City officials are regrouping after the sole bid for a long-planned expansion and renovation at Bartlett Regional Hospital came in $11 million over budget Wednesday.
Cornerstone Construction of Anchorage submitted a $40.9 million bid on the project, more than $11 million over the $29.7 million construction budget. Cornerstone was the only company to bid. The entire project is budgeted at $42 million.
City project manager Rod Wilson said Wednesday he wasn't sure yet why the city received only one bid and why the project came in over estimates. Bartlett Regional Hospital's Board of Directors is scheduled to discuss the overrun at a meeting tonight.
"I don't really know what the hospital board is going to want to do at this point," Wilson said. "I know one thing - we cannot build what we have designed. There's going to have to be some changes to what's designed."
The hospital renovation and expansion, called Project 2005, was to provide new space for the emergency and imaging departments, intensive and critical care, obstetrics, mental health and mechanical departments. It also would renovate the chemotherapy suite, cardiac rehabilitation, respiratory therapy, sleep lab and central registration areas. Voters approved a 1 percent sales tax to fund the work in 2000.
Bartlett Administrator Bob Valliant said the hospital board has three options: It could try to find the extra $11 million, defer the plans until later or reject the bid and redesign the project. It is highly unlikely the hospital would try to come up with another $11 million, he said.
"Because the architect's estimate was 10 percent lower than the actual bids coming in, they're obligated to redesign the project" at no cost to the city, Valliant said. "The board may ask me to reconfigure and redesign the project to come in where we can afford it or they may say, 'Put it on the shelf.' "
NBBJ of Seattle is the architect for the hospital project. Work was to have started this year and finished in early 2006.
Four contractors prequalified to bid on the project, including Cornerstone and Neeser Construction of Anchorage, Coogan Construction Co. of Juneau and McGraw Construction of Sitka.
"We made a decision early on to go with four prequalified bidders," Valliant said. "They can help provide input that may remove costs from the project, but when you do that, you limit your universe of bidders to four, so that might have hurt."
Chuck McGraw, owner of McGraw Construction, said his company decided not to bid the project because some of the basic contract specifications were restrictive. The specifications covered administrative requirements, liquidated damages and other issues, he said.
"In general terms, I wrote (to the city) that the Division 1 specifications anticipate an adversarial relationship between the owner and contractor," he said. "They were so restrictive that as a contractor you have to assess your risk. And if your risk is high, as a contractor, your costs have to be high to compensate for that."
Cornerstone Construction President John Eng said he couldn't analyze why other companies didn't submit bids on the project. Mechanical and electrical items made up half of his company's bid, he said. Cornerstone has experience with Anchorage hospital projects and it's not unusual to prequalify bidders for such work, Eng said.
Calls to Neeser Construction and Coogan Construction were not returned by the Empire's midday deadline. The hospital expansion has a project labor agreement, requiring that union workers be hired for some of the work.
The hospital overrun comes after bids on a federal fisheries center at Lena Point and the Juneau-Douglas High School renovation went over budget last year.
The city extended the bid deadline on Project 2005 twice to generate more interest from subcontractors, Valliant said. The hospital also made cuts to the renovation before it went out to bid, he said.
"We kept reducing the scope of the project and reducing it," he said. "We've reduced it as much as we can reduce it with this particular scope."
Joanna Markell can be reached at firstname.lastname@example.org.