Construction Competition Saving Miamidade Money Projects Costing Less As Labor Materials Drop
Written by Risa Polansky on November 13, 2008
By Risa Polansky
As construction demand and materials costs slip lower, bids for Miami-Dade capital projects are doing the same, saving the county money and creating potential opportunities to get more done, officials say.
"We are noticing the trend," said Johnny Martinez, county capital improvements director. "We’re getting more bidders per project, and we’re getting more bidders grouped underneath the [project cost] estimate."
He began noticing the pattern three to four months ago, he said. "It varies, but it’s ranging anywhere between 10% to 25% below our estimates." And it’s "across the board," from water and sewer to aviation.
After years of booming construction sent prices climbing, the recent slowdown means industry players are eager for work and readily offering competitive prices.
In metropolitan Miami in September, construction employed 45,200 people, down from 54,400 in September 2007, according to the US Bureau of Labor Statistics.
Statewide, construction employment in September hit 508,800, down from 580,700 in September 2007, according to the Florida Agency for Workforce Innovation.
At the same time, construction materials costs are gradually dropping to more normal levels after months of inflated prices.
Both lumber and steel costs fell during the past month, according to a November Engineering News-Record report.
Cement prices rose slightly, but the "1.5% decline in steel prices and a 0.5% drop in lumber prices overpowered a small increase in cement prices," the report says.
As these savings and the growing need for construction jobs trickle down to the county, they could add up to more capital projects, Mr. Martinez said.
County commissioners in July approved a stimulus plan allowing a list of $625 million worth of funded projects to be sped up to re-energize the construction economy.
If the county continues to get favorable pricing, the list of projects could expand — without the $625 million total growing larger.
"If we save 10% on 10 projects, that means that’s one more project we can do," Mr. Martinez said, optimistic lower estimates will continue to roll in. "I’m assuming the trend will continue through the life of the economic stimulus, which sunsets after a year. If there’s money left over, that means that they can push forward another project that they weren’t anticipated to do."
Already, county staffers are looking at project wish lists to see if they can fast-track others through the stimulus program, said Aleida Arrazcaeta, manager in the capital improvement department’s contracts and standards division.
Commissioners would need to OK additions.
About $121.7 million in approved stimulus projects are under review, out to bid or already awarded to contractors, Mr. Martinez said, in departments spanning from aviation to parks to police to the seaport — "all the capital departments. It’s a mix."
He called the stimulus plan — and the trend of better deals for the county — a "win-win."
"We’re able to put more work out on the streets, and people need the work," he said, adding that "these are projects that needed to get done, and right now the timing is perfect. We’re going to get a lot of competition" among companies seeking the work.