Council member raises concerns about project costs

Derek Lee: Watching bids closely is good stewardship of taxpayer dollars.

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A member of Springfield City Council raised concerns about the governing body’s acceptance of bids coming in significantly over estimate at last night’s meeting.

Councilmember Derek Lee raised the issue during the discussion of the first of two council bills to approve bids that were over budget. The first bill was for intersection improvements at Division Street and National Avenue.

“The engineer’s estimate on this one was roughly 30% off,” Lee said. “The next one, it’s over 20% off. These are very large numbers. Between this one and the next bill, we’re looking at $2.75 million over budget.”

The city received two bids for the intersection project, which includes geometric improvements, new signals, pavement improvements, accessibility improvements and railroad improvements.

The low bid – ultimately accepted by an 8-1 vote of council, with Lee voting against it – was submitted by Hartman & Co. Inc. in the amount of $2.6 million, which was 37% above the engineering consultant’s estimate of $1.9 million. The unsuccessful bid, from Radmacher Brothers Excavating Co. Inc., was for $3.6 million.

The following bill, unanimously accepted by council, was for rehabilitation of the historic Jefferson Avenue Footbridge, which spans 13 rail lines just north of Commercial Street.

The city received only one bid, which was in the amount of $10.8 million from Branco Enterprises Inc. – 23% above the engineer’s estimate of $8.8 million.

“It’s a lot of money,” Lee said, “and it’s not normal to have them as far off as these are off.”

Mayor Ken McClure said if Lee were to check with other public entities in the area, he would find that most are experiencing the same thing.

Lee, a practicing engineer, replied, “So I have checked, and I actually do it myself, and I think that we need to at least pay attention to this in a way that we provide some kind of oversight – some kind of direction. Right now, we’re doing nothing except accept them.”

McClure said he disagreed, and that he looks at the engineer’s estimate for every bid, and if it is over, he asks why. Before putting a project out to bid, the city has one of its engineers or an engineering consultant prepare an estimate of what the project is likely to cost.

“If you want to rebid it, you’re free to make a motion to do that,” he told Lee.

Councilmember Craig Hosmer said he agrees that council should not normally accept bids that are way over the estimate, but the two projects have special circumstances. The footbridge project, for example, includes lead paint removal and capture by workers operating above a functioning railway.

Hosmer pointed out that the first set of bids received for footbridge repairs were considerably lower. Past Springfield Business Journal reporting shows two bids received in 2021 for the bridge work came in at $6.2 million and $6.4 million, more than double the $3 million engineering estimate at the time.

“That’s the problem when you don’t take some of these bids, the prices are only going up, so I think it’s one of those things we have to be careful about,” Hosmer said, adding council should be diligent about rebidding, too.

McClure also said the risk of rebidding is that the city ends up paying more on the next bill.

Lee responded, “And also, you rebid projects and they come in less. Both happen, and especially in the case where you only have one or two bidders and they’re 20% or 30% over. It’s not always one direction.”

Lee added that he considers the contractors placing the bids to be highly reputable.

“My only issue is if we’re going to protect taxpayer dollars, I think we need to look at this more,” he said.

McClure said council has final approval over whether to accept bids for city projects, and that’s where it exercises its oversight.

Councilmember Matthew Simpson volunteered the council committee he chairs, Finance and Administration, to take a deep dive into the issue.

In an interview today, McClure said the intersection project is a tricky one.

“It has a weird configuration,” he said. “The railroad track runs through there at an angle, not straight north-south or east-west.”

Many entities are involved, making the project more complicated, he said.

The footbridge project is also unusually tricky, McClure said.

“Add to that the general climate, with construction costs continuing to go up, and we have to deal with that,” he said.

McClure said that in the next month or so, the city would be putting the first phase of the Renew Jordan Creek project up for bid.

“Estimates on that continue to increase based on construction costs and difficulty,” he said. “The Public Works Department is looking closely at how best to make sure the engineer’s estimate is the best it can be, and we’ll continue to watch it.”

He added that prior to the current climate, with contractors having a lot of projects to choose from and inflation running high, bids came in under estimate fairly often.

“It has to be watched. Derek is correct on that,” he said.