Update 1, 2011-07-19 16:30: minor edits for clarity.
Update 2, 2011-07-19 18:45: added link to the school district’s mandate-waiver application. (Thanks to David Huston for bringing it to our attention.)
Update 3, 2011-07-19 22:52: School-board president Josephine Posti writes about the switch back to multiple prime contracts.
Update 4, 2011-07-21 10:25: Dirk Taylor, president of Taylor Structural Engineers, Inc., and a member of the Community Advisory Committee that the school board formed to review the high-school plans, has written a public letter to the school board, condemning the recent switch back to multiple primes.
Update 5, 2011-07-25 15:56: Resident and frequent Blog-Lebo contributor Bill Matthews has also written a public letter to the school board, questioning the recent switch back to multiple primes.
Last night, the Mt. Lebanon board of school directors, on the advice of its architects and construction managers, reversed its decision to have a single prime contract for the high-school project.
Recall that a year ago, when the school board settled on a single prime contract, it did so to reduce the “all-in cost” of the project. As single-prime contracting was explained at the time, it would cost more up front but save money in the long run by reducing our exposure to delays, change orders, and legal claims, which are often expensive and have burned Mt. Lebanon in past projects.
At the time of the decision, school director
Josephine Posti wrote on her blog, “The School Board and Community Advisory Committee both identified the application for this waiver [which allows single-prime contracting to be used] as a possible cost-savings to the project, and the Board approved application for the waiver in March.” In Section 4 of
that application, the school district claims that, “without a waiver, the cost of completion of this project may be significantly and unnecessarily increased.”
So, if we originally chose single-prime contracting for cost savings, why switch to multiple-prime contracting now?
“Cost savings.” Yes, that was the explanation offered by our hired experts last night at the school-board meeting.
School director Elaine Cappucci found that explanation, for what appeared to be a big contradiction, somewhat lacking. “I’m not going to let you off the hook that easily,” she said. She reminded our hired experts that cost savings has always been an important issue, so why, she asked them, did they wait until now to push so hard for the supposed cost savings of multiple prime contracts?
Our experts: “Because [back then] the project was under budget, or within budget. And now we’re struggling to find ways to bring the project within the budget.”
Now we get to the heart of the matter: the budget. What matters to our experts is not so much the project’s actual cost, but the project’s cost
on paper, at bid time.
They’re probably looking ahead to the next round of bidding and wondering what’s going to happen to them should those bids, like the first bids, exceed the project’s price cap. As foolish as they looked the first time the bids flopped, if it happens to them again, their reputations are going to take a ringing blow.
So now they’re urging us to switch to multiple-prime contracting to lower the bids. In effect, they’re advising us to
buy lower bids by exposing ourselves to the very real possibility of substantially higher “all-in” costs down the line.
How much higher? According to Mrs. Posti’s earlier blog post, “The Master Builder's Association has estimated cost increases of approximately 13% for projects using multiple primes.”
So here’s the question: Does multiple-prime contracting truly hold the greater promise of cost savings, or did the high-school project, once again, just get more expensive?
Labels: high school renovation, mt. lebanon school board
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