Lindblom at the Seattle Times reports that the state has made the Highway 99 tunnel contract a bit sweeter:
As a bid deadline nears and pressure mounts, Washington state has sweetened its Highway 99 tunnel contract by offering a pair of bid teams $230 million in concessions.
The changes reflect a view by construction executives that the real costs are higher on this world-record project than the state projected several months ago.
The money can be shifted out of a large pool of risk and contingency funds, so the overall tunnel budget remains $1.96 billion, said Ron Paananen, state program administrator.
Why make these changes?
They’re designed to reduce the companies’ risk, so bids are more likely to meet the target price of $1.1 billion, published many months ago.
“Both teams, and maybe the two teams that dropped out, expressed concern the [state’s cost target] is too low. They couldn’t figure out how to bid the project at that amount or lower,” [one of the bidders] said.
WSDOT’s expert panel and the Seattle city council’s risk consultant say that reducing the amount of contingency funds is fine, and perhaps some of that contingency money exists for exactly the type of bid inflation we’re witnessing. But it’s slightly concerning that the engineer’s estimates are already unrealistic in a period where construction bids routinely come in under budget. Imagine what happens in 2014 or so, when construction is beginning in earnest and the change orders come pouring in.