Several factors, including last year's spate of Gulf Coast hurricanes and the high price of crude oil, are putting the squeeze on public works managers in the Las Vegas Valley.
Shortages of materials, rapid price increases, and in some cases, a lack of interest from contractors have all had an effect.
As a result, some projects have been delayed for rebidding, and officials have had to shuffle around funding for others in order to award bids.
For three or four months, said Les Henley, Las Vegas' chief of construction management, the city has seen problems in acquiring items as basic as steel poles and polyvinyl chloride (PVC) piping, making it difficult for the city to put in new traffic signals.
Allen Fajardo, an engineering associate with the North Las Vegas Public Works Department, reported that one bidder on a 2.5-mile reconstruction project along Ann Road had heard from a supplier who could neither quote a price on PVC nor offer a delivery date.
"The factory was incapacitated by the hurricane," Fajardo said.
Cliff Moss, principal engineer for construction management in North Las Vegas, said he has seen a 50 percent hike in PVC costs and no guarantees on when it will show up. "What PVC is available is being fought over," he said.
According to a November Internet article in the trade journal Plastics Technology, the double-whammy of hurricanes Katrina and Rita reduced by nearly one-third the country's ability to produce ethylene, one of the products used in producing PVC.
And just to make matters worse, the same journal reported, an Oct. 6 explosion damaged an ethylene plant in Point Comfort, Texas, that had accounted for 4.2 percent of the nation's capacity.
Henley said that due to the massive reconstruction efforts along the Gulf Coast, much of the PVC that is available is being channeled there.
Where the Ann Road project was concerned, North Las Vegas had budgeted $11 million. But only three contractors -- not, said Fajardo, the usual six or seven on a project of that scale -- bothered to submit bids. The low entry, from Meadow Valley Contractors Inc., was $14.3 million, or about 30 percent over budget.
Ordinarily, Fajardo said, it is expected that a low bid for a given project may come in 8 percent to 10 percent above what was planned. Such a difference is within the industry standard.
He and Moss said that, despite the much greater differential, the Ann Road project nevertheless will move forward. "We'll see where else we can come up with extra money," said Fajardo. "We're going to move some money around. This is the only one right now where we got sticker shock."
John Toth of Las Vegas' traffic management division said bids on a package for the installation of traffic signals at seven intersections came in 60 percent higher than anticipated. With the project budgeted for $2.1 million, the sole bid came in at around $3.2 million.
But he didn't think the difference could be blamed on PVC and the hurricanes. After all, he said, even if PVC costs jumped, they shouldn't have had that profound an effect, and Las Vegas' DPW was supplying the steel for the traffic signals. Where alleged shortages are concerned, Toth said he can go to any Lowe's Home Improvement Center and find PVC piping for sale. On the other hand, Moss pointed out that larger projects can eat up literally miles of the piping.
"Valleywide," he said, "I imagine it's a big issue."
In any case, Toth said, he has never been able to reach a firm conclusion on the reason for the price hikes.
In the end, he said, one signalization project bid was awarded for the Sun Coast project. The rest were repackaged in pairs. By splitting the project into three smaller packages, he said, it might become more attractive.
"Then you can get a smaller guy to bid the signals," he said.
Henley said he can think of three or four other projects that had to be rebid.
Officials like Toth pointed out that public works budgeting and bidding is not the same as in the private sector. Where a Steve Wynn might just throw around more money to cover increased costs, the cities of Las Vegas and North Las Vegas don't have that luxury. A set amount of money is appropriated and budgeted until the next fiscal year begins. The city is locked into a figure, and the contractor who accepts the work has little room to maneuver. In Henley's words, "The work we do is 'hard-dollar contract,' and the contractor is locked in with us."
The laws are strict and narrow, said Toth. "We have a relatively inflexible process. What we specify is an end product and an end date."
But that end date may not always be a guarantee. In Moss' words, "The contractors are under an obligation to do the work, but they're showing us there are going to be delays."
With those constraints and plenty of work around the valley, one official who preferred not to be identified said it may be that fewer bids are coming in because contractors are operating at capacity and just can't' take on more work -- or if they can, they're going to go for top dollar.
Moss said changes in price and availability are not necessarily new. In one season, acquiring steel at a reasonable price might be the problem, and then a year later electrical wiring might be the issue.
"Things fluctuate up and down," he said.
Henley said the main chokepoints now involve not just PVC, but cement, steel and the price of petroleum products, which affect not just transportation costs, but the price of asphalt, for instance, and plastics.
Where cement is concerned, he said, "Some regional plants have closed. The gray powder is in short supply."
While that problem appears to be easing, Henley said steel has been a problem for a couple of years. China is buying scrap steel that otherwise would be recycled and made available in the domestic market.
In addition, Toth said, a lack of steel also may be attributable to the hurricanes.
"I could see a steel shortage because a lot of traffic signals got destroyed down there," he said.
Henley cited neighborhood paving projects as a good barometer.
"Tax revenues are only so high, and in a typical year, we're only able to put about $6 million into those projects," he said.
But now, he added, "The square yard price has gone up 40 to 50 percent, from $10 to $11 to $15 to $16."
The result is less bang for the buck and more paving put off for another year.
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