Local and state government contracts for highway, road and bridge projects dramatically increased between 2021 and 2022, a sign that bipartisan infrastructure funds are starting to have an impact, but contracts for rail and transit projects slowed significantly since the start of the COVID-19 pandemic, according to an analysis conducted by the American Road & Transportation Builders Association.
The dollar value of contract awards for all transportation projects jumped 25% from 2021 to 2022, with the number of contracts up 12.4% to 39,500, according to ARTBA Chief Economist Alison Premo Black.
“It's a very positive sign that money from the federal investment is starting to make its way into the project pipeline,” said Black in an interview. She explained that state and local governments began to commit funds in 2021, the year the bipartisan infrastructure law was enacted, and last year started to award contracts, “a leading indicator of what is going to be done.”
Highway, pavement, bridge and tunnel projects vastly outnumbered rail and transit projects in 2022, both in total value and the number of projects. The 38,220 contracts for roadway-related construction totaled $102.2 billion, according to Black, while the 180 rail and transit contracts were valued at $3.5 billion. That represents a significant decline from 2019, when $11 billion in rail and transit contracts were awarded, according to data provided by Black.
The majority of rail and transit contracts go to mass transit, Black explained. “The work has continued to be ongoing, but that pipeline has really dropped dramatically over the last few years.” She attributed the decline to the effects of the COVID-19 pandemic. “It’s not surprising that the capital investment has been scaled back while agencies have been so concerned about operations.”
In a separate ARTBA analysis of how infrastructure law highway and bridge funds had been used through Sep. 30, 2022, 46% went to roadway repair or reconstruction work while just 1% went to bike and pedestrian facilities.
Many states are looking to ramp up their spending on transportation infrastructure. According to ARTBA’s Transportation Investment Advocacy Center, state legislatures have already introduced more than 150 bills to increase transportation revenue so far in 2023. The governors of Alaska, Michigan, Mississippi, Texas and Wisconsin have proposed increased transportation funding for their upcoming fiscal year budgets.
Infrastructure, engineering and construction firms are beginning to see the effects of the 2021 infrastructure law. “We have already started to see some infrastructure bill funding,” said Carey Smith, chairwoman, president and CEO of Parsons Corp., speaking on the engineering company’s Feb. 15 earnings conference call. “We've assumed that we're going to see a ramp-up as we approach the end of '23 and going into '24, with a likely peak around the '26 time frame.”
Bob Pragada, CEO of Jacobs, said the company has helped its clients secure more than $1 billion in competitive grants from the infrastructure law since it was enacted. “With another four years locked in and robust funding, the U.S. infrastructure climate is strong,” he said on the company’s Feb. 7 earnings call.
Black also sees a strong future for infrastructure projects. “I'm looking forward to more projects getting out the door and to see some of these projects actually start to be completed,” she said.