Construction bids came in 11 percent over the $102.5 million estimate for this planned Metro Transit bus garage at 560 Sixth Ave. N. in Minneapolis. (Submitted rendering)

Finance & Commerce

By: Brian Johnson  July 17, 2019

A planned 400,000-square-foot Metro Transit bus garage in the North Loop area of Minneapolis is proving to be more costly than expected after construction bids for the project came in 11 percent higher than the $102.5 million estimate.

Last Thursday, Adolfson & Peterson submitted the apparent low bid of $114.1 million for the garage, which would rise on the western edge of Metro Transit’s Heywood campus at 560 Sixth Ave. N. Four other bids ranged from $114.48 million to $120.85 million.

Metro Transit spokesman Drew Kerr said in an email that the bids are “under review.”

“Once that review has been completed, Metro Transit staff will determine next steps,” Kerr said.

A previous estimate, in December 2017, pegged the estimated construction cost at $88.9 million with a total price of $116 million. The total price includes land, engineering, site preparation and management fees.

Designed to accommodate expanded service and new equipment, the proposed two-level garage would house 20 maintenance bays and storage space for 216 buses, according to Metro Transit. Metro Transit expects the project to create more than 300 construction jobs.

Kerr said the Minneapolis Bus Garage is “an essential project that will help address Metro Transit’s existing bus storage and maintenance needs and support future growth of the transit network.”

From a big-picture standpoint, construction prices have been on the rise.

The Associated General Contractors of America said in an email Wednesday that contractors’ bid prices increased 0.2 percent from May to June while materials and services input costs declined 0.6 percent.

Citing information from the U.S. Bureau of Labor Statistics, AGC Chief Economist Simonson said the producer price index for new nonresidential construction rose 5.4 percent from June 2018 to June 2019. The index measures the “price that contractors say they would charge to build a fixed set of buildings,” Simonson said.

Don Kohlenberger, a construction consultant and president of Hightower Initiatives in Minnetonka, said owners should make sure they are looking at fresh data when setting their budgets and cost estimates.

Given the strong response and the competitive nature of the bus garage bids, Metro Transit should consider working with the low bidder on value engineering rather than seeking a new set of numbers, he said.

“Rebidding is not necessarily going to get you what you aspire to,” he said.

The Metropolitan Council’s 2019 budget, adopted in December 2018, identifies $97.6 million for the Heywood garage. In 2018, the Federal Transit Administration awarded an $11 million grant for the project.

Besides Adolfson & Peterson, other bidders were Knutson Construction ($114.48 million), Shaw-Lundquist ($118.3 million), PCL Construction Services ($119.75 million) and Graham Construction ($120.85 million).