Archaic Regulation Guidelines Driving Up State Government Construction Projects

Politicians at all levels of government like to campaign on “repairing our infrastructure” and “creating jobs” through government building projects. Meanwhile, behind the scenes they create an awful construction bidding system and pass regulations that makes project costs skyrocket.

Shackled to thin budgets and beholden to rules and regulations in place to ensure transparency and good governance, public agencies are increasingly unable to afford critical work and have scaled back or eliminated projects. Meanwhile, a decadeslong list of overdue improvements keeps growing.

Construction prices naturally modulate but the last three years have seen a sustained increase of at least 8 percent a year, said Clif Greim, CEO of Harriman, an architecture firm in Auburn that specializes in designing public buildings. The recent price escalation is steeper than any he recalls in his nearly 40-year career.

“It has been very noticeable. We are in a market now that regularly sees a premium of 30 percent over what would be typical for pricing. That is significant,” Greim said.

High material prices have partially driven construction costs in recent years, but a skilled-labor shortage is frequently cited as the central cause.

Public agencies are particularly disadvantaged in a high-cost environment. Major building construction, such as a school, can take years of planning, public input and buy-in and often a local vote on borrowing. By the time the project is ready to start, economic conditions may be very different from when project design and bond were authorized.

Public work has strict timelines, restrictions on materials and additional costs and oversight, said Marks, from the associated general contractors. Also, many public jobs are advertised late in the year, after construction firms and specialized subcontractors already have a full schedule.

“All those kind of things add up. On the public side there are a lot more rules and regulations; on the private side you have a client that can determine what is important for them,” he said. “At the end of the day it is a lot easier for folks to manage.”

Source:Press Herald


Published by Hoosier Econ

Located out of Central Indiana. Blogger of economics, politics and societal trends.

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