The construction industry is facing sharply growing costs for steel products, up by 142 percent in the last 12 months, and other key materials. Shortages of skilled labor are worsening, exacerbated by Covid-induced retirements.
“A lot of people would like to see the money quickly spent,” said Anirban Basu, chief economist of Associated Builders and Contractors, a construction industry trade group. “They are going to look at the costs they are facing and extend out the projects because of constraints.”
Bent Flyvbjerg, a professor at the University of Oxford who has studied scores of projects around the world, found that 92 percent of them overran their original cost and schedule estimates, often by large margins — in part, he said, because cost estimates are “systematically and significantly deceptive.”
“A lot of projects are not delivering what they promised to deliver,” he said.
In Baltimore this month, Mr. Biden lamented that U.S. infrastructure was once rated the world’s best and now, “You know what we rank in infrastructure? Thirteenth in the world.”
In some cases, U.S. construction costs are higher than those in Western Europe and democratic nations in Asia, according to an upcoming University of California, Berkeley, analysis, said Ethan Elkind, a law professor and director of the school’s climate program.
“It is a lot harder to build projects here, and we are not as skilled at doing it,” he said.
When California voters approved a bond in 2008 for a high-speed rail system from Los Angeles to San Francisco, the project was supposed to cost $33 billion and be completed by 2020. The job is now projected to finish in 2033 for $100 billion, though those estimates are dated and there is an $80 billion funding gap.