Construction is set to start back up on the flyovers at the interchange of Mopac and 290 in South Austin, with a new contractor taking over today.
Work ground to a halt in July when Wiser Construction, the contractor the state hired for the job, went bankrupt. And we might be seeing more contractors doing that in the months and years ahead.
Up to now, cases like Wiser’s have been few and far between, said John Hurt, spokesman for the Texas Department of Transportation.
“I never recall this happening in my career, but there’s always the possibility that it can,” Hurt told KUT News.
Wiser was about 60 percent done with the job when one day its workers just stopped showing up. Wiser, which had put in a lower-than-expected bid for the job, had run out of money.
Hurt says the low bid didn’t raise any red flags at TxDOT. In a bad economy, low bids are par for the course.
“It’s not unusual to see a bidder bid lower than we estimate,” he said. “Because of the business climate, we’ll have people bid a really low job because they can get work.”
But precisely because of all those low bids, local and state governments–and even the feds–might be seeing more bankruptcies like Wiser’s.
“Contractors that are working on projects that they bid a couple of years ago, maybe over-optimistically, are now going to be struggling with how to make ends meet,” William Allensworth, who practices construction law, told KUT News.
Allensworth teaches construction law at the University of Texas at Austin. He says a whole industry, the surety bond business, is built around insuring those construction contracts.
Steve Nelson with SureTec Insurance has been in that business for 10 years.
“Our challenge is sometimes dealing with the contractor who was in great shape two or three years ago, when we issued bonds on the long-term project, who is now succumbing to the economic situation,” Nelson told KUT News.
The surety company that held the bond for the Mopac/290 project didn’t return calls for comment.
Because the flyover project was bonded, Hurt said, “We still get the money, we don’t lose money on the project, and neither does the taxpayer.”
But as Allensworth points out, there are many ways the public does pay when a state construction deal falls through.
“If you were sitting in traffic on South Mopac, you may not be out of pocket any money, but there’s a cost,” he said. “There’s a reason we want those projects done on time.”
After the groundbreaking ceremony for the project last year, the city of Austin estimated that the flyover would save 400 hours of travel time daily, and 44,000 gallons of gasoline and 340 metric tons of carbon dioxide annually.
TxDOT says the job, originally due to be finish this December, won’t be complete until next spring at the earliest.