School project costs seen climbing
Aug. 10—GUILFORD COUNTY — Guilford County has yet to solicit bids on any of its proposed school construction projects, but when the final bids come in this winter, they are sure to be sharply higher than the original estimates, several people working on the projects warned Tuesday.
Final construction bids on projects nationwide this past May averaged 23% higher than two years earlier, and the increase is higher in the Southeast because there is more construction here, Ken Grube, senior vice president for construction contractor Samet Corp., told a joint committee of the Guilford County Board of Commissioners and the Guilford County Board of Education. The committee met Tuesday morning for an update on the projects paid for by the $300 million bond package approved by voters in November 2020.
Before the COVID-19 pandemic, construction costs were expected to rise about 5% a year, but now costs are increasing 1% per month, Grube said.
"I have never seen a market like we have today," he said.
Project manager Monte Edwards echoed that view, and Dave Smith of HICAPS/C2, which will be overseeing the contractors, reeled off a list of construction projects around the country and the steeply higher costs they faced than had been anticipated.
There are a variety of factors driving the high costs, including ongoing pandemic-related interruptions in the supply chain, a shortage of skilled labor and the war in Ukraine, Grube said.
Supply chain problems mean that some materials are hard to get and in high demand, so they have to be ordered much earlier than they are needed.
"If we don't order this material now, the building is going to be (finished) six to eight months later," Grube said.
Exacerbating the labor shortage is the fact that North Carolina is one of the five fastest-growing states, so there already is a lot of construction going on, he said, but the Triad also now has an unprecedented number of major new construction projects. He cited the Toyota car battery plant coming to Randolph County, the Boom Supersonic plant coming to Piedmont Triad International Airport, High Point University's major expansions, and new medical buildings in the region as examples.
"All of these projects are rolling in at the same time," Grube said. "We have a small pool of construction contractors in the Triad, and when you throw this amount of construction activity out there, the price is going to go up."
Edwards said higher oil prices stemming from the war in Ukraine and the sanctions on Russia affect the cost of not just fuel but things such as asphalt, roofing products, paint, solvents, waxes, upholstery and synthetic turf.
Commissioner Skip Alston, a co-chair of the joint committee, said the county has to find a way to live up to its commitments despite the higher costs.
"It's about our children's future and our children's children's future 75 years from now," he said. "Yes, our kids are important enough for us to raise the money."
There was some discussion also of the $1.7 billion bond issue for school construction that voters approved in May. The next hurdle for that bond package is review on Sept. 22 by the state Local Government Commission, which has to give its approval before the county can issue the bonds.
County Manager Michael Halford said the county's debt payment plan for that bond package probably will get close scrutiny from the commission because the county's revenue vs. debt service projections for the late 2020s and early 2030s currently are tight.
