The cost of a 13-mile toll lane being built to relieve congestion on the Interstate 70 mountain corridor is now more than 50 percent higher than planned and a signal that other big-ticket highway projects may soon hit shortfalls.
The I-70 Peak Period Shoulder Lane originally got more than $45 million from a state highway fund designed to speed much-needed road construction and repairs throughout the state.
But steadily rising construction costs helped push the total price of finishing the toll lane project to $70 million.
That prompted the High Performance Transportation Enterprise — an arm of the Colorado Department of Transportation — last week to get a $24.6 million loan from Banc of America Preferred Funding Corp. to finance the project.
Revenue from the tolls will be used to pay off the loan, said CDOT Regional Director Tony DeVito. An exact toll amount has not been set.
DeVito said the loan guarantees the toll lane will be open and ready for motorists by fall 2015.
“We were able to get a good partner for this, and we are happy with the results,” DeVito said.
Transportation officials began in August to seek commercial lenders to help finance the toll lane, which will be used only during peak travel times on eastbound I-70 between Idaho Springs and Empire.
CDOT says the toll lane will help reduce travel time from the Eisenhower Tunnel to the top of Floyd Hill by as much as 48 percent.
The project’s scope was expanded when CDOT decided to reconstruct a bridge on the interstate, which added to the cost, officials said.
But the jump in price was mostly the result of shortages in skilled labor, from plumbers and bricklayers to journeyman laborers.
“It really is hitting everyone hard; it’s pretty much industry-wide,” DeVito said.
Several industry groups and analysts say the problem stems from an economy emerging from the recession. An improved housing market produced a hiring spree for skilled labor and sucked up needed material like asphalt, lumber and steel.
“We are looking at worker shortages statewide in construction projects,” said Tony Milo, executive director of the Colorado Contractors Association. “It’s a situation that’s completely turned around. Demand is so much greater than it was just from two years ago.”
“Before, nothing was going on. Now we have a whole set of problems because of construction activity,” Milo added. “But I guess it’s a good problem to have.”
Those shortages are especially hurting public works projects — like roads and bridges — causing construction estimates to fall short of what’s really needed to finish a job, Milo said.
Nationally, the construction cost escalation rate — the amount a project’s cost increases between the estimate and final bid — was 1 percent between 2009 and 2012, according to the Engineering News Record.
But through 2014, the escalation rate has been at 3.2 percent.
Meanwhile, the pay for basic laborers is up 3.7 percent, and the cost of materials overall is up 1 percent, with lumber jumping to nearly 6 percent.
“I am not surprised CDOT has problems with their estimates,” Milo said. “The market now is completely different from just a year ago. And often the market is well out of the control of the contractors.”
All of this is prompting CDOT to review all road projects over $15 million that are being funded through the agency’s $1.5 billion Responsible Acceleration of Maintenance and Partnerships program. The I-70 mountain toll lane is one of the bigger undertakings under RAMP.
CDOT will do independent cost estimates of those projects to determine if they will face funding shortfalls as well, said CDOT spokeswoman Amy Ford.
“We’re looking at how best to mitigate the costs of these projects and give us the biggest bang for our bucks and deliver the best benefits for these communities,” Ford said.
Monte Whaley: 720-929-0907, mwhaley@denverpost.com or twitter.com/montewhaley