Bartlett expansion could cost more
Hospital board has 120 days from Tuesday to decide on new bid
The $40 million Bartlett Regional Hospital addition and renovation may cost more and be delayed. At issue are the cost of construction and whether to solicit bids for one job or divide it into three smaller projects.
The city expected construction to cost $30 million. Last January, the only bid came in at $41 million. The hospital solicited bids for the project again. On Tuesday, the lowest of four bids came in at $36.9 million.
The hospital board of directors tabled a decision on awarding a bid. It has 120 days from Tuesday to decide how to proceed, hospital Communications Manager Marijo Brantner said.
The project, divided into three phases, calls for erecting a three-story addition to the hospital building, remodeling the west half of the existing hospital and remodeling the east half.
The construction industry is pressing the hospital and city officials to reject the latest bid, divide the project into three separate jobs and solicit new bids.
If the project is bid as one large job, it becomes "overpriced" because local subcontractors cannot participate because of their bonding limitations, said Wayne Coogan, owner of Coogan Construction of Juneau.
In surety bonding, large insurance and surety companies guarantee the performance of contractors on construction projects, Coogan said. General contractors must provide bonds to project owners such as the city to guarantee their performance. Subcontractors provide bonds to general contractors.
Subcontractors are limited in their bonding ability by their financial capacity, said Max Mielke, business manager for the United Association of Plumbers and Pipefitters Local Union 262 in Juneau. Mielke represents plumbers, pipefitters and apprentices who work for mechanical subcontractors.
If the project is bid as one job, subcontractors could use all of their bonding power and not be able to work on other projects at the same time. About six local mechanical subcontractors are capable of working on the Bartlett project, Mielke said.
Local bidders would provide work to local people who are "truly the best qualified to perform their trades in this region," Coogan said.
But city project architect Rod Wilson contends that one large project is cheaper than three smaller jobs. The city engineering and architectural departments would have to educate three different contractors instead doing it once with one contractor.
Wilson has asked the construction industry for financial proof the project is cheaper divided into thirds, he said.
"If they can show me it will save $2 million, yes, I need the $2 million," Wilson said. "So far all I've seen is rhetoric and not any real numbers."
Wilson said he agrees with contractors the construction costs are closer to $40 million than $30 million, based on the latest round of bidding. But he noted that the bids for Bartlett are more than $150 per square foot higher than bids on other hospitals in Alaska.
The bids for Bartlett equate to about $480 per square foot compared to about $310 per square foot for a hospital being built in Valdez. Several years ago the Alaska Native Medical Center in Anchorage cost $314 per square foot.
The four latest bids for Bartlett, however, reflect the true cost to do the job because they were so close, Wilson said. Kiewit Construction Co. of Anchorage submitted the lowest bid at $36.9 million, and J.E. Dunn of Portland, Ore., was the high bidder at $38.34 million.
The discrepancy between the city's expectations and the bids lies in the addition to the hospital, not the renovation work, Wilson said. The architectural design company for the project, NBBJ of Seattle, estimated the addition at $20.2 million. Kiewit's bid came in at $27.6 million.
"Why is it so high here in Juneau?" Wilson said. "There is something happening and I'm not sure what that something is."
Now city officials will consider paying an additional $7 million, partly from city funds and outside revenue, or reducing the scope, Wilson said.
After the first bid came in $11 million over budget, NBBJ reduced the total project costs by nearly $4 million. The city contract with NBBJ is about $3 million and runs until one year after the project is completed.
If the hospital awards a bid within the 120 days, Wilson said the project will remain on schedule to be completed by May 2007. The project will be delayed if more bidding issues ensue. If the project is divided into three smaller jobs, the project will automatically be delayed up to six months because it would take longer than if one contractor did the project, Wilson said.
The improvements were dubbed "project 2005" because the hospital had hoped to complete it that year. But Wilson said hospital officials were optimistic and did not realize the complexity of such a grand project. NBBJ estimated the construction portion alone will take three years, he said.
• Tara Sidor can be reached at tara.sidor@juneauempire.com.