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The massive second phase of a city of Portland pipe rehabilitation program will bring plenty of work for local utility and paving companies, but also more financial risk, city and industry officials say.

The city’s need for creative cost controls has thrown a wrench into some traditional construction aspects, such as what materials are used for excavation and how flaggers are used.

The program’s $23 million first phase started in 2008 and finished last year. The second phase, anticipated to cost $139 million, started in 2011 and will continue through 2017; approximately 182,000 lineal feet of sewer pipe will be repaired or replaced in North, Northeast and Southeast Portland.

In the past, the city would have identified neighborhoods with a large quantity of old and failing piping and replaced all of it, said Bill Ryan, chief engineer for the city’s Bureau of Environmental Services. However, high costs led officials to change their approach.

“We are only fixing the very worst of the worst,” he said. “We are not replacing every pipe. We are not replacing every lateral.

“If we put those (neighborhoods) on the map and went for the old approach – that would come to over $500 million. That would be just too expensive. We are doing a more surgical approach.”

Another change is that paving projects now are more often using native infill rather than more expensive imported backfill.

Additionally, contractors now are responsible for replacing damaged asphalt. In the past, the city paid for additional paving due to road failures.

Contractors are nervous about such cost-saving measures, said Bret Taylor, general manager and co-owner of Cascade Shoring. Contractors will plan for contingencies based on the possibility of discovering more problems underground than anticipated; the city will have to pay for cost overruns, he said. However, some contractors may bid less without the contingencies in place, he added.

“Essentially, they’re throwing that all on the contractor,” Taylor said. “That puts risk in the bid. In other words, you have to increase your price to adjust to the gray area.”

The city also has changed the way it pays for flagging services, shifting from an hourly payment to a lump sum payment, Ryan said. That should affect contractors and how they use their flaggers, he said.

“Because it’s so dependent on how contractors spread out their work zone, we’re making contractors fully responsible for how many flaggers they’re using on the project,” he said. “Previously, we bid hourly based on how many hours they worked, but we’ve found over the last couple of years that’s impossible to guess.”

The cost of flagging for four projects completed recently varied from 3 percent to 10 percent of the total construction contract, Ryan said.

Gary Stephens, chief operations manager of Fairview-based Moore Excavation, is concerned about how the new flagging rules will impact public safety.

“Now we’re going the other way,” he said. “My concern is that I hate to have safety as a debatable topic in the field.”

Ryan maintained that contractors could be more efficient in their use of flaggers, running crews in more tightly confined spaces and time windows.

“It’s more efficient for crews to be right on top of each other and staying as close as possible, so they’re not all stretched throughout the neighborhood,” he said. “If you have a tight group, fewer flaggers are required.”

Portland pipe rehabilitation program, phase 2

Current projects:

• Repair of deteriorating sewer pipes in parts of the Vernon, Sabin and Alameda neighborhoods; work will last until early 2015.

• Repair or replacement of about 17,000 lineal feet of deteriorating sewer pipes in the Overlook neighborhood.

• Repair or replacement of about 40,000 lineal feet of severely deteriorating sewer pipes in the Eastmoreland and Woodstock neighborhoods; work should be completed by summer 2015.

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• Replacement of deteriorating sewer pipes in the Rose City Park and Madison South neighborhoods; construction will begin this spring and require about one year to complete.

• Replacement of deteriorating sewer pipes on the west side of the Grant Park neighborhood and along the boundaries of the Sullivan’s Gulch, Irvington and Alameda neighborhoods; work will start this spring and require about one year to complete.

• Repair or replacement of about 7,000 lineal feet of deteriorating sewer pipes in the Kenton neighborhood; work will start this spring and require about one year to complete.

• Repair or replacement of aging sewer pipes on about 75 blocks in the Sellwood-Moreland area; work will likely start this summer and require about a year to complete. – city of Portland