Competition among road construction contractors has paid off for Iowa, according to the Department of Transportation, which says bids for I-JOBS and federal stimulus projects have come in $10 million below projected costs.
The low bids on about half the state’s $250 million worth of federal stimulus highway projects have been, on average, 4 percent below the DOT’s estimates, spokeswoman Dena Gray-Fisher said.
In addition, she said, local highway-funded projects have come in about $1.4 million less than estimated, and the low bids on I-JOBS Bridge Safety Fund projects in January were about $1.1 million less than expected.
In some cases, the difference between the low bid and the second low bid was slight, added Assistant Contracts Engineer Ed Kasper.
“We’re getting very good prices, very favorable for our projects,” Kasper said.
That’s because “competition for projects is healthy in Iowa,” Gray-Fisher said, even if it’s not quite as intense as in some states. Federal stimulus bids in Massachusetts, for example, have been an average of 22 percent below the original estimate.
Those numbers don’t tell the whole story, said Scott Newhard, executive vice president of the Associated General Contractors of Iowa. He said the fact the Iowa DOT does much of the design and engineering on road projects in-house makes the cost estimates more realistic than in other states.
“So, when we’re coming in under their estimate, people are getting a bargain,” he said. “The public is the winner.”
That means the department can do more projects than it anticipated, Director Nancy Richardson said.
A Des Moines legislator isn’t as confident of the DOT cost estimates and thinks highway and bridge contractors might be the winners. With a river of stimulus money flowing through Iowa, Democrat Sen. Matt McCoy said it’s a great time to be in the road construction business.
Looking at data showing the highway construction cost index has risen 20 percent in 10 years, McCoy isn’t impressed by the low bids.
“Look, if the contractors can afford to raise prices 20 percent and still win bids, the projections are high,” he said.
Kasper, however, is quick to point out that the increase in the past year was two-tenths of a percent after years of double-digit increase in some of the “major indicators” — asphalt, earthwork and concrete, for example.
Although fuel costs, which can be a significant part of any road construction project, are lower than a year ago, Newhard and Gray-Fisher said several factors, including the cost of steel and Portland cement, have contributed to the overall increase in construction costs.
The stimulus dollars have had their intended effect, McCoy said. He cited an annual DOT survey that showed the number of workers on transportation projects in Iowa was up 30 percent from the five-year average.
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Now it’s time to spread the stimulus wealth around, McCoy said. Iowans in the building trades — carpenters, bricklayers, electricians, masons and others — are experiencing double-digit unemployment now, McCoy said, so he wants to apply triage principles to the state’s economic stimulus effort.
“We need to go to the patient who is bleeding the most,” McCoy said, and at this time, that’s building trades workers.
Newhard is sympathetic to the plight of those workers. However, he points out that the 5,200 people employed on road projects last summer — 1,000 more than previous summer — was 1,000 fewer than 10 years ago.
Before legislators and policymakers divert I-JOBS funds to other public improvements, they need to understand the challenge for road builders to keep their new employees on the payroll beginning this spring, Newhard said.
McCoy wants to redirect about $72 million in I-JOBS funds toward putting people to work on the growing backlog of non-transportation public improvements, he said, referring to the lengthy list of I-JOBS projects that have been deferred.
There’s no shortage of non-transportation projects waiting on I-JOBS funding. For instance, Davenport wants $1 million for flood protection work at Modern Woodman Park.
That story is repeated all across the state.
There are other avenues for funding road work, McCoy said. The state could loosen its “pay-as-you-go” philosophy and sell bonds for road projects.
Next, he would re-appropriate $75 million in I-JOBS funds to apply to non-transportation public improvements.
“To me, it’s a commonsense way to get out of the worst hole we’ve been in for a while,” McCoy said.
Bonding would be an “absolutely dependable” funding source because the state can use fuel taxes and gaming revenue to finance the bonds.
There seems to be little support at the moment for McCoy’s approach. A supporter of I-JOBS, McCoy conceded Gov. Chet Culver, who is up for re-election, is unlikely to push the idea of heavier use of bonding.
However, he hopes he can change some minds.
“Typically, this is the sort of thing that comes together at the end of the session,” McCoy said.