Concrete prices threaten projects

By: DAVE DOWNEY - Staff Writer | Sunday, August 29, 2004 10:06 PM PDT ∞

Because the Chinese are rushing to get ready for the 2008 Olympics, half a world away a fire station in Temecula is almost 40 percent over budget.

The breakneck pace of construction of dams, skyscrapers ---- and Olympic stadiums ---- in booming China is taking a bite out of the worldwide supply of cement and steel, driving up prices for commodities crucial for public works projects in places such as Southern California, trade analysts and state transportation officials say.

As a result, the cost of new freeway lanes, fire stations and concession stands for baseball fields is soaring skyward. Some could be delayed.

"It's affected every project," said George Johnson, Riverside County transportation director and chief overseer of the county's 2,600-mile road system. "The costs are definitely going up significantly."

Riverside County is having to absorb concrete costs double what they were this time last year ---- $1,400 per cubic meter of wet concrete delivered to job sites today compared to $700 per cubic meter during the summer of 2003, Johnson said. As well, asphalt prices ---- fueled by record-high oil prices ---- have risen 14 percent in the last 12 months to $40 a ton from $35 a ton. Those increases, in turn, have driven up the cost of road construction anywhere from 10 percent to 50 percent, he said, and are reflected in projects such as the Newport Road extension set to begin construction in a month.

"If this continues, we're going to have to delay projects," Johnson said. "There's only a finite amount of money."

Statewide concern

The soaring construction-material costs also are causing consternation in the state Capitol.

"Much like the record gas prices we faced earlier this year, skyrocketing costs for basic construction materials such as asphalt, concrete and steel threaten California's ability to build and maintain safe highways," said Assemblywoman Jenny Oropeza, D-Carson, chair of the Assembly Transportation Committee.

"We are seeing this firsthand with the multibillion-dollar cost overruns on the San Francisco-Oakland Bay Bridge. Steel prices alone have jumped 26 percent since January," Oropeza said. "Our highway engineers have not seen anything like this since the 1970s."

State transportation officials say much of the price explosion for concrete is being driven by China's building boom and preparations for hosting the next Summer Olympics in 2008. The Cincinnati Enquirer reported in July that more than 40 percent of all the world's cement ---- a mixture of lime and clay that is used to make concrete ---- is being used in China.

According to the Portland Cement Association, a Chicago-area trade group, United States demand for cement routinely outstrips domestic supply, and the nation typically turns to imports to fill the gap. In 2003, imports accounted for nearly a quarter of all concrete poured in roads, homes and parks. This year, the Chinese are buying some of the cement that would normally be shipped from Asia to North America.

Rose Melgoza, a spokeswoman for the California Department of Transportation in San Bernardino, also said that the hot housing market across the United States and Southern California is consuming a large amount of concrete and is a factor in prices, as well.

One need only turn to Temecula, which has been quite active in the public works arena lately, to see how vividly the rising material costs are affecting projects. On one after another, construction bids are coming in well above the city's engineering estimates for the work.

"We are continuing to get surprised beyond our imagination," said Temecula Public Works Director Bill Hughes.

One of the more shocking surprises came in recent bidding for the proposed Roripaugh Ranch fire station on the city's northeast side, Hughes said. The low bid was $3.3 million ---- 37 percent higher than the figure engineers had penciled in. The project is a joint city-county venture, and Temecula and the county must regroup and figure out their next move.

"It came in close to 40 percent over the engineer's estimate ---- just outrageous," Hughes said. "It's not something where you just say, 'OK, Let's throw in a little more money.'"

On another Temecula project, Hughes said the low bid for reconstruction of the Winchester Road-Jefferson Avenue intersection with new curbs, gutters, sidewalks and medians, came in 25 percent over a $1.3 million estimate. Last week, the Temecula City Council decided to go ahead and award a contract for $1.6 million.

Filling the gap

Consequently, city officials aren't exactly looking forward to opening bids in mid-September for the new 43-acre Wolf Creek sports park on Pechanga Parkway.

"We're expecting that to really get hit hard by the price increases," Hughes said, adding that the engineer's estimate for the park is $12.5 million. "We're just holding our breath and hoping that the bids come in close to that."

Temecula officials also are holding their breath over the library, which is to be built on a hill overlooking the community's existing sports park. Temecula Councilman Ron Roberts said construction is expected to get under way in 2005, and it will consume huge amounts of concrete.

Construction workers also will pour large amounts of concrete this fall in Lake Elsinore as they replace the aging Swick-Matich Field concession stand and restroom facilities. Soaring concrete costs are largely why that city's $275,000 estimate ballooned into a $446,000 contract, city spokesman Mark Dennis said.

So far in Murrieta, said Russ Napier, a civil engineer, his city has avoided soaring contracts because projects were bid and material costs were locked in before the wave of concrete, steel and asphalt price increases broke.

"We've gotten most of our bids in on one side of that substantial increase and we're riding through that right now," Napier said. "The contractors are probably absorbing that increase at the moment."

Temecula managed also to land on the safe side of that price wave with the Rancho California Road bridge widening over Murrieta Creek that was just completed north of Old Town, Hughes said.

Surging costs did hammer the Riverside County Transportation Commission's $38 million project to add several miles of car-pool lanes on Highway 60 in the Riverside area, increasing the price tag by $6.5 million.

Transportation commissioners did not hesitate in July to vote to fill that gap. Roberts, who also serves on the commission. said the panel is likely to continue to cover gaps for other projects despite the ongoing run-up in prices.

"When you're always behind the curve on transportation issues, I think you have to bite the bullet and build the project," Roberts said. "You can't stop."

Contact staff writer Dave Downey at (951) 676-4315, Ext. 2616, or ddowney@californian.com.

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