200px-Supply-demand-right-shift-demand.svgJust when you thought it was safe to come outside…

So now that the winter is over and many local units are planning to spend precious resources on fixing roads, the realities of basic economic principles are going to come into play and cost us even more.

There are only so many road contractors and asphalt plants—and the abundance of major road projects are going to put a damper on unplanned but direly needed repairs.

Here’s why: remember that economics 101 class?  When the demand curve shifts to the right and supply is fixed, price goes up.

We suspect that there will be at least a 20 percent increase in the cost of road projects based on this dynamic.  Even on jobs that were previously quoted, unless a contract has been executed, those quotes will most likely not stand.

So it may be time to look at some best practices, which may be found in the Munetrix Government Collaboration & Best Practices database.One of the great ideas, which can be found in a post by Auburn Hills, MI, describes how the city has leveraged some existing capital equipment to the benefit of road maintenance.

Under their best practice, the city purchased a small asphalt mill machine and a roller so they can perform basic mill and resurface projects on their own.  By using city resources to perform the work, the community can maintain those areas that require only some basic TLC (more than a shovel of cold patch but less than a road construction project).  We all know what a dollar’s worth of maintenance today can do to extend road longevity—and this is a great way to stretch those dollars.

In the spirit of collaboration, perhaps it would make sense for several neighboring communities to “go in” on the cost of this type of equipment, utilizing  the machines on a basis proportional to the amount of their investment.

Taking this one step further, a Michigan start-up called MuniRent is a database that allows municipalities to rent underused or available assets from one another. In this way, communities who want to recoup some of the cost of capital investments can post the items them so others could find and rent such equipment.  And municipalities who want to rent can shop around.

This is just one way to deal with the real challenges caused by changing market dynamics, and is just another way Munetrix.com continues to try and help local governments find solutions to better help themselves.

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