Wednesday, April 20, 2011

High-school bids exceed $113 million, despite assurances to the contrary (Updated 3)

Updated 2011-04-20 09:39 to add link to school district’s announcement about the bids.
Updated 2011-04-20 18:24: the school district cancels the April 28 groundbreaking ceremony.
Updated 2011-04-21 10:17: local media are now reporting that the lowest bid came in $15.3 million higher than the the school district’s estimate.

Yesterday evening, the Mt. Lebanon school district revealed in a press release that bids for the proposed high-school renovation came in more than $14 million higher than expected. The lowest bid suggests a project cost of over $127 million.

Earlier, the school district had told the community that the project would cost no more than $113 million. This was the “maximum project cost” reported in the school district’s Act 34 declarations, back in January, 2010.

Since then, proponents of the project, both on and off the school board, had spread the belief that the project would cost less. One school-board director had said that “$95 million or less” was achievable. Another had written in her blog, “I'm confident that we will bring the project in below $113 million...”

Community activists contributed to the belief as well. Bloggers at Real Lebo had written that “cold, hard facts” about similar projects offered guidance about what Mt. Lebanon “could likely expect,” explaining that, “if you do the math, if our $113 M cap gets bids that are 20% less, that would bring our ACTUAL cost down to about $90 [million].” Similarly, the VOICE of Mt. Lebanon group claimed that the cost would be capped at $113 million and “could come in as much as 20% less...”

Speaking about the bids now, superintendent Dr. Timothy Steinhauer said they were “unacceptably high.”

The school district’s construction manager and architect are trying to figure out why the bids came in so much higher than expected. They will report their findings at a meeting scheduled for Monday, April 25, 2011, at 7:30 pm in the high-school library.

Update: groundbreaking ceremony canceled

The school district has now canceled the groundbreaking ceremony planned for April 28. From the school district’s web site:
The High School groundbreaking ceremony scheduled for April 28, 2011 is postponed while the Board deliberates on the outcome of the bids for the High School project.
Update: lowest bid $15.3 million higher than school district’s estimate

In updated coverage, the Post-Gazette and the Tribune-Review are reporting that the lowest bid was $15.3 million higher than the school district’s project cost estimate.

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27 Comments:

Anonymous Michael Goodin said...

This is more than a public relations disaster. I think that this would force the board to start all over as they as opposed to putting it to a community wide vote that would go against them. Also, this could push the project back for a significant amount of time.

On the plus side, this might be the beginning of a more sensible and sustainable plan.

April 20, 2011 8:41 AM  
Blogger Tom Moertel said...

Michael, I agree: it’s a PR disaster. The school district was blindsided by the bids.

The school board’s leadership and the school district actually believed, right up until the bids came in, that the bids would come in significantly lower than estimated. (I was told this by a top school-district representative only four weeks ago.)

Had they known their beliefs about the project’s price tag were hopelessly optimistic, they never would have planned the ground-breaking so close to the bid-opening.

But they did, so . . .

April 20, 2011 9:06 AM  
Blogger JE Cannon said...

Blindsided? Um... that's being a bit generous, Tom. And if they did sincerely beleive the bids would come in low, then it's high time we made a change in the complexion of the board because that's sheer incompetence.

The simple fact is, the Board was provided input by residents who demanded this project not continue the way it was designed. They were ignored. The Board was given expert testimony by people who work in construction. That information was ignored. At every turn, this Board has turned a deaf ear to any valid and, frankly, necessary input, choosing instead to plow ahead with an ill-defined, ill-designed and grandiose project. This Board was told repeatedly that the Taj Mahal schematics could not be seen to fruition for $113 million, a cost that goes back well over a year. But no matter--in true PR fashion, they stayed on message. The only problem is, nobody bought the message in the beginning and nobody is buying it now.

It's stunning to me that a group of allegedly educated residents couldn't stow their egos for an hour and have an adult conversation about what is and is not possible in our community given the economic climate. I'll ask the same question I asked weeks ago--how does one have a groundbreaking ceremony for a project when the final cost is unknown and now the construction schedule doesn't even exist?? We still no nothing more about the real cost than we did six weeks ago or six months agao.

