KCI Construction

Contractors Debate Bidding Same Public Job Twice due to Cost Spikes, Unknowns

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By KERRY SMITH, EDITOR, ST. LOUIS CONSTRUCTION NEWS AND REVIEW MAGAZINE

Contractors in St. Louis and elsewhere are frustrated in the public bid world these days.

With material pricing uncertainties, inflation, supply chain delays and more, qualified contractors are often finding it tough to submit an affordable project bid response that matches the agency’s bid documents.

Evidence of this frustration can be seen in few – or no – responses to public lettings, illustrated recently with the proposed expansion of America’s Center downtown. The convention center expansion drew only one bidder for phase I, Ben-Hur Construction, whose bid came in $40 million over the owner’s expected budget. Phase II of the $210 million expansion project attracted no bidders. And in late December, operator St. Louis Convention/Visitors Bureau said there were not enough funds to complete the project. The bureau announced it had to use dollars reserved for phase II to meet the rising costs of phase I.

AGCMO President Len Toenjes says what has occurred with the America’s Center RFQs is not an isolated scenario.

“Typically an engineering firm develops a preliminary estimate and then it’s a matter of gaining bonding approval on a public sector project,” Toenjes said. “From that point on, as a public project is let, it becomes readily apparent very quickly – from the time of the engineer’s preliminary cost estimate onward, that those initial numbers didn’t factor in inflation, or enough inflation, into the formal bid documents.”

Toenjes says he has witnessed a number of contractors who have had to return to the public agency to provide all the back-up to substantiate what is the reality – the increased cost of materials, labor and more. “Trying to work through that issue becomes problematic,” he said. “And it’s real.”

From the contractor’s perspective, another issue also becomes real. If the bids come back over the estimate and the public agency rejects all the bids and does not award the project, those bidding contractors’ numbers are no longer private information. Their information is public, enabling their competitors to see exactly what their numbers are.

KCI Construction President Tom Huster says this, too, is frustrating.

“Two weeks after the agency rejects the bids, our numbers are out there for all to see,” said Huster. “Everyone knows your price. You’ve got a target on your back that makes it extremely difficult to bid that same job twice.”

Huster and other contractors have spoken with MoDOT about merely sharing the percentage that each competing bid is over the letting amount, rather than reporting the exact numbers provided by each contractor bidder. According to MoDOT, the U.S. Dept. of Justice and The Office of Federal Procurement Policy require that government-funded projects must disclose the costs of what government is agreeing to buy and at what prices in the name of taxpayer full transparency.

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KCI Construction Celebrates a Century in Business

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By KERRY SMITH, EDITOR, ST. LOUIS CONSTRUCTION NEWS AND REVIEW MAGAZINE

St. Louis-based KCI Construction is celebrating 100 years in business.

The firm that began in 1922, founded by Charles Kloster as a carpentry construction company known as Kloster Company, built schools, churches and single-family homes in the early days and evolved into hospital construction and then predominantly infrastructure work. In 1995 when the last of the Kloster namesakes left the business, the company’s name became KCI Construction.

(Left to Right) Rick Grebel, George Kloster Sr., George Kloster Jr., Lee Davis

But what hasn’t changed through the years, says its current president, is KCI’s love of construction.

“Our passion for building and finding unique solutions to new problems is what has defined KCI throughout its history,” said KCI President Tom Huster, only the fifth president in the firm’s century-long history, noting that since the 1960s and 70s the company has worked as predominantly a heavy construction and concrete contractor. “We try to self-perform as much of the work as possible, so we have tighter control from a schedule and cost standpoint. Self-performing holds us all accountable…if there’s a hiccup on a job, we have no one to look at but ourselves,” he added. “We definitely see ourselves as a builder, not a broker.”

(Left to Right) Karl, Barney and Kevin Kloster

KCI is currently owned by Huster and Vice President Brent Krueger.

Although the company’s early roots were in South St. Louis City, KCI later moved its headquarters to South St. Louis County and remains there, along with an office in Springfield, MO. Except for an occasional project performed in Arkansas, Illinois and Kentucky, the firm’s focus is on Missouri work. Its three biggest markets, according to Huster, are transportation infrastructure, civil engineering and water/wastewater construction. Secondary markets include design/build, heavy industrial, general building and earthwork/utility construction. The firm’s field workforce fluctuates between 150 and 200.

“We love to find jobs that aren’t typical so they push us to think outside the box,” Huster said. “We bring a collaborative approach to every project, from start to finish. We’re not into job titles. There’s not a lot of ego around here. Everyone contributes and has a team mindset. We all dive in.”

Early projects completed by KCI include: St. Cecilia Catholic Church; a former bowling alley at Hampton Avenue and Chippewa Street in St. Louis that Huster says was the first one to sport a carpeted concourse; and the Bowling Hall of Fame, which was torn down to build the current Busch Stadium.

