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Thursday, November 20, 2014 |  Madison, WI: 15.0° F  Fair
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How low can contractors' bids in Madison go?

Madison officials have pitched a number of high-profile projects - including a new Central Library and the Edgewater Hotel - by arguing that now is a great time to build because contractors, desperate for business, are bidding low.

This indeed seems to be the case. The 15 city projects bid since the beginning of last December have come in a combined $860,000 under estimate. For instance, Raymond P. Cattell Inc. bid $545,000 to repave a section of University Avenue - $308,000 less than the city had estimated. And Tri-North Builders bid $746,000 to renovate Elizabeth Link Peace Park, $161,000 less than estimated.

"We are seeing a great deal of competition in our bidding," says city engineer Rob Phillips. He agrees the city is saving money but cautions against making generalizations about it. "Engineers don't really want to be low on their estimates."

Thomas Thayer, president and CEO of Tri-North, says it once was typical for five to seven contractors to bid on a job; now he's seeing 20 to 30. And like everyone else, he's cut his profit margins to compete.

"I don't know how much longer this industry can continue to put out numbers like this," he says.

Though he's seeing some improvement in parts of the country, Thayer expects Madison to lag. "Wisconsin was a little slower to react to the recession," he says. "As such it's a little slow to return when it does get better."

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