High Five bids unsealed
LBJ-Central interchange could cost a record-busting $260 million

Building the Dallas High Five interchange could cost $260 million, cementing the project's Texas-size status by more than doubling the previous record for costliest highway contract awarded in state history. The bid from H.B. Zachry Construction of San Antonio, opened Tuesday, is about 20 percent higher than state estimates and beat three others that ranged from $262 million to $296 million. "Right now, I would expect us to go forward on it," said Jay Nelson, the Dallas district engineer for the Texas Department of Transportation. "Our other option is to give up on something to reduce the cost. I don't think that's something we're going to do."

The $260,900,383.12 bid to rebuild the interchange at LBJ Freeway and Central Expressway must still be approved by the state this month. The bids reflect at least a $45 million difference from recent state estimates of $215 million, increases mostly caused by contractors' expectations that they could face stiff financial penalties for not keeping traffic moving during construction. State officials, who expected contractors to recoup some of those costs in their bids, weren't overly concerned. "They're going to have to make that as small as possible," Mr. Nelson said. "They can't make it as large as they want and still have a competitive bid."

The Transportation Department has identified sources to pay for most of the additional cost, but a $10 million shortfall has not been addressed, Mr. Nelson said. "They could come to us" for the $10 million, said Michael Morris, director of transportation for the North Central Texas Council of Governments. His agency oversees a large portion of regional road financing and is lending the state $21.5 million to build the High Five high-occupancy vehicle lanes. "I can't think of a more important project for the region. It may sound like a lot of money, but I think the region would support getting this resolved."

Some of the project's cost is due to its unusual nature. Engineers originally planned to build the High Five in two contracts, but Mr. Nelson urged the state to combine the two into a single project to save time. By doing so, the project's planned duration has dropped from eight to five years. The penalties and incentives to minimize impacts on traffic flow range from $50 an hour to $22,500 an hour to close a lane of traffic. Finishing certain parts of the project early or late also could result in bonuses or penalties.

"Until now, there has been no disincentive to prevent closing lanes," said Transportation Department spokesman Mark Ball. "If the contractor wants to keep the money, he is not going to close lanes." The state expects that the contractor will face such penalties, another factor that will reduce the project's overall cost. The contractor stands to make $32,000 for every day the project is finished before January 2007 - up to an $11 million bonus for finishing a year early.

"We expected a higher bid than what we estimated in December," Mr. Nelson said. "With extensive night work, lane rental fees and air-quality issues, that drives up the cost. But I think we got a pretty good price." The $11 million bonus represents a large percentage of a contractor's profit margin, which Mr. Nelson has estimated at 10 percent. A contractor could make roughly $26 million on the High Five, then earn another $11 million if the project finishes in four years or sooner.

The bid from Zachry, which held the previous Texas record for most expensive project, will be reviewed further to ensure that it complies with state requirements. Other bids, including a $262.5 million offer from J.D. Abrams of Austin, also will be reviewed further. The close bids indicate that the prices are not inflated, state officials say. The Texas Transportation Commission will formally approve the winning bid at its April 26 meeting.

The previous record for the most expensive project was for Zachry's work on a $113 million portion of Central Expressway near Northwest Highway. Zachry completed that project for about $100,000 less than it had bid. Zachry also has several major projects under way in North Texas, including a $92 million project to rebuild the interchange at Loop 820 and State Highway 183 in northeast Tarrant County and a $75 million project to expand Interstate 35E through Lancaster and DeSoto. Both projects are on pace to meet the state's deadlines. "They've got experience to do big projects," Mr. Nelson said.