Legislature(2025 - 2026)BUTROVICH 205
02/13/2025 01:30 PM Senate TRANSPORTATION
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| Audio | Topic |
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| Start | |
| Presentation(s): Stip Update and Construction Outlook | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
ALASKA STATE LEGISLATURE
SENATE TRANSPORTATION STANDING COMMITTEE
February 13, 2025
1:34 p.m.
MEMBERS PRESENT
Senator Jesse Bjorkman, Chair
Senator Jesse Kiehl
Senator Bert Stedman
Senator Mike Shower
MEMBERS ABSENT
Senator Löki Tobin, Vice Chair
COMMITTEE CALENDAR
PRESENTATION(S): STIP UPDATE AND CONSTRUCTION OUTLOOK
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
KATHERINE KEITH, Deputy Commissioner
Department of Transportation and Public Facilities (DOTPF)
Anchorage, Alaska
POSITION STATEMENT: Co-presented STIP Update and Construction
Outlook.
DOM PANNONE, Director
Administrative Services
Department of Transportation and Public Facilities (DOTPF)
Juneau, Alaska
POSITION STATEMENT: Co-presented STIP Update and Construction
Outlook.
ACTION NARRATIVE
1:34:49 PM
CHAIR BJORKMAN called the Senate Transportation Standing
Committee meeting to order at 1:34 p.m. Present at the call to
order were Senators Kiehl, Stedman, Shower and Chair Bjorkman.
^PRESENTATION(S): STIP UPDATE AND CONSTRUCTION OUTLOOK
PRESENTATION(S): STIP UPDATE AND CONSTRUCTION OUTLOOK
1:35:29 PM
CHAIR BJORKMAN announced the presentation, STIP Update and
Construction Outlook by Deputy Commissioner Keith and Director
Pannone.
1:36:16 PM
KATHERINE KEITH, Deputy Commissioner, Department of
Transportation and Public Facilities (DOTPF), Anchorage,
introduced herself and advanced to Slide 2, 2025 Construction
Outlook. Slide 2 contains an infographic showing DOTPF's more
than 80 projects in over 40 communities. She stated that the
presentation would detail project delivery and payments for this
season and potential 2025 awards. She expressed hope that the
presentation would give a clear picture of DOTPF's status with
respect to project delivery and provide a satisfactory Statewide
Transportation Improvement Program (STIP) update for future
planning. The 2025 construction outlook maps and detailed
project information are available on the DOTPF website. The maps
are broken out into DOT regions: Northern, Central, and
Southcoast. There are currently 145 active construction
projects, which is an increase from 2024. She listed various
airport and roadway upgrades across the state.
1:40:08 PM
SENATOR STEDMAN asked if there is an update on the Angoon
airport.
1:40:20 PM
MS. KEITH said that detailed information about the status of the
project would be provided to the committee.
1:40:38 PM
DOM PANNONE, Director, Administrative Services, Department of
Transportation and Public Facilities, Juneau, Alaska, advanced
to Slide 3, Capital Expenditures. Slide 3 contains a table
showing the Program Balance Index (PBI) and Contractor Payments.
payments, a bar graph of capital expenditures ($ in millions)
for FFY 2022-2024, and a table showing the trend of increasing
capital expenditures for 2022-2024. He said that this tool is
used to monitor the health of the program. He briefly explained
how capital programs are monitored. He noted a yearly increase
in funds flowing from the department.
1:41:41 PM
CHAIR BJORKMAN asked about the lag time between when a
contractor completes work and when they receive payment. He
asked for clarification about the timing of work and payments by
fiscal year.
1:42:17 PM
MR. PANNONE said that Slide 3 shows when DOTPF issued a check.
He explained that average payment time for the past year was 10
days after receiving an invoice. He offered additional details
on this process.
1:43:10 PM
CHAIR BJORKMAN offered an example of a contractor not receiving
payment for work done and asked for further clarification of the
billing and payment process.
1:43:31 PM
MR. PANNONE said that he would need to consider the specific
scenario in order to offer further insight.