I've used the word "debacle" in public to describe all of this and I will continue doing so as it aptly describes the entire renovation process/project. I would strongly suggest the Board stop, take a breath, and consider starting over or at least revising their plans to bring a high school update back into line with what Mt. Lebanon can afford. Either that, or display the usual obstinance and arrogance we've seen from the Board, push forward with the "unexpected" bids and then the community will finally have their voice back due to a referendum.

April 20, 2011 11:32 AM  
Anonymous John Kendrick said...

My question is, "What now?" Yes, "What now, Mr. Remley?" We elected you to be our leader and to provide us with a vision that would guide our community schools forward. Now what Dan? You're a commercial real estate professional. What is your plan, Dan Remley? You do have a plan don't you, Mr. Remley? Please tell us that you have a plan Dan!

I think that we should flip this set-back into an opportunity and save our community. They floated the bond and raised the cash - let's remodel and repair the neglected high school building,eliminate the school distict property tax for any resident owning residential real estate in Mt Lebanon over age 58, dust ourselves off, pick up the pieces, and enact policies that will build tangible value in the community rather than another athletic (Select one or all) stadium, ball park, field, etc

I also think that if there is any gap between the cost of the high school renovation and the bond sale proceeds, then RAJA SHOULD CUT A CHECK FOR THE DIFFERENCE! Afterall, I would think that if an individual of his means really wants to be the County Executive, then he can start by making a contribution to the children of Mt Lebanon.

April 20, 2011 12:57 PM  
Anonymous Anonymous said...

The Post-Gazette article states “Residents worried in public meetings about the high cost of the project, and school board members repeatedly reassured them that the economic climate would yield bids that would lower the total cost of the construction project.”

Anyone who has paid attention to this issue for the past 18 months probably knows that I have been one of those “worried residents” for a long time. Obviously the “fear mongering” Concerned Citizens of Mt. Lebanon weren’t fear mongering after all when they requested that the board set a budget at $75 Million and plan accordingly. Community experts understood and voiced the reality of the situation regarding the potential project cost, but the school board majority has consistently appeared to ignore the flags being raised along the way. So much time and money has been wasted on all of this. I can only hope that something will finally change to bring the project back to a realistic scope that it should have had in the first place. Could this possibly be the wake up call folks have been hoping for? – Charlotte Stephenson

April 20, 2011 2:44 PM  
Blogger Matt C. Wilson said...

Well, what a mess.

But, looking on the bright side, it's better to know now than further in. At least we aren't stuck with gaping holes in the building, overruns, delays, and all other kinds of headaches.

I think the saving grace of this community is that during the whole process there have been a host of thoughtful, tireless, and dedicated people who have been bringing forward great ideas and appropriate critique. Who have been open with their concerns and haven't let opposing voices shout them down.

I hope those thoughtful people don't stop giving their contributions to this project. Now is the time for the community and the board to take advantage of those contributions, reset this project, and deliver on their mission "To Provide the Best Education Possible for Each and Every Student."

April 20, 2011 5:58 PM  
Blogger Bill Matthews said...

There is so much that could be said - but the District said it best in the announcement:

"The lowest bids came in significantly higher than the cost estimates provided to the District by the construction managers."

Just another way of saying - not our fault!

April 20, 2011 8:34 PM  
Anonymous Anonymous said...

Matt, You are assuming the District is there to educate students but their actions indicate they are really accommodating adults.

John Ewing

April 20, 2011 8:40 PM  
Anonymous John Kendrick said...

Exactly what does the Board plan to do about the interest that is accruing on the bonds? We are burning cash by the millions without any benefit to the community!

What are they going to do with the money that we borrowed? Sitting on the funds for months or even years while this drama unfolds is not an acceptable alternative. These are our hard earned tax dollars that are literally being burned!

April 20, 2011 9:15 PM  
Blogger Bill Matthews said...

To understand from where we have come, is to understand where we are.

Digging into my archives, I pulled this letter, which describes a portion of the road we have traveled.

