Tight Bids and Pension Reform

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Although there is a little bit of a seasonal lull in bidding as June begins, there is plenty of activity in the Pittsburgh construction market. The brighter prospects, however, haven’t materialized in the public hard-bid market yet. Two projects that bid this week illustrate the market well. First, in the heavy/highway sector, Golden Triangle was low on the Airport Authority’s bid to replace Deicing Pad C at the airport. At $21,934,890, the low bidder was 0.5% under the next bidder. Canon-Mac took bids on its high school that saw Lobar Inc. (from Dillsburg/Mechanicsburg area) get low at $9.3 million, a little more than 1% below the third bidder. Both projects were well under the published budget. Public spending shows no signs of significant increase through 2018, meaning the market should stay tight. How that changes in a tightening labor market remains to be seen.

A public pension reform law went to the governor for signing today. It’s gratifying to see both sides of the aisle collaborating on this critical issue, but the finished product trims only $1.4 billion from the pension outlay over the next 20 years. It does shift more of the risk of pension shortfall to pensioners instead of taxpayers but leaves unanswered the question of how to manage the $60 to $70 billion unfunded pension balance that exists. That means that school districts and the Commonwealth will continue to have pension costs drag against capital investment.

In project news from Harrisburg, the General Services Administration is taking RFP’s on the $150 million federal courthouse now. Closer to home, the Pittsburgh Parking Authority has apparently short-listed three development teams – Oxford/PJ Dick, Millcraft/Mosites and Davis/Mascaro – for its 1,000-car 9th & Penn garage replacement/mixed-use development. Shannon Construction is working as general contractor for the announced $7 million renovation of the Arts Institute building on Boulevard of Allies. 

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