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Rising Costs Push Transportation Projects Billions Of Dollars Over Budget, DOT Says

By Christina Haley O'Neal, posted Aug 26, 2021
Area transportation leaders will be reevaluating the region's roadway projects plan because of the rising costs of construction and land, officials with the N.C. Department of Transportation said Thursday.

The move comes following a recent cost estimate evaluation that state transportation engineers conducted this year showing the state's list of future projects is billions of dollars over budget, said Chad Kimes, NCDOT Divison 3 engineer.

There are three pools of funds that are used to budget for certain future projects across the state and region, Kimes said. 

One pool – which includes funding projects such as Interstate 40 pavement rehabilitation and some future improvements to College Road – is $3 billion over budget statewide.

The regional NCDOT funding pot, for Divisions 2 and 3, is nearly $542 million over budget. Projects within the regional budget include the Hampstead Bypass and a roundabout at N.C. 133 at 23rd Street.

A funding source for Division 3 alone – which includes future improvements to the Martin Luther King Jr. Parkway and College Road intersection, the Independence Boulevard extension and an interchange in Monkey Junction – is over budget by $242.2 million, Kimes said.

The future project budget issues are based on rising costs, including construction and buying land for road projects, and not because of cash balance issues NCDOT has faced in previous years, Kimes said, adding that NCDOT has recovered from its cash deficit.

“Diesel prices have increased, lumber prices have increased and steel prices are going up. For construction projects, it is very difficult to look at designs. We are burdened right now … the costs are just going up dramatically,” Kimes said.

The re-estimates for projects across the state started in January and wrapped up this month, Kimes said.

On Wednesday, Kimes met with the board of the Wilmington Urban Area Metropolitan Planning Organization (WMPO) during the organization's regular monthly meeting to give a presentation on the future projects budget shortfall.

A list of projects is outlined in the State Transportation Improvement Program, or STIP,  a capital improvement plan that lays out scheduling and funding for construction projects 10 years out.

The budget and project list are looked at every three to four years, Kimes said.

NCDOT is going to reevaluate the projects' timing or inclusion in the 10-year plan, as well as look for ways to bring down the costs of the projects, Kimes said.

"There may be things we can do to save money; tighten up things. We won't risk safety at all but there may be things we can do to save money. So we're going to look at all these projects, and these three pots of money and see if we can do some cost-saving there," Kimes said. 

Regional transportation officials will start those exercises to see where money might be saved, and also work closely with the area's planning organization to possibly reprioritize projects, he said. The process will take place over the next year. Final approval of the changes to the STIP is slated for 2023.

"It's going to take a lot of work. But it needs to take place," Kimes said. "We have plenty of time to work on this but between the value engineering and working with our planning partner, we feel like we can make these numbers a lot better."
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