Economic turndown makes school-building cheaper

MOUNT LAUREL, N.J. | New Jersey is finding one benefit from the recession: It's getting cheaper for the state to build new schools.

The Schools Development Authority opened bids last month to build new schools in Egg Harbor City and Camden. In both cases, there were more bids than expected -- and the winners were offering to do the work for millions less than the budgeted amount.

"We're the silver lining in a relatively dark economic cloud," the authority's chief operating officer, Kris Kolluri, said Friday.

Accelerating school-building is one of the major elements in Gov. Jon Corzine's efforts to stimulate the state's economy and create jobs in the construction industry.

Kolluri said the unexpected savings would go into a contingency fund to pay for cost overruns elsewhere; school building projects have a history of costing more than expected.

The SDA is in charge of building new schools in the state's neediest cities -- a task the state Supreme Court has ruled the state government must undertake.

The agency's two latest projects to go out for bid are for a new elementary and middle school in Egg Harbor City and a new Morgan Village Middle School in Camden.

The Egg Harbor City construction was expected to cost just under $18 million, but the state received a dozen bids and the winner came in at little more than $15 million.

In Camden, the savings were even bigger. The project was expected to cost about $27 million, but the winning bid there was less than $21 million.

The authority also plans to build a new Phillipsburg High School. Original estimates of $174.4 million have shrunk along with the design's capacity, from more than 2,000 students to only 1,750, SDA spokesman Larry Hanover said.

It's still among the authority's costliest projects, but Hanover said he had no updated cost as of Friday. The Phillipsburg bids are slated to be opened next winter, he said, with opening set for 2013.

A break from the past

Only two contracts have been awarded so far below the expected amount, but that's still a big change from when building costs were escalating faster than the overall inflation rate.

Just last year, raw material costs were growing so fast the state could hardly keep up. For example, plans for road building had to be cut back when asphalt prices jumped 16 percent in two months.

But now, the price of oil and steel is down -- and construction companies eager to land any work are willing to lower their prices.

If these costs stay down, it could mean more savings for New Jersey.

The state is planning to start 24 school-building projects this year, up from seven last year.

Kolluri said there could be even more work on schools if New Jersey gets money from a federal economic stimulus.