April 20, 2011 9:52 PM  
Anonymous Anonymous said...

I think the only people less in touch with reality than the school board are the people who think its productive to bash them on blogs.

It's all a mess, but if you think you're solving anything by mocking the school board with rhetorical questions or bashing the district on a blog, think again. We need more than that now.

Dave Franklin

April 20, 2011 11:24 PM  
Anonymous Anonymous said...

Hello Dave,

I don’t know if your comment was directed toward me or not, but I also don’t think the blog is a productive way to address the board. However, from my experience, speaking at the board meetings, sending letters to the board members and meeting with individual board members privately has not been productive either. At least the blog gives folks an opportunity to express their opinions on this topic that they feel passionate about and thank goodness we have the right to do so. Yes, it is a mess and there can be no worse bashing of the district than the newspaper articles today. Could it be time for the school board to put their project up for a community vote? My guess is that if residents have their say, they will be less inclined to use a blog to vent their frustration. On the other hand, perhaps we simply need a redesign with realistic limits. If given the chance, I know numerous residents who will gladly offer their assistance for the good of our important community. You and I, and many others in Mt. Lebanon have common ground – we care about the future here. Hopefully, a realistic solution will emerge.

-Charlotte Stephenson

April 21, 2011 12:38 AM  
Anonymous John Kendrick said...

So what is your proposal? I offered mine - fix the existing building with the money on the table; and then elect the next generation of leadership that will focus on building tangible value in the community by leveraging creative tax policy.

What is your proposal, counselor?

April 21, 2011 12:51 AM  
Anonymous Anonymous said...

Mr. Franklin, who got us into this mess? Surely not the people who record school board meetings and comment on this blog.
The blame goes squarely on the elected school board officials who are charged with spending tax dollars responsibly. Why should anyone else have to solve their problem?
This might explain why we only have 6 candidates for 5 seats.
David Huston

April 21, 2011 7:03 AM  
Anonymous Anonymous said...

Mr. Huston: That last statement makes no sense at all. Explain how it makes sense that people are so upset at the School Board (numerous commenters on this blog have called for mass resignations, since they say they don't represent the community), but when an election comes up (you know, the normal process for removing elected officials you don't like), nobody runs against them. With all the supposed community consensus against the board, I would have thought there would be 30 people willing to step forward to run. If your little band of malcontents (yes, I know, more than 10% of the community signed the petition) was so angry and so sure of your community support, why didn't you put forward a slate and take over the board in one fell swoop, then enabling you to put your policy ideas into practice? Or is there evidence in the meeting tapes if you listen backwards that Ms. Posti cast a spell on all of you? Where are candidates Kendrick, Huston (either one), Stephenson, etc.?
--Neil Berch

April 21, 2011 8:15 PM  
Blogger Bill Matthews said...

01-26-10

Per Ed Kubit:

What is the cost of the project?

The cost of the project is still fluid.

The maximum it could cost would be $113, 274,765 which translates into $340 a year on a home assessed at $100,000.

This includes contingencies of about $8 million for unknowns and does not take into account that bids on recent school construction projects came in at 17% to 25% below their original estimates.

Additionally, we are working with our architects and construction managers to find ways to further reduce the cost through value engineering.

The School Board is committed to find ways to reduce the cost of the project so the final cost will be less than $113,274,765.


Mr. Kubit's Complete Q&A

April 21, 2011 9:08 PM  
Anonymous David Brown said...

I would hazard a guess the bids are higher than we expected due to a combination of two factors:

(1) We are coming out of the recession, or will probably be doing so within the four-year schedule. If the procurement hadn't been delayed so long, we might have realized the same savings that neighbors did when they bought a little before us. Our bidders may not have wanted to be tied into a four-year deal at depressed pricing when next year or the following they might benefit from a better economy.

(2) Inflation is said to be on the way. Builders are not going to have price quotes that are good for four years, so they have built uncertainty in their costs into their pricing. This wasn't so obvious a year or two ago.

