Contractors could get incentives for early completion of Northwest Arkansas road projects

Northwest Arkansas motorists might not have to dodge orange barrels for quite as long because the mild winter has allowed state highway projects to progress at a faster pace.

A normal winter might lead road crews to lose 45-60 days to weather, Arkansas Highway Commissioner Philip Taldo said. After it snows, “it’s got to melt and got to dry out the mud. We are a good 60 days ahead of what a normal winter would be.” And 120 days ahead of a hard winter.

Some highway projects have built-in weather days to accommodate for inclement weather but others have fixed completion dates, meaning weather days aren’t included, Taldo said. One job with a fixed completion date is the $95 million project to widen Interstate 49 in Washington County to six lanes, a 2.8-mile stretch from Porter Road in Fayetteville to just south of Johnson.

Major highway projects such as this have incentives or penalties for completing the project ahead or behind schedule. And while the mild weather has allowed for construction to continue throughout the winter, most major projects aren’t ahead of schedule, based on the number of days contractors have spent on them. But whether the projects will be completed early is uncertain because a lot of work remains and factors such as the weather and change orders could impact completion.

As of April 1, the $95 million widening project was 34% complete, but 40%, or 180 days, of the 450-day contract have been spent. At $192,000 per day, this project has the most significant incentives or penalties tied to it of all the major highway projects in Northwest Arkansas. The contractor, Kiewit Infrastructure of Fort Worth, Texas, might receive as much as $2.3 million in incentives for completing the project ahead of schedule, or face as much as $3.84 million in penalties for being late.

The Fayetteville project, which includes overpass and interchange improvements, started in fall 2016 and is expected to be completed in December, said Emanuel Banks, deputy director and chief engineer for Arkansas Highway and Transportation Department.

When complete, the project will improve the interstate there “drastically,” Banks said. “This is a major corridor. It will improve it to a point where it will allow safer transport through this area. It’s going to be very important, and it will enhance the economic development in this area because we’ll have better transportation, a better highway through this area.”

The contractor (APAC-Central of Fayetteville) overseeing the widening of Interstate 49 in Benton County, a 5.1-mile stretch between New Hope Road and Arkansas Highway 264, might receive $34,000 per day for every day it completes the project ahead of schedule. As of April 1, the $38.7 million project was 67% completed. Also, the $100.6 million segment of the Springdale bypass, between I-49 and Arkansas Highway 112, was 66% completed, and the contractor might receive $19,700 per day for every day it’s completed ahead of the 650 working-day project schedule.

Both of the previous projects were ahead of schedule, with estimated completion dates of late 2017 and mid-2019, respectively.

But as of April 1, the contractor building a $52.6 million segment of the Bella Vista bypass was facing at least $408,000 in penalties after spending more than 300 days on the 285 working-day project. It was 91% complete.

Another project that’s not expected to be completed on time is the Elm Springs Road interchange. It experienced a setback because of an issue with the concrete that was poured for the overpass. As of April 1, the $6.3 million project was 60% complete, but 75% (107 days) of the 142-day contract had been spent. The two projects were expected to be completed in early 2017 and mid-2017, respectively.

Other major highway projects under construction include the widening of I-49 in Bentonville, between state highways 102 and 72. The $27.7 million project should be completed in late 2017. The final segment of the Bella Vista bypass, which is expected to cost between $20 million and $30 million, and the related interchange at U.S. Highway 71, expected to cost $40 million to $50 million, have yet to be scheduled.

Other interstate projects include interchange work set for construction in 2018:
• Walnut Street in Benton County, $20 million to $30 million;
• Highway 16 in Washington County, $15 million to $20 million; and
• Highway 62 interchange improvements are set for 2021 and will cost $20 million to $30 million.

Interstate 49 has seen 12 projects including 16 miles completed, five projects including 12 miles under construction and three scheduled projects.

“In three or four years, you shouldn’t see any orange barrels as far as (I-49)” between north Bentonville and south Fayetteville, Taldo said.

After the work on I-49 is completed, he said the other projects that will have the biggest area impact include the completion of the Bella Vista bypass; completing the widening of Arkansas Highway 265, between Fayetteville and Rogers; the Springdale bypass; and widening Arkansas Highway 112. (To find road project updates, go to www.idrivearkansas.com.)

