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