Both public and private project owners are scooping up incredible deals on construction this year, in the form of what seem like incredibly low bids for work.

In some cases, contractors' bids for projects are coming in at between 30 percent and 50 percent of the originally estimated cost of the work—which can amount to millions of dollars of savings on some projects.

The general consensus by project owners is that the soft economy—and specifically the lack of private development this year—have sparked fierce competition for available work. Some of it, however, is the nature of the bidding cycle, which often results in lower bids early on while contractor's schedules are open, says an estimator with a local contractor.

"The main factor is the economy," says Albert Tripp, city administrator of Airway Heights, where the lowest bid for a major planned wastewater-treatment plant project it had estimated to cost $11.2 million came in at $7.6 million. "With construction being down in various sectors, it created a very competitive environment."

Project owners say public works appears to be the only game in town for contractors scrambling to line up work for the construction season.

"Most of the contractors tell us that a third of their business is private development, and that's not happening," says Gary Nelson, a principal design engineer for the city of Spokane.

There's certainly, however, no lack of public works projects, Nelson says. The city of Spokane plans to construct about $50 million in projects this year, compared with about $20 million last year. If things continue the way they're going, however, the final price tag for this year's work could be a lot less than that, he says.

That could have significant impacts for entities such as the Washington state department of Transportation, which plans $129 million in projects in this region this year, and Spokane Valley, which plans about $17.5 million in projects this year. Spokane International Airport, which plans more than $53 million in work this year, already has realized savings of more than 50 percent on a major project.

Among the construction bids that have come in recently:

•A Spokane International Airport project to replace portions of its terminal parking apron was estimated to cost about $15.7 million, but Spokane-based Wm. Winkler Co.'s winning bid for that project was $7.7 million. Bids for a second project there, for upgrades to the main runway, netted bids from five companies.

•Airway Heights let bids for the first phase of its planned wastewater-treatment plant this month. The low bid by Robert B. Goebel General Contractor Inc., of Spokane, was 32 percent lower than the engineer's estimate for that project.

•A two-mile repaving job on Alberta Street in Spokane was projected to cost $4.5 million, but Spokane Rock Products Inc., of Spokane, won the project with a bid of $3.8 million.

•The planned repaving of Southeast Boulevard between Perry Street and 29th Avenue here, was estimated to cost about $2.5 million, but Newman Lake-based Eller Corp.'s low bid for that project was $1.9 million.

•The city of Spokane estimated that a project to construct a reservoir on Five Mile Prairie would cost about $2.1 million. The low bid for that project came in at $1.2 million, offered by T. Bailey Inc., of Anacortes, Wash.

•A recent Spokane Valley job to repave the intersection at Broadway Avenue and Fancher Road had been estimated by Spokane Valley engineers to cost about $770,000; Airway Heights-based Cameron-Reilly LLC's low bid for that work was $562,000.

Competition feeds early savings

Though bids for projects are low overall, the estimated prices of materials are higher in general on the bids that are coming in to the city of Spokane compared with this time last year, Nelson says. In the case of a recent bid for road work, the cost of asphalt was estimated at about 150 percent of the cost at this time last year, he says.

He says some contractors might have gotten bitten by sharply rising material costs last fall, and so are hedging their bets somewhat in case prices go up by the time they start work on projects.

Kathy Wilson, an estimator for Eller Corp., says that so far this year she's seen a significant reduction in materials costs from last fall, when diesel topped out at $5.25 a gallon. Right now it's between $2 and $2.50 a gallon, and the lower price of oil is reducing the cost of other petroleum-based materials, such as PVC pipe used in construction.

Nelson says that the material estimates included in Eller Corp.'s bid for the Southeast Boulevard project are the lowest he's seen this year. Still, despite the high estimates included for materials in most bids he's seen, bids so far are coming in at around 30 percent less than estimates, Nelson says.

When bids are competitive, companies tend to include less profit in their estimates.

"I certainly am seeing that contractors are cutting their profit down to a bare minimum," says Ken Nichols, senior civil engineer in the Spokane office of Anchorage, Alaska-based USKH Inc., which is designing an airport expansion project for Grant County Port District No. 7's Grand Coulee Dam Airport.

Eller Corp.'s Wilson says the lower overall bids are due in part to contractors' perception that there is a lack of work, and that perception is strengthened when companies from outside of the Spokane area compete for projects here.

"It's much more competitive," Wilson says. "The jobs I normally have only two competitors on, this year we have 10 to12. You're getting people from the coast, Oregon, southern Idaho, and western Montana."

Wilson says it isn't that Spokane doesn't have enough work, though she acknowledges that private development is pretty dry right now.

"The issue is, nobody else does," Wilson says, referring to other regions. She says as construction picks up in other areas, regional competition will lessen.

Neal Sealock, director of Spokane International Airport, says he believes SIA has benefited from seeking bids for its project early in the season, when contractors have had little activity elsewhere.

"We're elated" that the bidding has resulted in such a big savings, he says. SIA has had interest from many more major contractors for work it's planning, he says.

Wilson says that bids often come in lower early in the construction season than they do later. She says as companies that fear there won't be enough work eventually line up a job or two, their bid prices will rise, an annual phenomenon she says is common, though perhaps heightened this year by news reports about the economy.

Though bids seem to be coming in quite low right now, Wilson says that comparing the difference between the low bidder and the next lowest bidder often is more telling than comparing the low bids with the engineer's estimates for projects, which she asserts tend to be on the high side of what a project costs.

In the case of Eller Corp.'s bid for the Southeast Boulevard project, for example, its nearest competitor, Spokane-based Murphy Bros. Inc., bid about $55,000 more for that work, which isn't a huge spread.

"When you see low bids that are $300,000 less than their nearest competitor, that's a bidder who sees a different outlook," Wilson says.

For the Grand Coulee Dam Airport project, 16 general contractors came to the prebid meeting, he says. That project, for which bids will be open at the end of April, is expected to cost in the neighborhood of $500,000, though Nichols says he hopes the highly competitive environment will result in savings for the port district.

"We're expecting good bids," Nichols says. He's also hoping that the competitive environment could spur more projects to proceed here. "Certainly, the advice that I've been giving to owners is, 'Let's put it out and see what value we can get.'"