1:43:52 PM
MS. KEITH encouraged contractors to contact DOTPF in the event
of non-payment. She said that DOTPF works with the Association
of General Contractors (AGC) to ensure prompt payment but
acknowledged that sometimes issues arise. She advanced to Slide
4, Project Delivery / Construction Contract Payments ($ in
millions). Slide 4 includes a table displaying contractor
payment estimates with over $10 million difference. A second
table shows contractor payments estimated by regional
construction engineers & directors whose combined transportation
experience is an estimated 100 years. This table is broken down
into type of work and delta ($ in millions). She acknowledged
AGC concerns about forthcoming contractor payments. DOTPF has
discussed this with AGC and is continually working to understand
discrepancies and concerns. She noted the differences in
forecasted payments: DOTPF $885; Association of General
Contractors (AGC) $650.2; with a delta of $242.1. She briefly
discussed possible reasons for these differences. One reason is
related to payments awarded the in 2024 for work that is
carrying forward into 2025.
1:46:34 PM
MR. PANNONE clarified that the data presented was calculated
using open contracts awarded in prior years that have
significant dollar amounts (and work) remaining.
1:46:59 PM
CHAIR BJORKMAN said that the conflation of previously awarded
contracts with new contracts was causing concern among
contractors. He asked whether Ms. Keith or Mr. Pannone spoke
with AGC prior to publishing the data included on Slide 4.
1:47:45 PM
MS. KEITH indicated that neither she nor Mr. Pannone were in
direct communication with AGC; however, DOTPF (primarily
Commissioner Anderson) has been in communication with AGC during
this process. She offered to provide more detailed information
about these conversations to the committee.
1:48:09 PM
CHAIR BJORKMAN encouraged more open communication between DOTPF
and AGC, particularly regarding the DOTPF's reporting. He
suggested a clear delineation between new contracts and those
that are from prior years, in order to increase understanding
and reduce the potential for miscommunication. He said that
contractors are wondering if the three CMGC contracts have been
awarded and whether contractors have received a notice to
proceed on those contracts.
1:49:06 PM
MS. KEITH agreed that it is a complicated process. She
emphasized that DOTPF encourages sharing data and transparency.
She said DOTPF would like to hear from the contractors
expressing concern and briefly explained how the contract
payments are sometimes misunderstood. She expressed confusion
about concerns related to the health of the contracting
community for 2025, as this is not reflected in DOTPF's data and
reiterated that increased dialogue on this topic between DOTPF
and contractors is welcome.
1:50:09 PM
MR. PANNONE noted that DOTPF met with the AGC DOTPF steering
committee in October of 2024. He said that DOTPF would like to
continue to share data with AGC as a partner in delivering this
program.
1:50:31 PM
CHAIR BJORKMAN shared his understanding that current concerns
within the contracting community are based on a small number of
new contract awards and jobs put out to bid in 2025 and not
payments for previously awarded contracts. He noted that the
deadline for 2025 work is approaching and relayed that
contractors are concerned that a lack of new work will make it
difficult to keep Alaskans employed.
1:51:24 PM
MS. KEITH said that DOTPF has only received letters from AGC
related to contractor payments. She added that contract awards
would be discussed, as they are critical for future work and
future contractor payments.
1:51:55 PM
CHAIR BJORKMAN asked whether the three CMGC contracts on Slide 4
have been awarded and if contractors have received a notice to
proceed.
1:52:05 PM
MS. KEITH replied yes. The preconstruction portion has been
awarded. She briefly explained that a negotiation process
determines the scope of work and work packages are issued. The
work packages have not yet been issued, as the negotiations are
underway.
1:52:33 PM
CHAIR BJORKMAN asked for a timeline for those projects.
1:52:42 PM
MS. KEITH reiterated that negotiations are underway; however, an
exact date is unknown. She indicated that the Cape Blossom Road
project is delayed due to a price increase but will move
forward.
