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With little private or public work available in the slow many construction companies are undercutting one another towin stimulus-funderd contracts. In the end, that could mean more than $100 milliojn in savings to fund additionalp road work inNorth Carolina. “Everyone is bidding so close to thevest it’s a do-or-die situation,” says Beth Maxon, business development manager for in Burlington. That compant recently bid 17 percent undeerthe state’s cost estimate of $76 million on a stimulus-funded but didn’t win. the contract for the Fayetteville loop in Cumberland Countgy went to aSouth Carolina-based which bid $52 million, 31.
5 percent under the estimated Such scenarios are going on all over the with firms eliminating profit margins, sometimes even overhead expenses, to win the low bid. Such heavyt competition could prove a boon to the Victor Barbour, technical servicew administrator for the N.C. Department of Transportation, says statewidr bids for stimulus and other work are averagin 15 to 20 percentbelow engineers’ estimatezs as companies compete fiercely, even for small North Carolina is slate d to receive $737 million in federal stimulus money for road If the underbidding trend continues, that could mean $110 million to $150 million coulf be left over and used to do more projects than initially thought.
Barbour says North Carolina has alreadyawardesd $237 million in contracts. Without the underbidding, thos same contracts would havecost $294 based on state estimates, he Local DOT divisions are looking at project lists to see what can be should the trend continue and extrza money is available. While underbidding might reducr or eliminate profitsfor contractors, David Rowe, presidenft of Mount Airy-based , says many firms have $5,000 or more in equipment payments to make every month, and workers they want to As a result, many are bidding just to keep enougg cash coming in to make payments and Rowe says.
“Where you used to have a certain factor for overheadand profit, you’re now ‘Will I just coveer overhead, or am I going to cut into Forget profit,” he says.
