With little private-sector work to fill contractors’ pipelines, state and local officials have a once-in-a-generation chance to secure big savings on transformative projects. iStock photo illustration
Amid a big drop-off in private-sector construction, a relatively booming public sector beckons for contractors seeking to stay afloat.
And hungry contractors could potentially be a boon, helping keep costs down on new dorms, schools, hospitals and other public works projects.
Yet when it comes to saving taxpayer dollars, state officials in Massachusetts rarely miss an opportunity to miss an opportunity.
That’s especially the case with big public works projects, which have a long and colorful history here of budget-busting and going off the rails.
Think: Boston’s waterfront convention center, nearly canceled after soaring construction costs sparked public outrage.
It didn’t have to be that way. However, state legislators dilly-dallied for years during the 1990s on whether to give a green light to plans for a showcase convention hall in the Seaport.
In would have been the perfect time for the public sector to put major projects out to bid.
The construction and development market was just starting to slowly recover from the recession of the early 1990s, which hit New England with the force of a full-scale depression, leaving failed banks and half-built office projects in its wake.
But as we have come to learn, the Massachusetts Legislature works in mysterious ways, on a timeline seemingly disconnected from so prosaic a concern as construction prices.
By the time money was finally allocated and construction got underway on the Boston Convention and Exhibition Center in the early 2000s, it was a different world.
The economy and the real estate development sector especially were in overdrive and construction prices were soaring, with a huge jump in the cost of steel.
A Rare – But Fleeting – Opportunity
But that was then and this is now.
And with the collapse of new office, lab, and residential construction across Greater Boston, state and local officials have a rare and likely fleeting opportunity to build some major infrastructure projects and save a few dollars while they are at it.
The economy may still be booming, but private sector construction in the Boston area has yet to rebound from the interest rate hike shock, which derailed plans for desperately needed new apartment buildings, condominiums and homes.
Work on new housing all but ground to a halt this past fall in Boston, and the Federal Reserve’s declaration last week that it was halting its campaign of interest rate cuts all but ensures it will be a while before that sector booms again.
The shift to remote work and a burst lab space bubble have killed off new work in those once-thriving sectors as well.
Contractors and unions are now hungry for new work, with seven to eight bidders chasing work on new schools, hospitals and other public or institutional projects where two or three was the norm previously, Joe Kelly, a construction consultant and host of a popular industry podcast, told me.
Scott Van Voorhis
“We are creating a strategy to get more into public work,” Jon Desmond, CEO at Cox Engineering, noted in an interview on Kelly’s Mass Construction Show. “It does seem like an opportunity. With life sciences drying up, you really have to be creative.”
Now is the time for state and local officials to seize what could be a once-in-a-generation opportunity to negotiate some good deals on major public works projects.
But doing so will mean finding a way to get billions of dollars in contracts for major projects moving before the window closes in as little as one or two years.
We are talking about projects like the $4 billion replacement of the Cape Cod Canal bridges, the $1 billion straightening of the Mass. Turnpike in Allston and the $800 million rebuild of Madison Park, Boston’s struggling but potential-filled vocational school.
The Trump administration’s antics this past week certainly raise questions about whether federal dollars can be relied on, but the contractors are still out there, sharpening their pencils. The question is whether anyone in state or local government is paying attention.
Scott Van Voorhis is Banker & Tradesman’s columnist and publisher of the Contrarian Boston newsletter; opinions expressed are his own. He may be reached at sbvanvoorhis@hotmail.com.
