While the major part of the work supervised by the State Highway
Department is handled under the contract system, it has been found to be
good business for the Department to go into competition with contractors
and where satisfactory bids are not received to proceed to handle the
work with State forces.
During 1917 and 1918, the Department handled in this manner the
construction of 45.5 miles of macadam surfacing, 3.0 miles of concrete
paving, and 27.3 miles of grading.
Although war conditions prevailed during the past year and every
possible obstacle had to be surmounted, the work done with State forces
made a creditable showing when compared with cost plus and contract
jobs. Especially is this true of paving work where a comparison of costs
with bid prices show a very substantial saving to the State, as
illustrated by the following table:
===================+======+==========+==========+===========+==========
|Length| Prelimi- |Cost Based|Actual Cost|Saving to
| in | nary | on Lowest| With State| State
| Miles| Estimate | Bid Price| Forces |
| | of Cost | | |
-------------------+------+----------+----------+-----------+----------
Sheridan Paving | 2.2 |$42,535.50|$52,438.00|$40,065.61 |$12,372.39
Ashland Hill Paving| .8 | 16,962.00| 19,858.66| 15,908.03 | 3,950.63
+------+----------+----------+-----------+----------
Total | 3.0 |$59,497.50|$72,296.66|$55,973.64 |$16,323.02
-------------------+------+----------+----------+-----------+----------
Highway construction by the State Highway Department with its own forces
has its limitation, however, in spite of the fact that it is often
possible to do work at less cost than by contract. The Oregon State
Highway Department is by law and of necessity an engineering
organization and, in order to have the best success in handling
construction work, it is necessary to have a distinct organization.
In the hiring of men for handling such construction, it is necessary for
the State to compete with contractors for the higher priced and more
experienced men, and the contractor is often in a position to offer more
salary than the State. Furthermore, it is necessary for the State to
carry large quantities of expensive equipment which is idle at least a
part of the year, and, in fact, the amount of equipment necessary to
handle all of the State work by force account would represent too large
a portion of the year's available money for road work.
In handling its construction work direct, however, the Department has
the advantage of not being required to make a profit on the work,
neither has it to pay interest on the necessary moneys to carry payrolls
and other incidentals, neither is there any loss in retained percentage.
The State does not have to carry a construction bond and, in fact, there
are many reasons why a state should handle its construction direct,
cheaper than by contract.
There is much to be said on both sides of the question, but the
Department at this time does not believe that it is justified in
attempting to handle all of the State work, believing that only under
certain conditions where the State does not receive reasonable bids the
work should be handled direct.
The State Highway Department has many large construction jobs under
contract at one time, and it is obvious, even to the layman, that an
organization to handle all of this work with State forces is impossible
under the present laws of the State of Oregon, and the Department
recommends that force account be limited to such cases as are mentioned
above and work for which the quantities and cost can not be closely
estimated in advance of construction, such as maintenance work and light
grading.