COST OF CONGESTION
Between 2006 and 2016, the number of vehicles per day on Interstate 49 in Fayetteville, between the Highway 112 and U.S. Highway 71B interchanges, has risen 25% to 86,000, from 68,500.

Similarly, between 2007 and 2016, the number of vehicles per day on I-49 in Rogers, south of the New Hope Road interchange, increased 31% to 80,000, from 60,700.

David Schrank, research scientist for Texas A&M Transportation Institute, said highways will start having “everyday congestion” once vehicle traffic reaches about 60,000 vehicles per day.

“In essence it starts behaving like a big-city freeway.”

In Northwest Arkansas, traffic congestion costs a driver $520 per year or about $2 per weekday, according to the most recent data from the institute. While that might not seem like a lot, it equates to about the price for lunch one day each week or a daily coffee from a fast-food chain, Schrank said.

He said the Northwest Arkansas data looks at traffic congestion spread out over the entire region and might be more significant in some areas, such as along I-49. He explained this as the “creamy peanut butter approach.”

When asked how traffic congestion costs would be impacted by new highway projects, he explained with the existing approach, the data won’t show the benefits of single road projects on the region. But it could be done if segments of I-49 were tracked over a period of time, showing data before and after construction. An example of tracking roads like this is TTI’s rankings of the most congested roadways in Texas. Schrank said a new report on traffic congestion for Northwest Arkansas is set to be released this fall.

ECONOMIC IMPACT
The impact of the construction projects “are a lot more significant than most people would anticipate,” Taldo said. “There’s a number of how many times that money turns over.”

He explained that the $95 million I-49 project in Fayetteville has brought in between 150 to 200 workers who will live in the area for up to two years. They bring their families, who stay in apartments here or rent homes.

“That alone is a big impact,” he said.

According to a study by the Arkansas Good Roads Foundation, highway construction spending led to a 75% return on investment in the state in 2014.

In summer 2016, the foundation, in partnership with the Clinton School of Public Service, released a study on how highway spending impacts the state economy, and data in the study was based on the $1.43 billion spent on roadway construction in the state in 2014. More than 15,538 private-sector jobs were created or were supported by the investment, according to the study. Each dollar spent on highway construction supports about 10 private-sector jobs in the state economy, and every dollar spent on maintaining roads and bridges leads to more than 11 private-sector jobs.

The $1.43 billion investment translated into a $2.47 billion overall economic output or GDP, according to the study. For every dollar spent on highway construction, it generated $1.75 in economic output. A similar output amount is generated for spending $1 on highway maintenance.

In an article on the study, the authors, Nathan Watson and Craig Douglass, who is executive director for the foundation, noted the study only looks at the economic impact of construction or maintenance on Arkansas highways, including the effects of buying materials, hiring workers and how much is spent on projects. It doesn’t include long-term impacts of how the improved highways might increase consumer savings, reduce fatal crashes or improve the economy.

In 2015, highway projects led to the creation of more than 2,400 jobs and generated $363 million in economic output in Benton and Washington counties, according to Arkansas Good Roads Foundation. Statewide, a total of $1.2 billion was spent on highway and maintenance projects in 2015.

Another way to look at the economic impact of roads is the road user cost, which is typically the daily incentive or penalty a contractor might have for being on time or late on a project. The highway department bases the cost on the economic and safety costs of a project. It’s a dollar amount “primarily made up of cost of delay, (such as) being late to work or having a late shipment and safety,” said Danny Straessle, public information officer for the highway department.

The economic cost includes “variables such as driver safety, freight inventory and vehicle depreciation,” he said. “These factors are incorporated into hourly dollar amounts to represent cars, single-unit trucks and tractor-trailer trucks independently.”

The safety cost takes into account the “crash modification factors, which are dictated by the type of work being done, and applying them to the facility’s crash record,” Straessle said. “The increase in crash risk is translated into a dollar amount” representing the potential crashes “induced by the work zone.”
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Editor’s note: This story was first published in the May 1 edition of the Northwest Arkansas Business Journal.