TCosts are rising for transportation projects in the Fairfax County area and it’s not just because of the coronavirus pandemic.
A question was raised at a meeting of the Fairfax County Legislative Committee regarding the increased costs of transportation projects in the area, which have been estimated at nearly 40 percent, which has been confirmed by the ministry. of Virginia Transportation. Committee members noted that contingencies in transportation project plans were a major factor in these rising costs.
Essentially, contingencies are funds set aside to deal with unforeseen costs or potential cost changes due to changes in the scope of the project. These contingencies are set aside in the project budget itself and can be used to offset potential increases in aspects of the project, for example, if the costs of building materials increase during this period, contingency funds will be used to cover this cost increase.
These costs are not new, the increase in hardware costs has been happening for many years and continues to do so. Some of the most notable increases come from the cost of steel and glass as well as the cost of transporting these materials to construction sites.
According to a January 2020 Financial Express article, the rise in the price of steel is mainly due to increased demand for steel especially in countries like China. This increase in demand forced steel mills to purchase more materials for products such as iron ore and coking coal, resulting in increased production costs.
Another reason for the rising costs of steel has also been the effect of tariffs on the transportation of materials such as steel imported from other countries. According to an article published in May 2021 by The Fabricator, the cost of importing steel rose when then-President Donald Trump imposed a 25% tariff on steel imported from countries like Canada. , Mexico and the European Union in 2018. This tariff caused an increase in steel costs relative to the rest of the world, as well as a reduction in steel imports into the United States.
Tariffs, along with other factors such as changing purchasing habits, material substitution for production materials, and the closure of some US-based steel mills, have pushed up these prices.
And that was before the impact of the coronavirus pandemic.
Once the pandemic hit the world, the production and import of steel was slowed down due to the imposition of protocols to combat the virus such as social distancing. Demand for steel has also fallen since the shutdown of auto production and many construction projects. The prices of raw materials have also increased. According to a May 2020 article in Barron’s, the price of scrap metal has increased due to lower production.
So what does this mean for current and future transportation projects in the Fairfax County area in general?
According to Robin Geiger, communications manager for the Fairfax County Department of Transportation, rising costs will continue to affect aspects of projects such as contingencies as long as associated prices such as material and transportation costs continue to rise. .
So the question becomes, how can these costs be mitigated? What are the possibilities for reducing the costs of these transport projects in the future?
“For many construction projects (especially large projects), during the design phase a process called ‘value engineering’ is carried out where the project team tries to find ways to reduce costs. costs through methods such as making design more efficient, eliminating unnecessary design features, finding more concise ways of phasing construction, or other measures. One of the best ways to help reduce the cost of building a project is through value engineering. It is also possible to simply reduce the overall scope of the project itself to help reduce costs, ”Geiger said.
For example, Fredericksburg recently reopened the Chatham Bridge, which is a main track on Trade Route 3. The project was initially planned to last 38 months and be piecemeal while allowing traffic to continue to flow. The schedule was reduced to 16 months due to the decision to completely close the bridge, which allowed the VDOT and the construction team associated with the bridge rehabilitation to stay on budget and reopen the bridge 45 more days. sooner than expected.
The lesson here may be that as material costs increase, Fairfax and other communities may need to save money in other ways.