Construction progress at the site of Bargersville Police Department’s future headquarters is seen in November at the northwest corner of Whiteland and Morgantown roads.
DAILY JOURNAL FILE PHOTO
Local officials are facing some tough decisions about some big projects.
City and town leaders are hitting pause, changing the way projects look or powering through them blindly due to inflation, labor shortages and supply chain issues related to the ongoing coronavirus pandemic.
The main culprit is construction material costs, which jumped nearly 20% last year, contractors say. An analysis of the producer price index for new non-residential construction, an index that looks at the prices charged by goods producers and service providers such as distributors, increased by 19.6% in 2021, according to the Associated General Contractors of America, a construction contractor and industry trade organization.
The rising costs caused issues for many local towns and cities. The Bargersville Police Department’s $3.6 million headquarters project that is under construction faced increased lumber costs, and has been affected by supply and demand issues. Still, officials decided to run with the project now knowing what the total costs would be, said Todd Bertram, Bargersville police chief.
Other cities and towns put off projects, or changed or rebid previously planned projects. They are also now planning for alternatives if future projects don’t go as planned.
Edinburgh delays pool project
Rising costs caused the town of Edinburgh to completely scrap and spread out the town’s planned $400,000 reconstruction project at Edinburgh Aquatic Center.
The project would renovate the center’s concession stand and locker rooms to comply with standards from the Americans with Disabilities Act.
The goal was for bids to not exceed $400,000. All four bids the town received did, said Dan Cartwright, town manager.
Bids for the project ranged from $700,000 to $900,000, double what was budgeted. Construction companies cited inflation as the reason the bids came in over what the town expected, Cartwright said.
He recommended the town council reject all of the bids, which they did during a December meeting. The town can get by with the aquatic center they already have, but should be prepared for more costs down the road as the pool is near its life expectancy, officials said during the meeting.
Instead, the town plans to add a part-time position and complete just the upgrades needed to be ADA compliant. The part-time position is tentative as it will depend on how busy the pool is come spring and summer, and Cartwright hopes to pull the employee from the town’s existing pool of employees to help save money. Those changes will cost the town about $75,000, he said.
The town is also preparing for several other projects to go out to bid later this year, including a new water plant that is expected to cost about $7 million, and a new fire station along County Road 900 South, near the town’s industrial park.
Cartwright, who was previously in the construction and development business for 30 years, has not seen inflation as prevalent as it is right now, he said.
“It’s crazy — with a capital C,” he said.
Franklin changes street project
The city of Franklin also rejected every bid for its nearly $2.66 million Yandes Street reconstruction project after bids came in millions of dollars over budget.
The project would see the entirety of Yandes, and about a block of Madison Street between Yandes and Depot streets in downtown Franklin, reconstructed as fully brick-paved streets.
During an Indiana Department of Transportation letting in November, the city received five bids for the project. Letting is the process of receiving bids before construction contracts for any part of a project are awarded.
None of the bids were close to the target estimate of about $2.66 million, city engineer Mark Richards wrote in a Dec. 20 letter jointly addressed to the Franklin Board of Public Works and Safety and Redevelopment Commission.
The low bid came in at about $3.94 million, $1.34 million over budget, and the high bid came in at $5.16 million, $2.5 million over budget, according to state documents.
The city also had two other projects as part of the November INDOT letting and saw the same issue. Statewide, 21 of the 46 projects let in November came in over engineers’ estimates, Richards said in the letter.
Because the bids were higher than expected, Franklin decided to reject the bids after discussions with GAI Consultants and the Indianapolis Metropolitan Planning Organization (IMPO). Now, the city plans to modify the design to reduce costs, re-classify some of the expenditures to come out of different funds, request additional funding from the IMPO and shift some funding avenues. The city also plans to rebid the project next month, Richards said in the letter.
The cost of the street project is now estimated at $3.71 million, Richards said in the letter.
Greenwood faces fewer bids
Greenwood is facing a different problem with its construction projects — fewer bids period.
In the last two years, Kevin Steinmetz, capital projects manager for the city of Greenwood, has not only seen fewer bids come in for projects, but also seen more quotes. Additionally, more projects seem to be scaled down compared to previous years. He attributes the decline in bid responses to the amount of work available for contractors right now.
“Because there’s so much work out there, there’s less incentive for contractors to bid work compared to … pre-pandemic,” Steinmetz said. “It is very much less likely to get robust demand for work when you throw it out there.”
The city recently bid out a sanitary sewer project for work close to the Brighton Estates development and didn’t receive a single bid. The cost of that project was under $1 million dollars.
When it comes to road projects, bids have come in at or around the engineer’s estimate, but across the city’s departments, officials have seen cost pressures for projects and items involving very skilled trades. For example, the Madison Avenue streetscape project the city completed last year was lucky to find a contractor available to work on it, he said.
The Madison Avenue project went out for bids in the summer of 2020, and had multiple bidders. The winning bid ultimately went to Calumet Contractors for $4.32 million.
For the streetscape project, the city had created multiple alternate scenarios to account for the issues Franklin is now facing, Steinmetz said.
Now, Greenwood is preparing for another streetscape project near Madison and Main Street. This project was originally planned to begin in 2020, but Greenwood delayed the project due to the pandemic, he said.
Variety of factors causing issues
The differences between estimates and bids could be due to a variety of factors, including the amount of time between when an estimate was made and the bidding date.
Another factor is due to high demand and low supply of manpower and materials.
There is an increased need now for cities to partner with trade schools, such as Central Nine Career Center, to get more people involved in the trades, Steinmetz said.
“It is a byproduct of (the) incredibly robust demand to build from all sectors of the economy,” he said. “Some of it is (also) luck — having the right people being available at the right time.”
Many cities and towns are facing the same issues right now, and prices are not likely to go down anytime soon, Cartwright said.
“It is what it is,” he said. “Suppliers don’t foresee a big difference in general prices in the future either.”
