AASHTO Survey on Construction Cost Increases and Competition Summary of Responses April 2006

1. AASHTO Survey on Construction Cost Increases and CompetitionSummary of ResponsesApril 2006

2. Responding Agencies(44 States, DC, Canadian Provinces of Alberta and Ontario) DC DC DE PR Canadian Provinces Alberta Ontario

3. CompetitionQ#1 - Have you experienced a decrease in the number of competitive bids per project over the past 2 to 3 years? DC DC DE PR Canadian Provinces Yes (35) No (11) No response Alberta Ontario

4. Average Number of Bids Per Project *Question # 3 – responses for each year received from between 32 and 39 contracting agencies

5. Average Number of Bids / ProjectSelected Results Canadian Provinces Alberta Ontario 2.45 2.64 2.8 4.0 4.0 2.86 4.53 5.5 DC DC 2.9 4.27 2.54 DE 2.18 4.1 2.6 2.93 PR 2.66 2.86 4.62 2.9 2.94 < 3 bids per project in 2005 > or = 4 bids per project in 2005

6. Why has competition decreased?(Q#5 - If competition has decreased in your state, to what do you attribute this situation?) • Industry consolidation (contractors, quarries, etc.) (27 responses) • Increased work with the same number of contractors (26 responses) • Downsizing of workforce due to instability of transportation funding (6 responses) • Regulatory restrictions, such as environmental permits for plants and quarries (6 responses) • Increased technical requirements in contracts (7 responses) • Bankruptcies (1 response) • Hurricane-related issues increasing non-highway construction demand (2 responses – FL, LA) • Other (10 responses)

7. Why has competition decreased?(continued . . . Q#5 - If competition has decreased in your state, to what do you attribute this situation?) • Other (selected responses) • IA - Increased size of contracts has resulted in fewer qualified contractors being able to bid some contracts • OH - Not only consolidations but consolidations in a way in which force precedence for the little contractor to now purchase goods and services from the consolidated contractor that once was their competitor. • WY - Energy industry is typically more lucrative to the contracting industry, so more effort in that direction

8. Q#6 - If competition has increased, to what do you attribute this situation? Selected responses • NC - Competition increased in 2005 but that was more a function of fewer projects being let due to a drastic downturn in the funding availability. 1233 projects were let in 2005 as opposed to 231 projects in 2004. • NH - We haven't really had any new contractors enter the Highway or Bridge construction business in the last 5 years. • VA - Less work in the private sector means more public sector bids.

9. Q #7 - Have you experienced an increase in the number of single bids over the past 2 to 3 years? DC DC DE PR Canadian Provinces Yes (27 responses) No (18 responses) No response Alberta Ontario

10. Q #9 - Have you experienced an increase in the number of projects with only 2 bidders? DC DC DE PR Canadian Provinces Yes (26 responses) No (18 responses) No response Alberta Ontario

11. Occurrence of Single Bids by Type of ProjectAsphalt Resurfacing Projects Canadian Provinces Alberta Ontario ME - 80% VT - 23% 30% 28% DC 19% DC 40% 30% 33% 29% 33% 30% DE 20% 10% 70% 21% 30% 11% 10% PR 80% 34% 37% 10% Asphalt resurfacing, percentage of single-bids greater than 50% Asphalt resurfacing, percentage of single-bids between 20%-50% Asphalt resurfacing, percentage of single-bids between 10%-19%

12. Occurrence of Single Bids by Type of Project Reconstruction Projects Canadian Provinces Alberta Ontario VT - 14% DC DC 35% 30% DE 50% PR 80% 19% Reconstruction projects, percentage of single-bids > or = 50% Reconstruction projects, percentage of single-bids between 10% - 50%

13. Occurrence of Single Bids by Type of Project Major Bridge Projects Canadian Provinces Alberta Ontario 25% DC DC 30% 32% 15% DE 11% PR 11% Major Bridge projects, percentage of single-bids greater than 10%

