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Slow Economy Has Silver Lining for School Construction

[Source: Herald Net | September 17, 2009]

Hal Beumel figured the Everett School District had an enticing project when it went out to bid for a new elementary school.

The district’s director of construction was disappointed when just one contractor bid.

That was three years ago.

Times have changed dramatically since then. Wall Street wobbled, companies pulled back on expansion plans, and now contractors hungry for work are literally going back to school.

These days, the Everett district wants to rebuild two more schools. For one project, they got seven bids. The other drew nine.

The competition has resulted in millions of dollars in savings for taxpayers, and projects that would have been bare bones three years ago are now being built with additional features.

“It’s making up for the hard hits we took a few years ago,” Beumel said. “It’s also a way we can get jobs and money into the economy as well.”

It’s not just a windfall for Everett. Low bids and robust competition are becoming a familiar story for school construction projects in Snohomish County and throughout Washington.

“Across the state, there’s just a lot more bidders out there,” said Gordon Beck, director of facilities for the state Office of Superintendent of Public Instruction.

“Certainly, the economy is the big factor with the lack of private sector work,” said Ralph Rohwer, vice president of Heery International, a Seattle firm that is supervising school construction work in Snohomish.

A bid opening last week brought good news to the Lake Stevens School District, which learned it could not only build a new 2,500-seat stadium, but also pay for everything on a long wish list of other projects.

“We were hoping to get some of the bid alternatives, but we got all of them within our budget,” said Arlene Hulten, a school district spokeswoman. “It’s very exciting.”

The $4.8 million contract went to Ferguson Construction Inc. of Seattle. It was one of 14 contractors to bid.

The additional work includes concrete plazas with stairways on both sides of the stadium, two locker rooms, a room for referees, a storage area, a scoreboard, a ticket booth, ornamental fencing and a training and laundry room.

The district’s estimate for the base bid without all the extra projects was up to $4.8 million; the actual base bid was $4.17 million, meaning the district was able to order about $600,000 in additional projects.

That will take some pressure off local boosters to finish the stadium.

“How many cake raffles do you need to build a ticket booth?” Hulten asked.

Money for the project comes from a $65.5 million bond measure Lake Stevens voters approved in 2005.

In March, the Mukilteo School Board awarded an $8.8 million contract to JTM Construction of Seattle to expand and remodel classrooms at the Sno-Isle Tech Skills Center. The contractor was one of eight companies to submit a bid, which came in about $4 million below the budget estimate.

In August, the Everett School District awarded a $10.3 million bid to replace six small pod classroom buildings at Jefferson Elementary School with a two-story classroom wing and to remodel the gym and cafeteria. The project estimate was $14.5 million. Graham Contractors of Bellevue submitted the low bid. It was one of nine companies to bid.

At Whittier Elementary, another Everett school, bids came in $1.7 million under budget for a renovation project that attracted seven bidders.

“What we are seeing in general is a lot of competition and a lot of real high quality contractors,” said Beumel, the construction director for the Everett School District. “The tight economy is making it difficult for smaller contractors to bid up. The larger contractors are starting to come back to schools and do more school work.”

Today’s bidding climate is a far cry from the sticker shock districts felt in 2006 when construction costs spiked.

At that time, analysts blamed surging costs on several factors. Steel, concrete and copper wiring were at a premium because of China’s construction boom and the rebuilding in the Gulf Coast region following Hurricane Katrina. High oil prices jacked up the cost of getting those materials to building sites. And construction projects closer to home, such as high-rises in downtown Bellevue, were gobbling up workers and intensifying the competition for labor.

“Three years ago we were lucky to get one or two bidders,” Beumel said. “I just wish I had more projects to bid.”

It has been a roller coaster ride for school districts. During the 2004-05 school year, the average cost for new construction in schools receiving state matching money across Washington was $184.41 per square foot, according to the state superintendent’s office. It shot up to $261.83 in 2006-07 before dipping to $224.58 last year.

Three years ago, Snohomish’s three major school construction projects together were millions of dollars above the estimates voters were given in 2004 when they approved selling the bonds to build them.

Lake Stevens did vigorous marketing to get bids for its Cavelero Mid High School, yet drew only two bidders.

In trying to corral escalating costs at the time, the invitation to bid to build a new high school in Granite Falls included the potential for $1 million in bonuses to finish on budget and on time.

Now, Everett and Snohomish school districts have accelerated schedules for elementary school construction projects to take advantage of the competitive market.

“We have created a very aggressive schedule for all of our projects,” said Bill Mester, superintendent of the Snohomish School District. “Because of the bid climate, the quicker we can go out to bid, the better off we are.”

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