Abstract: An unexpected $450-million loan from local governments and the ability for contractors to borrow against credit in order to continue without progress payments have saved numerous California highway construction projects from being shutdown. Transportation officials believe several of the 615 projects, which amount to a total of $6.7-million will come to a halt if the state does not pass a budget. Although many projects will continue with help from firms, local and regional agencies, counties, and the California Department of Transportation (Caltrans), the budget crisis has repercussions. Caltrans will delay awarding and will suspend advertised projects due to the standoff with California legislature over closing a $38-billion budget deficit and the inadequate planning of funding projects in the event of such a standoff. Before the unexpected loan, many contractors had decided to push forward with their contracts because demobilizing a project, making it safe for travel, and remobilizing it can cost a great deal. A monumental shutdown of California's 600 active construction projects will cost $100 million in demobilization costs and penalties, as well as another $30 million per month. This shutdown would require money for new projects to be spent on demobilization and start-up costs, thus delaying new projects. Caltrans may need to layoff up to 1,400 employees and suspend contracts leaving design firms in risk of expensive fees.
Publication Year: 2003
Publication Date: 2003-07-28
Language: en
Type: article
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