2020 Texas Construction Industry Forecast
2020 Ushers in a New Decade of Construction Possibilities in Texas
For the first time in nearly 170 years, a decade has come and gone without our nation spiraling into a recession. While many people are still feeling the strain of the last major economic slump, which lasted from December 2007 until June 2009, America’s recovery in general has been remarkable. This feat likely would not have been possible without the continued modernization of U.S. infrastructure, which is vital to stimulating population and job growth while enhancing national security and global competitiveness.
Despite Economic Slowdown, 2020 Construction Looks Strong
The U.S. economy has now entered its 11th consecutive year of expansion, buoyed by a strong job market and high-performing equity and bond markets, reports the Associated Builders and Contractors (ABC). While this is the lengthiest economic expansion in American history, there are indicators of elevated recession risks in the foreseeable future, notes ABC Chief Economist Anirban Basu. “The economy has already been slowing for the past eight months,” he explains, “and recession risks are elevated over the next 18 months.”
ABC’s Construction Backlog Indicator shows there is a climbing backlog of projects under contract that are yet to be executed. In light of this and other factors, Basu forecasts continued momentum for the construction sector this year. “For the most part, contractors can expect to remain busy in 2020, although construction spending growth continues to stall in a number of segments,” he states. “However, if the economy continues to soften, 2021 and 2022 will end up being far less benign than recent years in terms of supporting substantial demand for the delivery of construction services.”
As 2020 ushers in a new decade of untold prospects, it’s a good time to look at what’s on the horizon for transportation infrastructure – a vital market sector that literally moves society forward.
Expect $300B in U.S. Transportation Infrastructure Growth
In its annual economic forecast released last month, the American Road & Transportation Builders Association (ARTBA) predicted the country’s transportation infrastructure market would grow at least 5 percent this year. Total domestic transportation construction and related market activity should reach $300.4 billion, up from 2019’s $286.5 billion, after adjusting for project costs and inflation.
“The real market growth for 2020 is being fueled by increased transportation investments from federal, state and local governments,” explains ARTBA Chief Economist Dr. Alison Premo Black. Overall, sector activity is expected to increase or be steady in about half of U.S. states, including Texas, one of the largest markets expected to either remain stable or grow.
Industry authorities at ARTBA have made several predictions for the coming year. For instance, the real value of public highway, street and related construction investment by state transportation departments and local governments is anticipated to rise 6 percent to $77.5 billion. The pace of bridge and tunnel construction work is forecast to grow by $800 million, or 3 percent. Public transit and rail construction will likely swell to $24.2 billion, and subway and light-rail investments are expected to reach a record-level $11 billion.
In addition, airport terminal and related construction work (including structures like parking garages, hangars, air freight terminals and traffic towers) is estimated to increase to $19.6 billion while runway work will likely rise to $4.9 billion. The value of port and waterway investment should grow to $3.4 billion.
A Dire Need for Sustainable Federal Funding
Material prices, increased labor costs and labor shortages are all variables that could temper growth in the transportation infrastructure market. Another hurdle is obtaining adequate funding and financing to build, expand, upgrade, maintain and repair the assets within America’s vast transportation network.
One of the biggest infrastructure funding packages currently in the works is America’s Transportation Infrastructure Act of 2019, a five-year, $287-billion bill that would substantially increase federal investment in highway safety and mobility improvements.
Last July, the U.S. Senate Committee on Environment and Public Works (EPW) unanimously approved the proposed legislation. Advocates of the measure say this highway reauthorization bill offers a viable solution to the looming September 2020 expiration of the Fixing America’s Surface Transportation (FAST) Act, which is the federal surface transportation law currently.
“The Senate EPW’s highway bill really kickstarted the reauthorization process and was a really positive sign for ultimately developing a piece of legislation that both the House and the Senate can agree to,” says Murphie Barrett, a former congressional staffer who is now Vice President of Congressional Relations for Infrastructure Advancement, Associated General Contractors of America (AGC).
The issue of sustainably funding this type of legislation represents a significant hurdle in the multi-step approval process, Barrett notes. In addition to Congress’ efforts to develop a feasible funding package, support from the construction industry will be pivotal in getting this bill to the president’s desk.
“From my experience coming from Capitol Hill, the construction industry has been a powerful force in helping to drive the conversation forward on the need for federal investment in infrastructure and help make progress happen on different pieces of infrastructure legislation,” Barrett emphasizes. “One of the things these construction professionals have done well is make this issue personal and talk about why those investments not only create careers in the industry, but also help drive our economy forward and allow Americans to enjoy a good quality of life.”
“Having safe, reliable infrastructure is critically important to so many aspects of our lives,” adds Senator Shelley Moore Capito (R-W.V.), Chair of the EPW Subcommittee on Transportation and Infrastructure. “Not only will this comprehensive, bipartisan legislation help us rebuild and repair America’s infrastructure system, but it will also help create new infrastructure opportunities now and for future generations.”
2020 UTP Update
Last September, the Texas Department of Transportation (TxDOT) announced its new mission statement: Connecting You With Texas. This simple assertion aims to embody all that TxDOT employees do to support efforts that improve and preserve an integrated transportation system.
The mission statement certainly aligns with many of the objectives outlined in the new 2020 Unified Transportation Program (UTP) approved by the Texas Transportation Commission in summer 2019. As the largest-ever UTP in TxDOT history, this 10-year program allocates more than $77 billion to 8,000-plus planned transportation projects in various stages of development across TxDOT’s 25 districts.
Recent improvements to the UTP development process include TxDOT’s refinement of performance-based planning efforts, increased transparency in the alternative delivery program, maximization of funding opportunities, and increased transparency in scheduling for future UTPs. Of particular note, the 2020 UTP maximizes Texas’ federal transportation funding by increasing the flexibility of federal program usage across the plan’s 12 category lines.
