Work on the $325 million Highway 65 bypass around central Lincoln started this week.

Residents and travelers in the area will notice the construction start just west of the existing Highway 65 at Industrial Boulevard.

Because the work is taking place off the route of the current Highway 65, traffic should continue to flow as well as it can, said Lincoln City Councilman Tom Cosgrove.

But given the reasons for the bypass, traffic through Lincoln will still have its challenges, he said.

The north end of Industrial Boulevard when it links into Highway 65 is blocked for construction but drivers can gain access to the boulevard at Twelve Bridges, he said.

The construction project will create an 11.7 mile bypass around the city. The bypass is designed to relieve congestion along the current bottleneck through the business section of town.

The first phase of the project will add four lanes for the bypass between Industrial Avenue and Nelson Lane, and two lanes farther north to the town of Sheridan. The second phase will add two more lanes between Nelson Lane and the town of Sheridan, plus additional interchanges.

Cosgrove said the project is now taking advantage of lower-than-initially-anticipated bids from contractors and that will likely allow what had been a downsized project to increase its scope as work continues.

“We can now get more things built for the dollars we have,” said Cosgrove, who also serves as chairman of the Sacramento Area Council of Governments. “We can grow the project back to its original size.”

While bids are lowering, funding levels from the state and federal government are still a question mark, given the economic downturn. But Cosgrove said that while he’ll never be completely satisfied about funding until the project has all the money it needs, the possibility of the project being postponed is a remote one.

The Journal’s Gus Thomson can be reached at gust@goldcountrymedia.com.