and design-build-operate-transfer. These methods, some of which are commonly used overseas, may soon become the norm here in the United States as well.

Craig Finley, P.E., is managing principal of Finley Engineering Group—an engineering and construction consulting firm that he founded in 2004. He can be reached at 850-894-1600 or craig.finley@finleyengineeringgroup.com.

 

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