November 10, 2018 (updated/corrected November 11, 2018] – The City of Memphis is asking for bids for the renovation of its convention center. It is the third time this year.
As reported here earlier, the process has had a few hiccups along the way. The bids received in round one and two have simply exceeded the City’s budget for the renovation.
After the first set of bids from two contractors were received, which would have put the project well beyond the budget, the architects went to work to provide “value engineering,” meaning substituting less costly materials and some relatively minor design changes.
The second bid solicitation was divided into six categories, a base bid and five options for additional construction. In the second round of bids three contractors participated. Bid opening was November 1. The lowest bid for the base and all the options came in at $173,382,000. The next lowest bid was more than $10-million higher.
There were widely disseminated media reports that the renovation project, based on these bids, would come in under the budget of $175-million. Those reports were apparently based on a lack of understanding of the project. There are about $25-million in “soft costs” that the project will require. Soft costs are things like architect, lawyer, and consultant fees, of which there are obviously considerable. Add those soft costs to the lowest construction bid for the base all options and the total expected cost of the renovation project would be $198,382,000, once again, nearly 25-million over budget.
Soliciting rebids, even multiple rebids, for major projects is not uncommon, according to architects and construction consultants.
The reason the second round of bids had those five options was in case the total exceeded the budget. The Memphis Convention Center Board of Commissioners and the City could then pick and choose the options, with hopes of finding an acceptable combination that would come in within budget.
The choices of options, however, were narrower than seen at first glance because there is considerable agreement that three of the options are critical to the future of the convention center. Figuring only those three critical options in the lowest bidder’s proposal and including the soft costs brings the anticipated cost down to $188,674,000. That is still $13.6-million over budget. Using only those three critical options in the other bidders’ proposals brings the project, based on their bids, more than $10-million over the lowest bidder’s.
On this third solicitation for bids, released yesterday, two of the less important construction options have been dropped: a renovation of meeting rooms on the third floor where convention center staff offices and some smaller conference rooms are now located, and a “media mesh,” a large electronic sign, on the side of the building.
On top of all this, one of the November 1 bidding companies has filed an appeal with the city, claiming its bid was the only one that met the documentation requirements. That bidder, by the way, had the highest proposed cost of construction.
Architectural and construction consultants say that the rebidding process, if it goes successfully with this third round of bid solicitation, will not likely affect the August, 2020, substantial completion date of the project.
The new bids are due into the city November 20, 2018.
[In an earlier version of this story the date the bid solicitation was released was also given as the date the bids were due in to the city. The actual date the bids are due is November 20, 2018]