Taxpayers save as contractors compete for projects
Posted January 4, 2010
Raleigh, N.C. — A fierce bidding war among contractors scrambling for road projects to keep their crews working has saved the state nearly $200 million since last March, officials said Monday.
"It's a good time for us as an owner to be letting contracts because of the low bids we're receiving. It gives us the ability to deliver a lot more projects to the public," said Victor Barbour, technical services administrator for the state Department of Transportation.
The DOT has awarded $855 million in construction projects in the last 10 months, and most winning bids for projects have come in under DOT estimates. The latest 34 contracts awarded, for example, were a combined $19 million below projections.
"Competition is a wonderful thing, and we get the best deals we can in a competitive bidding environment," Barbour said, noting the savings allow the state to stretch tax dollars and complete more projects.
The competition is leaving scars on highway contractors, though.
"A lot of people are bidding on government work at cost and in some cases below cost because they're trying to survive," said Dave Simpson, direction of the North Carolina Buildings Division for Carolinas AGC, a trade group representing construction firms.
The competition goes beyond highway projects. The state construction office reported that winning bids have been coming in anywhere from 7 to 35 percent under estimates.
The bid on a building at Wake Technical Community College, for example, was 35 percent under budget, while the restoration of the Roanoke River Lighthouse was about 11 percent lower than state estimates.
With private work hard to find, competing contractors aren't optimistic. Simpson said Carolinas AGC members see similar bidding wars for the year ahead.
"The construction industry right now is facing the toughest times I've ever seen. It is a bear out there," he said.