Keeping the Roof on Building Costs

School Administrator, June, 1994 by James E. Rydeen

Strategies for Containing Expenses During New Building and Renovation Projects

Horror stories abound of school construction projects rife with cost overruns and other disappointments and frustrations.

Most problems stem from less-than-thorough planning, mismanagement, and inexperienced individuals. They lead to many dilemmas: overlooked items in the budget process; added items; poorly managed "wish lists"; inadequate development of educational specifications and space; incomplete construction documents developed by architects and engineers; contractors' mistakes; unrealistic budgets developed by school districts, architects, construction managers, and project managers; and unreasonable expectations by school administrators and board members.

What is the secret to successful cost containment? No magic is needed to control project costs--just a knowledgeable, trustworthy professional who is experienced in designing and constructing school facilities. This experienced professional should help schools develop a process that identifies all necessary items for the project and formulate a realistic budget.

To start the budget process, you must decide on the size of the building and site, based upon the desired student capacity. This is accomplished by developing the space program and educational specifications to meet your district's unique planning requirements--curriculum, scheduling, and class sizes.

A ballpark cost estimate is developed before the space program and the educational specifications are completed, based upon estimating standards learned from our experiences with other school projects. After the budget is approved by the school board, that professional should help a responsible school district official manage the budget and guide all parties throughout the project.

Screen Carefully

If the magic ingredient in the cost-containment formula is selecting the best qualified professionals to work with your school district, how is this accomplished? By carefully screening the qualifications of firms and individuals.

I believe school construction projects are best managed--with costs contained most effectively--by competent professionals who have a successful track record in working on school facilities; who understand and are knowledgeable in the areas of educational planning, design, and facility needs; and who listen to and become acquainted with the expectations of the user--the school district. The administration and school board members must have complete faith and trust in the firm they choose.

Building construction costs are affected by four prime items: (1) building size--the area and volume; (2) materials and systems; (3) the accuracy and completeness of the construction drawings and specifications; and (4) the economy at the time of the bidding.

We control the first three items, but not the fourth. The construction economy can fluctuate rather rapidly, depending on the attitude, need, and the amount of work currently under way in the community for all the bidders: the prime general, mechanical, and electrical contractors, including the subcontractors and their suppliers. That is why a proper fee should be paid to the architects and engineers, to enable them to take the necessary time to develop a complete set of construction drawings and specifications that will result in more competitive bids and fewer change orders during the construction phase.

Contractors report that a good set of bidding documents results in lower bids, sometimes by as much as 15 percent. Incomplete bidding documents force the contractors to guess on their estimates, and to be safe, they usually guess on the high side. Incomplete documents also give the contractors more opportunities for change orders during the construction phase.

Devising Budgets

Our firm has worked successfully with school districts for more than 40 years on one, two, three, or multiple construction projects contained within a bond referendum. For example, since 1985, we have been involved in school projects totaling $105 million for the Osseo, Minn., School District, $75 million for the Anoka-Hennepin, Minn., School District, and construction projects totaling $300 million in 30 other school districts. All projects were completed on time and within their total budgets.

The budget of $38.9 million for the new 2,400-student Champlin Park Senior High School was developed in 1988; the bond referendum passed in 1989; construction bids (multiple prime contractors for site, general, mechanical, and electrical) were accepted in 1990; furniture, equipment, and supplies were bid in 1991-92; and the school was completed in 1992--under budget for $37.2 million.

A $35 million budget to build a new 2,000-student Stillwater Senior High School was developed in 1990; the bond referendum passed in 1990; construction bids (single prime contractor) were accepted in 1991; furniture, equipment, and supplies were bid in 1992-93, and the school was finished in 1993 within the budget.

Our firm is responsible for developing the total budget--everything needed for the school district to move into a completed building ready for use. In our office, cost budgets for school construction projects have followed a standard approach developed in 1960.