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Baby Steps: 14th Annual Municipal Survey
Consulting engineers and contractors were jumping at every opportunity, large or small (and often outside their expertise comfort zone) to bid work. Often, that work was bid far too cheap. Projects that usually had half-a-dozen quality bidders suddenly had 15 or 20. The industry was stuck in survival mode, relaying on economic stimulus monies to keep funding levels at reasonable levels.
“Economic stimulus” and “shovel-ready projects” became perhaps the most overused yet highly anticipated terms for cities, contractors and engineers in 2008 - 10. While the long-term impacts and benefits of the stimulus are yet to be determined, those funds did shore up sewer and water spending in 2009 and 2010. However, almost all of those funds have now been invested and we enter 2011 without the federal government and politics dictating spending in various regions of the country.
The primary difference in the 2011 numbers is that they represent actual market-driven dollars rather than the artificially inflated spending of 2009 – 10. In 2011, the industry should see self-generating stability and improving health without outside dollars being pumped into the market from deficit-spending stimulus monies. In effect, the projected municipal budgets for 2011 reflect real dollars, actual improvement and at last, a light at the end of the tunnel. This year is projected to exceed 2010 spending levels without aid. While 2012 is not projected to be a banner year for sewer/water spending, it is expected to continue with slow improvement and 2013 potentially the break-out year for substantial market turnarounds.
Almost all niches of underground sewer/water piping spending are anticipated to see slight improvement in 2011. Municipalities expect to spend $4.3 billion on new sewer construction compared to $4.2 billion last year. For sewer rehab, cities are planning to invest $3.4 billion compared to $3.3 billion in 2010.
New construction for water pipelines will climb $100 million in 2011 to $2.8 billion while water rehabilitation, a market continuing to garner high interest and growth potential – even in a recession – should grow to $1.6 billion, up from 2009’s $1.4 billion.
Municipalities also anticipated a substantial growth for their storm water rehabilitation spending from $781 million to $852 million in 2011. New construction spending for storm water piping systems is the only blemish on the 2011 growth record as funding is expected to decrease slightly from $1.1 billion to $912 million.