America, Iowa, construction--America Construction less expensive lately

When the University of Iowa received bids this summer for one of its highest profile construction projects -- the Pappajohn Biomedical Discovery Building -- officials were pleased to find the low bid was $5 million below the estimated $75 million construction cost.

But this was no anomaly, said Rod Lehnertz, UI director of planning, design and construction. Since July 2009, UI has been averaging below-estimate bids from contractors, and the more expensive the project, the greater the savings, he said.

"Primarily, this has all been due to competition. We have seen this in all but one area of our construction segments," Lehnertz said noting the exception is in paving. "We are seeing a wider range of bidders from a wider range of locations."

It's not just at UI, either. Locally and nationally, construction projects appear to be going for well below the estimated costs.

Brian Turmail, a spokesman for the Associated General Contractors of America, said a survey this year found 90 percent of 33,000 member firms reported bidding lower than estimated and 10 percent were bidding at a rate that would cause them to lose money to keep their workers getting paychecks.

At UI, projects estimated at $100,000 or less have had bids 10 percent below estimate, projects between $100,000 and $1 million are 14 percent below and those more than $1 million are getting bids 22 percent below budget, Lehnertz said an internal review of projects since July 2009 showed.

Iowa City reports similar savings, said Rick Fosse, Iowa City public works director.

Iowa City projects have come in on average 15 percent below estimate so far this year, Fosse said.

"It is a good time to be doing work because the prices are so low," Fosse said.

Contractors were hungrier early in the year, but as the construction season has worn on, the competition diminished, so the gap has closed, Fosse said.

The city also has found savings by refinancing municipal debt loans to more favorable rates, Fosse said. The savings this year will translate into more money for the construction budget next year, which includes flood recovery projects and revamping Lower Muscatine Road, Fosse said. ( by B.A. Morelli)

Source: press-citizen.com