UNDERGROUNDING HIGH: Cost Balloons to $1 Million

The City Council awarded a construction contract for the undergrounding of utility lines for the Tewa Court/10th St. Undergrounding Project at its Feb. 7 meeting, with the lowest bid coming in a whopping 88% higher than what the City’s consultant and staff had estimated. The total projected cost for this small undergrounding pilot project is now almost $1 million dollars ($962,266), and it will top $1 million if the full 15% contingency for the construction contract is spent. When the Council approved Tewa as a pilot project the total cost was projected to be $635,216; that estimate has now ballooned by 51.48%. The Tewa project will remove 10 existing utility poles, with 1,345 linear ft. of trenching, and provide service to 21 parcels.


Earlier, at a May 16, 2019, Council meeting, a wide difference between cost estimates for city-wide undergrounding — $26 million in an estimate prepared by Utility Specialists in 2016, and $51.6 million estimated by Lee & Ro, Inc. in 2019 — had been identified as a key concern. If the Tewa costs are predictive of actual costs going forward, it appears that Lee & Ro’s estimates will prove to be far more accurate. However, at the Feb. 7 Council meeting, Utility Specialists and staff had not revised the estimated cost of the 1A and X1A projects, or the estimated cost of city-wide undergrounding, based on bids received for Tewa. The Council approved the Tewa construction contract without considering revised costs for the full undergrounding program.

Red line: undergrounding lines. Black line: poles to remain. Source: City of Del Mar.

The Tewa project jumped ahead of the two projects (referred to as 1A and X1A) previously deemed to be the highest priority by the Undergrounding Project Advisory Committee (UPAC) and the City Council in 2020. When the new Council majority voted to jump Tewa to the front of the line in 2021, only Council member Worden voted no, and that council action resulted in the resignation of several UPAC members, as previously reported in the Sandpiper. 


The rationale stated by Council Members Gaasterland and Quirk when the Tewa project was approved was that this was an important “pilot project” that would provide valuable lessons when the larger projects were started. One obvious lesson is that undergrounding is far more expensive than Utility Specialists, the consultants hired by the Tewa residents and by the city, had estimated. The estimate provided in 2019 by Lee & Ro turns out to have been more accurate. And it is sobering that the two other bids submitted for Tewa were massively higher than the lowest bid.

*Utility Specialists’ original estimate of construction cost per linear foot (LF) was $120. Source: City of Del Mar.

During the council discussion on Feb. 7, the fact that the lowest bid was significantly higher than the estimate was ascribed by staff and Utility Specialists to the small scale of the project, the rising costs of material, supply chain issues, inflation, and how busy most contractors are at present. Yet, all of those factors existed at the time the November 2021 cost estimates were made. And the numbers reflected in the lowest bid were more consistent with the estimates made in 2019 by Lee & Ro on a cost/LF basis, well before the inflation and supply chain issues of today were an issue. 


Undergrounding of utilities has long been a city goal. But was the recent decision to award a construction contract for Tewa without first evaluating the import of the Tewa bids for the entire, city-wide undergrounding program a wise decision, and a prudent expenditure of Measure Q funds? The Sandpiper will explore these important questions in future issues.