By KERRY SMITH, EDITOR, ST. LOUIS CONSTRUCTION NEWS AND REVIEW MAGAZINE
Within the past 45 days, two major public-sector building project lettings – one in St. Louis, the other in Springfield, IL – have been left wanting for bids from contractors.
The first project, phase two of a proposed expansion to St. Louis’ downtown convention center, met with only one bidder for phase one and no bidders for phase two. The contract to build the second half of the Cervantes Convention Center expansion/modernization, estimated by city officials to cost $70.8 million, received nary a bid. Phase one of the project, awarded in early May to the only bidder – Ben Hur Construction – included approval of a $123.9 million contract with the construction firm, 65 percent higher than what the city initially budgeted.
The second project, the largest-ever renovation of the Illinois State Capitol, attracted only one bidder with a price tag that came in 43 percent over the state’s job cost estimate. Core Construction Services of Illinois Inc. was awarded the $243.5-million project, for which the state budgeted as part of a 2019 capital improvements package. Four contractors expressed interest at a pre-bid session, according project architect Andrew Aggertt, but only one firm bid on the contract.
“I am not surprised,” said Leonard Toenjes, president of the Associated General Contractors of Missouri, referencing the lack of bidders. “These longer-term projects, with inflation as it is and all the different work opportunities there are, dissuades contracting from trying to work in the public low-bid market because that carries a lot of risk, especially now.”
In contrast to private-sector construction projects, taxpayer-funded public builds don’t allow for provisions such as escalation clauses, according to Toenjes, to help minimize the risk contractors bear when there are supply chain unknowns. Private sector project agreements also frequently include flexibility in working with the project owner when diesel prices double over the course of the project timeline.
“The long-term nature of some of these projects often requires that contractors go back to owners and restructure various portions of the contract to account for dramatic cost escalations,” Toenjes said. “These candid constructor-supplier-owner conversations are often needed these days to keep a project on track. In a public low-bid, hard-bid situation, this type of flexibility often is not possible.”