Predicting the future is never easy and that’s especially true when there’s a new administration in Washington. For those in the design-build industry, there are more economic questions than answers. Will President Trump deliver on his promise to rebuild America’s infrastructure? Will Congress fund an infrastructure package? What role will public-private-partnerships play in Trump’s proposal? Industry analysts with S&P have looked at all of these issues and their report for the transportation sector in 2017 may provide some hints of what the future could hold, particularly if we do enter a new era of American infrastructure investment. The “U.S. Public Finance Transportation Sector 2017 Outlook” issued by S&P Global Ratings reports, “the public finance transportation sector as a whole is strong.”
The current forecast by S&P economists predicts transportation sectors will see 2.4% growth in 2017 and 2.3% in 2018. While a federal infrastructure investment package is far from a sure thing, economists say their “upside scenario” including passage of tax cuts and $170 billion infrastructure program would boost growth in transportation to 2.8% in 2018 but then revert to 2.2% once the stimulus begins to fade. That’s the optimistic prediction. The report says, “A key question remains: will a consensus plan for direct federal spending for infrastructure overcome the obstacle that prevented a large-scale initiative in recent years – namely, how to pay for it. We believe a modest plan is likely, the size and scale being the subject of negotiation between Congress and the administration.”
However, as we’ve seen nationwide, the states aren’t waiting for Congress to act. S&P reports, “In 2016, 24 states approved 267 ballot measures, including tax increases for $207 billion in transportation infrastructure spending over the next 40 years.”
2016 was also an excellent year for design-build in state houses around the nation. There were legislative victories in 21 states, with improved design-build authority, public-private partnership authority or successes in turning back efforts to limit those authorities. Currently half the states in the nation have full authority to use design-build, while 17 other states allow it to be widely used. That leaves only eight states, as of the writing of this article, where design-build remains a limited option. A Design-Build Institute of America survey of state Departments of Transportation show an 800% increase in projects in 2016 when compared to 2002.
Despite rare bipartisan agreement and recognition of the need for increased infrastructure investment, there is no easy answer to the critical question of “how do we pay for it?” While the figures vary, the most recent report by the American Society of Civil Engineers (ASCE) gave the U.S. infrastructure a D+ in its annual report card, estimating that we need to invest $3.6 trillion by 2020 to upgrade it to acceptable levels. With current funding levels unable to fully address the funding gap, part of the solution is for industry leaders to help our nation reevaluate how we are spending the limited funds available.
One thing is clear; the design-build industry is ready to help our nation deliver on the promise of increased infrastructure investment by delivering projects faster and more cost-effectively, with fewer changes, fewer claims and less litigation.
Lisa Washington, CAE
DBIA Executive Director/CEO