General Karl Downey, Secretary-European Concrete Paving Association (EUPAVE), recently wrote an article on the new Portland Cement Association (PCA) report that examines paving trends in the United States (U.S.). Concrete paving’s share for roads in the United States is primarily determined by the cost of paving in each material. Interestingly, it is shown that while asphalt prices rise with oil prices, a drop in oil prices results in a lesser drop in asphalt prices. The authors point to three factors for this anomaly:
- Changes in oil refining processes mean less bitumen by-product is being produced
- Increased demand thanks to the resurging U.S. economy
- A lack of competition between paving industries
The report notes that, given these market realities in the U.S., initial costs (as well as life-cycle costs) for urban concrete roads can be lower than those in asphalt. Of course, economic conditions in Europe are not the same as in the US.., but some definite parallels can be drawn:
- As in the U.S., concrete pavements in Europe will never suffer from the same price volatility as asphalt
- Like in many U.S. states, road authorities across Europe are often conservative when it comes to pavement type selection—real competition between industries does not exist in many areas
- However, excellent examples of competitive procurement practices do exist in North America. The basic principles of life-cycle costing and alternative bid contracts need to be taken up more in Europe.
Promoting competitive procurement in road construction can help road authorities, as it lowers prices and makes spending more efficient, as explained in EUPAVE’s position paper, “Ensuring healthy competition between pavement industries saves public money”. Healthy competition is a win-win for everyone – taxpayers, public authorities and industry!
To read the EUPAVE position paper, please go to: http://www.eupave.eu/documents/position-papers-and-leaflets/eupave-healthy-competition-position-paper.pdf.
For the ISCP October 2015 article on the EUPAVE position paper titled “Healthy Competition Between Pavement Industries Could Save the Public Millions”, please go to: https://www.concretepavements.org/2015/10/02/healthy-competition-between-pavement-industries-could-save-the-public-millions/.
To read the PCA report PDF, please go to: http://www.cement.org/docs/default-source/market-economics-pdfs/issues-trends/paving_report2016final.pdf?sfvrsn=2.