While each process has its advantages and disadvantages and each is authorized by State law, the benefits of the Construction Manager at Risk method include:
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Yes. The original budget included both a Design & Estimating Contingency ($8,618,276) and an Escalation/Market Condition Contingency ($5,688,062). These funds were fully re-allocated into the construction cost as the design and bidding processes progressed. Due to unprecedented rates of cost escalation, a budget deficit arose when the bids were received.
Early bids are typical in a project of this size. The benefits include:
Contingencies are built into the budget to cover unanticipated conditions, particularly those which may be found during site excavation and demolition of the existing structure. For example, a pipe covered with asbestos was found underground during site excavation that needed to be abated. The increases in contingencies correspond to the increases in construction costs and minimize likelihood of future budget shortfalls. If contingency funds are not used at the end of the project, they can be re-purposed by a vote of Town Meeting.
No. The budget shortfall is a result of conditions happening throughout the economy and is being seen at numerous other school construction projects in the state.
Given the constraints of Proposition 2 ½, the full amount of the budget shortfall could not be funded within the operating budget without severely impacting Town and School services. Efforts are underway to refine and hopefully reduce the amount of money that will be requested at the Special Town Meeting. These efforts already have proven successful.
Yes. To keep the project on track, contracts have been awarded for the specific trades needed to allow construction to continue between now and Special Town Meeting. However, unless there is an affirmative vote at Special Town Meeting, the additional contracts needed to complete construction cannot be awarded.
A delayed construction approach is highly unlikely to lead to lower costs. Much more likely is that it would result in increased costs. Even in non-inflationary times, construction costs tend to increase by 4%-6% annually. In this period of high inflation, costs are increasing much more rapidly. In 2021, for example, construction costs rose by approximately 15%. Even assuming a return to more typical increases, cost increases of more than $650,000 could be expected for each month of delay in construction. Among the reasons why a delayed construction approach likely would lead to higher costs are the following:
Teachers, staff, and administrators at both schools provide excellent education to our students. However, there are inherent limitations at each of the buildings that impact the overall quality of education that can be provided, and which will persist for as long as those schools remain in operation. These limitations include:
The two basic options are: 1) to adjust the scope of the project and complete it within the original budget; or 2) to seek funding at a subsequent Town Meeting so that a project of similar size and scope as the currently proposed school could be completed. Both options have significant negative consequences.
If the additional funds are approved at the Special Town Meeting, the remaining contracts needed to complete construction will be awarded and a Guaranteed Maximum Price (GMP) will be agreed to with the construction manager, Gilbane, at which point the risk of construction cost overruns, including for work performed by subcontractors, shifts to the construction manager. When combined with the recommended increases to the contingency funds, these factors make it highly unlikely that there will be a need for any future budget requests, if the current request is approved.
The Town does not need to borrow all the money that Special Town Meeting approves. If the Town borrows less than the authorization, the impact to taxpayers will be less.
Town Meeting can vote to re-purpose funds from a previous borrowing authorization.
We considered this option and determined it would not be appropriate to add to the scope of the project at this time, even though these items were included in the original design. However, we are hopeful that the installation of the second elevator in the West El wing will eventually be funded through other mechanisms.
Like the above, we do not think it is appropriate to add to the scope of the project. However, we are hopeful that solar panels will be added at some point through other funding mechanisms.