Companies Pretty Up Prices to Win Stimulus Projects

[Pirate Smile]

Source: The New York Times

Department stores are marking down their spring collections. Broadway shows are offering discount tickets. Now road work is on sale, as well.
Construction companies, hungry for work in the dismal economy, have slashed their prices to try to win the first round of public works projects being paid for by the federal stimulus package.

Pennsylvania officials said contractors competing for their first round of road and bridge projects had offered bids 15 percent lower than the state had expected. Utah officials said some of their bids were coming in 25 percent lower than expected. And a bid to build a 4.7-mile extension of Interstate 49 from Shreveport, La., toward the Arkansas state line came in at $31.1 million, about $4.7 million less than the Louisiana Department of Transportation and Development had estimated the project would cost.

“The bids are coming in lower than we would have imagined,” Transportation Secretary Ray LaHood said in an interview, adding that the low bids should provide good value to taxpayers. “I think there’s a huge appetite for these projects, and people are raring to go. There’s pent-up demand for people to get these bids and get the work.”

If the low bids keep coming and the price of construction material stays low, the Utah Department of Transportation hopes to get more work done with the stimulus money than expected, said Nile Easton, a spokesman for the agency. “We’re hoping that we can actually stretch that money,” he said.
The low bids are the result of supply and demand: there are plenty of construction workers out there and not much demand for their work lately. Many construction operations suffered when residential and commercial building evaporated as the recession hit, and then again when public works tapered off as many states cut back. So they are eager to get back to work, even if it means they must charge less to do it.



Read more: http://www.nytimes.com/2009/03/29/us/29bids.html?hpw

[BlooInBloo]

1. (Conjures up mental image of pirahna feeding frenzy.)

[spag68]

2. Low construction bids

All this proves is that these companies have always made much more profit then they allowed their workers to know about. It reminds me of an old boss of mine who claimed to have lost money on a particular job. When I pointed out to him that as the foreman on the job I was privy to the bid and the costs of completion, he responded that he only made 18% on the job instead of the 25% he figured, therefore he "lost" 7% on the job. Fuck them all until they see the need for a livable wage, humane treatment of workers, and some honesty in their miserable lives.

[sutz12]

3. I thought this first round was for 'shovel ready' projects...

You know, already bid and ready to go.

:shrug:

[AZCat]

4. Not necessarily already bid.

But designed and reviewed, yes.

[Kaleko]

5. A great leveling is taking place.

The excesses of the super rich are a thing of the past. America will become more like European social democracies eventually... after we've stabbed to death the myth of American exceptionalism.

[Pharlo]

6. Color me cynical,

but my first thought when I saw this was 'are they underbidding (offering to do the work for less than they can actually do the job for) in order to get the job? And, what is the quality of the construction materials being used?

[kojak]

7. I see Big Dig redux

Did we say $31.1 million? Oh we meant $311 million. Sorry about that dang decimal point. Now bend over.

[rfranklin]

8. They will suck out as much as they can and then go bust...

Leaving the government with half finished projects that have to be bailed out with more money than they would have originally spent if they had not accepted low-ball bids.