PJ Dick should certainly have known about these factors, but they probably weren't tasked with updating the estimate. It costs money to have a detailed construction cost estimate performed and they are notoriously imprecise. Given that the bidding process was coming up, I would have done what the board did -- wait and see how the bids come in.

Opinions will certainly differ and fingers will be pointed as to why the procurement got delayed past the advantageous period. We can argue endlessly about that or we can roll up our sleeves and start prioritizing our wish list. I would have a hard look at the bid tabulation and see where our estimate differed from the bids. Then we can decide whether to have the best of everything for our children, or the best of some things and pretty good for the rest.

Hopefully the obligatory indignation and recriminations will die out quickly and we can get on with business before it gets delayed any more.

April 21, 2011 10:35 PM  
Anonymous Anonymous said...

Neil,

Please read this previous thread http://bloglebo.blogspot.com/2011/03/letter-have-we-been-hijacked.html initiated by Rob Gardner. Additionally, other folks I talked with about running believed that, given the current plan for spending on a high school renovation, by the time they would be elected there would be little damage control they could do – similar to closing the barn door after the horse has escaped. Essentially, their hands would be tied to escalating costs for construction with less left over for academic resources. It was stated that once the contracts were in place, those binding agreements could not be revised. So, what incentive would those opposed to the current project have once the dye was cast?

The bids were reported this week, several weeks after the deadline to file a candidacy petition and after the groundbreaking celebration date was announced.

Change takes time and I am confident that there will be some soon and then more to follow in the next election cycle. The last election cycle candidates promised a much lower cost project and we supported and believed them. Hindsight is 20/20, but the time to run would have been the previous election. So, now as you criticize others including me who have worked hard to convince the school board that the renovation plan was not the right one based on input from resident experts, may I ask you a question: What value is there in inheriting mistakes of the previous leadership with little opportunity to have an impact going forward?

– Charlotte Stephenson

April 22, 2011 12:02 AM  
Anonymous Anonymous said...

Charlotte: Thanks for a thoughtful answer to my rather direct questioning. I probably disagree with you about the impact that a new school board would have over four years. Even if there was reason to believe that the high school project would go forward no matter what, there are plenty of other issues that have been raised here (transparency, etc.) that I think might have prompted people to run. Still, that's an honest difference of opinion on an empirical question (and one whose answer remains to be determined). Thank you for helping to explain why your side didn't run a slate. It makes much more sense to me now.--Neil

April 22, 2011 12:19 AM  
Blogger Tom Moertel said...

David (Brown),

Is it possible that the project’s boosters allowed their hopes to get the better of them? Wouldn’t that explain everything we’ve seen, including the seemingly high bids?

Your explanation is much harder to believe.

Even if we assume that “procurement got delayed past the advantageous period,” that doesn’t explain why the bids came in more than a third higher than the $90–95 million that the boosters claimed was realistic. Even during the best of the “advantageous period,” if indeed that period has passed, the discounts were only around 20 percent.

Further, why were school-district representatives telling people, within days of the project going to bid, that the bids were likely to come in low? (I was one of the people told this.)

No matter how you weave the story to defend them, the people who pushed the project hardest were way wrong about the bids, even as they unsealed the envelopes. I’m pointing this out not to pick on those people, but because it's important that we not ignore this reality-check.

Decisions are based on beliefs, but the outcomes of decisions are determined by reality. If our beliefs about important things have become separated from reality, we need to recognize it before we make any more big decisions.

Otherwise, reality is not likely to treat us kindly.

Cheers,
Tom

April 22, 2011 12:40 AM  
Anonymous Anonymous said...

Hello Neil,

I see your point about the transparency issue and I did not think of that. I had previously raised a fuss about planned secret meetings initiated by Josephine Posti with a few Commissioners. Since that proposal was ultimately voted down by the Commissioners, and considering that school board meetings are available on podcast (thanks to dedicated resident volunteers) and briefly on the cable access, the transparency issue has diminished in my mind. In any case, I sincerely appreciate the dialogue and believe that you, many others and I want the best for our community and of course – students!

Sincerely,

Charlotte

April 22, 2011 1:00 AM  
Anonymous David Brown said...

