Bill for '11 Minn. shutdown comes in extra costs, road delays

The toll from last year's political standoff that shut down state government is still rising on Minnesota's highways.

The cost of settling the claims of contractors for road work that was suspended last summer has doubled in the last few months and will climb much higher.

Motorists, too, are about to pay a heavy price this summer from the added hassle of dealing with highway work left over from 2011 to new construction scheduled for this year.

Cleaning up the unprecedented mess has occupied much of the time for dozens of engineers and others at the Minnesota Department of Transportation (MnDOT), who have been working on settling contractor claims involving 77 projects.

They've paid out over $4 million, with other claims still pending.

"The big ones haven't been settled," said Mike Leegard, who is overseeing the chore for MnDOT. Six of the biggest projects have claims totaling more than $5 million and their tallies will climb as additional costs become known.

The projects include the reconstruction of the Lafayette Bridge, repaving I-94 between St. Paul and Minneapolis, the Hwy. 169/Interstate 494 interchange and overhauling Interstate 35 in Duluth.

The cost of settling all remaining claims is on track to far exceed the $5 million the state saved during the three-week government shutdown that took place last summer when Republicans and Gov. Mark Dayton couldn't agree on a budget.

The cost of settlements doesn't include the cost of managing the claims process, which has become so complicated that MnDOT hired yet another contracting firm to help sort it all out.

"It's been a burden," Leegard said.

Builders see domino effects

The $130 million Lafayette Bridge project offers an example of the shutdown's impact. The prime contractor, Lunda Construction, said the shutdown cost it and other contractors at least $1.7 million. Disruptions involving supplies made up more than half the costs.

"The Minnesota Shutdown will have significant impact on the delivery of fabricated items which will undoubtedly affect Lunda and every contractor on this project," the firm said in its claim.

In a letter to MnDOT, Lunda Vice President Dennis Behnke added, "On a daily basis, we are encountering additional, ongoing and domino cost impacts."

Lunda also is among the contractors working on a $65 million rehab of I-35 in Duluth, dubbed the Mega Project because it involves grading, paving, and work on walls, signals and lighting. The contractors said the state owes them at least $1.3 million, including losses for idled equipment during the shutdown.

The reconstruction of the Hwy. 169/I-494 interchange also was hit hard by the shutdown. A joint venture involving C.S. McCrossan and Edward Kraemer & Sons has claimed at least $894,162 for losses from the work stoppage.

Much of the give-and-take between contractors and MnDOT involves estimating office overhead losses. At times the dispute becomes esoteric, with government and the firms arguing over which accounting methods to use in calculating losses.

MnDOT got permission from the state Department of Administration to pay an outside accounting firm up to $100,000 for consulting help in making the calculations.

Prolonging the hassle

While the shutdown lasted three weeks, it caused much greater delays in construction. Restarting the projects took time because contractors and subcontractors fell out of order in obtaining steel, and some workers left for jobs in North Dakota and elsewhere. MnDOT officials told legislators this year that work on 36 projects supposed to be finished in 2011 will be completed instead this year, including some work on I-94 between St. Paul and Minneapolis and on the stretch of I-35 in Duluth.

They said another half-dozen projects never started as expected in 2011 and were pushed into this year.

Edina Mayor James Hovland said he had expected the Hwy 169/I-494 interchange project to be completed by October, but now hears it could take until the end of the year.

"It has regional significance," Hovland said of the delayed work. "Time, money and safety are the three key components. And then, continued congestion."

Pat Doyle • 612-673-4504