Another noteworthy change is that total project costs for design-build projects, including development costs, are now reflected in the UTP. TxDOT can contract up to three design-build projects per fiscal year using the design-build method. Eligible projects must have a total anticipated cost exceeding $150 million and meet certain non-statutory criteria supporting the state’s benefit in utilizing a design-build approach.
In the 2020 UTP, more than $4 billion has been set aside for safety improvements, including an extra $600 million over the next two years, which fits with TxDOT’s overarching goal to cut traffic fatalities in half by 2035 and end them entirely by 2050. Also, more than $600 million is allocated toward transportation infrastructure upgrades in the state’s bustling Permian Basin energy sector. These projects focus on safety, connectivity and congestion relief as well as improving mobility at high-volume intersections.
In addition, special attention is being given to roadway segments identified on Texas’ 100 Most Congested Roadways list. These projects will be delivered with funding from legislative and voter-approved initiatives that allocate portions of oil and gas taxes, sales taxes and other money to the state highway fund. One key undertaking will take place on U.S. 281 in San Antonio, from Loop 1604 to the Bexar/Comal county line, where TxDOT is planning to construct a six-lane, non-tolled expressway to relieve congestion and improve mobility. Also included in the plan are the remaining northern interchange connectors at Loop 1604.
For insights about other projects or programming updates in the 2020 UTP, visit txdot.gov/inside-txdot/division/transportation-planning/utp.html. Also, for a summary of TxDOT’s biggest highway construction projects slated to begin this year, check out the sidebar in this article titled, “TxDOT’s Top 10 List of Highway Construction Projects.”
Emerging Technologies Pave Path to Future
This year, TxDOT is concentrating its efforts on drafting the Texas Transportation Plan (TTP) 2050, the state’s newest long-range planning document geared toward building a highly sophisticated multimodal transportation system. Specifically, the instrument will summarize existing and future system conditions, needs, revenues, funding gaps and supporting data sources for all modes of transit over a 30-year period. Public and stakeholder input will be incorporated into the strategic program, which will be updated every four years.
Surging population growth and economic expansion in the state are principal factors spurring the development of the TTP 2050. Furthermore, telecommuting and ridesharing – along with innovations such as drone delivery – will likely lead to new mobility services and alter travel behaviors. To keep pace with the evolving needs of Texas commuters, state transportation planners are studying the risks and benefits of implementing various emerging technologies.
“Right now, the top emerging transportation technology in the U.S. is clearly automated vehicles,” says Carol Lewis, Ph.D., a professor and Emeritus Director of the Center for Transportation Training and Research at Texas Southern University in Houston. “There’s a range of automation, however, and most professionals think it’ll be a number of years before we get to full automation. But in order for autonomous vehicles to be fully operational, the infrastructure needs to be automated as well.”
Another major trend in transportation is connectivity. In vehicle-to-vehicle (V2V) and vehicle-to-infrastructure (V2I) applications, the ability to wirelessly connect vehicles, roads and mobile devices serves to augment safety and mobility for drivers as well as alert appropriate authorities of infrastructure failings or traffic situations and incidents.
“As we enter the next decade, significant research, testing and policy planning will be underway to implement connected infrastructure,” states Greg Winfree, Texas A&M Transportation Institute Agency Director. “For example, at TTI we are studying how roads can alert maintenance personnel before the asphalt fails and creates a pothole, how flood sensors can predict when a roadway will be washed out, and how machine learning can augment human oversight in a traffic management center. The benefits of tomorrow’s integrated transportation network will increase mobility, improve operational efficiencies and, most importantly, protect human life.”
A multitude of emerging technology pilot programs are underway in the Lone Star State. The Texas Connected Freight Corridors (TCFC) project, for instance, launched last April as part of an effort to improve roadway safety and increase the mobility and efficiency of freight across the Texas Triangle. The four-year TCFC program will deploy a sustainable connected vehicle environment using I-10, I-30, I-35 and I-45, and showcase up to 12 V2V and V2I applications. Examples of these applications include warnings about work zones and low bridge clearances, wrong-way driver alerts, information on border crossing wait times, routing recommendations based on emission reduction, and updates regarding available parking options.
In Texas, emerging transportation technologies will go a long way toward meeting increasing travel demands. “We know beyond a shadow of a doubt that our population and growth are exceeding our capability to meet them, both financially and in terms of physical space. The best way for us to make a dent in future traveling demand is to utilize the efficiencies of these technologies. We’re going to be required to do what we can in the space we have available. It’s going to take intellectual capacity, combined with our technological advances, to help us actually meet those needs,” Lewis says.
Over the years, transportation planners in metropolitan Austin have embraced a variety of emerging transportation technologies. Currently, equitable access is one major need the burgeoning city is looking to address with these forward-thinking solutions.
“As Austin continues to grow at a rapid rate, we are looking for innovative technologies and for a variety of transportation modes that improve access for everyone. We understand that equitable access to transportation leads to equitable access in all areas of one’s life. Our role is to facilitate inclusion and ensure that all community members have the ability to access options that fit their needs. Our involvement as a city in piloting new technology keeps the collaboration and innovation engine going,” comments Austin Transportation Department Director Rob Spillar.
Integrating the needs of rural Texas with transportation advancements in urban areas is also vital. “Along with solving the huge challenges in urban areas, we must have the wherewithal to ensure rural areas receive the advantages of these emerging transportation technologies,” Lewis stresses. “As a society, I think it’s so important to make sure everybody’s travel needs are met with the advances in our technology. It’s about meeting the life needs of every person.”
Clearly, emerging technologies are primed to revolutionize transportation infrastructure priorities and strategies in the foreseeable future, unlocking even greater potential to keep construction in our nation strong and progressive.