Hospital reviews renovation options

City attorneys to look at ways to deal with project that's $11 million over budget

Posted: Friday, April 04, 2003

Bartlett Regional Hospital's board of directors on Thursday postponed action on an over-budget hospital renovation project and will ask city attorneys for advice.

Cornerstone Construction of Anchorage, the only company to bid on the project, said it could make its staff available to go through its costs in detail with the city, according to President C. John Eng. Cornerstone bid $40.9 million, about $11 million over the hospital's $29.7 million construction budget. The entire project budget is $42 million.

If the project is awarded to Cornerstone, the company wouldn't charge the city for the review of costs. If the project is canceled or awarded to another company, Cornerstone would ask for a consulting fee, Eng wrote to the hospital. The city of Anchorage used a similar arrangement when bids for a jail budgeted at $40 million came in at $50 million, he said.

Hospital Administrator Bob Valliant said he wanted the city's attorneys to review Cornerstone's offer before taking action. He also presented a list of other options:

• Accept the bid and come up with $11 million. Valliant said that option is unlikely.

• Reject the bid and redesign the project to bring it within budget.

• Reject the bid and put the project on the shelf.

• Rebid the project and open it to all companies. Valliant said the project probably would come in at $40 million if rebid as is, based on discussions with contractors.

Four companies prequalified to bid on the project: Cornerstone, Neeser Construction of Anchorage, Coogan Construction of Juneau, and McGraw's Custom Construction of Sitka.

Wayne Coogan of Coogan Construction said Thursday his company decided not to submit its bid because it was significantly higher than the city's estimate.

"Accordingly, the bid was withheld so that the specific amount was not divulged to competitors," he said.

Valliant said the city is trying to figure out why the bid came in higher than estimates. The length of the project, its complexity or geographical inconvenience of building in Juneau could be reasons the project is over-budget, he said.

"We need to wait and see what the architects find out," he said.

The project would add 51,000 square feet of new space to Bartlett and renovate another 33,000 square feet. Work was to have started this year and finished in 2006.

Richard Cattanach, executive director of the Alaska chapter of the Associated General Contractors of America, said he couldn't comment specifically on the Juneau hospital project. A review by his organization of construction jobs statewide found many under $1 million had only one bidder, he said.

"We're just seeing that there's less competition out there," he said. "Part of that is because bonding is hard to get and also because people are busy."

At the same time, some Alaska projects are getting seven or eight bidders that are significantly below estimates, Cattanach said.

"It's not an easy thing to say that contractors are adding profit, because I don't see that, or that material costs are going up, because they're not going up more than inflation," he said. "Insurance costs are up horrendously."

Joanna Markell can be reached at

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