Brighter Outlook Seen for Infrastructure Services

All the signs point to more infrastructure spending in the years ahead.

Move Illinois rebuilding and widening program

Value of project: $12.1 billion

Value of consulting contract: $70 million

HNTB’s role: Supervise management of the project

Reason HNTB was selected: The company had performed a similar role with the Tollway’s last multibillion-dollar system-wide rebuilding program, and was the right fit for the job, according to the Tollway’s chief engineer.

Contract awarded: June 2012

Source of monies for the project: The 15-year Move Illinois program is being funded by the 87.5 percent toll hike that went into effect Jan. 1, 2012, and an increase in tolls for commercial vehicles that began in 2015.

Project tasks: The Move Illinois projects include rebuilding and widening the Jane Addams Memorial Tollway (Interstate Highway 90); construction of a new interchange connecting the Tri-State Tollway (I-294) to I-57; and building a new Elgin-O’Hare West Bypass.

The value of public works construction in the U.S. will climb 3 percent in 2018, reaching $133 billion, predicts the 2018 Dodge Construction Outlook from Dodge Data & Analytics. Contract authority funding from the Fixing America’s Surface Transportation Act (FAST Act) is growing 2 percent annually through FY 2020, which should help expand highway and bridge construction. If it gets Congress’ approval, the Trump administration’s infrastructure program will also boost dollars for projects.

Spending on public safety construction projects, including police stations, courthouses and jails will grow 6% in 2018 over 2017. Value of public safety construction will reach $9 billion in 2018, predicts construction consultant and investment banker FMI. Its first quarter 2018 forecast says overcrowding in correctional facilities and obsolete police stations in major metro areas are driving the need for new public safety projects.

And HNTB, an infrastructure solutions firm, is poised to capture many of the public projects in 2018. The firm assists clients with large and complex projects by providing a range of professional services. The firm serves as a program management consultant for the Illinois Tollway, specifically the tollway’s Move Illinois upgrade effort, a 15-year, $14 billion capital program.

ilinois tollwayHNTB was the program manager for the Illinois Tollway’s Congestion-Relief Program: Open Roads for a Faster Future initiative. Project contractors widened and constructed 274 miles of existing highways and built a new 12.5-mile extension of a major corridor. The contractors converted 20 mainline toll plazas to open road tolling at an accelerated pace.

Icons of Infrastructure reached out to Tom O’Grady PE, HNTB Corp.’s Corporate President since 2015, for his views on infrastructure trends. Below are excerpts from the conversation:

Icons of Infrastructure: What sets HNTB apart from other firms in the infrastructure space?

tom ogradyTom O’Grady: HNTB understands that a strong infrastructure system creates jobs, promotes economic development and advances America’s competitiveness in the international marketplace. The firm is committed to its clients to deliver transportation projects to improve mobility and quality of life.

We help clients do more with less by developing creative funding, management and public outreach strategies that turn projects into reality. The firm serves as a trusted adviser to transportation agencies around the country, providing counsel and extension of staff.

Celebrating more than a century of service, HNTB understands the life cycle of infrastructure and addresses clients’ most complex technical, financial and operational challenges.

HNTB is 100% employee owned by its 4,000 employee owners and is focused on the U.S. transportation infrastructure market.

Icons: How does HNTB see the 2018 infrastructure marketplace shaping up?

O’Grady: There is strong and growing bipartisan agreement that infrastructure is an issue that must be addressed now. The funding needed to address aging and obsolete infrastructure as well as improvements to provide adequate mobility for people and goods, far outstrips funding available at the federal, state and local levels, even with the administration’s recent federal infrastructure proposal.  We need to address long-term, sustainable funding needs at the federal level.

In total, the transportation infrastructure market is as strong as it has been in many years, but still woefully inadequate from a global competitiveness standpoint. At this point, there is a growing divide between states and local governments that are addressing funding through gas and sales tax increases in many locations and those that are not. Competitive pressures will continue to mount on locations that aren’t proactively addressing their mobility needs.

The infrastructure market is strong for many state DOTs (that have passed new funding), toll agencies (that generate funding critical to maintenance, operations and system expansion), transit authorities (especially that have passed new funding), and airports (given the strong economy and economic health of airlines).

The federal infrastructure proposal would give states the opportunity to put tolls on interstate highways as long as toll revenues are dedicated to infrastructure investment. This provides an alternative source of new funding that should be considered.

Icons: Does HNTB have any advice for local government officials contemplating a major infrastructure project this year?

O’Grady: Below are my thoughts:

  • Invest funding strategically to maximize benefits of a local infrastructure project, including jobs and increased economic growth, and an improved quality of life in a local community.
  • Advance projects aggressively – costs are escalating and may accelerate as the economy continues to improve and inflation continues to grow.
  • Evaluate all project delivery options and create delivery structures that protect the public’s interest while not placing undue risk and therefore higher project costs on the parties delivering the projects.
  • If the first need is to generate local or state funding, move forward aggressively and be very open with your communities about the need and plan, including prioritized projects and implementation schedules. Utilize resources efficiently. Consider the many examples of success in this arena over the past five years, including Measure M in Los Angeles, Sound Transit in Seattle, and the State of Iowa. Many other state and local transportation agencies that have successfully passed and implemented gas and sales tax increases focused on transportation infrastructure.

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