The request for qualifications didn’t exactly stir a frenzy of competition.
A $265-million to $310-million design-build highway improvement project advertised by Washington State transportation officials in November, with responses due early last month, attracted only Guy F. Atkinson Construction and Walsh Construction Co., which submitted qualifications and the names of other team members.
The poor "showing" in Washington state, where the project is part of a series of Seattle area improvements to the vital Interstate-5 transportation artery, is also happening in other parts of the U.S.
Big infrastructure projects that a few years ago might have attracted three or more competing teams have drawn fewer submittals, and the lack of competitors combined with inflation and supply-chain snags means that it’s much more difficult to know if prices quoted by competitors will be near the estimate.
“Any time we only have two proposals that can be a concern,” says Tom Pearce, a spokesman for the Washington State Dept. of Transportation. “But we’re happy we have qualified submittals from Atkinson and Walsh because they are both very qualified and capable.”
This was supposed to be a Golden Age for U.S. infrastructure. Funds provided by the $1.2-trillion infrastructure act passed by Congress over a year ago now are filtering into the marketplace. But it turns out that inflation has so depleted buying power that the once-anticipated surge of construction work is no longer expected.
In November, Chris Daum, CEO of consultant FMI Corp., told an audience at the International Risk Management Institute’s construction conference in Las Vegas that price increases to date “will eat up most or all” of any anticipated higher market activity the federal funds might have paid for.
In recent months, transportation officials have had to recheck their funding sources with long-planned projects priced far above original estimates. In Texas, state transportation officials warned they may scale back or delay projects as inflation devours budgets. A highway project in New Jersey and another connecting Oregon and Washington received new dramatically higher price tags.
The timely start of work often depends on the costs not exceeding the funding sources.
Shared Concerns on Light Rail
“We share the concern” about prices, says Mark Harrison, a project manager for Gonzalez Cos., which is the project manager of the planned 5.5-mile light rail line extension planned by the St. Clair County, Ill., transit district. The extension will connect an existing station to the MidAmerica St. Louis airport. Bids for the first of five packages are due Jan. 17. The project’s anticipated price, $96 million, is funded by a state grant from Illinois. “We hope to get three to four bids” for the important double-track portion of the project, says Harrison.
Louisiana recently ran into price and competition issues when seeking a design-build contractor for an anticipated $150-million replacement for Shreveport’s Jimmie Davis Bridge.
State officials restarted the request for qualifications and request for proposals process in late October, after naming, last March, three shortlisted firms—two of which dropped out.
Shawn Wilson, state transportation secretary, said in a television interview in October that “we haven’t had the competitive attention that was necessary.” The new RFP produced another three shortlisted firms: American Bridge Co., Thalle Construction Co. and the James Construction Group, which was also shortlisted in the first round. The current schedule calls for inking a design-build contract by April.
A Georgia P3 and The Great Repricing
There is another recent example of a state agency trying to turn the situation around.
The Georgia Dept. of Transportation adjusted the terms of a big design-build P3 project in October. Prices had come in from competitors more than $100 million above what the state had anticipated for 16 miles of express lanes to be added along State Route 400 in and around Atlanta. In 2021 the department cancelled the project and started over. In October it shortlisted three potential concessionaire teams whose price will be based on sweetened commercial terms related to how the winning team will collect its payments.
Georgia DOT was deliberately putting its focus, in words from a forum on the project in March, on "putting the 'partnership' back in P3."
Whether other state or local agencies are willing to take more risk—not on P3 terms but with more flexible design-build contract price and schedule terms—remains unclear.
What happens will do much to define whether the hoped-for Golden Age of infrastructure delivers on some of its promise or is remembered only as the Great Repricing in an age of surging costs.
