The planners of Dublin's World War II memorial got a shock when they opened the single bid for its construction: A project they expected to cost about $337,000 would cost $200,000 more.

Contractors who are skittish about unstable prices for fuel and construction materials are overbidding, or simply not bidding, on municipal projects.

Bidding high allows contractors to hedge their risks by covering unexpected price hikes. But doing so, or not bidding at all, might also limit bidding competition and cause project delays.

Dublin's new roundabout being built at Avery-Muirfield and Post roads also exceeded estimates. The low bid on what engineers expected to be a $1.8 million traffic circle came in at $2.3 million and with just four qualified bidders, said Paul Hammersmith, Dublin's engineer.

"Given the economic climate, I would have thought we'd have more bidders," Hammersmith said.

Dublin opened bids on May 29 for the city's long-delayed Grounds of Remembrance World War II memorial.

Cities typically reject bids that are more than 10 percent over their estimated project cost, and Dublin dumped its sole bid for being too high.

Dublin officials interviewed contractors who didn't bid and learned that "fluctuation in fuel, metals, concrete and stone costs has caused contractors ... to make greater than normal allowances to assure that by the time construction contracts are signed, their cost assumptions are covered," according to a city memo.

Those who monitor construction projects say that more contractors statewide appear to be covering themselves.

"There's greater risk in putting in a fixed price bid today than there was two years ago," said Chris Runyan, president of the Ohio Contractors Association. "We have never seen price increases at this rate in all of the 25 years that I've been involved in the transportation industry."

Dublin has since upped its estimate for the memorial project to $470,000 and is advertising for new bids, said Fred Hahn, Dublin's director of parks and open spaces.

McDaniel's Construction was one of several interested companies that didn't bid on Dublin's project, blaming a hypercompetitive market and volatile prices for not wanting to lock into a long-term contract.

"If the price of fuel or materials goes up, that just comes out of my pocket," said Eric Girard, the company's president.

Girard said competition has been intense this year from contractors seeking work. But that doesn't always translate into lower-priced projects.

"It is more competitive. But it's also harder to get work," Girard said. "And with the jobs you get, it's harder to make money on them. They're fewer and farther in between."

The American Road Transportation Builders Association reports that nationwide iron and scrap steel prices are up 93 percent over last year; asphalt paving is more than 8 percent higher.

"If you're bidding a project, where you won't be doing any work for three or four months except for planning, it's hard to predict those costs," said John Mahoney of the Ohio Municipal League.

Last week, Hilliard officials opened a lone bid for generator work to prevent flooding under the city's two railroad underpasses. The bid, from the Righter Co., came in more than $20,000 over the engineer's estimate of $65,000 and was rejected, said Clyde Seidel, the city's engineer.

Hilliard's street paving, which can be completed within a few months, has not been a problem, he said.

Some suburbs, including Worthington and Westerville, report that bids are coming in near estimates, but that those estimates are much higher than a year ago.

Franklin County Engineer Dean Ringle said that bids for major road projects also have been coming within estimates.

"But it's not making us feel any better. The estimates were already taking into account the higher cost of materials," Ringle said.

Asphalt and concrete rose 11 percent compared with 2007, Ringle said.

The engineer's office is contending with higher fuel costs plus fee hikes from suppliers facing similar costs.

The Ohio Department of Transportation also has seen a decrease in the number of companies bidding on their projects, said Scott Varner, ODOT spokesman.

Because state projects can take years to complete, their contracts often include sliding adjustments to account for unexpected cost changes that can help mitigate the risk factor, Varner said.

Still, experts say the uncertainty is worse than they've ever seen.

Steel suppliers have told many contractors that they will guarantee their prices for no more than 30 days.

And asphalt suppliers have included the phrase "call for market price" in marketing brochures that typically have included firm pricing.

"It's like pricing for fish," said Dublin's Hahn.

Dispatch reporter Jim Woods contributed to this story.

dnarciso@dispatch.com

"If the price of fuel or materials goes up, that just comes out of my pocket."

Eric Girard
McDaniel's Construction president