14. Occurrence of Single Bids by Type of Project Specialty Projects Canadian Provinces Alberta Ontario 60% DC DC 32% DE 30% 30% PR 75% 22% 15% 19% Specialty projects, percentage of single-bids > or = 50% Specialty projects, percentage of single-bids between 10% - 50%

15. Occurrence of Single Bids by Type of Project Maintenance Projects Canadian Provinces Alberta Ontario ME - 50% 11% 15% DC DC 18% 35% 12% 33% DE 85% PR 32% 17% Maintenance projects, percentage of single-bids > or = 50% Maintenance projects, percentage of single-bids between 10% - 50%

16. Occurrence of Single-BidsQ #12 - If single bids have become an issue in your state, is it confined to rural areas or specific areas of your state? • Rural areas only (5 responses) - HI, KS, NH, PA, TN • Specific areas of the state (15 responses) - CO, FL, GA, IA, IL, KY, MO, MS, MT, NC, OH, ON-Can, SC, VA, WV • More widespread (13 responses) - AB-Can, CA, DE, ID, LS, ME, ND, NM, NV, UT, VT, WI, WY • Single bids are not an issue in my state (8 responses) AR, AZ, CT, DC, IN, MD, MI, TX

17. Bidders listsQ #14 – Does your state publish a bidders list for proposals or plans? Canadian Provinces Alberta Ontario DC DC DE PR Other No response Yes (33 responses) Yes, partially restricted No

18. Cost IncreasesQ#16 - Is your state experiencing significant cost increases in construction bids relative to similar previous projects? DC DC DE PR Canadian Provinces Yes (41) No (4) No response Alberta Ontario

19. 2005 Cost IncreasesQ#18 - If your state experiencing significant cost increases . . . What is the percentage increase (2005 from 2004)? 3% ME - 20% VT - 15% 12% 10% NH- 7% 18% 5% 23% 3% 9% 9% DC 35% DC 4% 13% 11% 70% 52% 32% 24% 25% 10% 10% DE 10% 14% 30% 12% 27% 28% MD 1% 1% 68% 15% 16% Cost increase greater than 50% Cost increase between 20%-50% Cost increase between 10%-19% Canadian Provinces Alberta 6% Ontario

20. Earthwork Price Increases Q #19 - If data are available, what construction bid items have experienced the most rapid cost increases in the past year? ME - 33% VT - 27% 27% NH - 16% 11% 14% 22% DC DC 86% 100% 79% 15% DE 12% 65% 100% 25% PR 19% 30% 60% 68% Canadian Provinces Cost increase greater than 50% Cost increase 20%-50% Cost increase 10%-19% Based on responding agencies: Low 2% High 100% Count 32 Average 27.7% Alberta Ontario

21. Asphalt Price Increases Q #19 - If data are available, what construction bid items have experienced the most rapid cost increases in the past year? ME - 12% VT - 15% 16% 14% 15% DC 25% DC 15% 21% 20% 13% 41% 40% 25% 30% 12% 20% DE 27% 15% 12% 15% 40% PR 16% 58% 26% Canadian Provinces Based on Responding Agencies: Low 5.0% High 58.0% Count 37 Average 18.1% Cost increase greater than 50% Cost increase 20%-50% Cost increase 10%-19% Alberta 28% Ontario

22. Portland Cement Concrete Price Increases Q #19 - If data are available, what construction bid items have experienced the most rapid cost increases in the past year? 27% VT - 30% 12% 63% DC 16% 15% DC 19% 15% 80% 26% 29% 20% 20% DE 47% 25% 32% 13% 35% PR 39% 64% 16% 35% Canadian Provinces Based on Responding Agencies: Low 1.0% High 80.0% Count 32 Average 22.8% Cost increase greater than 50% Cost increase 20%-50% Cost increase 10%-19% Alberta Ontario