1:54:11 PM
MS. KEITH advanced to Slide 5, Top Contractor Payments FFY2021-
2024. Slide 5 contains a bar graph showing payments by project
and a chart showing the remainder on contracts awarded post
FY2021 ($ in millions). She said that some concerns from small
contractors are reflected here. She pointed out that the
majority of contractor payments have gone to a few large firms
across the state. She noted a decline that highlights fewer
contractor payments and greater growth instability across
contractors. She indicated that the companies on the lefthand
side show growth and success, while those on the righthand side
show greater fluctuation. She noted concerns from the contractor
community and indicated that DOTPF is working to address this.
1:56:07 PM
MS. KEITH advanced to Slide 6, Contractor Payments / Difference
between DOTPF and AGC. Slide 6 contains a graph showing the
difference on contractor payments between DOTPF and AGC (delta
greater than $1 million; $ in millions). A table of contractor
payments in FFY2025, forecasted outlook ($ in millions) is also
included. The table indicates that contracts awarded prior to
FFY2025 totaled $424.9, contracts awarded or bidding in FFY2025
total $90.9, Construction Manager General Contractor (CMGC)
payments total $93.7, and $276.2 remain to be advertised, for a
total of $885.7 million in contractor payments. She explained
that this considers previously awarded projects, what is
currently being awarded or bid, and projects already arranged
with CMGC. She emphasized that the payments have a high degree
of certainty. She briefly explained the formulas used to reach
these values. She indicated that DOTPF continues to monitor this
and will provide updates.
1:58:23 PM
MR. PANNONE advanced to Slide 7, Project Delivery / Pipeline
Readiness. Slide 7 includes tables showing the Construction
Obligation Utilization Index (COUI) and Funding Pipeline Index
(FPI) for FFY2022-2024. COUI is trending downward as change
orders and preconstruction commitments reduce funds available
for new awards. FPI is also trending downwards due to a
potential funding gap and obligations lag active construction.
Slide 7 also includes bar charts showing FHWA and FAA
obligations ($ in millions) and Contract Awards ($ in Millions).
He explained that contracts awarded in winter receive payment
the following construction season. He briefly explained pipeline
leading and lagging indicators. He indicated that DOTPF is
working to reverse downward trends.
1:59:59 PM
MS. KEITH advanced to Slide 8, Contract Awards FFY2021-24. Slide
8 includes a bar chart showing these payments alongside total
bids. She emphasized that many contracts have received change
orders that are not included on the chart of contract awards.
These change orders impact new project funding. She explained
that contract payments are increasing while new project awards
are decreasing as DOTPF works to complete current projects. She
emphasized that this is a balancing act and DOTPF is working to
respond to industry concerns and uncover what is not working.
2:01:32 PM
SENATOR KIEHL referred back to Slide 7 and asked if change
orders are responsible for the delta between award amounts.
2:01:58 PM
MS. KEITH replied no. She briefly explained some of the factors
causing these changes.
2:03:08 PM
MR. PANNONE stated that change orders do not account for
obligation reductions. He explained that canceled projects,
reduced August distribution, and late FAA funding led to the
obligation reduction. He noted that contract obligations could
be affected by change orders because obligation funds are
redistributed. He reiterated that change orders are not
responsible for a reduction in obligations.
2:04:12 PM
SENATOR KIEHL expressed confusion. He clarified that he was
asking about the obligations compared to the awards over the
three years shown. He pointed out that there is a delta for each
year and a total award decrease of roughly $920 million than was
obligated during that time. He surmised that if this was due to
delays, it would even out over subsequent years. He further
surmised that this was not due to AC and asked how this
consistent delta across FFYs can be explained.
2:05:17 PM
MR. PANNONE attempted to clarify. He said that the contract
awards are a different lens and time from the obligations. He
explained that once funds are obligated, they go to contract
award. He said that there was a $300 million decrease in
contract awards during that time. He explained the role AC
played in this difference.
2:06:31 PM
SENATOR KIEHL expressed continued confusion. He asked for the
starting and ending AC amounts for FFY 2022-24.
