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

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

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

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

Average Number of Bids / Project Selected Results DC DE PR Alberta Ontario Canadian Provinces < 3 bids per project in 2005 > or = 4 bids per project in

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)

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

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 projects were let in 2005 as opposed to 231 projects in 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.

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

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

Occurrence of Single Bids by Type of Project Asphalt Resurfacing Projects DC DE PR Alberta Ontario Canadian Provinces 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% 40% ME - 80% 70% 30% 34% 30% 80% 37% 21% 30% 33% 30% VT - 23% 28% 29% 10%20% 19% 10% 11%10%

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

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

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

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

Occurrence of Single-Bids Q #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

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

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

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

Earthwork Price Increases Q #19 - If data are available, what construction bid items have experienced the most rapid cost increases in the past year? DC DE PR Alberta Ontario Canadian Provinces 60% 100% 30% ME - 33% 65% 68% 79% 86% NH - 16% 19% 22% 25% 27% VT - 27% 14% 15% 11% 12% Based on responding agencies: Low2% High100% Count32 Average27.7% Cost increase greater than 50% Cost increase 20%-50% Cost increase 10%-19%

Asphalt Price Increases Q #19 - If data are available, what construction bid items have experienced the most rapid cost increases in the past year? DC DE PR Alberta Ontario Canadian Provinces 58% 13% 15% 16% ME - 12% 12% 26% 40% 21% 15% 40% 41% VT - 15% 14% 30% 27% 28% 25% 20% 16% 15% 12% Based on Responding Agencies: Low5.0% High58.0% Count37 Average18.1% Cost increase greater than 50% Cost increase 20%-50% Cost increase 10%-19%

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? DC DE PR Alberta Ontario Canadian Provinces 64% 63% 13% 39% 32% 35% 29% 80% 26% 35% VT - 30% 20% 47% 15% 20% 27% 15% 25% 19% 16% 12% Based on Responding Agencies: Low1.0% High80.0% Count32 Average22.8% Cost increase greater than 50% Cost increase 20%-50% Cost increase 10%-19%

Steel Price Increases Q #19 - If data are available, what construction bid items have experienced the most rapid cost increases in the past year? DC DE PR Alberta Ontario Canadian Provinces 56% 16% 13% 24% 14% 18% 85% 13% 50% 72% VT - 65% 35% 41% 25% 35% 37%23% 15% 50% 20% 18% 20% 14% NH -14% 14% Based on Responding Agencies: Low2.2% High85.3% Count32 Average26% Cost increase > or = 50% Cost increase 20%-50% Cost increase 10%-19%

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

Delays from material shortages Q #22 - Have you experienced project delays resulting from material shortages of any of the following? DC DE PR Alberta Ontario Canadian Provinces 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

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.

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.

Initiatives to Control Costs / Increase Competition Q #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)

Most Effective Initiatives to Control Costs / Increase Competition Q #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? * 1. Rejecting non-competitive bids and re-advertising (17, 5, 3) * 2. Balancing work type in each letting (7, 4, 3) 3. Bundling projects (placing several smaller projects together) (2, 4, 5) 4. Updating construction cost estimate data (0, 5, 4) 5. Splitting large projects into smaller projects (2, 5, 1) 6. Reducing contractor's risk (3, 1, 3) 7. Deferring project lettings (1, 3, 1) * (1 st, 2 nd, and 3 rd ) most effective responses

Bid Rejection Savings Q #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: $1,866,426.08; $1,737, 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.