23. Steel Price IncreasesQ #19 - If data are available, what construction bid items have experienced the most rapid cost increases in the past year? VT - 65% 15% NH -14% 14% 41% 35% 13% 14% DC 35% DC 23% 72% 37% 85% 50% 20% 16% 18% 18% DE 25% 20% 24% 50% PR 13% 56% 14% Canadian Provinces Based on Responding Agencies: Low 2.2% High 85.3% Count 32 Average 26% Cost increase > or = 50% Cost increase 20%-50% Cost increase 10%-19% Alberta Ontario

24. New Price Adjustment ClausesQ #20- Have you initiated any new price adjustment clauses not previously noted in the September 2005 AASHTO/FHWA survey?(16 Yes responses) DC DC DE PR Canadian Provinces Alberta Ontario

25. Delays from material shortagesQ #22 - Have you experienced project delays resulting from material shortages of any of the following? DC DC DE PR Portland cement (9 “Yes” responses) AB-Can, AZ, CA, FL, HI, NC, NM, NV, UT Asphalt cement (6 “Yes” responses) AZ, CA, FL, HI, IN, NM, Structural Steel (9 “Yes” responses) AB-Can, AZ, HI, IN, MI, NM, NV, PA, VT Reinforcing Steel (4 “Yes” responses) AB-Can, AZ, HI, NM Fuel (1 “Yes” response) FL Canadian Provinces Alberta Ontario

26. Delays from material shortages – continued . . . “Other” reasons for delays from material shortages • AB-Can - Heavy Equipment tire availability • GA - Rock • LA - Base course, precast piles/girders • ME - High Mast Arm Poles • SC - Aggregate • VT - Signal controller boxes from suppliers because of sole source contracts.

27. Q #23 - Have you granted contract time extensions for any specific material shortages in the past 2 or 3 years? • CA -on a few very localized projects • FL - Time extensions have been granted for liquid asphalt, fuel (post-Katrina for a short term) and aggregates. • GA - For a short while 1-2 years ago, several time extensions were granted because of a shortage of rock. • HI - Fencing material shortage since 9/11. • ME - Traffic High Mast are poles Contractor stated lack of availability due to hurricanes. • NV - We have delayed the project start on two contracts approximately 90 days, due to structural steel girder material availability. • ON-Can - Some Structural Steel contracts over the last two years. • SC - Large demand for specific aggregates out-stripped suppliers ability to produce. Any opportunities to increase production or open new quarries were deterred by resource agencies.

28. Initiatives to Control Costs / Increase CompetitionQ #25 - If your state has experienced reductions in competition and/or significant cost increases in bids, what initiatives have you implemented or considered to address these issues? Five initiatives with the most “yes” responses • Rejecting non-competitive bids and re-advertising (41 responses) • Updating construction cost estimate data (32 responses) • Bundling projects (placing several smaller projects together) (24 responses) • Using price adjustment clauses for certain materials (22 responses) • Balancing work type in each letting (19 responses)

29. Most Effective Initiatives to Control Costs / Increase CompetitionQ #26 - Of the above initiatives, which three have been the most effective (or which three does your state consider to be the most effective) in fostering competition and controlling costs? * • Rejecting non-competitive bids and re-advertising (17, 5, 3)* • Balancing work type in each letting (7, 4, 3) • Bundling projects (placing several smaller projects together) (2, 4, 5) • Updating construction cost estimate data (0, 5, 4) • Splitting large projects into smaller projects (2, 5, 1) • Reducing contractor's risk (3, 1, 3) • Deferring project lettings (1, 3, 1) * (1st , 2nd, and 3rd) most effective responses

30. Bid Rejection SavingsQ #28 - If non-competitive bids are rejected, do you have data to support the savings/costs associated with this policy? Notable responses • KY - Savings from projects that were re-let: 2005 - $1,866,426.08; 2004 - $1,737,573.26 • MO - MoDOT keeps track of savings from rejected projects. Average savings per fiscal year is over $5 million per year, although one recent month of re-lets resulted in a savings of over $5 million in the single month. • VA - Projects previously rejected and re-bid in calendar year had savings of $3,623,174. This total does not include plant mix schedules. • WI - Approximately $500,000 in savings per year.