2:07:07 PM
MR. PANNONE provided the following AC estimates:
Advanced Construction Estimates:
FFY 2022: $400 million
FFY 2023: $550 million
FFY 2024: $400 million
MR. PANNONE offered to provide exact numbers to the committee.
2:07:41 PM
SENATOR KIEHL said that this answered part of his question. He
indicated that he would find a way to rephrase his original
question for greater clarity.
2:07:51 PM
MS. KEITH commented that the decline in each factor shows that
the future pipeline of projects is not as strong as DOTPF would
like it to be and indicates that the pipeline needs to be
addressed. This is rebalanced by FFY 2025 projects.
2:08:51 PM
MS. KEITH returned to Slide 8 and continued to discuss contract
awards for FFY2021-24. She briefly discussed how contract awards
are distributed across projects and contractors. DOTPF evaluates
how contracts are distributed and project size. She pointed out
that one company received 42 percent of the contract awards
issued for the past 4 years. She directed attention to the total
bids submitted and wondered why contractors are not bidding. She
noted that some larger companies submit many bids while others
do not have that capacity. She surmised that some companies are
more successful at bidding. DOTPF would like to work with
companies to understand the issues. Estimates may also be an
issue, especially with airport projects.
2:12:02 PM
SENATOR SHOWER asked for clarification that the trend is
shifting toward fewer contractors receiving more of the awards.
2:12:12 PM
MS. KEITH confirmed this understanding.
2:12:22 PM
MS. KEITH advanced to Slide 9:
[Original punctuation provided.]
Forecasted Contract Awards
Tentative Advertising Schedule (TAS)
• DOTPF's Forecast of Construction Project Bidding
• 1 Year Time Horizon
• Strengthened Protocols This Past Year
Timing Of Bids
• Typical Bidding Window for Upcoming Construction
Season
• February through May
• Longer in Southeast Alaska
• US Congress Staggers Release of Obligation
Limitation - Not Optimal for Alaska's Short
Construction Window
[Slide 9 also includes a chart, Contract Awards: 2025
Forecasted Outlook ($M) and a memorandum from DOTPF
regarding the Tentative Advertising Schedule (TAS)
protocol.]
2:13:38 PM
MR. PANNONE said that he has received feedback from AGC
regarding the important role TAS plays in planning. He explained
that DOTPF has developed a dashboard to provide project details
and notify AGC leadership when project variables change. He
noted that the most significant variable is the advertise date
and added that these changes are evaluated daily. DOTPF is
moving toward a weekly check-in to ensure that project delivery
occurs as stated.
2:14:33 PM
SENATOR KIEHL asked about TAS accuracy.
MR. PANNONE replied that TAS is highly accurate. He clarified
that the dashboard tool is monitoring how often projects change.
He said that he does not have statistics available for how often
projects have shifted but offered to provide this to the
committee.
2:15:21 PM
SENATOR KIEHL commented that this would be useful. He surmised
that TAS is very helpful tool for measuring metrics; however,
excessive changes to project timelines negatively impact the
usefulness of the tool.
2:15:39 PM
SENATOR SHOWER asked about raising costs and about the trend of
in-state versus out-of-state contracting companies performing
work.
2:16:15 PM
MS. KEITH replied that over 50 percent of DOTPF's contracts are
awarded to out-of-state contracting firms. She indicated that
DOTPF would like to see this shift to in-state contractors if
this would ensure a healthy contracting community in the state.
She stated that one way to do this could be to break larger
projects up into smaller stages.
2:17:25 PM
MR. PANNONE said that, with respect to inflation, DOTPF utilizes
the National Highway Construction Cost Index (NHCCI). This shows
nationwide highway infrastructure costs. NHCCI has shown a 67
percent construction cost increase (nationwide) since the
Infrastructure Investment and Jobs Act (IIJA) was put in place.
He briefly discussed the impact this has had in Alaska. He
explained that new estimates and increasing inflation negatively
impacts the number of projects, as inflation has outpaced
funding received.
