Bad economy will help Pa.'s stimulus money go farther

PITTSBURGH - Early signs indicate Pennsylvania will get some extra mileage from its $1 billion share of the highway and bridge construction funding provided by the federal economic stimulus law.

Bids opened for 57 stimulus projects as of Tuesday have come in 14 percent below the Pennsylvania Department of Transportation's cost estimates. If the trend continues, the state will be able to pay for more than the 241 projects currently in line for stimulus money.

Highway construction bids are coming in low all over the country because the economic slump has left contractors thirsty for work. Also, since their peaks last summer, steel prices have fallen nearly 40 percent and petroleum prices nearly 70 percent, as measured by the U.S. Producer Price Index.

"What you have is a simple matter of supply and demand," said Robert Latham, executive vice president of Associated Pennsylvania Constructors, a trade association of construction companies and suppliers. "When the market shrinks, competition gets keen."

Contractors who typically avoid PennDot projects are jumping in because commercial and residential markets are slow, Latham said. He said he expected the price trend to last through this year, with a rebound possible in mid-2010.

"Nine months ago, PennDot was canceling projects because the bids were out of control," Latham noted.

Rich Kirkpatrick, a PennDot spokesman, said any savings from lower-than-expected bids would be reallocated to other "shovel-ready" projects in the same region. He said that "it is too early to say specifically what any net savings will be that can be applied to additional projects."