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ARTBA: Highway Construction Material Costs Skyrocket 22 Percent in Past 2 Years, Could Impact Efforts to Improve Safety

Posted on: Tuesday, 31 January 2006, 15:09 CST

WASHINGTON, Jan. 31 /U.S. Newswire/ -- A 22 percent increase in the cost of materials used for highway and street construction over the past two years is eroding the impact of the new federal highway bill and will likely limit the ability of the states to meet their ever-growing transportation needs, according to an analysis by the American Road & Transportation Builders Association (ARTBA).

In 2005 alone, highway contractors paid 13 percent more for materials over the previous year, ARTBA's analysis of Bureau of Labor Statistics' data found. By contrast, the overall rate of inflation for 2005, as measured by the consumer price index, was just 3.4 percent.

"Construction costs are going up much faster than highway construction budgets," said Alison Premo Black, the ARTBA research economist who conducted the analysis. "Last year, Congress enacted a new highway bill that increases federal funding for highways about 4.5 percent per year. This is only a fraction of the recent rise in construction costs. State governments will need additional financial resources to move forward on transportation projects that could improve road safety and reduce traffic congestion."

Black's analysis found that materials and services account for about one half of total project costs.

Increases have hit a number of important highway construction materials including iron and steel, which rose more than 60 percent in two years; asphalt paving mixtures up 10 percent; construction sand, gravel and crushed stone up 11 percent; and ready mix concrete up 18 percent. The cost of construction machinery rose 10 percent, while diesel fuel for construction vehicles rose 88 percent in two years.

Black said highway contractors are facing much higher material price increases than other sectors of the construction industry. Material prices for non-residential construction were up 7.6 percent in 2005, maintenance and repair construction material prices were up 8.7 percent, and residential construction material prices increased 7.9 percent. These differences are due to the different types of materials used in the construction process, she said.

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EDITOR'S NOTE: A copy of the ARTBA analysis can be found online in the "Economics & Research" section of the association's Web site at http://www.artba.org.

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Established in 1902, ARTBA is the leading information source on the impacts of transportation construction on the U.S. economy. Additional information about the association can be found online at http://www.artba.org.

http://www.usnewswire.com

Source: U.S. Newswire

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