2:18:35 PM
CHAIR BJORKMAN directed attention to Slide 9. He wondered about
the differences between the award amount shown on Slide 9 and
the amount shown on [Slide 6]. He asked for the amount that has
currently been awarded and that contractors have received a
notice to proceed on for the 2025 construction season. He
pointed out the short timeframe that remains for additional bids
and awards for the 2025 season. He asked what DOTPF is doing to
close the delta to reach the new program totals for FFY2025.
2:19:58 PM
MS. KEITH shared her understanding that the $95 million (on
Slide 6) included both projects being bid and those that had
been awarded (and those that were close to award). She briefly
explained the data on Slide 9. She indicated that this
accurately reflects current award and bid amounts (totaling $189
million). She explained CMGC awards. The remainder ($574.9
million) is on TAS and are to be awarded. With respect to
timing, she said that this is also a concern for DOTPF. She
stated that late federal grant award times are concerning,
particularly for airport projects. Permitting is another cause
for delays. She indicated that DOTPF has acceleration strategies
in progress for projects on TAS. DOTPF is working with project
managers for solutions to avoid pushing deadlines. She indicated
that the goal of transparency has led to some hesitancy for
moving projects up on TAS. DOTPF is conservative in its approach
to moving TAS projects back and would prefer projects to begin
early. She explained that 2024 estimated contractor payments
($885 million) are based on when DOTPF expects projects to go
out - regardless of TAS. She clarified that this is due to the
timing of the award.
2:23:15 PM
CHAIR BJORKMAN reiterated that contractors are less concerned
about payments and more concerned about bid awards and new
projects for 2025. He asked whether federal delays related to
obligating funds are impacting DOTPF's ability to put projects
out to award.
2:23:47 PM
MS. KEITH replied yes. She noted that this is of particular
concern with FAA funding and DOTPF is working on strategies to
remain flexible. She said acceleration strategies would benefit
projects for this year but acknowledged that this would not
necessarily impact the pipeline of future projects (which is a
concern of the contracting community).
2:24:55 PM
SENATOR KIEHL pointed out that TAS shows that bidding will occur
in June and said it is highly unlikely that this work will occur
in 2025. He asked for an estimate on the 2025 project award
value.
MS. KEITH replied that the value for awards going out in 2025 is
$935 million, which is higher than it has been in previous
years.
SENATOR KIEHL clarified his question. He said he is asking about
work that can start in 2025.
MS. KEITH replied that new work starting in 2025 (contrasted to
what was previously awarded and underway) is $276 million. She
clarified that of 2025 awards, $276 million would be awarded and
available to begin in 2025.
2:26:29 PM
SENATOR STEDMAN asked Mr. Pannone for a written statement of his
earlier comments on inflation and the 67 percent escalation in
costs. He indicated that this would be shared with both the
Senate Transportation Standing Committee and the Senate Finance
Committee.
2:27:39 PM
MR. PANNONE said he would provide this to the committee.
2:27:52 PM
SENATOR SHOWER noted the short window for construction projects
and the impact of the federal funding timeline. He wondered if
here is a way for Alaska's congressional delegation to
communicate the challenges that Alaska faces in order to adjust
the funding timeline and allow work to occur.
2:28:34 PM
MS. KEITH stated that STIP processes recently changed to require
amendments in certain situations related to contracts and bid
amounts, which can delay projects further. She commented that
this is one area where Alaska's congressional could help.
2:29:28 PM
MR. PANNONE agreed. He briefly explained the previous process,
the new process, and the impact the changes have had on
projects.
2:30:14 PM
MR. PANNONE advanced to Slide 10 and discussed advance
construction (AC). Slide 10 contains a chart showing trends for
both the Program Activity Index (PAI) and the Advance
Construction Dependency Index (ACDI). PAI is trending upward,
indicating heavy activity compared to obligations, potentially
reducing the pipeline. ACDI shows a reduced advanced
construction balance to stabilize long-term funding. Charts
showing AC funding amounts for FFY 2022-24 are also included. He
explained that AC applies to federal highways but not to
aviation and is a tool to advance projects. When used in a
single year, it is repaid in the same year (by using federal
funding when it is released). AC can apply to projects that are
ready for bid if the project is in STIP, thus allowing projects
to go out to bid early. He briefly explained the impact the AC
cycle can have on future projects.
