Soaring fuel, material and labor costs have forced Maine transportation officials to delay crucial highway projects.

The Maine Department of Transportation has rejected seven bids for highway and bridge work so far this year because contractors’ proposals were far above project budgets.

In April, the department had to put off reconstructing a major bridge in Old Town because the lowest bid was more than $39 million, almost double what the state had budgeted. A department report in September 2020 said the bridge deck was in poor condition but that the structure was satisfactory. It was built in 1952.

“We hate rejecting bids,” Transportation Commissioner Bruce Van Note said in an interview this month. “The public was planning on the work getting done. It is not a place we like to be.”

Transportation planners have been struggling to stay ahead of rising construction prices for years, and recent price spikes and supply chain disruptions have exacerbated the situation. In 2019, the department rejected bids on more than a dozen road projects that were at least 40 percent higher than estimates.

Since 2018, the transportation department has thrown out bids on 59 projects. Sixteen bids were rejected last year alone. So far, 2022 is turning out to be on the lower end in terms of bids that have been rejected, Van Note said.

State officials and contractors blame a tight labor market for high construction prices. But in the last year soaring fuel and materials costs compounded construction companies’ continued challenges in finding enough workers.

“They have never seen it quite like this, everyone is waiting for things to settle out because they simply can’t stay where they are right now,” Van Note said. The cost of road and bridge construction has gone up 50 percent in the last four years, he estimated.

Prices have significantly increased for nearly all construction products. Paving asphalt was almost 18 percent more expensive this June than a year before, while structural metal for bridges was up nearly 24 percent and concrete products were up more than 13 percent, according to an analysis by the Associated General Contractors.

Construction prices increased by more than 1 percent in June alone. Though some materials cost less, items such as gypsum and concrete are likely headed for more increases, Ken Simonson, the association’s chief economist, said in a statement.

“In addition, the supply chain remains fragile and persistent difficulties filling job openings mean construction costs are likely to remain elevated despite declines in some areas.”

In Maine, elevated prices led the department of transportation to reject bids on paving projects in Augusta, Shapleigh, Old Town, Bangor and Byron, a bridge replacement in Old Town and traffic signals in South Portland.

$28 MILLION IN WORK PUT OFF

In total, the department rejected nearly $28 million in work, about 10 percent of its annual budget.

The department would not release its cost estimates for the paving or provide individual bid tabulations for the rejected projects. As soon as the department rejects all bids on a project, the tabulations are removed from its public bid website to protect contractors’ prices in case the work is advertised again in the future, department spokesperson Paul Merrill said.

He said the work connected to the rejected bids will get done, but it wasn’t clear Monday how or when.

“Sometimes we break the work up into smaller contracts,” Merrill said. “Reconsider allowing night work because it is more expensive. Lots of different ways to sharpen our pencils to make sure the work still gets delivered.”

Rising costs have blunted the impact of highway funding Maine received through the federal infrastructure bill passed last year. The state was in line for an extra $66 million a year for bridge and highway projects from that bill.

“If it hadn’t come, I can’t imagine where we’d be. The funding offset a good portion of those cost increases,” Van Note said.

Lawmakers and Gov. Janet Mills also included $100 million in the state budget for 2023 highway work, which means for the first time in eight years voters will not be asked to decide on a transportation bond this fall.