As the economy improves, cities that got bargain prices for street, bridge and sidewalk projects during the recession are now getting bids so high that they are delaying or rebidding construction jobs.
Some contractors are so busy that they don’t need the work. Bidding has also been affected by a construction season shortened by wet spring weather and perhaps even by equipment shortages linked to the oil boom in North Dakota.
Edina, Bloomington, Fridley and Three Rivers Park District are among those seeing either a lack of interest in bidding for public works projects or bid prices that crept up after work schedules filled up this summer. In July, the Edina City Council voted to delay pedestrian improvements on France Avenue when the city got just one $3.6 million bid for a job that had been anticipated to cost $3 million.
City Director of Engineering Wayne Houle said late snow in May and heavy rain through June shortened the construction season and higher fuel and materials prices increased bid amounts. The city was aiming at getting the work done by fall, but with contractors’ schedules full the city plans to rebid the project this winter.
“Rebidding the contract in a new construction period should result in more competitive bidding,” Houle said.
This week, Houle will recommend to the council that the city delay a project to remove a sanitary sewage lift station. The lowest bid for the job was $360,000, about three times the estimated cost.
Houle said the city could rebid the project or delay the job until 2017, when the work can be done in conjunction with scheduled street work.
“It’s supply and demand,” he said. “The slack is out of the system.”
‘An evaluation game’
Last month, Three Rivers Park District approved two projects where low bids exceeded expectations. A pedestrian overpass for the Luce Line State Trail in Plymouth was approved at $2.24 million instead of the estimated $1.97 million, and cross-country ski trail construction and snow-making contracts were approved for almost $6.4 million instead of the planned $5.75 million.
Amy Gurski, the district’s design director, said the rain- and snow-shortened construction season and rising materials costs pushed prices higher.
This summer Bloomington saw bids on three recent projects that were above estimates. The biggest was the new diverging-diamond intersection of I-494 and 34th Avenue S., a job where the lowest bid of $6.1 million was almost 30 percent above the estimated cost.
The project partners — the city, Metropolitan Airports Commission and state Department of Transportation — considered the project so important that they went ahead with the project anyway, splitting the additional cost.
“Sometimes we don’t think rebidding will save us anything,” said Jim Gates, Bloomington’s deputy public works director. “It’s an evaluation game.”
Bloomington delayed a “green” project to build 22 rain gardens along a street after the project drew only one too-high bid. It will be rebid next year. The other higher-than-expected bids were for a sanitary sewer project on 24th Avenue near the Mall of America.
The four bids on the sewer project exceeded the estimated $1.048 million cost for the job by $212,000 to $805,000. The city took the low bid.
“We think it was more due to fuel escalation, but getting supplies like pipe and trucks is kind of a statewide problem right now,” said Shelly Pederson, Bloomington city engineer.
Pederson said that representatives of a large Twin Cities contractor told her they were having problems getting enough trucking for some jobs. Many truck companies are owned by small independent companies, she said, some of which are working in western North Dakota on oil-related projects.
“They took their manpower and their equipment out there, and not all of them came back,” Pederson said.
Flexibility good for finances
Fridley public works Director Jim Kosluchar said being flexible in this construction environment pays off. Disappointed that a sidewalk project that was supposed to be finished this year got few bids, the city shifted the completion date to next summer and extended the bidding deadline. More contractors bid and the city awarded the contract for about 20 percent less than the estimate.
Cities that have decided to proceed with projects despite bids that are higher than expected can usually cope by spending contingency funds attached to those projects, Pederson said. She said cities will adjust their cost estimates, just as they did when prices were sinking in 2008 as the economy tanked.
“We will be adjusting our budgets and looking at where we think bidding will be going over the next three years,” she said. “We tweak these a bit every year.”