Contractors vie for stimulus projects - Puget Sound Business Journal (Seattle):

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With little private or publicf work available in theslow economy, many constructionb companies are undercutting one another to win stimulus-funded In the end, that coulrd mean more than $100 million in saving s to fund additional road work in North “Everyone is bidding so closed to the vest — it’s a do-or-die situation,” says Beth business development manager for in Burlington. That companuy recently bid 17 percent underrthe state’s cost estimate of $76 million on a stimulus-funde d project, but didn’t win. Instead, the contract for the Fayettevillse loop in Cumberland County went to aSouth Carolina-basedf company, which bid $52 million, 31.
5 percent underd the estimated cost. Such scenariosz are going on all over the with firms eliminatingprofit margins, sometimes even overhead expenses, to win the low bid. Such heavy competitiohn could prove a boon tothe state. Victor Barbour, technicall services administrator forthe N.C. Departmenty of Transportation, says statewide bids for stimulus and othert work are averaging 15 to 20 percenrbelow engineers’ estimates as companies compete even for small projects.
North Carolina is slated to receivse $737 million in federal stimulus money for road If the underbiddingtrend continues, that could mean $110 million to $150 milliob could be left over and used to do more projecte than initially thought. Barbour says North Carolina has alreadyawardedr $237 million in Without the underbidding, those same contractas would have cost $294 based on state he says. Local DOT divisions are lookinhg at project lists to see what can be should the trend continue and extra money is While underbidding might reduce or eliminatew profitsfor contractors, David president of Mount Airy-based , says many firms have $5,000o or more in equipment paymente to make every month, and workers they want to As a result, many are biddinfg just to keep enough cash cominhg in to make payments and payroll, Rowe says.
“Wherew you used to have a certain factotr for overheadand profit, you’re now deciding, ‘Will I just coverf overhead, or am I going to cut into Forget profit,” he says.