The City Council last week approved a $1.2-million contract with Orange County-based Sully Miller Contracting Co. for the first phase of a street resurfacing project in the San Fernando corridor. The contract came in nearly 20% below the initial cost estimate.
City officials say that has become the norm, with the majority of construction contracts averaging 15% to 25% below the cost estimate.
Stakeholders attribute the competitive market to an extreme slowdown in the construction industry, which has forced companies who previously worked on privately-funded commercial and residential projects to turn to government work.
Jonathan Layne, business development manager for Sully Miller, said his company has been forced to lower its bids to stay competitive with so many companies flooding the public works market.
“There’s just not enough jobs out there,” he said.
Most city projects now attract double or triple the amount of bids received in better economic times, city officials said. A recent contract for more than $2 million in renovations to Maple Park in south Glendale attracted proposals from 26 companies, 11 of which came in at or below the cost estimate.
Layne said many companies are trying to find jobs “just to try to keep their doors open.”
Still, some bids have come in so low that city officials have had to review them by line-item to ensure the work will actually be able to stay within the bidding price, Zurn added.
Overall, city officials say the dropping construction costs have helped them stretch limited dollars as City Hall also copes with the recession.
Dave Ahern, capital projects manager for the Community Services & Parks Department, said a number of park renovations and other projects have also benefited from the lower construction costs.
With most projects relying entirely on grant funds, he said the dropping costs have allowed for additional components to be added, such as upcoming renovations to the 3,000-square-foot historic Le Mesnager stone barn at Deukmejian Wilderness Park.
Public Works officials expect about $3 million in combined cost savings from both phases of the San Fernando corridor road project, which is being funded through state bond proceeds for road improvements.
Those savings will be able to fund four more street rehabilitation projects, according to a city report. And the pace of annual sidewalk maintenance will now be doubled, Zurn said.
“The bottom line is we get to do more work with what we have budgeted,” he said.
Get in touch MELANIE HICKEN covers City Hall. She may be reached at (818) 637-3235 or by e-mail at email@example.com.