Even amid double-digit construction cost increases, time is the biggest culprit when it comes to cost overruns on a public infrastructure project.
Sticking to a budget is “the most difficult challenge in the public works arena,” said Michael Connor, assistant secretary of the Army for Civil Works, speaking Thursday at a White House summit on accelerating infrastructure projects.
“And the most important item to stay on budget is time. Time equals money.”
The White House Thursday unveiled an accelerating infrastructure action plan to help states and local governments move fast and remain on budget when spending the $1.2 trillion in the Infrastructure Investment and Jobs Act.
The summit came as the latest inflation numbers showed that consumer prices climbed 8.2% over a year ago. Construction costs outstrip consumer inflation, and have endured recent double-digit year-over-year increases. Some government officials have said the rising costs are forcing them to delay or scale back projects. Even without inflation, the U.S. already faces some of the highest costs in the world when it comes to building projects like transit rail.
Transportation Secretary Pete Buttigieg said during the summit that the DOT is setting up a project delivery center to provide best practices on project design and construction, and the Department of Commerce is launching a “Dig Once” program along with the transportation and energy departments to coordinate broadband, transportation and electrification projects.
The IIJA has several tools that can help keep costs down, the Army Corps’ Connor said. Providing full funding up front, encouraging public-private partnerships, and offering the flexibility to add additional funding down the line will all prove helpful, he said.
“The most immediate and advantageous way to control costs is having that full funding up front,” Connor said.
So-called scope creep, in which a project grows beyond its original scope, is another cost driver, said Executive Director of Transportation Research Board Neil Pedersen.
“Almost always when there are problems with adherence to budget management, scope creep ends up being a big part of the problem,” Pederson said.
His “message for elected officials is that it’s not just the responsibility of the bureaucrats who are delivering [the project] but also the responsibility of leadership to ensure that we adhere to scope.”
Tampa, Fla. Mayor Jane Castor said the city uses progressive design bid delivery models when designing projects, bringing in stakeholders early to prevent costly changes later. Tampa uses the model more than any other city in the state, Castor said.
“You also have to be very, very nimble because issues are going to arise – look at Hurricane Ian,” Castor said. “You have the force majeure you can always go back to, but outside of that you have to do everything in your power to ensure you’re controlling everything you can in the preplanning.”
The $5.1 billion La Guardia Airport renovation is a “national model” for how P3s can help deliver large, complex projects on task, on time and on budget, said John Porcari, managing director at 3P Enterprises.
Key to the project’s success was “frontloading” work like bringing in the community and crafting project labor agreements, Porcari said.
The private team’s willingness to take on risk was another key, he said.
“The public sector exposure to overruns was capped and the private sector partner had the ability in terms of scope and timing to deliver the project on budget and that’s what happened,” he said.
White House infrastructure coordinator Mitch Landrieu said “it’s not really that easy” to undertake all the infrastructure projects promised in the IIJA.
“America has gotten out of the habit of building big things well and big things together and we have to learn how to do that again,” Landrieu said. “It requires federal, state and locals pulling together and we can build it faster, stronger and better if we stay on time, on task and on budget.”