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At least one Portland population is deviled by the current building boom: the managers of public construction projects.

That’s because the roaring construction sector has produced an unusual bid climate 鈥� few builders are pursuing public projects, and those that do are bidding higher than projected by owners.

As head of Portland Public Schools‘ $482 million bond program, Jerry Vincent has encountered competition for contractors with not only the region’s other public entities, but also commercial project owners. As a result, bids for PPS projects are coming in up to 20 percent over initial estimates.

鈥淭he bid climate is hot right now, and lots of projects are overlapping each other,鈥� he said.

A bid climate is considered to have three main factors: cost of materials, cost of labor and cost of capital 鈥� i.e., the profit a business is likely to make.

Due to increased demand, costs of construction materials have risen by up to 5 percent per year since the recession, according to Engineering News-Record. Labor costs have also jumped as the construction industry continues to recover from employment losses suffered after the housing crash.

When demand ramped back up, it ramped way up, said Todd Hess of Todd Hess Construction.

鈥淭here’s just not as many people in the pipeline getting trained to work in construction,鈥� he said. 鈥淭hat’s the real issue: subcontractors can’t get enough labor to do the work.鈥�

The health of the commercial sector (building permits in Portland are up 38 percent since 2010-11) has given those firms that survived the recession greater freedom to choose which projects to pursue. And when given a choice, few subs elect to bid on public work, Hess said.

鈥淭he privately-funded projects don’t have the same paperwork and documentation requirements as public projects,鈥� he said. 鈥淭hey’re a little easier to perform, they’re a little easier to get, and you make a little more money.鈥�

Two subcontractors that initially were interested in PPS’ Faubion PK-8 reconstruction project have already backed out, according to Vincent.

Steve Clem, vice president of pre-construction for Skanska, said the company hasn’t pursued a public project this year; it instead has favored work in the hospitality, office, multifamily and other healthy commercial sectors. He said that securing subs for public projects is harder now.

鈥淲e’re seeing the same thing,鈥� he said. 鈥淭here’s a greater selectivity among the trade contractors in bidding.鈥�

During the Great Recession, when most work available was in the public sector, as many as 15 subcontractors would bid on a project. Now, an agency is lucky if it attracts the five bidders required by the state’s Public Contracting Code, and it’s a much bigger deal if a few drop out. That’s because when fewer subs bid, they tend to turn in higher bids, knowing that they have a better shot at winning the project.

鈥淭here have been times where only one subcontractor has bid on our work,鈥� said Linda Degman, head of the bond program for Portland Community College, which has two years of work remaining on its $374 million bond that voters passed in 2008. 鈥淎nd sometimes it’s because the sub has a long-term relationship with the GC. They’re willing to bid almost as a favor. Relationships are important.鈥�

This difficulty retaining subcontractors has made meeting minority hiring goals a greater challenge. PCC has a benchmark for 20 percent participation by women- and minority-owned firms.

鈥淚t’s been difficult to meet that goal, where it wasn’t earlier on,鈥� Degman said.

Along with PCC and PPS, Beaverton School District is bidding out work as part of large bond program.

鈥淲e are seeing a general tightening of the market with a shortage of labor,鈥� said Michael Mathews, purchasing manager for Beaverton School District, which is working with a $680 million bond that voters approved in 2014. 鈥淭he local Beaverton area construction market seems saturated with work, and contractors are very busy.鈥�

Vincent said that PPS’ construction managers are concerned about climbing costs.

鈥淲e are noticing that the construction cost indices for Portland are, on average, between 2.5 and 3.5 percent up, and it’s a growing trend for 2015-2016,鈥� he said.

A rebuild of Faubion PK-8 school, now late in the bidding stage, is budgeted to cost around $37 million. With bids for projects like this now coming in between $5 million and $10 million over estimates, Vincent said he wouldn’t be surprised if the Faubion project ends up costing the district more than $40 million. And it could be the same story for the upcoming modernization of Grant High School, which the district estimates should cost between $80 million and $90 million.

This problem comes down to basic concepts of supply and demand, said Todd Duwe, vice president of business development for Andersen Construction.

鈥淲ith there being a greater quantity of negotiated projects in the marketplace, whether private or public, those institutions or organizations seeking hard-bids are going to find it harder and harder to find interested participants,鈥� he wrote by email. 鈥淚f given a choice, the majority of general contractors are going to seek a more collaborative and less risky project delivery method.鈥�

Clem said the industry works in cycles of about 18 months to two years.

鈥淲e have such a small market (that) things go up and down quickly,鈥� he said. 鈥淓ventually, (commercial projects) won’t pencil, and things will slow down.鈥