The Juneau Assembly awarded Dawson Construction of Bellingham, Wash., an $11.4 million contract Wednesday for the voter-approved renovation of Glacier Valley Elementary School.
The bid came in $1.1 million higher than the original city estimate of $10.3 million.
The Assembly awarded the bid after the Juneau School Board accepted the project price at a Tuesday meeting.
No local companies bid for the project.
Dawson originally bid $12.1 million for the two-year renovation project, but was able to reduce its bid by $700,000 after removing eight line-item improvements, including kitchen equipment, a new entry way and canopy and refinishing the gym.
The Juneau School District will pay the additional $1.1 million in costs with money it had hoped would cover bidding overruns that might occur when Harborview renovations go out to bid in two weeks.
City Project Manager Sarah Lewis warned the school district Tuesday that Harborview renovations could cost the city $2 million to $3 million more than the current estimate of $14.1 million.
Lewis based the projection on the results of the Glacier Valley bidding process. She said the city was "actively working" to finds "areas of significant cost savings."
Assembly member Merrill Sanford said project cost estimates are created by firms hired by the city to do cost estimates. He said the problem of accurately predicting costs could come from supply and shipping prices rising faster than the estimator's figures.
"They've been off the last couple of years," Sanford said.
Additionally, Sanford said bids from out-of-town builders run 20 to 30 percent higher than local companies' bids because workers have to be brought to Juneau, housed and fed.
The additional percentage also comes from equipment that must be transported. He warned the city would see the issue again as a list of projects begin while Juneau construction companies are busy with local and out-of-town projects.
Assembly member Randy Wanamaker called the additional expense paid to distant companies "mobilization costs."
If the Harborview renovation comes in over cost estimates, the school district will have to figure out how to get the additional money for or make cuts to the project, Assembly member Jonathan Anderson said.
"They'll have to redesign to have less," Anderson said. "Or find the money elsewhere."
Contact reporter Greg Skinnerat 523-2258 or email@example.com.