City explains why abandoning old bid process may be good for some projects; 3 examples of bids that saved Lawrence millions
Estimating isn’t easy. For example, my estimate of 200 pounds of chicken wings for my Kansas City Chiefs playoff watch party might end up being a bit high. Don’t get me wrong, I can always find a use for 200 pounds of chicken wings, but sometimes wrong estimates can cost millions of dollars. That’s what has some people concerned as the city starts talking about moving away from its practice of using sealed bids for major construction projects.
In the last few days we’ve written a couple of articles about how the city may build the proposed $17 million police headquarters building using a process that deviates from the standard sealed-bid procedure. I’m going to write about it again because I’m getting some phone calls from concerned citizens, city officials want to better defend the idea, and I’ve dug up some other examples of cautionary tales about relying on architect/engineer/builder cost estimates rather than a robust bidding process.
Example No. 1: Rock Chalk Park. This was in yesterday’s Town Talk, but it is kind of the classic example. The city originally wasn’t going to bid the construction of the recreation center. It had two estimates from two architects that said the recreation center would cost between $18.4 million and $20.7 million. The city was going to enter into a complex public-private partnership to build the center for a price based off those estimates. The public balked. The city went through a bid process. The low bid came in at $10.5 million.
photo by: Mike Yoder
Example No. 2. VenturePark. In 2013, the city was building roads, water and sewer lines to convert the former Farmland Industries property into VenturePark. Engineers estimated the work would cost about $9.5 million. When the city bid the project, the low bids totaled about $5.5 million.
photo by: Nick Gerik
Example No. 3. Baldwin Creek Sewer project. In 2008, the city embarked on a large sewer line project in northwest Lawrence. The city decided to forgo the bid process. It negotiated a contract with a designer and a builder to construct the sewer project for $3.6 million. Depending on who you listen to, at some point the city either figured out or were told by others in the construction industry that they were about to pay way too much for this sewer project. So, the city canceled the contracts and put the project out to bid. The low bid came in at $2.1 million.
All of those projects point to the advantage of a traditional bid process. However, city officials are increasing their efforts to defend the use of alternative processes. Indeed, as I stated yesterday, there are some advantages. In talking this morning with city utilities engineer Melinda Harger, she said one of the biggest advantages is more input from builders during the design process. Think of it in terms of a home improvement project I’m sure we’ve all experienced. You design a closet only to discover during the building process that your plans didn’t include an opening for a door. (That’s awkward, especially when you are building from the inside out.)
A builder reviewing the plans from the beginning is likely to catch inconsistencies, have recommendations for alternative materials, or have different ideas on how to accomplish design elements. That collaboration can result in a better quality project, a more timely project, and sometimes even a more affordable project, city officials say.
But that still leaves questions about how the public will be protected from estimates that are out of line, or contractors who simply see an opportunity to charge more than warranted. But Harger said there are some ways the city can protect itself. The library expansion project of a few years ago is an example. It used a bit of a blended process. The city didn’t accept sealed bids to select the architect or general contractor. It instead requested proposals and made a decision based off of experience and qualifications. But when it came time to build the project, the general contractor was required to get sealed bids from all subcontractors. The City Commission had the power to review and approve those bids. That ensured that a good portion of the project was subject to sealed bids. One other advantage is it gave the City Commission much greater ability to select a locally based general contractor. That often becomes a political consideration. City commissioners like to be able to say they are giving work to locally based companies.
In talking with Harger, I think that is the type of process the city would like to do with the police headquarters building, but they haven’t come out and said that yet. That leaves open the possibility that the city could use a different model that is more a true design-build process. That involves the city selecting a builder and an architect up front, and then agreeing to a maximum price that is determined via estimates from the builder/architect. That’s the type of process that members of the public seemingly have concerns over. Harger said she understands why the public may be leery of that process.
“I don’t see that being the norm,” Harger said of such design-build options. “If we have other options, that is not the path we would want to take. With this community, we want to be as transparent as possible.”
How often the city uses that type of process probably will be key. It will be interesting to watch whether city commissioners take a stand on this. Several of them have their seats, in part, due to outrage over how the Rock Chalk Park project was handled. Tonight’s vote by the City Commission won’t decide the issue. It still will be several weeks before city staff makes a recommendation on what type of process it wants to use for the police headquarters building.
But staff members are raising this subject for a reason: They clearly envision a future where more projects are built in ways that don’t use the standard bid process. City commissioners will set the tone tonight.