Gravel and oil make asphalt
United is part of Oldecastle, the North American arm of a company headquartered in Dublin, Ireland, and United Oldecastle operates numerous locations in Western Colorado.
United’s bid on the work at Yampa Valley Regional Airport represented the low bid among three that were submitted. The Precision pit was the only gravel supplier to make a proposal to United. The bid was for unmined aggregate, referred to as in-bank, meaning United’s mobilization to the Precision pit will include gravel mining and processing equipment. The plan also is to move a portable asphalt batch plant to the airport property.
Gravel and oil
Asphalt comprises 94 percent gravel and 6 percent oil, according to Tony Connell of Connell Resources, but oil represents the majority of the cost. At the price of $71 per ton for asphalt that he quoted to CDOT this season, the gravel represents $12 of the cost.
Steamboat Springs Representatives of Jviation, the engineering firm advising Routt County on the upcoming $13.44 million runway overlay project at Yampa Valley Regional Airport, were in Steamboat Springs on Monday to affirm what airport manager Dave Ruppel told the county commissioners last week, that costs associated with gravel and asphalt are the primary reason the low bid for the work came in almost $4 million greater than Jviation’s estimate — a gap of about 30.5 percent.
However, a local gravel mining operator and a paving contractor insist that the cost of gravel here could not be the explanation for the estimate being so far off the mark.
Routt County Commissioner Doug Monger informed Jviation senior project engineer Jeremy Lee that the gravel supplier, David Zehner, of the Precision gravel mining operation, told him that he had not raised his price for gravel in six years. Zehner confirmed those remarks Thursday.
Lee told the commissioners Tuesday that since his company estimated the cost of the runway project in September/October, the Federal Aviation Administration and Colorado Department of Transportation have reported seeing 25 percent increases in the cost of applied asphalt, comprising mostly gravel.
“The price of asphalt has not gone up 25 percent since last October,” said Tony Connell, vice president of the Steamboat division of Connell Resources, a gravel pit operator and paving contractor. “If you look at CDOT and the cost database, it’s not going to show a 25 percent increase. It’s just not happening.”
Connell said gravel currently is selling for $8 to $10 per ton. Zehner said the amount of gravel needed for the airport is 137,000 tons. At $10 per ton, that would come out to a gravel cost of $1.37 million, not enough on the face of it to account for the nearly $4 million gap between the engineer’s estimate and the lowest bid.
Lee told the county commissioners the successful low bidder, United, was “quoted a price two times what they have ever paid for in-bank, unprocessed source materials (rock to be processed into aggregate) in the ground.”
Lee also said that another factor in the gravel cost is that United must mobilize its own equipment to Routt County to mine and process gravel in the Precision pit. Another consideration in bidding airport runway work is the risk associated with the FAA’s demanding specifications for the quality of aggregate materials.
Connell, whose company operates gravel pits and carries out paving contracts, cited online documents at CDOT that, at first look, appear to be in conflict with that assertion. The CDOT Asphalt Mix Supply Bid for 2014 reports the cost of asphalt paving mix at 16 sites across the Western Slope rose just 2.02 percent on average from 2013.
It can’t be overlooked that Connell Resources unsuccessfully filed suit against Routt County in 2009 for breach of contract about money withheld from paving work it did at YVRA. A Routt County jury found in favor of the county in December 2010. Connell Resources since has performed paving jobs for Routt County, Connell said.
Relaying information through YVRA manager Dave Ruppel, Lee explained Wednesday that when his company compiled its estimate about nine months ago in time to meet FAA deadlines, it looked at specific projects that were comparable to the runway project at YVRA.
“Part of the issue in terms of looking at the CDOT (Mix Supply Bid) is that Jviation doesn’t just take averages across the board,” Ruppel said. “They look at comparable projects using the same grade of oil, same grade of aggregate, same type of project and similar availability.”
“The contractor (United) was anticipating mobilizing all of their resources for improving aggregate from out of the Valley,” Lee told the commissioners Monday. “Their sources weren’t interested in making it” up to FAA specifications.
Ruppel stopped short of revealing the actual amounts bid for gravel and aggregate in the low bid of $13.4 million by United, saying the contract had not been finalized, and until it is, he doesn’t want the other two bidders to know the details of the bid.
Zehner said that offering in-bed gravel (unprocessed rock in the ground) is more involved than it sounds. His crews must prepare the site, de-water it and provide access roads and stockpiling areas. Zehner added that the 137,000 tons of gravel required for the airport job represent a fraction of the 850,000 tons his pit is designed to put out annually.
CDOT’s asphalt price quotes
CDOT annually pre-arranges a “Mix Supply Bid” for asphalt from various Western Slope suppliers across its Northwest District 3, Connell said. It allows contractors to see where they can access asphalt and for how much.
The spreadsheet shows that this year’s price from 16 locations and five suppliers is up an average of just 2.02 percent. Prices for a ton of asphalt, which comprises 6 percent oil and 94 percent aggregate materials, ranges from Connell’s low of $71 per ton from its Hayden plant (down 2.82 percent from 2013) to $91 from United/Oldecastle at its locations in Gunnison, Telluride, Meeker and Hotchkiss. The price at those locations went up 2.2 percent.
In the case of the construction at YVRA, United will be moving one of its own batch plants to the airport site to make asphalt using aggregate mined at Precision.
United Oldecastle Grand Junction is quoting asphalt at $75 per ton, up 2.67 percent from $73 per ton in 2013, according to CDOT.
Documents on file at the city of Steamboat Springs, including bid documents for the 2014 overlay paving program, show that two low bidders quoted $95 and $93 per ton of asphalt and that the annual cost increase for asphalt has averaged 4.4 percent during the past 20 years with a modest increase this year.
Ruppel said Wednesday that Lee told him that when they checked CDOT documents in September to base their estimates on, they determined the price range for asphalt for jobs with comparable materials in similar situations was in the mid-$50s to $70 per ton for asphalt.
Not referring specifically to the Precision quotes, but characterizing the quotes in the three bids to the contractor, Ruppel said the price of asphalt was significantly higher than the estimate.
“They expected to be around $60 per ton,” Ruppel said.
They received quotes for different portions of the paving work of $102 and $104 per ton.
When it came to in-bed gravel, which the contractor will mine and process, Jviation’s estimates based on CDOT jobs last fall anticipated prices of $20 and $30 per cubic yard. Quotes, Ruppel said, were in the range of $52 per cubic yard for the runway widening project and $56 for a vehicle roadway.
Major runway paving work will not take place until spring 2015, when the runway will be closed for 60 days.
To reach Tom Ross, call 970-871-4205, email tross@SteamboatToday.com or follow him on Twitter @ThomasSRoss1