Tom,

You are unfair to characterize my previous post as "weaving a story," that is to say, calling me a liar. I have always given my honest opinions on this blog, though not always all of them.

In fact, I was merely trying to describe how construction companies approach bidding a project. I thought it would be helpful to people who, through their preeminence in other fields, are necessarily uninformed about the business of construction.

As for what is most likely, I find it far more likely that a group of independent companies rationally assessed their risks and priced their services accordingly than that a group of public servants purposely or unconsciously deceived themselves and/or the public. I do not see any motive or potential benefit accruing to the board members to have designed a project to be just under the referendum limit while simultaneously hiding a true cost that is higher, so any reasoning along those lines seems to me quite far-fetched indeed.

A construction cost estimate is a calculation, nothing more and nothing less, and certainly not a belief or a hope, as you have characterized it. Purchasers of construction services can and should plan based on such a calculation. Even if it is inaccurate, it is better than nothing, or worse, a total guess.

Of course, if conditions change after the time of the estimate, then that needs to be taken into account, either by redoing the calculation (at some cost) by or simply noting the direction in which changed conditions are likely to push the end result as compared to the estimate. By all accounts that is what the board members were doing when they said bids were expected to come in lower than the estimate due to the economy. If, after some more time conditions changed again, it still made sense to go ahead with the bidding. The time for calculations and speculations was past. The proof would be in the pudding.

Regardless of the reason, bids coming in higher than anticipated or desired is a fact of life. The task now at hand is to compare the bids to the estimates, identify where the differences lie, and then make some hard decisions. I'm sure we can agree on that reality.

April 22, 2011 2:05 PM  
Anonymous Anonymous said...

I'm not sure if any of you saw this http://www.post-gazette.com/pg/11111/1140684-54.stm. Mt. Lebanon is not the only school district that had bids come in high.

Chris Musuneggi

April 22, 2011 2:20 PM  
Anonymous Anonymous said...

Mt. Lebanon's project estimate is five times the cost of Quaker Valley's.
We have much more at stake.
David Huston

April 22, 2011 2:39 PM  
Blogger E. T. Gillen said...

Chris,
Thanks for posting the link.
"Board members agreed to delay plans for a new athletic field and focus solely on the middle school building...
"We're really looking to upgrade the building and get it up to speed so it is good for the next 25 to 30 years," he said. "We are a decade into the 21st century, and we want to provide a high quality 21st century education for our students."
I wonder if this option will be proposed by our School Board.
Elaine Gillen

April 22, 2011 2:46 PM  
Blogger Tom Moertel said...

David (Brown),

Thanks for your response. I certainly didn’t mean to suggest that you’re a liar. If that’s how you read my post, I’m sorry for my wording.

What I intended to convey by “no matter how you weave the story” is that I don’t think it’s possible to weave any story around the evidence before us to make the boosters’ belief that a $90–95 million project was achievable agree with the reality of the current bids. (If you say that their belief was on the money at one time, but now that favorable conditions have passed the new reality is something else, you must still explain how those favorable conditions would have brought the present $130 million down to the claimed $90–95 million. Do the math: I can believe in 130 being reduced to 113, or 113 to 90–95, but not 130 to 90–95; the favorable conditions were never that favorable.)

This isn’t an academic exercise. If our decision-makers’ beliefs about important things are wrong, they may be wrong about other important things, especially related things. Before we make any more important decisions, then, we ought to at least do a reality check, right?

Cheers,
Tom

April 22, 2011 3:18 PM  
Blogger Matt C. Wilson said...

Tom and David,

Seems to me you guys are "in heated agreement" as they say. I think David's explanation as to why the costs are higher now than they were when PJ Dick gave its estimate is perfectly reasonable.

I also think it doesn't shed any light on how the school board members who believed a $95 MM figure was achievable intended to get there. I wouldn't expect anyone to be accountable for that explanation except said board members.

Regardless, we are where we are. The best this community can do is begin to recapture the consensus around what is needed, what is possible, and move forward with a plan that balances each as best as possible.

April 22, 2011 8:50 PM  

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