Under the shadow of potential reductions in local infrastructure spending in the near future, two trade groups the Long Island Contractors’ Association (LICA) and the American Road & Transportation Builders Association (ARTBA) came together in August of 2019. Together, they compiled a meta-analysis that can hopefully provide Long Island with a clearer roadmap to spending cuts that do not reduce the value of local roads or the labor that builds and maintains them.
The document in question explores the types of government contracts often used for maintaining roads, sewers, parks, bridges and more and explores their value in comparison to each other. It also looks at how the cost of materials, like asphalt, can positively or negatively impact the value of a given contract. Among several conclusions drawn in their findings, the study suggests that local governments that pay for a single project at a time, rather than bundling repairs or using open-ended contracts, tend to spend less time and money on both, with better results.
What Are the Specifics of the Study?
The finished analysis looks at a total of 62 contracts awarded in five Long Island areas, specifically in Nassau County as well as the communities of Hempstead, Islip, Oyster Bay, and Smithtown. It uses the numbers on these contracts to explore how the type of contract had an impact on how much value returned.
The three types of contracts that infrastructure work tends to fall into are:
- Single, specific projects – These are “based on the delivery of a set of improvements for a road or bridge.”
- Bundled projects – Usually a group of repairs to bridges or roads or other parts of the infrastructure.
- Open-ended contracts – These have no set end and will take as long as it needs to in order to get done. While there are set bids and budgets, the open-ended nature means it cannot account for the changing cost of materials at this time.
A Breakdown of the Study’s Conclusions
In exploring the contracts included in the analysis, the researchers found the following:
- Single projects spanned 35 of the 62 tested. With an average of 5.6 bidders, these lasted around 189 days, and valued in total at $78.6 million. That’s an average of around $2.2 million per project.
- Bundled projects were 15 of the 62 tested and had 5 companies bidding. There was an average completion time of 220+ days, and these were awarded a total of $55 million. That’s an average of $3.6 million per contract.
- Open-ended contracts represented by the remaining twelve projects examined. These lasted an average of 500+ days and averaged three bids per contract. The winning bids were around $29 million altogether, but the actual spending was over $63 million total. The study notes this is nearly as much as was spent on the 35 specific projects. That’s an average of $5.25 million per contract.
These numbers support their conclusion about what appears to benefit local communities in a faster and more cost-effective way. A major factor in the expanded costs of bundled and open-ended contracts showed that the type of contract could affect the per-unit bid price on materials like asphalt as much as 10 percent. Especially in open-ended contracts, with no set deadline, the cost of materials at the time of bidding could fluctuate a great deal before completion.
What Could This Ultimately Mean for Road and Repair Contracts?
While the data is now out there and free for anyone to examine, there is no definite word on action to be taken. However, according to Newsday, state spending is expected to go down in the coming years, dropping as far as $108 million in 2020 versus $274 million in 2018. These numbers show there may be a surefire way to cut costs without losing quality or jobs. Will a transition from open-ended and bundled projects to single contracts mean more bids for every company? If so, will smaller, more focused projects save money or leave tradespeople with less takeaway? It remains to be seen.