Transport Industry Waits for Infrastructure Bill Funding
By KERRY SMITH, EDITOR, ST. LOUIS CONSTRUCTION NEWS AND REVIEW MAGAZINE
Heavy highway firms are preparing to mobilize their people, eye potential projects and await project lettings as DOTs await funding appropriations for the new federal infrastructure bill.
It has been three months since Congress passed the $1.2 trillion Infrastructure Investment and Jobs Act (H.R. 3684), yet transportation agencies aren’t able to let contracts without the necessary appropriations. Although the most ambitious infrastructure bill in recent history was enacted into law last November, Congress is still operating on 2020 funding, woefully less than the levels promised under the new law.
The February 18 government appropriations deadline came and went, with the U.S. Senate agreeing upon another continuing resolution to continue the same funding levels through March 11 rather than authorize new spending to include the $1.2 trillion influx.
Contractors and engineering firms say it’s a triple witching effect in the making: a shortage of skilled project team members, a still-clogged supply chain and continued volatility in materials prices. Those who design, engineer and build highway, bridge, rail and mass transit infrastructure would normally be bidding on these projects during this season to enable crews to begin during peak work season.
“The lack of appropriation is putting pressure on agencies such as Missouri Dept. of Transportation in terms of the timeframes and estimated costs of their upcoming projects,” said St. Louis-based KCI Construction Inc. President Tom Huster. “Until Congress appropriates this infrastructure bill and MoDOT receives the funding, the timeline remains in question. We’re excited about the infrastructure bill because it’s the type of work we perform. This funding, coupled with the Missouri gas tax increase that passed in 2021, means good things for the state and the region from an infrastructural standpoint. Yet as an industry, we don’t have nearly enough people…from top to bottom, project managers to laborers in the field, we’re short.”
Criteria that KCI and other heavy highway contractors will be weighing to decide whether to bid or pass on an infrastructure bill-funded project includes: the number of people the company has available or will have available once the project start timeframe becomes clear; the job schedule itself; the scope of work; how much of the work is self-performed versus subcontracted; and lastly, whether the owner/agency’s budgeted project amount is realistic given current labor and materials constraints.
“We have bid projects recently that were over the initial owner budget, and it forced the owner to either cut scope or find more money, and then issue for re-bid,” said Huster. “It’s a challenge to be low on a bid one time, much less twice.”
Cliff Mashuda, Jr. is president of Mashuda Contractors Inc. The earthwork contractor performs much of its work in Wisconsin and Iowa. Mashuda says the firm’s projects range from moving 10,000 cubic yards of dirt to three million cubic yards of dirt.
“There’s definitely quite a lot of uncertainty surrounding the infrastructure bill,” Mashuda said. “If transportation agencies don’t know for sure when the funding is coming, they can’t plan in a realistic fashion. The season typically runs from April 1 until Thanksgiving. It’s already time for DOTs to be appropriating the money at the state level and getting project bids out the door. Once Congress does appropriate the funding, many of us may find that our more experienced project managers are already immersed in managing other jobs. The timing could prove to be poor regarding the four to six weeks it’s going to take to do the paperwork, engineering, preconstruction and mobilization of workers.”
Persisting supply chain issues could also prove detrimental to the start of these projects,” added Mashuda. “We’re already seeing huge delays for certain pieces of heavy equipment and components. If the project demands two or three more (bull)dozers, we may not be able to get them.”
Charlie Quandel is chief executive officer of Chicago-based Quandel Consultants Inc. The niche firm’s specialty is engineering intercity high-speed rail projects. Quandel draws a distinction between the “shovel-ready” projects of the Obama administration’s 2009 federal stimulus package with the “shovel-worthy” projects waiting to be funded via the current infrastructure package.
“There are Midwest-based high-speed rail projects that are indeed ‘shovel-worthy’ and ready to move forward once the necessary federal appropriations are made,” Quandel said. “These are projects which have environmental clearance with the records of decision already in place, and they can move quickly toward construction with concurrence from the freight railroads.”
The Consolidated Rail Infrastructure and Rail Improvements (CRISI) program is working to get its 2022 budget passed so that the federal infrastructure dollars can be appropriated into the various (rail) programs, Quandel added. “Once that is done, the NOFOs (Notices of Funding Opportunity) will come out and then states will be able to submit their applications,” he said. “We’re realistically looking at the latter part of 2022 or early 2023 before funds appropriated by this infrastructure bill could flow to the states. We’ve already seen one high-speed rail project estimating significant increases in costs just over the past six to 12 months.”