2:31:23 PM
SENATOR STEDMAN noted concern on the growth of AC over time. He
asked if adjusting AC to lower levels would have an impact on
the 2025 and/or 2026 construction year.
2:32:11 PM
MR. PANNONE said DOTPF has seen the balance of authorizations
increase. He noted feedback from the contracting industry that
AC would be desirable for projects that are ready to go. He
explained that in 2025, the current goal is to have a net zero
gain in AC balance rather than reduce the AC balance. He
clarified that the intention is to keep AC funds or use them to
accelerate projects.
2:33:05 PM
MS. KEITH said AC is a policy call and expressed interest in
continuing the AC conversation. She surmised that AC could
increase in 2025 and DOTPF is using AC as a tool to help
alleviate issues related to STIP requirements.
2:34:21 PM
CHAIR BJORKMAN asked about general risk for utilizing AC. He
wondered why it is necessary to pay down the entire AC balance
rather than keeping the number down to a certain amount (e.g.
$550 million).
2:34:49 PM
MR. PANNONE explained that future funds must be used to pay the
AC balance incurred in a single year. He explained that DOTPF
determines whether to pay the AC balance depending on incoming
federal funds and project availability.
2:36:05 PM
MR. PANNONE advanced to Slide 11:
[Original punctuation provided.]
Project Delivery / Inflation Impacts
Inflation Effects on Program
• Overall program of active construction projects
has been significantly impacted by cost
increases.
• STIP procedures require amendments when a low bid
exceeds 20 percent of the engineer's estimate.
Kotzebue to Cape Blossom Road
• $27M Congressionally Directed Spending (CDS)
• 2022 Stage 2 Engineer's Estimate: $55M
• 2024 Stage 2 CMGC Estimate: $140M (In
Negotiations)
[Slide 11 also includes a graph of the National
Highway Construction Cost Index (NHCCI)]
MR. PANNONE noted that costs have increased 61 percent since the
beginning of the Covid-19 pandemic and 67 percent since IIJA was
put in place. Additional data is forthcoming.
2:36:55 PM
MS. KEITH briefly discussed the impact inflation has had on the
Cape Blossom Road project. She stated that several other
projects around the state will potentially be delayed as this
program moves forward.
2:37:38 PM
MS. KEITH advanced to Slide 12, Project Delivery/Inflation
Impacts. Slide 12 includes charts showing inflation impacts on
various projects, as well as proposed projects that were not
awarded. She noted that this primarily impacts rural airports.
2:38:14 PM
SENATOR STEDMAN commented that increasing costs are ubiquitous
and unavoidable and expressed appreciation for the inclusion of
this data. He expressed concern that cost estimates for the
potential liquified natural gas (LNG) pipeline project do not
include estimated cost increases. He commented that DOTPF's
estimates are more realistic. He noted that a pipeline project
would significantly impact roadways, requiring additional work
after pipeline completion. He asked if DOTPF has considered this
and whether Alaska's infrastructure could handle a project of
this magnitude. He asked what it would cost to upgrade where
needed - and recondition the infrastructure for the project.
2:40:06 PM
MS. KEITH agreed. She said that DOTPF needs to update previous
estimates and does not currently have a set dollar amount
estimate.
2:40:57 PM
SENATOR STEDMAN suggested that the Senate Transportation
Standing Committee hold a future meeting to consider this. He
said that the cost is significant and reiterated that this is
not included in the project estimates seen to date.
2:41:33 PM
CHAIR BJORKMAN asked to what extent inflation cost escalation
exceed the 20 percent engineer's estimate threshold and thus
delay projects. He referred to an earlier discussion related to
inflation cost escalations and wondered why there is not an
associated increase in award value.
2:42:13 PM
MS. KEITH explained that fewer projects are being awarded due to
increased project cost. She clarified that the awarded value is
not changing; however, the number of awards - and what they can
be used for - is decreasing.
