Contractors around the state have sharpened their pencils, and public coffers should benefit from a highly competitive bidding environment.
Construction is one of the pillars of the Alaska economy, and like the rest of the state, it has been relatively insulated from the turmoil of the Lower 48, where unemployment in the industry peaked at 25 percent in 2009.
Employment in construction is essentially flat for June 2011 compared to 2010, with 18,500 jobs estimated by the state Department of Labor. That’s down 100 jobs from last June, but projects from the $2.8 billion capital budget for fiscal year 2011 are hitting the street and a surge of new commercial construction in Anchorage is making up for a slowdown in residential permits.
“Flat is good when you consider the alternative the rest of the country is going through,” said John MacKinnon, executive director of Associated General Contractors of Alaska.
In Anchorage, residential permits (single family, duplex and multi-family) are down 11 percent through June compared to the same point in 2010, with 162 versus 182.
However, commercial construction has more than doubled in value, with permits totaling $161.7 million through June compared to $71.3 million in the first six months of 2010. The number of permits for new commercial buildings and alterations in Anchorage are up 14.3 percent overall year-to-date.
Unlike 2010, when commercial alterations totaled $41.4 million and new construction was $29.8 million through June, the ratio has flipped in 2011 with $98.7 million in new construction compared to $63 million in building alterations.
The value of all building permits in Anchorage is up 42.2 percent, with $259.4 million so far in 2011 compared to $182.3 million in 2010.
Some high-value projects under way in 2011 include:
- A $21.9 million expansion at the Alaska Native Tribal Health Consortium with a new, three-story, 85,000-square-foot office building being constructed by Watterson Construction Inc.
- A $10.1 million power plant, spending between partners between Chugach Electric Association and Anchorage Municipal Light and Power. This a multi-year project.
- An $8 million new home for Kendall Toyota Scion of Anchorage and Kendall Lexus of Alaska on Old Seward Highway. The lot is 12.8 acres with a showroom of 80,000 square feet. The general contractor is Ken Brady Construction of Anchorage.
Although private commercial construction is up year-over-year, it is far off the volume of peak seasons from 2006 to 2008, when total Anchorage permits through June were a collective $1.1 billion.
Anchorage building permits through June 2006 totaled $490 million; through June 2007, permits totaled $346 million; and through June 2008, permits totaled $272 million. So while private construction permits are well up in 2011 compared to 2010, the total value is still below 2008 levels.
MacKinnon said he’s been impressed with the number of bids he’s seeing for government contracts compared to years past.
“There are a lot of names that typically you never saw on the public sector projects, so I’d conclude from that is there are a lot of contractors out there that previously did private work but that has mostly dried up from a couple years ago,” MacKinnon said.
The competition has been heavy for public sector projects:
- A $16.6 million project to build a new fisheries research center on Kodiak’s Near Island attracted 13 bidders with the winning company PCL Construction Services Inc. of Anchorage coming in at $14.95 million.
- A $5.05 million project to replace Anchorage Fire Station No. 6 drew 14 bidders, with Alcan General Inc. of Anchorage beating out SR Bales Construction Inc. by less than $3,000 with its bid of $4.75 million.
- Even a relatively small contract such as a sewer upgrade on Anchorage’s Photo Avenue had 11 bidders for a project estimated between $100,000 and $500,000. Dirtworks Inc. of Palmer beat out Construction Unlimited Inc. of Anchorage by less than $400 with a bid of $145,973.
- Improvements to the Merrill Field taxiway drew nine bidders on an estimated $1.86 million project. Six of the nine came in under the estimate, with Roger Hickel Contracting Inc. of Anchorage winning the job with a bid of $1.57 million.
- A renovation project at the McDonald Memorial Center in Eagle River estimated at $7.5 million had 14 bidders, with every bid a half-million or more below budget and the winning contractor FE Contracting Inc. of Palmer coming in at $5.85 million.
- A $2.57 million project to repair rock slide damage on the Taylor Highway drew nine bidders, with Wolverine Supply Inc. of Wasilla winning the job nearly $1 million under the estimate with a bid of $1.65 million.
MacKinnon said the state and municipalities are “absolutely getting a good deal” between a healthy capital budget supporting the economy with jobs and a competitive environment bringing in many projects below estimates.
“I think the Legislature and the administration has been very smart by having a good capital budget,” MacKinnon said. “They recognized the rest of the country was having problems and we had plenty of revenue. They’ve carefully crafted the capital budget to maintain a healthy economy here. Construction is a significant part of it. The unemployment that would result if the volume of construction went down would hurt tremendously.
“It was a smart move, and plus we end up with facilities the owners end up with a better deal than they would have five or seven years ago.”