State gets bargain on stimulus bids 

So far, bids for four stimulus-funded road projects have been opened, and they’ve all come in way under budget.

Based on the lowest bids, ITD will be spending a total of $29.9 million on projects previously estimated to cost $49.5 million – a savings of 40 percent.

Mark Dunham, executive director of the Idaho Association of General Contractors, said contractors have been able to bid so low because materials costs, especially oil prices, have come down substantially in the time since the estimates were made.

Additionally, competition for scarce work has driven general contractors to clip their profit margins down to the bone.

“That’s a sign of the competitive times,” Dunham said. “These companies are doing whatever they can to keep their people employed. Construction has one of the highest unemployment rates in the nation.”

Blackfoot-based Gale Lim Construction submitted the lowest bid for construction of passing lanes on U.S. 20 near Henry’s Lake in eastern Idaho. Gale Lim bid $2.3 million, where the state estimated the project would cost $3.5 million.

“We bid it at pretty much our cost to be able to get this project,” said Sheri McLaren, office manager for Gale Lim. “We have no profit built into this job. That’s how these jobs are going; people are so desperate to work that most of the jobs going to work right now are going at cost to get them. So we have to really be careful to keep this job right on line. … But to keep our people working, that’s what we have to do.”

McLaren said work has been “very slow” this year for the company, which focuses on road construction.

She said the company has trimmed its workforce down to its “very core people” and kept those core people at 40 hours a week or less. That means no overtime, which some workers count on in the spring and summer to keep them going through slow winters.

“It’s really hurting them financially. We can tell it’s hard,” she said.

The $2.3 million will tide the company over for a month or two. McLaren said she’s seen a few more road projects start to pop up, and she’s hopeful that there will be more jobs in the coming months.

Construction on U.S. 20 will start this summer, and ITD estimated the project would generate or preserve approximately 40 jobs.
While construction companies are taking big cuts in profits, that doesn’t mean workers are taking any pay cuts to work on stimulus projects. Because the projects are federally funded, contractors have to pay a federally mandated minimum hourly wage.

These wages tend to be slightly higher than average.

Kate McCaslin, president of the Inland Pacific chapter of the Associated Builders and Contractors, said if a bid comes in too low, project owners should pay close attention to make sure the winning bid didn’t leave anything out.

“You might say, ‘well, you made a mistake, just eat it,’ but he [the contractor] could go bankrupt. Then you’re sitting there with a project that’s half finished and a bankrupt contractor, and you’ll pay through the nose to get that done,” she said.

But on all the stimulus project contracts, bids came in within 10 to 20 percent of each other, showing that the estimates were probably just too high, considering materials costs and the competitive market.

ITD spokesman Jeff Stratten said department Director Pamela Lowe anticipated that bids might come in below the estimates, which were made before materials costs began to drop.

Earlier this year, Lowe asked ITD staff to begin reviewing and prioritizing additional projects that could be funded with the savings. Those recommendations will be presented at an Idaho Transportation Board meeting in July or August.

“It’s good news – bids are very competitive right now, so construction owners – in this case the taxpayers – are getting a lot of product for their money,” McCaslin said.

Other stimulus projects whose bids have been opened include a $2.7 million U.S. 95 passing land project north of Moscow by Orofino-based Debco Construction, a3.3 million widening of U.S. 95 in White Bird by Boise-based Knife River Construction, and a $21.6 million replacement of Dover Bridge in northern Idaho by Great Falls, Mont.-based Sletten Construction.

Federal laws require federally funded contracts to be open to all licensed, qualified contractors, meaning contracts were fair game for out-of-state companies.

A majority of workers on all Idaho projects will most likely be Idaho residents, Dunham said.

Debco, Knife River and Sletten did not return phone messages.

Idaho has about $182 million of federal money to spend on transportation projects. A study by George Mason University estimated the money would create about 4,300 jobs around the state.

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