What Will My School Project Cost at the End of the Day?
April 13, 2012
Huckabee has successfully used almost every construction delivery method authorized by the Texas Legislature, but the two methods our clients have chosen to use most often are Competitive Sealed Proposals and Construction Manager at Risk. Both of these methods have an impact on the cost estimating process as well as the initial and final construction cost. Let’s examine the strengths and shortcomings of the two methods and examine the project types that may work best with one method or the other.
Competitive Sealed Proposals (CSP)
First, let’s look at CSP. In this method, the contractor isn’t selected until after bidding is completed. Here is the typical timeline:
- District selects the architect to design the project
- District establishes qualifications for General Contractor selection
- After documents are fully complete, lump sum proposals are accepted
- Selection of General Contractor not only based on low price, but also on qualifications such as project team, personnel, schedule and similar project experience
When to Use CSP
Although this delivery method can be used for any type of project, Huckabee believes that CSP works best on new, freestanding educational buildings. It represents a “win-win” approach because you get aggressive pricing competition combined with the ability to closely scrutinize the builder’s qualifications. Competition in the pricing area has never been higher.
Our research shows that while material and equipment prices are going up, total construction costs are continuing to stay very competitive. Projects are few and far between, and builders are aggressively working to build their backlog. CSP allows you to take advantage of this cost environment, but at the same time, allows you to check past performance.
One caution, because of the competitive environment, it is imperative to investigate the contractors’ and subcontractors’ financial stability.
What to Expect from your Architect during the Estimating Phase
You, as the owner, will rely more on the architect to provide estimates during design. Normally, at the Schematic Design phase, estimates are more “square foot” holistic approaches; however, as the project develops, the estimates should build into more comprehensive quantity estimates. Estimates are only as accurate as the architect’s quantity takeoffs and the unit cost applied to them. As we’ve seen a great deal of fluctuation in pricing in the past couple of years, it’s important that your architect review the trends of recently bid school projects, and it’s also important to have trusted subcontractors that will provide current pricing information. Most subcontractors are happy to lend a hand early in a project, which can provide a checks and balance to your architect’s numbers.
Construction Manager at Risk (CM at Risk)
Now, let’s discuss CM at Risk. When the project is delivered under this method, the process will be very different. Some key elements of this delivery method are:
- Construction Manager serves as General Contractor assuming the risk for construction at a contracted price or Guaranteed Maximum Price (GMP)
- CM provides design phase service in evaluating cost, schedule, materials and alternatives
- Selection is based on criteria that combines qualifications, experience and fee
When to Use CM at Risk
Huckabee believes this construction delivery method is an outstanding alternative for complex renovations and additions to existing facilities. The opportunity for the builder to participate in the investigation of existing conditions and to work with the design team to develop project phasing solutions will have a positive impact on the final cost of the project. This early coordination and teamwork will also minimize the impact on the building occupants (students, teachers, etc.) Although CM at Risk may result in a slightly higher initial construction cost, it will help eliminate the possibility of costly change orders during construction based on unforeseen conditions. If problems can be avoided before construction begins, the cost is less. Fixing construction issues on the drawings is cheaper than fixing them in the field.
What to Expect from your Architect and your Construction Manager during the Estimating Phase
One of the benefits of hiring a CM is the input and costing they should provide during the design phase. This means, to affect a real impact on your project, the CM should be hired very early in the design process. You should then spell out your expectations of cost estimating assistance and require that they deliver detailed estimates and input on designs. That said, if you require the CM to be part of the cost estimating process, your architect needs to be willing to look at the CM as a “partner” in the design process. They should trust their estimates and accept their suggestions. This shouldn’t relieve your architect from doing their own in-house cost estimating, but it does make their costing secondary to the work done by the CM.
No matter which delivery method you choose, in order to be successful, it is paramount that all parties involved work together to deliver quality construction documents. Quality documents allow for a smooth running and successful construction project.