Engineer tells committee labor, equipment and regulation are inflating rural water project costs

Brian Bollig, president and founder of Bollig Engineering, told the House capital investment committee on March 10 that a mix of market, regulatory and project-design factors is pushing up the cost of drinking water and wastewater projects in small Minnesota communities.

Bollig said Minnesota’s roughly 856 communities include many under 5,000 people that lack in-house engineering capacity and rely on outside consultants to navigate funding and compliance. He said Bollig Engineering has helped secure nearly $300 million in funding for those towns, with about $176 million from federal sources and roughly $96 million from the state.

“The reports we prepare to access federal money can take 1,000 hours — a full-time person for half a year — and some reports can cost $75,000 to produce,” Bollig said, arguing that those up-front costs are passed into project budgets. He also cited geography and climate: deeper burial requirements in Minnesota’s cold climate and a smaller local tax base increase per-project costs.

Bollig pointed to specific material and labor pressures: cement and concrete pricing shifts after COVID-19, reduced availability of fly ash used historically in cement, equipment costs that have risen steeply (he cited a new pumper truck approaching six figures to mid six figures), and labor-market increases where some craft wages rose from roughly $60,000 to $90,000–$100,000 a year in outstate areas.

He highlighted another driver inside treatment plants: ‘‘electrical and controls’’ equipment has risen sharply and now accounts for a much larger share of treatment-plant costs, which he said may not decline because some controls are being sourced domestically at higher labor rates.

Members asked whether annual bonding or a steadier pipeline of work would retain contractors and reduce price spikes. Bollig said stop-and-go funding risks sending contractors to neighboring states and recommended legislative support for regionalization and stronger incentives that would keep capacity in Minnesota.

The presentation closed with members briefly probing competition for materials and the effect of local monopolies, and Bollig reiterated that permitting and supplier scarcity — for example gravel pits or bituminous suppliers in certain markets — reduce competition and raise bid prices.

The committee did not take votes on policy during the hearing; members asked the presenters to provide additional briefings and data.