COVID-19 creates more competitive bidding for city construction projects

KELOLAND.com Original

Construction continues in front of the Law Enforcement Center on West 4th Street.

SIOUX FALLS, S.D. (KELO) — It’s not business as usual for public construction projects but it isn’t poor business.

While the coronavirus pandemic is causing likely declines in local sales tax revenue, it’s also caused some lowering of prices for city street projects.

“The majority of our (bids) have come in at the estimates or below since COVID-19,” Mark Cotter, director of public works in Sioux Falls, said.

“With the bids coming in the last month, we’ve had more bidders and very competitive prices,” Cotter said. “It’s a great time for cities, states and counties for bidding on projects if they’ve got the resources (for projects).”

Construction continues on 13th Street near the intersection with Phillips Avenue on Friday, May 8.

Increased competitive bidding has resulted in at least $1.6 million when approved bids are compared to original estimates in three major projects, which illustrates the benefits of more bidders.

Cotter said the construction project on 57th Street between Minnesota and Western was estimated to cost $2.07 million but the approved low bid was $1.7 million.

This is the map graphic of the project at W. 57th and Western Avenue in Sioux Falls. City of Sioux Falls graphic.

“We had five bidders and strong local interest,” Cotter said.

A 25-acre, 75-foot deep landfill cell in the city’s sanitary landfill was estimated to cost $3.84 million. The lowest bid was $3.15 million, Cotter said.

An equipment purchase that usually draws four or five bidders drew nine this year, Cotter said. That resulted in a nearly $400,000 savings. The low bid was $2.15 million compared to the $2.5 million estimate.

Contractors that do paving work, such as work on streets and highways, are generally “hungry” for work, said Toby Crow, the vice president of the Association of General Contractors in South Dakota.

It’s not only South Dakota contractors who are interested in work, Crow said.

Contractors who may typically work in the energy industry in North Dakota or in Montana and Wyoming may start bidding on projects in northern or western South Dakota because energy work has stalled, Crow said.

While competition for construction projects has increased, budget concerns caused by COVID-19 has caused the city to set aside some projects.

City finance director Shawn Pritchett said about $11 million in public works and parks projects have been set aside as the city continues to evaluate COVID-19’s impact on the budget. Pritchett said COVID-19 will impact sales tax revenue, which helps to fund various projects in the city.

Two set aside projects include an overlay on 41st Street.

The project was originally going to be paid for from a surplus in the city’s sales tax revenue.

A second waiting project is the intersection at 33rd Street and Minnesota Avenue.

“We will know more in two to six weeks,” Pritchett said of those projects returning to the construction schedule.

Typically, late winter and early spring are the ideal times to get bids so that contractors can plan their work schedules. But COVID-19 could change that as contractors may still be looking to add more work, Pritchett said.

Cotter said some of the design work for future projects has also been put on hold this year as the city continues to evaluate the budget.

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