2:42:40 PM
CHAIR BJORKMAN asked about the number of projects that fall
above and below the 20 percent threshold. He wondered why DOTPF
is not awarding projects that fall below the threshold.
2:43:08 PM
MS. KEITH said that she would provide that information for the
committee. She said that the presentation highlights the biggest
discrepancies. She explained that DOTPF prefers to have low bid
procurement. The lowest bid is awarded regardless of where the
bid falls relative to the estimate. The department can move
forward and award bids if certain criteria are met.
2:44:13 PM
CHAIR BJORKMAN asked what the deadline is for the Cape Blossom
Road Project.
2:44:20 PM
MS. KEITH said DOTPF intends to have a contract in place and
obligated funding by June.
CHAIR BJORKMAN asked if this is a result of CMGC negotiations on
the Cape Blossom Road Project.
MS. KEITH replied yes. She explained that the project will
likely require rescoping. She briefly described this process.
She emphasized that this is an important project and finding
ways to move forward has presented a challenge.
2:45:10 PM
SENATOR KIEHL noted a 3.5 percent problem rate with engineer's
estimates. He asked if this was in reference to how often bids
come in 20 percent higher than the engineer's estimates.
2:45:26 PM
MS. KEITH said that the 3.5 percent is the overall difference
between engineer's estimates and awards over a four-year period.
She said that roughly $3 billion was awarded and engineer's
estimates were $93 million less.
2:45:59 PM
SENATOR KIEHL asked for the trendline over the last 12-18
months.
MS. KEITH said that the difference between awards and estimates
has decreased since 2021 and surmised that this may be due to
practices to ensure accuracy.
2:46:56 PM
SENATOR KIEHL commented that this is a good change. He expressed
confusion that the presentation indicated that the 20 percent
difference between estimates and awards is a primary reason
project delays - particularly if the difference is small and
continues to decrease.
2:47:20 PM
MS. KEITH said that the problem is tied to anomalies that come
up, primarily with rural airport projects and inflation. She
explained that the engineer's estimate can be adjusted for
inflation. Therefore, the estimates typically account for
inflation; however, a project that was expected several years
ago may have doubled or tripled in cost since that time. She
reiterated that the projects of concern tend to be rural airport
projects. She noted several factors that can impact those
projects.
2:48:32 PM
CHAIR BJORKMAN asked how many of the rebid projects have been
rebid.
2:48:45 PM
MS. KEITH replied that a letter was provided in response to the
earlier question of rebid projects. She estimated that 70
percent have been rebid and awarded. She explained that some
projects are under evaluation to determine how to proceed and
offered examples. She noted that some projects have been put out
several times and will not be put back out to bid; in this case,
DOTPF works to understand how projects need to change to receive
competitive bids.
2:50:15 PM
MS. KEITH advanced to Slide 13, Construction Change Orders.
Slide 13 includes charts showing initial awards and post-award
increases for a variety of projects and total awards and
increases for FFY2020-25. The total of cost increases from
projects awarded since FFY2020 is $326.5 million. She explained
that this information helps DOTPF evaluate contingencies and
avoid over-programming. She offered examples and briefly
discussed the various changes that can occur and the process to
respond to these. DOTPF is working to anticipate potential
change orders and avoid delays.
2:52:09 PM
MS. KEITH advanced to Slide 14 and discussed inflation impacts
on project cost for the Cooper Landing Bypass (Sterling Highway
Milepost 45-60). Slide 14 contains tables showing project cost
net change ($ in millions) and total project cost estimate and
cost to complete by phase ($ in millions). She briefly discussed
the history of this project and the cost escalations. She
explained that this is related to both preconstruction and
construction costs and DOTPF must evaluate the entire program
and consider how to proceed. She noted that inflation has
significantly impacted the program and the project.
