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Wednesday, June 24, 2009

Update on Construction Outlook

McGraw Hill published its Spring 2009 Construction Outlook publication and here are some of the significant highlights of the of the report.

The American Recovery and Reinvestment Act includes a $787 billion stimulus of which approximately $130 billion will go to construction from 2009-2011. The bulk of construction related stimulus money is going to GSA and the DOT.

GSA Activity:

  • 70% of the GSA work will be in Washington DC with the majority of the remaining 30% going to projects in the larger states such as California and DC.
  • These projects will likely not start any time soon; the GSA needs to obligate $5 billion by mid-2010 and the remaining amount by mid-2011.
  • There are numerous rules and regulations that will go along with these projects; many of which may cause many of your customers to opt out of bidding.

DOT Activity:

  • There is immediate work with half of the funding required to be designated by June 30, 2009 and the remaining half by March 2010.
  • Current breakdown of funds is $27.5 billion for highways, $8.4 billion for transit, $9.3 billion for rail ($1.3 billion for Amtrak; $8 billion for high speed rail) and $1 billion to TSA.
  • This funding is “use it or lose it” which means it will not be wasted by the states stimulus plan eliminates the standard state fund matching requirement.
  • For roads, this is 20% of the total project cost; again supporting that these funds will not be wasted..

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