Chris Runyan
OCA President
As 2023 draws to a close, we naturally look back, assess, and plan for the year ahead. As I talk with OCA members, the reports I hear range from good to great when it comes to work opportunities for the year past. For many, it isn’t highlighted as “the most profitable year,” but it has been better than others. With increased federal and state funds available, I wanted to understand the past a little better. So, naturally, I started with the highway construction industry’s largest client – the Ohio Department of Transportation. While there are many other factors at play, ODOT’s Capital Program is the obvious place to start.
As 2023 draws to a close, we naturally look back, assess, and plan for the year ahead. As I talk with OCA members, the reports I hear range from good to great when it comes to work opportunities for the year past. For many, it isn’t highlighted as “the most profitable year,” but it has been better than others. With increased federal and state funds available, I wanted to understand the past a little better. So, naturally, I started with the highway construction industry’s largest client – the Ohio Department of Transportation. While there are many other factors at play, ODOT’s Capital Program is the obvious place to startThere is no doubt that the dollar volume of ODOT’s program has grown. Looking back over the past three years, the program grew from $1.7 billion in 2021 (still a COVID impacted year), to $2.2 billion in 2022, and $2.4 billion in 2023. That’s a healthy, steady increase. As a mentor of mine at ODOT, (former Transportation Director) Jerry Wray, once told me, “ODOT always spends what it takes in. We’re not a bank. Our revenue does nothing for the citizens of Ohio unless we spend it.” To their credit, I believe the Department still manages its finances with the same philosophy.
But there is another part of the picture and that is project awards. The average over the past five years is 953 projects per year. This reflects a high of 1,002 projects in 2019; a low of 917 in 2021 (hello, COVID); and 957 projects in 2023.
So, what does that tell me? It says to me that while dollars are increasing, the actual amount of work has remained flat. The culprit – inflation. And while inflation may decrease amounting to a slower increase in the cost of doing business, it does not necessarily mean a reduction in previously established higher costs. For prices to come down, there needs to be some disruptor within the market – such as an overabundance of key materials. You might see that with fuel, but you won’t see that with respect to wages or most other needed materials. Much of what is now costlier will remain at current levels or more.
How does this impact an assessment of the future?
Funding for Ohio’s transportation infrastructure will be at historically high levels for the next three to four years. While the federal funding law will expire in three years, if history serves to be correct we will see stop-gap levels of funding until a new law is approved. In addition, there are one-time federal funds for discretionary grants, including the Brent Spence Bridge. These onehit wonders will boost the number of construction projects but cannot be counted upon for the long haul.
The key to the funding increases we currently enjoy being fully utilized will be ODOT’s ability to ramp up plan production. You can count on that being a topic of discussion with ODOT leadership and legislative leaders as we move into the new year and beyond.
For now, enjoy the good times and have a healthy, prosperous and safe new year