When Georgia awarded its first road projects from the federal stimulus over the past week, some transportation officials couldn’t believe their eyes: The bids had come in lower than estimates. A lot lower.
For the 40 bids on stimulus projects taken from across the state so far, the winning lots totaled almost $56 million. In a likely windfall for more projects, that’s nearly $42 million less than predicted, an AJC analysis shows: 43 percent less.
In the Atlanta region, bids were even more aggressive than the state average, coming in at half of the estimate amounts.
“We thought they were going to be low,” said David Haynes, who works on transportation planning at the Atlanta Regional Commission. “But when we saw how low, it was like, holy cow.”
Federal transportation officials said Friday that the nation on average is seeing low stimulus bids, but not that low. U.S. Secretary of Transportation Ray LaHood wrote to U.S. governors in April that across the country, bids were coming in 10 percent to 20 percent under estimates.
LaHood added that the leftover money should be spent on other transportation projects in the same state.
Several factors are probably at play, but one seems clear: The recession and Georgia’s transportation funding crisis have a silver lining.
“We were very aggressive” with low pricing on stimulus bids, said Bill Hammack, president of C.W. Matthews Contracting Co., which won most of the projects in metro Atlanta. “Everyone’s out of work or low on their work —- the old supply and demand.”
In fat times DOT was getting one or two bids per project, officials said, but for the stimulus it’s been getting four or five.
Still, the estimates seemed high to Hammack. When told that a project in Banks County that his company won for $759,446 was estimated at $1,712,500, he replied, “Holy mackerel.”
Hammack said that the projects Matthews won in this round would probably put hundreds of people to work, from road crews to subcontractors, quarry workers and asphalt plant workers.
No one’s crowing about the potential windfall. Agencies addressed it with the press only when an AJC reporter noticed, too. They caution that there are more possible explanations, and that the state is far from closing the checkbook on those projects.
DOT spokesman David Spear said the agency is methodical about its estimates. But DOT recently started building larger contingency funds into project estimates, after years of getting sucker punched with surprise costs.
In addition, asphalt and construction prices have been on a roller-coaster, rising steeply in recent years, then falling during the recession.
Indeed, the good news is a turnabout from recent years, when low, outdated cost estimates helped cause a budget catastrophe with Georgia’s roadbuilding program.
“Now it’s like the tables have turned,” said Jane Hayse, transportation planning chief at the ARC. “It’s just a real conundrum that we’re trying to figure out.”
DOT spokeswoman Karlene Barron said DOT would decide what leftover money was usable and slate it for other projects some time between July 1 and Feb. 29.
