Officials in Maine’s largest city expect to scale back work on sewers and roads and at the airport as construction prices strain taxpayer-funded budgets for infrastructure improvements across the state.
The Maine Department of Transportation announced last week that it would forgo tens of millions of dollars in work this year because bids from contractors were too expensive – sometimes double what the department had estimated.
Now, municipalities and other public agencies are reconsidering the work they planned to do this year as construction prices driven up by labor and material costs near a 10-year high nationwide.
The city of Portland is reviewing all road and sewer projects it planned this year after receiving unexpectedly high quotes for two sewer upgrades.
“We have put all these projects on the table to take a look at to see if we can pay for them in the context of the budget,” City Manager Jon Jennings said.
A Brighton Avenue sewer separation project would have cost $1.6 million, 60 percent more than budgeted. Another separation on three streets in Back Cove came in at $7.1 million, almost 30 percent higher than estimates. That work will be re-bid in the fall for completion in 2020.
The city is going through a period of intense private development with new offices and apartment buildings popping up downtown, but even some developers are starting to get priced out of the market, Jennings said.
“It is not only impacting the city, but the private sector,” he said.
The difference is that private developers may be able to pull together funding to make a project work or accept lower profit margins.
Public agencies, however, have fixed budgets. If necessary work winds up being too expensive, other construction projects might have to be canceled or delayed to make up the difference.
The Portland International Jetport will likely postpone some of its work because costs are too high.
Airport Director Paul Bradbury said he planned to have enough federal funding to complete two projects this year – a taxiway extension and a new airplane de-icing area.
But the low bid for the taxiway came in at $6.7 million, 42 percent more than expected.
That was even after the jetport added 10 percent to its budget estimates, expecting an expensive season. Coincidentally, that was the same proportion the Maine Department of Transportation added to its estimates.
“We both independently came up with a 10 percent increase and we were both wrong,” he said.
Contractors and agencies believe an acute labor shortage, combined with high prices for some materials, is driving up costs amid an economic boom in some parts of the state.
Maine still hasn’t recovered the construction workers it lost during the Great Recession. In 2017, Maine’s construction industry employed 28,000 people, which is more than 3,000 fewer workers than in 2006, according to data from the Maine Department of Labor.
“Clearly, labor is up, there is no doubt about it,” said Peter Mills, executive director of the Maine Turnpike Authority.
Some projects this year have come in higher than expected, he said. The agency declined to award a recent contract for a new directional sign at the turnpike interchange in Wells because the lone bid for $742,201 was almost 60 percent more than budgeted.
Other work has been above estimates by millions of dollars, but the agency paid up because the work can’t be put off, Mills said. He expects the turnpike authority will evaluate its remaining work for the year at some point unless costs come down.
“At some level you just put your head down and keep going, you think you are at high point now, but you defer a couple jobs and next year it is higher still,” he said.
Officials in Lewiston and Bangor are getting nervous about what construction they will be able to get done this year given the current prices.
In Bangor, the low bid for a traffic signal upgrade was $297,000, 26 percent over estimates, and work on a downtown parking garage cost $1.08 million, almost 40 percent over budget.
“The city of Bangor has not canceled any projects yet; however, we still have a lot of work to put out this season. The city may consider delaying some work if future bids are too high,” city engineer John Theriault said.
Projects in Lewiston have been slightly pricier than expected, but not outrageous, said Dale Doughty, the director of public works. But with most of the city’s paving work still on deck, he’s nervous about what might come up.
“We saw some increase, I believe we are going to see something more than that coming up,” he said. “I am just worried, I think it is a nationwide thing right now.”
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