Posted on July 21, 2022
Market volatility has raised prices in the grocery store, at gas pumps — and on Louisiana’s ongoing effort to rebuild its lower third.
The price tag for projects has increased by at least 25% due to supply chain issues, spikes in construction material costs, labor shortages and rising fuel costs, according to Louisiana Coastal Protection and Restoration Authority Executive Director Bren Haase during its board meeting Wednesday.
Three projects that, together, were expected to cost just under $50 million last year, now cost $62 million after going out to bid, Haase said. When he averaged the cost of proposals from contractors for those projects, the total rose nearly 50% higher than the agency’s projections.
CPRA Executive Director Bren Haase and North Lafourche Levee District Executive Director Dwayne Bourgeois discuss how prices for coastal projects are increasing during a CPRA board meeting on Wednesday, July 20, 2022 in Baton Rouge.
“What does this mean?” he said Wednesday. “At its most basic, it means we aren’t able to deliver today what we were able to deliver, in terms of benefits, even just a year ago.”
And he said they’re not expecting the trend to change “anytime soon.” The problem isn’t unique to CPRA as other state, local and federal agencies also grapple with increasing contract costs.
CPRA board member Dwayne Bourgeois, who leads the North Lafourche Conservation, Levee, and Drainage District, said they’ve also been forced to consider how to prioritize projects with limited funding and try to minimize the risk posed to contractors dealing with rapidly changing prices for materials.
“When we consider moving forward, we need to stick with the projects that have momentum,” he said. “They might have to take priority over new projects.”
Haase noted that the U.S. Army Corps of Engineers decided against awarding contracts for several dredging projects after the costs came in too high. Fuel costs often account for nearly half of the price of a dredging project, Haase said, and diesel costs 85% more today than it did in early 2021.
So far, CPRA hasn’t had to walk away from any contracts due to cost because they’ve been able to find the money in other pots. They’re also ready to scale down projects as needed to bring the price to a manageable level. Delaying a project to see if costs come down “will be the last option on the table,” said Chip Kline, the board’s chairman.
State officials already had to scrape together money from CPRA’s budget to move forward on a project to add more rocks near the hurricane-prone shores of Grand Isle after cost increased by nearly 50%. Projected to cost $6.5 million, the lowest bid came in at $9 million, Kline and Haase said.
Another project planned to upgrade a pump station on Bayou Lafourche in Donaldsonville by the local freshwater district cost $31 million more than anticipated. It was only with a larger appropriation from the state legislature this session that the contract was awarded, according to Kline.
Finding different funding sources might prove more difficult for larger, more expensive projects like its dredge-and-pump marsh creation efforts or barrier island restoration work that can exceed $100 million.
Whether it’s finding more money for one project or scaling it down, Haase said either way there will be an effect on what can be delivered now or in the future if money is taken from other sources.
