Reader Harry H tells us that, at least in Vermont, shovel-ready projects aren’t as ready to go as the very nature of the term would suggest. The Wall Street Journal described some reasons for delay back in March:
It turns out, though, that shovel-readiness is in the eye of the beholder. Soon after his visit, Mr. Biden found out that his model stimulus project wouldn’t see a shovel for almost four more months, possibly longer, knowing how such timetables slip….
States are quickly assembling their construction wish lists. But it takes time to advertise for contractors, collect bids, check the numbers, pick a winner and get work underway. A typical paving project — easy roadwork — takes close to three months from the time the money is approved to the arrival of work boots on the ground, according to the American Association of State Highway & Transportation Officials. “It is not an instant process,” says a spokesman.
However, an additional complicating appears to be the vagaries of the bidding process. Harry H describes the local situation:
I was talking with a construction firm that was supposed to oversee a large ($9 million) civil project in VT.
The bids on the project came in and there were 2 that were below $7 million. The $9 million was the engineers estimate. Take 20% off that, and that is roughly the cost of the work for the contractor, or $7.2 million. So the bids came it below what the costs for the project were likely to be.
This situation is very bad. The municipality does not want to let the work out if the contractor is going to go broke during the project, even with bonding it is a royal mess to have a contractor go bust in the middle, and to get someone else to go in and finish it is even harder. At the same time, getting rid of low bidders on government projects is very difficult. Lots of lawyers and obscure bidding laws, but it is possible to not let the job to the lowest bidder. It depends on law mostly, but smaller municipalities will usually throw out the entire bidding process, and start over in a few months. This is a simplification of the process, obviously. Lots of law behind the scenes that I only have seen in practice.
I have hear this is happening a lot, all of the “shovel ready” projects are not going anywhere because of bidding problems. This particular project was in a small town in VT, dig up main st and replace all of the water, sewer and gas line, and then re-do the entire road and drainage, as well as sidewalks. Very good work for a stimulus, lots of labor, as compared to say a new road.
The construction season is relatively short in the Northeast. If it doesn’t get started soon, it will have to wait till next year.
I wonder if this is a sign of how desperate some contractors are, that they will put a bid that is bare minimum because they really need the work, and are too optimistic about what it will take to get it done (ie, they implicitly assume everything will go right, which never happens). This may just be a local fluke, but John L suggests it is broader based. I’d be curious if any readers have insights into this, or the more general question of whether these projects are moving forward as fast as hoped.