Highway, bridge contract awards down 3 percent – ARTBA report

Despite the 2012 passage of the federal surface transportation law, “Moving Ahead for Progress in the 21st Century” (MAP-21), the real value of highway and bridge contract awards over the last 12 months was down three percent compared the previous 12-month period, according to the latest analysis of McGraw-Hill Dodge data by the American Road & Transportation Builders Association (ARTBA).

Taking into account changes in wages, materials and inflation, state and local governments awarded $54.3 billion in real highway and bridge contract awards between February 2012-January 2013, compared to $55.8 billion in the same 2011-2012 time period.

Contract awards are a leading indicator of construction activity at the state level.  “We did see a significant jump in the value of awards in January 2013,” ARTBA’s Chief Economist Dr. Alison Premo Black said in a written statement.  “Although that is a positive sign, the increase was primarily due to several large projects in Arizona, Arkansas, California, New York and Virginia.”

The outlook on a state-by-state level is mixed. The real value of highway contract awards is down in 23 states and Washington, D.C., up in 20 states, and within a range of plus or minus five percent in seven states.  Bridge awards are down in 22 states and Washington, D.C., up in 24 states, and within a range of plus or minus five percent in four states.

“This tells us that nearly half the states are pulling back on their programs,” Black noted. “The good news is that we do expect to see an uptick in activity later this year given the recent increase in federal aid obligations – many of those projects should go through the bidding and awards process over the next few months. It remains to be seen, however, if it will be enough to provide real growth in the highway and bridge construction market by the end of 2013.”

There is better news for state and local government contract awards for docks piers and wharves, which were up nearly 30 percent in the past 12 months, to $1.4 billion. Awards in California, Georgia and New Jersey drove growth in January 2013.

Awards were also up nearly 30 percent to $3.5 billion for state and local government transit and railroad awards, reflecting an increase in demand following 33 months of extensions of the federal aid program. January awards were driven by projects in California, Illinois, New Mexico and Pennsylvania.

Finally, the value of state and local government airport runway contract awards was down 3.2 percent.

Note: Data accounts for changes in project costs, including material prices and overall inflation. Figures do not include contracts for planning and design work, environmental analysis, or project management associated with transportation capital improvement projects.