Article Tools

• Bookmark

Advertisement

Most Popular News

• Accurately measuring pay in the public sector
• Government spending legislation aims to audit GSA each year
• Investigations could lead to tighter controls on agency spending

Know before you buy or sell. Get your truck's value instantly online.

Find Your Truck Now

*To see the actual values, you must purchase a subscription or a single-vehicle lookup.

Editor's note: The following is the fifth of a five-part series on government budgets and government spending that comprise the 2012 Keating Report. The topics we are covering include: federal budgets, state budgets, public-private partnerships, local government budget trends and government construction.

In its "2012 Dodge Construction Outlook," New York-based McGraw-Hill Construction (MHC) estimates that the value of public works construction projects under way will drop 5 percent from 2011 levels, settling at $94.8 billion. Government spending cuts and the absence of a multi-year federal transportation bill for highway and bridge construction are the reasons for the drop, say MHC analysts. Highway/bridge and environmental public works construction are the two largest categories in public works construction activity.

Construction of schools, healthcare facilities, and other government and institutional buildings will slow a little in 2012, according to MHC. The value of government and institutional building projects under way in 2012 will fall by 2 percent compared to 2011 levels, totaling $92.1 billion in 2012. Healthcare is the one bright spot in this category; spending on healthcare construction will grow by 2 percent in 2012 over 2011 levels, with the value of construction reaching almost $22.9 billion, MHC predicts.

In 2012, public buildings construction projects will cover 22 million square feet, down 9 percent from 2011 levels, according to MHC preliminary estimates. Military housing, courthouses and detention facilities are some of the government projects covered in this category.

In its 2012 forecast, the American Road & Transportation Builders Association (ARTBA) predicts that the highway and bridge construction market is expected to contract 6 percent, to $72.6 billion, from an estimated $77 billion in 2011. 

Alison Premo Black

"The main factors driving the decline in highway and bridge construction are not surprising: the winding down of infrastructure investment under the American Recovery and Reinvestment Act (ARRA), continued weak growth in the U.S. economy, persistent state and local budget challenges, and a static federal-aid highway program," says Alison Premo Black, ARTBA's vice president of policy and managing director of its Research & Education Division.  

"Of course, the long-delayed highway/transit reauthorization bill remains a 'wild card,'" she adds. "If Congress in early 2012 passes a multi-year bill that, at minimum, maintains current investment levels, it could help interject greater certainty in the market."

Bernard Markstein

Now is the time that the U.S. should be investing in its public infrastructure, says Bernard Markstein, chief economist at Norcross, Ga.-based Reed Construction Data, an information provider to the construction industry. "We have a lot of skilled construction workers who are out of work and available, so wages are relatively low or as low as they are going to be. In addition, building materials are relatively inexpensive, interest rates are low, and at this point, we have a great need. This is an investment that will last for years — it's not short term," Markstein told Govpro.

Once the economy has improved, construction-related prices will go up, Markstein says. "So, it's a great time to be borrowing money and putting folks to work, whether repairing or [building] new infrastructure. But politically, it seems a lot of people treat any government spending as a negative instead of looking at it as an investment," he says.