Vail Daily editorial: Supply and demand
This has been the year when carefully crafted, well-researched construction cost estimates have been blown to smithereens by the law of supply and demand.
The latest estimate to fall apart is the one for the proposed underpass in Vail that would link the north and south frontage roads under Interstate 70. The project would be a good one, taking traffic out of the main and west Vail interchanges. Town officials say the underpass would help the bus system create more efficient routes and would speed response times for ambulance crews, police and firefighters.
When the project was announced in 2013, the plan was for the town to pick up about $6 million of the expected cost of about $21 million. Then the estimate went up in smoke.
The Colorado Department of Transportation estimates that road construction costs have increased as much as 25 percent since 2013. The main culprit is the sheer amount of work to do.
Between the Front Range floods of 2013 and projects freed up by $1.5 billion in road spending thanks to a state plan to more quickly spend available funds, there’s a lot of work to do and a limited supply of material and manpower.
Supply, meet demand.
We’re sure there will be critics who accuse construction companies of taking advantage of taxpayers by hiking prices. With respect, we disagree.
In everything from home renovation to road work, the construction industry was hit hard by the Great Recession. A lot of companies closed, and a lot of people who once worked in relatively high-paying jobs found themselves unemployed. The companies that did survive often took on any work they could find, often bidding jobs at prices just barely above their costs.
Now those companies are facing higher costs for labor — the other side of a shrunken workforce in a now-growing industry — and, frankly, have an opportunity to put a little more meat on the bones of their estimates. As a company that’s been running a supermodel-lean operation for more than five years now, we understand their position.
Ultimately, though, the laws of economics are likely to mean less work will get done with that finite pool of state money.
We hope Vail’s underpass can be saved. But it won’t be much of a surprise if Vail’s leaders look at their own finite funds and say they simply can’t move forward.