St. Cecilia Catholic Church -1926

Recent high-profile KCI projects include: an aggressive nine-month rehabilitation of the I-70 Blanchette Bridge in St. Charles, completed in Fall 2020; multiple Route 61 Troy bridge replacements, also finished in 2020; the St. Louis County Courts building, completed in 2017; and completion of the pedestrian bridge affording visitors a continuous greenway route to walk from the Old Courthouse to the Arch grounds and St. Louis downtown riverfront, finished in 2014 as part of the Gateway Arch National Park revitalization.

St. Louis County Courts Building – 2017

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Transport Industry Waits for Infrastructure Bill Funding

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Congress Continues 2020 Funding Levels through March 11

By KERRY SMITH, EDITOR, ST. LOUIS CONSTRUCTION NEWS AND REVIEW MAGAZINE

Heavy highway firms are preparing to mobilize their people, eye potential projects and await project lettings as DOTs await funding appropriations for the new federal infrastructure bill.

It has been three months since Congress passed the $1.2 trillion Infrastructure Investment and Jobs Act (H.R. 3684), yet transportation agencies aren’t able to let contracts without the necessary appropriations. Although the most ambitious infrastructure bill in recent history was enacted into law last November, Congress is still operating on 2020 funding, woefully less than the levels promised under the new law.

The February 18 government appropriations deadline came and went, with the U.S. Senate agreeing upon another continuing resolution to continue the same funding levels through March 11 rather than authorize new spending to include the $1.2 trillion influx.

Contractors and engineering firms say it’s a triple witching effect in the making: a shortage of skilled project team members, a still-clogged supply chain and continued volatility in materials prices. Those who design, engineer and build highway, bridge, rail and mass transit infrastructure would normally be bidding on these projects during this season to enable crews to begin during peak work season.

“The lack of appropriation is putting pressure on agencies such as Missouri Dept. of Transportation in terms of the timeframes and estimated costs of their upcoming projects,” said St. Louis-based KCI Construction Inc. President Tom Huster. “Until Congress appropriates this infrastructure bill and MoDOT receives the funding, the timeline remains in question. We’re excited about the infrastructure bill because it’s the type of work we perform. This funding, coupled with the Missouri gas tax increase that passed in 2021, means good things for the state and the region from an infrastructural standpoint. Yet as an industry, we don’t have nearly enough people…from top to bottom, project managers to laborers in the field, we’re short.”

Criteria that KCI and other heavy highway contractors will be weighing to decide whether to bid or pass on an infrastructure bill-funded project includes: the number of people the company has available or will have available once the project start timeframe becomes clear; the job schedule itself; the scope of work; how much of the work is self-performed versus subcontracted; and lastly, whether the owner/agency’s budgeted project amount is realistic given current labor and materials constraints.

“We have bid projects recently that were over the initial owner budget, and it forced the owner to either cut scope or find more money, and then issue for re-bid,” said Huster. “It’s a challenge to be low on a bid one time, much less twice.”

Cliff Mashuda, Jr. is president of Mashuda Contractors Inc. The earthwork contractor performs much of its work in Wisconsin and Iowa. Mashuda says the firm’s projects range from moving 10,000 cubic yards of dirt to three million cubic yards of dirt.

“There’s definitely quite a lot of uncertainty surrounding the infrastructure bill,” Mashuda said. “If transportation agencies don’t know for sure when the funding is coming, they can’t plan in a realistic fashion. The season typically runs from April 1 until Thanksgiving. It’s already time for DOTs to be appropriating the money at the state level and getting project bids out the door. Once Congress does appropriate the funding, many of us may find that our more experienced project managers are already immersed in managing other jobs. The timing could prove to be poor regarding the four to six weeks it’s going to take to do the paperwork, engineering, preconstruction and mobilization of workers.”

Persisting supply chain issues could also prove detrimental to the start of these projects,” added Mashuda. “We’re already seeing huge delays for certain pieces of heavy equipment and components. If the project demands two or three more (bull)dozers, we may not be able to get them.”

Charlie Quandel is chief executive officer of Chicago-based Quandel Consultants Inc. The niche firm’s specialty is engineering intercity high-speed rail projects. Quandel draws a distinction between the “shovel-ready” projects of the Obama administration’s 2009 federal stimulus package with the “shovel-worthy” projects waiting to be funded via the current infrastructure package.

“There are Midwest-based high-speed rail projects that are indeed ‘shovel-worthy’ and ready to move forward once the necessary federal appropriations are made,” Quandel said. “These are projects which have environmental clearance with the records of decision already in place, and they can move quickly toward construction with concurrence from the freight railroads.”

The Consolidated Rail Infrastructure and Rail Improvements (CRISI) program is working to get its 2022 budget passed so that the federal infrastructure dollars can be appropriated into the various (rail) programs, Quandel added. “Once that is done, the NOFOs (Notices of Funding Opportunity) will come out and then states will be able to submit their applications,” he said. “We’re realistically looking at the latter part of 2022 or early 2023 before funds appropriated by this infrastructure bill could flow to the states. We’ve already seen one high-speed rail project estimating significant increases in costs just over the past six to 12 months.”

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