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Philomath School District officials say they were caught off guard by unexpectedly high construction bids on a $24 million high school renovation project.

High demand for labor at large projects and rising costs of materials made the project more expensive. As a result, the district had to scale down the renovation and completely cut other projects that it can no longer afford.

鈥淥ur budget was going to be tight anyway, but we thought the bidding would come in better than it has,鈥� district business manager Kelly Howard said.

The problem facing the Philomath School District could affect others in Oregon if they begin projects unprepared for higher construction costs.

鈥淲e’re seeing easily 5 percent or 10 percent higher costs from what we saw a couple years ago,鈥� said Rick Yeo, project manager at Cornerstone Management, which is involved in the Philomath project.

One of the major factors in the cost of construction is prices of materials and commodities like steel, masonry and glazing, said Jim Jerde, principal with .

鈥淲e’re seeing some price creep on (materials) that had gone down significantly,鈥� Jerde said.

Yeo said that some material costs seem to have 鈥渂ottomed out鈥� and are heading back up.

Big projects like the one for Intel in Hillsboro or at Oregon State University have occupied subcontractors. With fewer subs bidding, prices are coming in higher, Howard said.

鈥淐ompetition for subs has been tough, and (subs) are not as available to bid the K-12 work,鈥� Howard said.

Jerde said it’s hard to tell exactly how big projects like Intel influence cost, but the main effect is timing.

鈥淥ne big job always tips the scale because it takes big groups of people during specific time periods, whereas with a bunch of little jobs, the timing is spread out,鈥� Jerde said.

The Philomath High School renovation is a multiphase project: A major renovation of the classroom wing was finished earlier this month, and Skanska USA, the construction manager-general contractor, is preparing to step into another yearlong phase to construct a new classroom building, administration area and gymnasium complex. Because a quick, phased schedule is being used, design and construction have sometimes overlapped.

鈥淲e had initial estimates, but as the architectural drawings get more defined and there’s more detail, the contractors have been able to have better, more accurate estimates,鈥� Howard said. 鈥淭hose estimates keep going up, and as costs start to creep, that throws the budget out of balance.鈥�

The project team is preparing final drawings to bid for the next major construction phase in the coming weeks, Skanska project manager Trevor Wyckoff said.

To accommodate unexpectedly higher construction costs, the school district has had to scale back some of its expectations, Howard said. He said the district has had to decide whether to reduce project scope, increase the budget or reduce the quality of finishes.

鈥淵ou have to make some choices,鈥� Howard said. 鈥淚nstead of using carpet, you do tile. Instead of using brick, you do concrete tilt-up. Some of the most expensive accents that are cosmetic have to go away.鈥�

The district had hoped to have some extra money from the bond for projects such as a renovation of the press box at the football stadium, Howard said.

鈥淓verybody has a wish list,鈥� he said. 鈥淲e’re just not going to have money available to do any of those extra things.鈥�

Howard said the district prefers to reduce the scope of work rather than take money from operations, because school budgets are extremely tight. That conflict is true across multiple districts, Yeo said.

鈥淚f you’re not reducing the scope, you’re reducing programs or funding (construction) with money that the district doesn’t have (or) would like to use to buy textbooks and computers,鈥� Yeo said.

Despite the cost creep, Yeo said the construction market favors owners, if they have money available.

鈥淐osts are still 25 percent lower than they were five years ago,鈥� he said. 鈥淚t’s still a fabulous time to be building.鈥