Construction Cost Increases Eat Away Funding Gains

According to estimates recently presented by the Corps of Engineers to the Inland Waterways Users Board, the Kentucky Lock Addition Project will need an additional $332 million above and beyond what it has already been allocated in the Infrastructure Investment and Jobs Act. Montgomery Locks and Dam will need $237 million more than IIJA allocated it.

The Corps is locked in an alternate dispute resolution with a contractor at the Chickamauga Lock Replacement Project over cost estimates, with final estimates supposed to be released by the end of March.

The Upper Mississippi Lock 25 Project was supposed to be “fully funded” at $732 million by the last official estimate—in 2018. Its costs have surely ballooned since then.

The funding of these projects made up for decades of neglect and under-funding, but a total of $5 trillion injected into the economy in just a few years has contributed to monetary inflation. Various shortages and supply chain issues related to COVID-19 and the war in Ukraine have also played a part, as has the ongoing tight labor market.

These are all reasons why Congress might want to consider moving to a 75-25 federal cost-share for major inland waterways projects.

In the Greek myth, Sisyphus is condemned to punishment in the afterworld by having to endlessly push a boulder up a steep hill, only to have it slip just before the summit. More modern images of frustration are Charlie Brown trying to kick the football and Wile E. Coyote trying to catch the Road Runner.

These are the images that project cost inflation is bringing to mind. All these projects were supposed to be “funded to completion.” But cost increases are causing these completion dates to be pulled away like Lucy’s football, or dash off like the Road Runner at the last minute.