As state DOTs and local governments plan road maintenance and construction, pending external influences such as federal funds, asphalt and concrete manufacturers wage a heated battle to dominate the paving market.
Until 2008, asphalt captured roughly 94% of all pavements in the U.S. market. During this time, asphalt enjoyed a lower initial bid and a life-cycle paving cost advantage over concrete, according to a Portland Cement Association (PCA) analysis using Wisconsin DOT's paving software. But not anymore, says Ed Sullivan, PCA's chief economist.
Increasing oil prices and changes in the oil-refining process have forced asphalt prices up, says Sullivan, thereby leveling the playing field for cement/concrete contractors.
Since 2003, liquid asphalt prices have increased by more than 200% and concrete only 37% — yet some state DOTs' procurement practices hinder “free market” economics that favor concrete, says Sullivan. He blames outdated policies for slowing concrete's penetration into the paving market and costing taxpayers billions of dollars. These include policies that:
- Don't allow bids with alternative materials
- Include asphalt cost escalator provisions (established during the oil embargo of the 1970s, allowing contractors to adjust their construction price based on fluctuation in liquid asphalt cost after the bid is won)
- Lack equivalent paving design methods that can compare current asphalt and concrete mixtures. (The American Association of State Highway and Transportation Officials responded to the need by adopting a mechanistic empirical pavement design guide in 2004: MEPDG, referred to as DARWin-ME.)
Asphalt industry experts also blame outdated bidding practices for hindering what they consider one the largest growth opportunities in paving: green roads. In his Software Advice blog “Green Roads Construction: Are contractors our road block?” Enterprise Resource Planning Analyst Derek Singleton argues that cost-plus pricing agreements, which pay contractors for the cost of labor plus the cost of asphalt, encourage excess use of asphalt and man-hours.
He says the contracts ultimately cost taxpayers more and discourage environmentally friendly road construction methods such as hot and cold in-place recycling and full-depth reclamation — which reuse existing asphalt for repair rather than replacing it with new material.
Singleton concludes that performance-based bidding increases use of recycling techniques, thus reducing the cost of road construction. He points to North Carolina, where contractors pay for the asphalt, but can use any method to meet engineers' standards. The state has the lowest cost of road construction in North America — and the highest amount of hot in-place recycling.