Connecticut construction companies vying for stimulus-funded projects are bidding as much as 45 percent lower than what state officials estimated the work would cost, a sign that the deepening recession has made the industry desperate for work.
So far, five stimulus projects have been put out to bid by the state Department of Transportation, and in each case, bids have come in 6 percent to 45 percent lower than state estimates.
The rehabilitation of Mount Hope Bridge in Ashford, for example, was slated as a $1.5 million project, but one company has offered to do the work for $792,346, a 45 percent drop off.
The highest bid for the project is about $1 million, still 26 percent less than the original estimate.
“This appears to indicate that contractors are eager — maybe a better word is ‘hungry’ — for work this year,” said Judd Everhart, a spokesperson for the Connecticut Department of Transportation.
The DOT has received hundreds of millions of dollars in stimulus funding for various projects around the state. That allocation includes $202 million for highway projects like road and bridge repairs or rehabilitation, about $150 million for transit and rail projects, and over $9 million for local enhancement projects.
Everhart said the low bids are an “extremely encouraging” sign because it shows that companies are clamoring for work. It also raises the possibility that additional projects could be taken up by the state depending on how much money is leftover in the end.
“It’s something we will keep an eye on,” said Matt Fritz, a spokesperson for Gov. M. Jodi Rell.
Fritz said all stimulus money currently allocated for DOT-related projects must be used for that purpose.
Repairs on a bridge on Route 5 over I-91 were expected to cost about $7 million, but the highest offer the state received was for $5.5 million, a decline of about 21 percent. One company has offered to do the work for as low as $4.7 million.
Other projects that have received lower than expected bids include repairs on the Merritt Parkway in Trumbull and Fairfield and the installation of traffic signals at various locations across the state.
None of the contracts have yet been awarded.
Donald Shubert, president of the Connecticut Construction Industries Association, said he is not surprised that the state is receiving low bids for the contracts.
“It’s happening across the country,” Shubert said. “Commodity prices are coming down and there are a lot of contractors looking for work, so naturally there are going be very competitive bids put out there for these projects.”
The state’s construction industry has been one of the hardest hit sectors of Connecticut’s economy since the start of the recession. According to statistics from the state department of labor, employment in the state’s construction industry dropped to 55,400 in February 2009, from 68,400 a year earlier, a decline of 13 percent.
The sharp downturn has caused businesses to pull back on expansion plans or halt projects, which means new homes, office towers and retail stores aren’t being built.
Additionally, constraints on lending are preventing developers from getting money to start work.
In September, for example, the Mohegan Sun casino announced that it would have to delay a $734 million expansion.
The industry is now depending heavily on stimulus funds to put people back to work.
Shubert said his organization predicts that the stimulus funds for transportation projects could create 2,000 in-state jobs directly and another 2,000 jobs indirectly for suppliers or people who service the industry.
The funding could also create another 4,000 jobs when workers start spending that money, Shubert said.
“We are hoping to see stimulus funding translate into further economic development,” Shubert said.
Tanya Cutolo, director of design and business development at O,R&L Construction in Branford, said her company was experiencing a boom in business during the first part of 2008, but when the financial crisis escalated things changed.
Cutolo said her company instituted a hiring freeze and has maintained about 23 employees since that time.
She said she hopes her company can benefit from the stimulus funding and thinks they have a leg up on the competition because they do a lot of green building projects.
