A shortage of construction workers coupled with higher prices for materials used in construction are driving up costs for San Diego County Water Authority’s infrastructure and maintenance projects, the agency is warning.
During a Water Authority Board of Directors’ Engineering and Operations Committee meeting held earlier this month, Gary Bousquet, the agency’s deputy director of engineering, told attendees: “The Water Authority will monitor market trends and adjust individual project budgets as required. Our planning process includes prioritizing projects and evaluating the timing or need and scope of projects. We will adjust our project cost estimates to meet changing market conditions.”
Due to the increasing materials’ pricing and the labor shortage, Water Authority project bids from contractors in 2018 ranged from $200,000 to $6 million over the project costs estimated by the agency.
According to a recent report from the Associated General Contractors of America, construction employment declined by 1,300 jobs in the San Diego region from January 2018 to January 2019.
“There are many large-scale construction projects underway in Southern California, while at the same time there is a shortage of skilled and unskilled labor, which means greater competition for those workers,” said Brent Fountain, a principal engineer with the Water Authority. “In addition, increasing prices for materials are impacting the costs for both maintenance and capital projects.
“We’ve received fewer bids at higher bid amounts from contractors for several projects in the past eight months,” Fountain continued. “The Water Authority generally had more bids and bid amounts closer to our project cost estimates, from 2014 through 2017.”
Fuel, metal and asphalt costs increased by double digits as labor costs also continued to rise between September 2017 and September 2018, according to the Associated General Contractors of America. Diesel fuel, steel pipe and tube, asphalt paving mixtures and aluminum products were among the products that contributed to the larger year-over-year cost increases, according to the AGCA.
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