Josh Goodman is a former staff writer for GOVERNING..E-mail: firstname.lastname@example.org
After a painful period of price inflation, the cost of concrete, steel and asphalt is dropping. So as states begin spending their stimulus checks from Washington, they'll find they can build and repair more roads and bridges with less money.
Construction costs rose faster than the rate of inflation between 2004 and mid-2008. The trend was driven by a global building boom, especially in countries such as China and India, as well as higher energy costs. The price increases bedeviled transportation planners and embarrassed state and local politicians as road, bridge and rail projects came in way over budget.
Finally, the run-up is over. Thanks to plunging energy prices and the global economic slowdown, the cost of highway and street construction materials dropped by 16 percent over the last three months of 2008, according to an index compiled by Reed Construction Data. Labor and equipment rentals also have become modestly cheaper, further driving down the cost of transportation projects.
Experts expect construction costs to remain roughly stable through the end of this year. It's one upside to the economic forces that currently are decimating state and local budgets, says Jim Haughey, chief economist for Reed Construction Data. "This is a good time to buy stuff.
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