It’s a low-ball world out there if you’re thinking about bidding on state jobs. As you might expect with construction unemployment hovering near 20 percent, the number of bidders has increased and the bids are lower than many agencies anticipated. This Washington Post article details the bid environment on the East Coast. Last week we reported on a similar situation in California.
Some of the prices on these bids can be attributed to lower material prices, especially asphalt. But the rest is driven by a need to survive. This is great for the taxpayers, but these low margins are going to put the squeeze on many construction companies. For the record, the Construction Financial Management Association’s survey pegs the industry net margin before income taxes at 2.7 percent.