Projectmates Construction Software Blog

Bids for government construction projects heat up

You can thank the economic stimulus package for increased government building projects. But despite the abundance of jobs, getting the winning bid may not be a cinch.

According to a September report on Taragana.com, every state this year has reported average winning bids coming in from 5 to 12 percent below estimate, said Tony Dorsey, spokesman for the American Association of State Highway and Transportation Officials, whose organization polled state governments this year on the first round of projects funded by the federal economic stimulus.

The lower bids are being attributed to reduced prices for materials. But increased competition is also a factor.

Jim Andoga, president of the Irving, Texas-based construction giant Austin Bridge & Road told the Web site his company, facing more competition, has reduced built-in profit margins in its bids by about 20 to 25 percent over the past year. In 2006, he bid an average of 9 percent over engineers’ estimates, compared with 17 percent under this year — and still has not won as often.
 
This seems to be a stark contrast to what’s happening in Ohio.

The Columbus Dispatch reported in July government projects in that state are getting fewer bidders and higher bids on projects.

The paper reported contractors are seeing unstable prices for fuel and construction materials and are overbidding, or simply not bidding, on municipal and state projects.

Scott Varner, Ohio Department of Transportation spokesman, said his department is also seeing fewer bidders despite the fact state contracts often include sliding adjustments to account for unexpected cost changes during the years it takes to complete the project – helping to mitigate the risk factors.

"There's greater risk in putting in a fixed price bid today than there was two years ago," Chris Runyan, president of the Ohio Contractors Association told The Columbus Dispatch. "We have never seen price increases at this rate in all of the 25 years that I've been involved in the transportation industry."

Whatever the case may be for your bids, Projectmates can help you get organized during the bidding process and keep everything on budget. The online capital project management software is designed to share documents, track budgets and financials, manage changes and report progress with ease. 

Healthcare debate affecting construction outlook

We’ve heard so much in the news lately about the healthcare reform debate. What I haven’t heard talked about is the future of healthcare construction … until now.

Jim Haughey, Reed Construction Data chief economist, said in July healthcare spending is certain to expand in 2011 and create a need for more facilities – hospitals more than residential care.

The good news for those in the healthcare construction business is it looks like there will be plenty of projects in the next couple of years.

“The long term outlook for healthcare construction remains good and will likely be boosted somewhat by whatever Congress decides to do,” he wrote on the RCD Web site.

The uncertainty facing hospitals is also affecting medical offices, nursing homes and residential care facilities … compounding their woes are the effects of the recession and surplus office spaces.

Haughey says overall, healthcare construction spending growth has declined from several years in the 10 percent range to about 2 percent, allowing for drops in construction materials costs, since last fall. He is predicting a further 7 percent decline through the end of 2009. But there is light at the end of the tunnel!

“This is as much due to the uncertain market environment as it is to the recession,” Haughey said. “Then expect a return to the 10 percent growth range by late next year (2010).”

He does warn you to be open-minded and flexible about your projects, however.

“But depending on what Congress decides to do, the project owners may not be the same hospitals you now expect to expand next year,” he said.

Regardless of the size and scope of the project, you can count on Projectmates to help keep all facets of your project running smoothly, on time and on budget.