2:53:35 PM
CHAIR BJORKMAN noted that DOTPF has not dedicated construction
funding to the Cooper Landing Bypass Project (CLBP) for several
years. He surmised that this was done to preserve funding for
statewide construction projects. He pointed out that there is
significantly less money for new projects across the state for
FFY 2025, despite this effort. He asked how Alaskans are
benefitting from the project delay. He emphasized that delaying
the project is resulting in significant cost increases (for that
project).
2:55:31 PM
MS. KEITH said that the funds in the STIP are for paying down AC
(and not for new construction over the next 3 years). She said
that this program has no associated revenue and has been AC
only. Over $200 million AC has been applied to this project,
making it a large portion of the AC balance. She briefly
discussed the work that needs to be done before the project can
move forward and said this is an important project for DOTPF.
2:57:03 PM
CHAIR BJORKMAN asked how not including Phase 1 of CLBP in STIP
benefits Alaskans.
2:58:12 PM
MS. KEITH said DOTPF is working on a path to obligate
construction funds for Phase 1. She stated that the primary
concern is how to move forward with the bid in a way that also
resolves the concerns of the contracting community. She said
that the Alaskan contracting community has communicated a need
for work and the CLBP is a priority for Alaskan contractors.
DOTPF would like to make a portion of this project available for
Alaskan contractors, as the primary construction company for the
project is not an Alaskan company. She said that many issues
play into whether the project would benefit Alaskans. She added
that DOTPF balances statewide needs and noted that this project
would not benefit all Alaskans.
2:59:14 PM
CHAIR BJORKMAN commented that all Alaskans are interested in
keeping costs down. He expressed confusion about the
relationship DOTPF has with certain construction companies in
the state. He stated that there is equipment that will require
demobilization on the East side of CLBP due to a lack of revenue
to proceed. He has heard conflicting reports on the progress of
this project. He shared his understanding that there are aspects
of the work that could be completed to move the project forward;
however, this work is not being done. He noted that bridge and
archeological work is being done. He reiterated that further
delays would result in increasing costs and opined that this is
not in the best interest of Alaskans. He questioned current
contract award amounts and asked what other projects are
competing with the CLBP in STIP.
3:01:35 PM
MS. KEITH emphasized that DOTPF has no issues with the companies
doing work in the state. She stated that DOTPF is mindful of
complaints received regarding lack of work. She clarified that
the contracting payments DOTPF expects to issue are $885
million. 2025 award amounts and contracting payments are
increasing. With respect to projects competing with CLBP, she
said there are several, including the Safer Seward Highway
Corridor. She briefly discussed the importance of this project.
3:02:57 PM
SENATOR KIEHL commented that it is valuable to have payments
going out but expressed concern about the low number of projects
that are currently out for bid. He noted that some projects have
carried over from previous years but emphasized that the current
year is behind the usual curve.
3:04:21 PM
CHAIR BJORKMAN noted the time and suggested either continuing
the presentation or returning to complete the presentation at a
future time.
3:05:00 PM
MS. KEITH indicated that she would leave this to the will of the
committee.
3:05:12 PM
At ease.
3:07:44 PM
CHAIR BJORKMAN reconvened the meeting and noted that the
committee is out of time.
3:08:14 PM
MS. KEITH expressed gratitude for the discussion and emphasized
the common goal of seeking solutions that provide the greatest
benefit to the state.
3:08:50 PM
MR. PANNONE noted that there are 8 projects are on TAS.
3:09:03 PM
CHAIR BJORKMAN emphasized that he would like to help DOTPF in
this process. He expressed a desire to make more jobs available
and for CLBP to be completed within a reasonable timeframe. He
shared his understanding that there have been struggles with the
Safer Seward Highway Program while CLBP is ready to go. He
reiterated his question about why CLBP has been left out of
STIP. He expressed hope that this project would be included in
the next STIP.
3:11:10 PM
There being no further business to come before the committee,
Chair Bjorkman adjourned the Senate Transportation Standing
Committee meeting at 3:11 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| STIP Updates Construction Outlook 20250213 CORRECTED.pdf |
STRA 2/13/2025 1:30:00 PM STRA 2/18/2025 1:30:00 PM |
STIP Update Construction Outlook |