Builders' competitive bids give schools some leeway in Oregon

Competition for work among builders has led to unexpected cash bonuses for some Oregon school districts.

Contractor bids on school construction projects in the Bend-La Pine and Clackamas school districts are coming in as much as 3 percent lower than district construction estimates. On some large

"It's given us a little breathing room," Paul H. Eggleston, director of facilities for the Bend-La Pine School District, said. "We're not running out looking for new projects to do, but it makes it easier for us to do the projects we were slated to do and finish them all, as opposed to having to prioritize."

As the housing market declines and home building dries up, home builders and small commercial contractors that wouldn't normally bid on large commercial projects are lining up for work.

"Subs wanting to get into the market are just plain getting more aggressive, so they're bidding work for smaller margins," Dave Watson, a project manager for Kirby Nagelhout Construction in Bend, said.

The bidding war means that for the first time in decades, the school districts predict they'll have enough money to finish all of the projects they promised in their 2006 bonds - an amazing feat given the rising cost of steel and other building materials, said Garry Kryszak, capital projects manager for the Clackamas School District.

"In the past two bonds we've had, we didn't experience any low bids," Kryszak said. "The inflation has beaten us to the punch."

Now builders are mostly coming in with bids almost exactly at Clackamas School District's construction estimates. Some renovation projects are running slightly higher than the district estimated and larger, new construction projects are coming in sometimes significantly under estimates.

The district originally placed a $47 million price tag on its 190,000-square-foot Happy Valley Elementary and Middle School project. But builders placed the cost at $46 million - saving the district $1 million on the project.

The district plans to use those savings as a buffer against cost overruns on other projects, Kryszak said. A remodeling project on Putnam High School came in a little over pre-bond estimates, for example, and the district has tapped bond reserves to cover the additional cost, he said.

Bend-La Pine has also seen significantly lower bids on its large projects. The district's Westside Elementary School project came in $1 million lower than the district expected, at $12,389,000.

"It bid less than our Eastside Elementary School that had bid about six months prior to that. They were identical designs, so that makes it easy to make a correlation that something has happened to the bidding climate," Eggleston said.

As a result, project managers are considering adding features to the Westside school that would earn extra points toward the district's goal of achieving a gold rating on the project from the U.S. Green Building Council's Leadership in Energy and Environmental Design program, Eggleston said.

But what's good news for schools, isn't so great for general contractors. Increased competition among subcontractors has a cascading effect, cutting profit margins for general contractors and increasing competition for work across the board, Nagelhout Construction's Watson said."If anything, it might actually hurt us. We self perform so much of our work, the other generals that sub their work might get more aggressive," he said. "That would hurt our profit margins."

Credit: Libby Tucker