Costs of Transportation Projects Collapse

Prices are rapidly falling on construction projects. Please consider Bay Area transportation projects benefit from low bids in poor economy.

California's poor economy has led to surprisingly low bids on transportation projects across the Bay Area and state, as construction companies fight for their business lives to capture whatever work they can. In an industry where unemployment is at 18.5 percent and more than 30,900 jobs were lost last month, according to the Bureau of Labor Statistics, dozens of firms are vying for work that in the past might draw interest from a handful.

From major highway construction to small sidewalk improvements, bids are sometimes close to half as much as public works officials had projected.

When the Santa Clara County Roads & Airports Department recently sought a contractor to do bicycle and pedestrian improvements along three streets, it expected the cost to be about $975,000. The winning offering was just $543,533.

"Twenty bidders, with the low bid 44 percent under," said Dan Collen, a deputy director with the agency. "Six bidders would have been considered a good turnout, but things have moved beyond competitive. They are desperate."

On the carpool lane project on Interstate 680 from Fremont to Milpitas, the three contracts awarded last month totaled about $88 million — compared with the $136 million Caltrans anticipated.

Repairing bridge decks on Highway 237, Highway 84 and El Camino Real will cost $982,000 — $529,000 less than forecast. Repaving four streets in Cupertino will cost $3.6 million, nearly $1 million under what the city figured it would have to pay. And making the northeast corner of the Virginia-Budd street intersection accessible to the disabled will cost $2,090 instead of $3,000.

No one is certain how much agencies across the state are saving. But it could run into hundreds of millions, maybe even into the billions of dollars.

"I've never seen better bidding in my 35 years in transportation," said Dennis Fay, head of the Alameda County Congestion Management Agency.

Lower costs and better bidding are just what the doctor ordered.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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