Inflation, supply chain woes raise costs for Georgia road projects
(The Center Square) — Inflation is driving up the cost of road projects in Georgia, with some project bids more than 40% higher than projected.
As a result, Georgia Department of Transportation officials have rejected some high bids and deferred resurfacing projects for the last six months.
“The issues of inflation and supply chain delays have impacted both GDOT and our valued contractors, as they have in so many other sectors,” Natalie Dale, a GDOT spokeswoman, told The Center Square. “Roughly six months ago, it became apparent through the letting process that resurfacing projects were experiencing significantly higher bids than expected due to global instability in the crude oil market.
“Liquid asphalt cement is produced from petroleum products and figures greatly into the overall pavement cost,” Dale added. “It had more than doubled from earlier estimates. Because high volume storage of liquid asphalt cement is uncommon it is purchased shortly before incorporation, which could be months later. This reality brings the fear of future increase into the contractor’s bid.”
GDOT officials said they took steps to lessen the state’s budget’s impact by rejecting those high bids and deferring major resurfacing projects for the last six months.
“The goal was to provide enough time for the market to regulate, easing the risk concerns of further increases to contractors and costs to the department,” Dale said.
But inflation is only one of the headwinds facing the construction industry. Supply chain delays continue to affect projects throughout the state.
“Capital and maintenance projects that are currently underway (outside of resurfacing activities) have experienced the most impacts from these supply chain issues,” Dale said.
“However, not every item delayed impacts project schedule or is associated with overall project delay,” Dale added. “We continue to work with our contractors experiencing supply chain delays to evaluate schedule critical impacts, and respond accordingly with schedule extensions as needed.”
