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Alexandria "Hassle Factor" Partially Blamed For Bridge Bid

Alexandria City government has been cited as a causal factor for the super inflated Woodrow Wilson Bridge construction bid.

In a report just issued by the Independent Review Committee [IRC] it was stated that construction work currently underway has demonstrated the continuing frustration and difficulties in dealing with the local jurisdictions, in particular the City of Alexandria and regulatory agencies.

"Contractors will typically include a "hassle factor" in their bids to reflect this. This factor was not fully anticipated and difficult to estimate," noted the IRC's report.

The IRC was impaneled by the Maryland State Highway Administration (SHA) in mid January to do a line by line analysis of the $859.9 million bid on the bridge superstructure contract. The report presents a series of recommendations and identifies a variety of elements which impacted the bid, in addition to the so called "hassle factor."

Chaired by Tom Warne, President, Tom Warne and Associates, a western U.S. based construction consulting firm, the committee was comprised of engineers and construction industry professionals. It's primary job was to review the engineer's estimate against the bid.

Their summary report begins by noting, "A single bid was received from the joint venture of Kiewit/Tidewater/Clark [KCT] that was more than 75 percent higher than the engineer's estimate. Maryland formally rejected the bid since it far exceeds the project budget."

It further notes, "It is clear that current and projected market forces will have a much more substantial impact on the cost of this project than originally anticipated. The actual impact of these forces could vary significantly depending on the specific date that any new contracts are advertised and on the manner in which the work is packaged into individual contracts."

EVERYTHING HAS CHANGED

The report warns that, "we can no longer count solely on traditional estimating procedures that have proven successful in the past." It concludes, "The single most important factor in reducing bid prices will be to attract additional competition."

SHA clarifies, the IRC " was specifically charged with providing us with the advice and information we will need to restructure the project in such a way as to gain that additional competition." It now "advises us that even with additional competition we will need to build in cost contingencies to account for ... unknown market factors."

The report then drops a fiscal bombshell by stating, "Therefore, it is apparent that additional funding, beyond what has been identified in the financial plan, will almost certainly be necessary to complete the construction." This statement collides with the present budget crunch in both Maryland and Virginia.

In developing its advisory, the IRC cited four pertinent findings.

1. SHA has an excellent history of estimating highway and bridge construction projects.

2. The project estimate was prepared by national professionals and verified by the Federal Highway and U.S.Department of Transportation's Office of the Inspector General.

3. KTC's bid was not a realistic price.

4. Certain relevant factors, particularly for large construction projects, are difficult to quantify in an estimate.

THE PRIMARY CULPRITS

The IRC devotes a full paragraph to elaborating on each of the four points. It then spells out what it refers to as "soft" factors as being "primarily responsible for the estimate being low." Joining the "hassle factor" on the IRC hit list are:

. A disappointing lack of competition from the major bridge building firms nationwide caused by, in the IRC's analysis, a lack of firms capable of a project of this size and their availability within the necessary time frame; the size of the project necessitates the formation of a joint venture; and the uncertainty surrounding the proposed labor agreement.

. Due to recent experience on other mega-projects contractors are including larger margins in their estimates than was done in the past.

. Equipment demands for projects like this are substantial.

. Steel demands on this project are so significant that fabricators, who typically compete, needed to team together to meet those demands. This limits the "second tier" competition.

. A significant amount of precast concrete is needed and there is only one supplier with convenient water access to the site.

. The project is so large, specialty suppliers would have had to forego all other projects in order to service this project thereby "putting all their eggs in one basket."

. The bridge V-piers, which are the defining signature element of this project, represent a construction technique never previously attempted on such a magnitude.

. The long construction duration, more than five years, is appreciably greater than most projects.

. Events of Sept. 11 and the Enron collapse caused havoc and uncertainty in the bonding and insurance industries. And many contractors lending help to New York City, post Sept. 11, may have not had the ability to prepare bids during the specified time frame.

The ultimate conclusion is, "Maryland is considering various strategies for how to proceed with this project."