The Oct. 14 MACCRAY School Board meeting was well attended by many people from across the school district. A number of citizens provided public comment and Stephan Dewald from Lightowler, Johnson and Associates presented cost of construction estimates for the renovation of the MACCRAY East and West Elementary Schools. Dewald described using a 3 hour tour of the schools on the morning of Sept. 18 and simply applying the facilities square footage to industry averages found in standard construction references to produce the study.
After initial examination, the Lightowler upgrade study and Dewald’s presentation have a number of areas in need of clarification. This cost of work budget presented to the Board does not include additional other costs involved in construction. Anyone who has built or renovated a home understands the expenses outside of a work budget can grow from sources unconnected to construction materials or labor. In this case these include: the cost of permits, construction insurance, legal fees, site specific/materials testing, cleaning, signage and temporary facilities rental.
Like that home building project one can never foresee unexpected construction obstacles hidden underground or within existing walls. Whether it is previously undiscovered asbestos in need of abatement or new regulations requiring code upgrades, a contingency fund is an appropriate part of overall estimated project costs. Specific questions about costs that might not be included in the Lightowler study are: water diversion/storm water management, replacement of dropped ceilings, and interior furnishings such as desks, tables, and white boards.
The Lightowler cost of work budget is based upon 2013 construction costs. The renovation of East and West Elementary Schools will require numerous spaced projects across a span of years. The district does not have enough classroom space to have a school unoccupied for an entire year or conduct simultaneous projects at both schools. One facet of the project that could cause disruption of school operations will be the demolition of the 1939 building containing the kitchen/cafeteria at East Elementary. The projected increase in building costs across this extended construction time line needs to be reflected in the overall budget.
In all projects, financing including bonding costs and debt service interest are major expenses. The inclusion of all budget costs is essential to create a comprehensive financing package. Whether from a single bond issue or from multiple sources, the amount borrowed has to be structured into a level repayment schedule. Under estimating the amount of financing for a construction project is an error that can dramatically change the size/purpose of the building, impact funding school districts use to support student instruction and in the long run cost taxpayers more.
Offered as an alternative cost of work budget estimate, one needs to understand the presented study is not a guaranteed quote or bid to complete the project. Lightowler, Johnson & Associates is an engineering firm and not a general construction contractor.
Page 2 of 3 - Questions were raised at the Oct. 14 meeting about Energy Service Group’s (ESG) qualifications and if the MACCRAY School Board conducted diligent background checks before hiring the firm. ESG’s expertise is in the planning and renovation of school facilities. ESG was not only vetted once but twice by the school district. ESG conducted a comprehensive 6 month study of school facilities, district energy/utilities usage and projected district needs. Before hiring ESG to renovate MACCRAY H.S., 4 area schools: Monte, RCW, Minneota, and Lester Prairie, were selected from a reference list of over 90 ESG project schools. They were surveyed about ESG projects completed in their districts. Each district provided a positive recommendation of ESG’s work on their schools. The survey results can be found on the MACCRAY School webpage. The School Board voted 6-0 to hire ESG to manage the renovation of MACCRAY High School.
ESG created budgets and timelines for the renovation of MACCRAY High School, East and West Elementary Schools. Each line item in the ESG budgets were estimated based on the site conditions observed and evaluated during the 6 month facility study. These estimates were rechecked against actual historic costs from similar ESG construction projects. The district moved forward to renovate MACCRAY H.S., obtaining historic low 1.65 percent financing and securing contractor bids $400,000 lower than project budget estimates.
When the results of a community survey indicated a significant interest in the construction of a unified elementary, the MACCRAY School Board invited four firms to make presentations to develop preliminary design concepts for a new school. Once again ESG was selected by a 6-0 vote by the MACCRAY School Board to develop a preliminary conceptual design, submit the required Review and Comment Plan to the MN Dept. of Education and develop a comprehensive budget. This allowed the school district to contact bonding agents and provide an estimated tax impact on community property owners if the bond issue is approved by the voters.
Construction management firms like Energy Service Group (ESG), operate much differently than general contractors. Construction managers serve as the school’s advocate All costs are open book, fully transparent to the school and the public. General contractors often mark-up subcontractor quotes making the actual costs less apparent. Construction management firms are compensated on a straight negotiated fee basis. Construction management firms develop project budgets to determine the correct amount of financing needed to pay for all expenses connected to the project. This budget is not a quote or bid. Through a series of budget reviews, school representatives change, subtract or add to the project, finalizing the total financing needed to complete the project.
After project approval, the construction management firm uses architects, engineers and experienced construction professionals to develop the specifications for each project phase. These specs are included in the requests for proposals released so independent construction contractors can bid on portions of the project. The management team and school representatives review the bids, determine if they comply with project specs and decide if the company has the capacity to complete this part of the project. The expertise of the construction management team is critical in selecting the most cost effective contractor bid. Like a many homeowners doing a building project, school staff do not have enough construction knowledge to make informed decisions. This expert bid review process results in huge savings to the school district avoiding sub-standard work and expensive change orders.
Page 3 of 3 - During the whole project, the management firm has an on-site project manager constantly reviewing the work of the selected contractors. Project managers are the school’s eyes and ears, continually monitoring/documenting both the quality and the timeliness of contractors’ work. The project manager is the school’s representative in the resolution of any construction disputes with contractors. The ultimate goal is an easily accessed, student focused facility supporting instruction & activities in a safe, comfortable environment. Within the new facility, design elements will provide for the efficient use of energy/utilities and provide long term maintenance savings.
Over the past three years the district has reviewed the identified facility needs of the district and began exploring options and estimates. The Lightowler, Johnson, and Associates cost of construction study reaffirmed the district’s position that over $10,000,000 are needed if renovation occurs at East and West Elementary Schools. Regardless if renovation occurs or if a unified elementary school is constructed, school district property taxes will be impacted.