Inflation taking bite out of new infrastructure projects

The price of a foot of water pipe in Tucson, Arizona: up 19%. The cost of a ton of asphalt in a small Massachusetts town: up 37%. The estimate to build a new airport terminal in Des Moines, Iowa: 69% higher, with a several year delay.

Inflation is taking a toll on infrastructure projects across the U.S., driving up costs so much that state and local officials are postponing projects, scaling back others and reprioritizing their needs.

The price hikes already are diminishing the value of a $1 trillion infrastructure plan President Joe Biden signed into law just seven months ago. That law had included, among other things, a roughly 25% increase in regular highway program funding for states.

“Those dollars are essentially evaporating,” said Jim Tymon, executive director of the American Association of State Highway and Transportation Officials. "The cost of those projects is going up by 20%, by 30%, and just wiping out that increase from the federal government that they were so excited about earlier in the year.”

In Casper, Wyoming, the low bid to rebuild a major intersection and construct a new bridge over the North Platte River came in at $35 million this spring — 55% over a state engineer's estimate. The bid was rejected and the project delayed as state officials re-evaluate their options.

“If this inflation keeps the way it is, we will have to roll projects from one year into the next, into the next, into the next," said Mark Gillett, chief engineer of the Wyoming Department of Transportation.

Gillett had hoped the federal Infrastructure Investment and Jobs Act would finance a boom in highway and bridge construction.

“But it’s just not going to go as far as we had hoped,” he said.

In addition to roads, the federal infrastructure bill includes billions of dollars for...