CONSTRUCTION WORK BY STATE FORCES

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
in
Miles		Preliminary
Estimate
of Cost		Cost
Based on
Lowest Bid
Price		Actual Cost
With State
Forces		Saving to
State
Sheridan Paving2.2$ 42,535.50$ 52,438.00$ 40,065.61$ 12,372.39
Ashland Hill Paving.816,962.0019,858.6615,908.033,950.63
Total3.0$ 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.