Tuesday, April 18, 2006

Blaming Rising Material Costs to hide Incompetence?

Monday's Potomac News has a dire report about rising costs for road construction.

There were several aspects of this story that simply did not make sense. But first, here are the actual numbers from the story detailing the increased costs:

Between February 2005 and February 2006, cement, which is the main ingredient in concrete, shot up by 14.2 percent, according to the American Road and Transportation Builders Association, a Washington-based industry group.

Steel prices are also up 3.9 percent, the group said.

In the last year, there was a 16 percent increase in contract prices for asphalt, and the cost of sand, gravel and crushed stone used in pavement rose by 8 percent, said VDOT spokeswoman Joan Morris.

Diesel fuel prices increased by 34 percent, according to the spokeswoman.

OK. 3.9% is hardly more than inflation (The PWC board is using a higher number to justify their 5.7% tax increase). The other numbers are considerably above inflation, and you'd expect that paving a road might cost 10% more now (the cost of asphalt being a major, but not the majority, of the total costs).

But the fuel prices are a large increase, and could drive costs up by another 10-20%, I suppose.

But even if the entire cost of construction was the purchase of fuel, the cost increase would be 34%.

So, explain this:

Sharp increases in raw material prices are expected to cost the Virginia Department of Transportation an additional $180 million this year for road and maintenance projects, and will double the price tag of one local bridge renovation.
In Prince William County, expensive construction materials will double the cost of the Va. 28 bridge project over Broad Run.

Construction of the overpass is slated for the summer, and will cost about $11 million, Morris said.

I don't see how an increase of 100% in the cost of a bridge could possible be blamed primarily, much less entirely, on the inflation of raw material prices, all of which are under 34%. It seems clear that the primary cause of this increase is something else, but what? Did someone made a major mistake in estimating the job? Are we being ripped off by unscrupulous contractors? We don't know, because the PNews simply chalks the cost increase up to "sharp increases in raw material prices".

The rest of the story is a series of contradictions. My favorite:

VDOT representatives said the agency will use cheaper raw materials for maintenance and construction projects, but will not resort to using less durable supplies.

"We are not using inferior pavement," Morris said. "It's sort of like using oak instead of mahogany, you still are going to have a good quality project."

If I read this right, VDOT has a choice of two materials, which are equally durable, and they have been using the MORE EXPENSIVE of the two, because it LOOKS BETTER?

How many of us want to have our taxes raised another billion so that we can build our roads out of more expensive materials? Not me -- I don't care much what the road looks like so long as it's not filled with holes, and not blocked by stopped cars.

Last week a report suggested that VDOT WAS using inferior-quality materials that would wear out quicker. This story seems to refute that, but I don't know what to believe now. Given that there is a huge cost in labor, and in lost time and traffic backups, when fixing a road, it hardly seems wise to use material with a shorter life span -- that's just asking for big problems down the road.


Riley, Not O'Reilly said...

Cement is NOT the main ingredient in concrete. 80 percent of concrete is aggregates (crushed stone, sand and gravel.) Cement is essentially the glue that holds it all together. The other type of pavement, asphalt, is 90 percent aggregates. I should know, I'm the Nick Naylor of aggregates.

Charles said...

I didn't catch that one, thanks, Riley. The aggregates only went up 8%.

Greg L said...

Great post. Keep up the good work -- every time the MJM or other papers that cover VA transportation issues covers (pontificates on) this they uncritically parrot this faulty meme. Just because the VADOT is subject to inflation doesn't mean that we, subject to the same inflation, are obligated to fork over ever greater percentages of our incomes.

And then after easy analysis, it becomes evident that inflation really isn't the problem after all. Well, what a surprise. I'm just waiting for the shouts of "Kaine lied, transportation died" from the left. I think it'll be a long wait.