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Bidding frenzy a boon as Everett builds

By David Chircop
Herald Writer

Everett is discovering an upside to the economy's downturn.

The city is saving millions of dollars on construction projects that are being fought over by hungry contractors who need work.

Some recently awarded projects have seen multiple companies bidding well below city estimates.

"It wasn't very long ago that we were seeing items come in above engineers' estimates with some frequency," Everett City Council President Drew Nielsen said. "So this has been a distinct turnaround."

Last week, the City Council awarded a $24.6 million contract to a company for work on water transmission lines, $2 million below the city's estimate.

In March, the two lowest bids to build a new animal shelter came in close to $1.5 million below the estimated $4.8 million construction cost.

The city's public works department, which hires multiple companies for utility, road and building projects, is working to reap the benefits of increasing competition among contractors.

Where reasonable, the department is pushing forward its schedule for bidding out capital improvement projects, council members say.

"We don't know how long that climate will last, so we want to take advantage of it," Councilman Arlan Hatloe said.

Hatloe said the city has been forced to rebid some public works projects in recent years because too few contractors were bidding on projects or their bids were too high.

"While the general economy in the Puget Sound area is stronger than many areas of the country, particularly with regard to commercial construction, it's fair to say it's been leveling off in the last few months," said Jerry VanderWood, spokesman for Associated General Contractors of Washington, a statewide trade group.

Besides increased competition, VanderWood said there might be another explanation for the uptick in low bids.

He said government agencies might be finally adjusting cost estimates to reflect increased building material costs.

Some in the construction industry have complained that government estimates for materials were slow to respond to changes.

"They may be overcorrecting," said Doug Suzuki, president of Shoreline Construction of Woodinville.

His company last month won a $4.49 million contract to replace city sewer lines in south Everett. It was the lowest of 11 bids and came in more than $1.7 million below the engineer's $6.2 million estimate.

PVC pipe, what Suzuki uses for sewer lines, saw some of the sharpest price increases after hurricanes Katrina and Rita ravaged the Gulf Coast in 2005.

Government estimates on projects did not immediately reflect the inflated price, he said.

Neil Neroutsos, a spokesman with Snohomish County PUD, said the utility has adjusted its estimates on jobs to reflect rising building material costs.

The cost of asphalt and copper has more than tripled during the past five years, he said.

Everett City Councilman Paul Roberts, who is also the public works director for Marysville, said he, too, has noticed what appears to be a shift in the market.

"It's certainly different from a year ago when the economy was moving along in a more healthy state," he said. "I think companies are trying to trim as much as possible."

The water transmission line project awarded to Bellevue-based Tristate Construction earlier this week was the city's second attempt.

Three years ago, the city rejected offers from three contractors whose bids were all several million dollars higher than the city's $16 million estimate.

Engineers for the city recalculated cost estimates and re-bid the project this year with an estimate of $26.7 million.

Paul Clements, a project manager with Tristate, said fallout from a slowdown in private developments is stepping up competition for government projects.

"We are seeing more competition, no doubt about it," he said. "And it tends to drive prices down."

Reporter David Chircop: 425-339-3429 or dchircop@heraldnet.com.