The Oct. 1 deadline to sign contracts for water and sewer stimulus projects is forcing municipalities to scramble and builders to consider increasing their bids.
The Wisconsin Department of Natural Resources received more than $100 million from the American Recovery and Reinvestment Act for the DNR’s Clean Water Fund, which gives grants and low-interest loans to sewer and storm-water projects.
But federal deadlines for awarding the money are straining all levels of the industry. Engineers had to hurry to design projects to meet a June 30 stimulus money application deadline. Cities now must find a way to award construction contracts by October. Depending on the weather, builders will either hurry to beat the freeze or work in the cold to finish the stimulus projects in 2010.
Any of those factors could lead to higher bids, said Mike Campbell, chief operations officer for Ruekert & Mielke Inc., Waukesha.
“I would not blame the state because they’re under the gun from the federal government,” he said. “It’s pressure from America to start the engine and get the flywheel effect going. The fast track, I guess, is necessary, but it can create some problems.”
The DNR usually does not set deadlines for municipalities to apply for Clean Water Fund loans, which means cities, villages and towns generally can get their bids out earlier in the season. But federal stimulus deadlines trickled down to the DNR, which then had to set a June 30 deadline for project applications, said Adam Collins, DNR spokesman.
He said the department will announce grant awards late this summer. But, Collins said, the DNR does not have an exact date because the awards must receive federal approval.
If some municipalities rushed to finish engineering work on projects by the application deadline, Campbell said, there is a chance some details were missed. So contractors could increase their bids to protect against unexpected problems, he said.
Some municipalities are opting for the financial risk of designing and bidding out projects before the DNR announces the stimulus awards in late summer, said Richard Wanta executive director of the Wisconsin Underground Contractors Association.
“I think municipalities had no choice but to do that because of the short construction season,” he said.
“Certainly they can put it out for bid and not award the contract. So they had nothing to lose really except the cost of putting out a bid.”
The village of Dousman gave Ruekert & Mielke the green light to design a sewage-treatment plant project early this year, Campbell said. The village is bidding out the project now even though officials do not know if the village will get the $6.8 million Clean Water Fund grant it applied for.
“If not, you put the plans on the shelf and wait until you can afford them,” Campbell said.
But projects cannot receive stimulus money if a contract has been awarded or work has begun, Collins said.
There is likely to be a long list of projects going out for bids after the DNR announces the grant awards late this summer, Campbell said. Municipalities must award contracts by October and, considering it takes roughly a month to award a contract after opening bids, August is likely to be busy, he said.
“If there’s an abundance of bids coming out at the same time, then you might get higher bids because the contractors can pick and choose,” Campbell said.
Because contractors cannot start work until projects are awarded, some companies will start work in 2009 but finish in spring, he said.
“If the project is dragged out until next year, the contractor is going to have to figure out his costs down the road,” Campbell said, “and he would probably add in some inflation.”