Continued delays could cause “long-established contractors to contemplate closing their businesses, and for some, bankruptcy…
Two construction industry groups have appealed to Alaska Governor Mike Dunleavy to step in regarding issues with the state’s 2025 Federal Highway and Federal Airport construction program.
The January 27 letter from Associated General Contractors of Alaska and the American Council of Engineering Companies, which represent hundreds of Alaskan contractors, says the Alaska Department of Transportation’s $1.6 billion construction funding for fiscal year 2025 has only advertised $93 million worth of bids in the first quarter.
The AGC of Alaska and ACEC said their members rely heavily on these programs and that a continuation of this pattern could cause, “long-established contractors to contemplate closing their businesses, and for some, bankruptcy may be the unfortunate outcome.” The letter also said this “alarming and unprecedented circumstance” could see portions of the Alaskan workforce leave to find work elsewhere.
To address the situation, the two groups asked Governor Dunleavy to:
- Prioritize a supplemental capital budget request.
- Commit $300 million in state funds to expedite projects.
- Provide the state DOT with a match to maintain the construction program at an estimated $1.3 billion through program funding.
- Ensure the state DOT submits Statewide Transportation Improvement Program amendments to acquire $126 million in Federal Highway Administration funds in August.
Both groups also asked Dunleavy to provide Alaska DOT with any additional resources needed to secure and spend all available federal funds in this fiscal year, with suggestions including an STIP management team, hiring temporary workers or the private sector to help get projects out to bid and establishing annual project delivery plans.
A letter from Alaska DOT Commissioner Ryan Anderson to Dunleavy reads, “While the overall outlook is positive, we recognize that timing of contract awards and project delivery uncertainty are challenges that persist. Key issues affecting project delivery include inflationary impacts that have elevated material and labor costs; delays in federal fund distribution affecting the construction window; constraints in procuring Buy America/Build America (BABA)-compliant materials; and protracted right-of-way acquisition processes. It’s clear that a primary concern is that projects scheduled for later delivery in the construction season leave insufficient time for meaningful work to be completed on our highways and airports during the upcoming season.”
Key steps outlined by Anderson to address the problems include the following:
- Sequencing larger projects into smaller stages to offset the impact of inflation on construction costs.
- Leveraging financial tools such as advanced construction and accrued un-billed to get projects moving without waiting on federal funding release schedules.
- Communicating directly with federal agency leadership regarding federal land acquisition delays and asking for direct involvement.
A January 2025 McKinley Research Group report commissioned by AGC of Alaska forecast $3.2 billion in public sector construction spending this year, including $600 million spent on highways and roads. The report also forecast $3.5 billion in private-sector construction spending this year.
The Alaska DOT, in a February 3 press release, projected $900 million in 2025 construction awards for highway and aviation projects, up from about $630 million in the 2024 fiscal year. However, contractor payments are forecast to decrease from $1.14 billion in fiscal year 2024 to $885.7 million in fiscal year 2025.
Two construction industry groups have appealed to Alaska Governor Mike Dunleavy to step in regarding issues with the state’s 2025 Federal Highway and Federal Airport construction program.
The January 27 letter from Associated General Contractors of Alaska and the American Council of Engineering Companies, which represent hundreds of Alaskan contractors, says the Alaska Department of Transportation’s $1.6 billion construction funding for fiscal year 2025 has only advertised $93 million worth of bids in the first quarter.
The AGC of Alaska and ACEC said their members rely heavily on these programs and that a continuation of this pattern could cause, “long-established contractors to contemplate closing their businesses, and for some, bankruptcy may be the unfortunate outcome.” The letter also said this “alarming and unprecedented circumstance” could see portions of the Alaskan workforce leave to find work elsewhere.
To address the situation, the two groups asked Governor Dunleavy to:
- Prioritize a supplemental capital budget request.
- Commit $300 million in state funds to expedite projects.
- Provide the state DOT with a match to maintain the construction program at an estimated $1.3 billion through program funding.
- Ensure the state DOT submits Statewide Transportation Improvement Program amendments to acquire $126 million in Federal Highway Administration funds in August.
Both groups also asked Dunleavy to provide Alaska DOT with any additional resources needed to secure and spend all available federal funds in this fiscal year, with suggestions including an STIP management team, hiring temporary workers or the private sector to help get projects out to bid and establishing annual project delivery plans.
A letter from Alaska DOT Commissioner Ryan Anderson to Dunleavy reads, “While the overall outlook is positive, we recognize that timing of contract awards and project delivery uncertainty are challenges that persist. Key issues affecting project delivery include inflationary impacts that have elevated material and labor costs; delays in federal fund distribution affecting the construction window; constraints in procuring Buy America/Build America (BABA)-compliant materials; and protracted right-of-way acquisition processes. It’s clear that a primary concern is that projects scheduled for later delivery in the construction season leave insufficient time for meaningful work to be completed on our highways and airports during the upcoming season.”
Key steps outlined by Anderson to address the problems include the following:
- Sequencing larger projects into smaller stages to offset the impact of inflation on construction costs.
- Leveraging financial tools such as advanced construction and accrued un-billed to get projects moving without waiting on federal funding release schedules.
- Communicating directly with federal agency leadership regarding federal land acquisition delays and asking for direct involvement.
A January 2025 McKinley Research Group report commissioned by AGC of Alaska forecast $3.2 billion in public sector construction spending this year, including $600 million spent on highways and roads. The report also forecast $3.5 billion in private-sector construction spending this year.
The Alaska DOT, in a February 3 press release, projected $900 million in 2025 construction awards for highway and aviation projects, up from about $630 million in the 2024 fiscal year. However, contractor payments are forecast to decrease from $1.14 billion in fiscal year 2024 to $885.7 million in fiscal year 2025.
About The Author
