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Published Sunday, August 24, 2008 in Local

New school cost up $5 million

By Brenda Pedraza-Vidamour

The Newnan Times-Herald

The Coweta County Board of Education approved $101,219 in change orders on the construction contract for its newest elementary school this month, and it has to do with the price of oil and the economy, according to construction officials.

The last two change orders increased the total construction cost of the new Brooks Elementary School to close to $17.9 million.

By comparison, the total construction costs for Coweta's similar-sized schools -- Lee Middle School and Welch Elementary -- were $13.2 million and $11.8 million, respectively. Those schools opened two years ago.

While costs are skyrocketing for school construction, the public funds to build the schools are dwindling.

Schools and other construction projects in Coweta are primarily funded by voter-approved Special Local Option Sales Tax. SPLOST is the one-cent sales tax that's been collected over the past several years and has successfully funded many of the school system's and other area construction and renovation projects. It's also another one of the tax collections that is falling short in school revenue coffers as a result of the declining economy.

The new Brooks Elementary School being built in north Coweta was originally projected to cost $11.6 million at the time of SPLOST planning three and a half years ago.

Inflation, tripling sitework costs and increasing prices in steel, concrete and petroleum byproducts first pushed up Brooks Elementary's building construction price to $16.3 million, not including the other costs tied to its completion such as the land purchase, furniture, fixtures, equipment and contingencies.

The increases are in spite of construction costs being curtailed by using a construction manager at-risk and entering into a guaranteed maximum price (GMP) contract.

Ronnie Cheek, Coweta Schools director of facilities, explained a GMP contract guarantees the price for the scope of work covered in the original plans and specifications, but any changes in that scope justifies a change order.

Built into a GMP contract is also a contingency that is typically about three percent. Any monies remaining in the contingency are credited to the school system at the end of the project through a deductive change order, thus the GMP isn't increased unless the contingency amount is exceeded, he explained.

For example, Welch's $11.8 million cost includes an overall $217,408 deduction in the budgeted contingency.

The actual total cost of the Brooks Elementary project will be known after it's completed next year. Brooks Elementary's contingencies allocation in its $17.9 million projected cost is $450,926, according to Cheek.

The 120,780-square-foot school is designed to accommodate about 875 students. It is under construction on a 30-acre tract of land at the intersection of Jim Starr and Tommy Lee Cook roads.

Welch was smaller at 115,451 square feet and Lee was 120,357 square feet.

Welch was originally budgeted to cost about $11.1 million and actual costs came to $11.8 million. Lee was originally budgeted at $13.1 million, and the total project cost was $13.2 million.

Around the same time, the school system was planning for Welch and Lee, it also did its planning for the third elementary school, which turned out to be Brooks.

The site or land had not been acquired or determined. Using its historical data with Welch, the school system budgeted $750,000 for site work for Brooks.

Brooks' sitework, which includes a sewerage system allowance and roadwork that wasn't needed at Welch, increased sitework costs to $2.5 million. Roadwork and asphalt are part of the 239 percent increase in the sitework costs.

Currently, grading for Brooks Elementary's building pad and the detention ponds are complete. Work is also proceeding on a large retaining wall that will be built between the single- and double-story portions of the two-story school.

To date, there have been three change orders totaling more than $106,000 on the construction contract with the bulk of these increases attributed to asphalt and roadwork.

A $76,764 change order was "to adjust the asphalt price due to the low bidder's refusal to sign the contract plus no other contractor would hold their price throughout the contract," according to contract administration documents signed by the architect, contractor and Coweta County Schools.

Another $24,455 change order was approved to meet county specifications requiring a three-inch binder (asphalt product) instead of a two-inch binder on the parkway leading to the school.

The architect on the school project is Southern A&E of Austell, Ga., and the CM at-risk is Torrance Construction of LaGrange, Ga.

Rick Torrance of Torrance Construction explained the low bidder on the paving "made an error in his quantity of square yards, and also gave an indication that he didn't have certain addendums. In other words, he just tried to back out of it."

The low bidder confirmed that while he clearly identified a unit price bid, he did neglect to include 2,000 square yards of material in his bid, and could not commit to the requested lump sum amount required for the project.

Torrance explained he received bids for the asphalt portion of the project from seven paving companies. After checking with each one of them after the low bidder backed out, he found that all of them had "escalation clauses" built into the price of the asphalt.

The low bidder from Moreland, who made the miscalculations, submitted a bid of $327,741 as his base bid. The contract was eventually awarded to a Villa Rica subcontractor for $389,184, Cheek said.

"Asphalt was paying at $20 a yard. It may be $35 a yard now," Torrance added. "I, as a manager, tried to stop the bleed, and find a contractor that would lock in the price."

Asphalt is a product that's tied to the cost of oil.

"It's an influence that's come about by the oil prices," Torrance said, explaining that while the price of a barrel of oil is trending downward now, the decreases don't materialize as quickly as the increases. The same slow reaction seen at the gas pump is also experienced in the construction industry, he said.

"Yes, it skyrockets up and creeps back down," he said.

Torrance could not confirm whether asphalt subcontractors for some of the LaGrange company's other current projects, including a stadium, included escalation clauses.

Ken Runyan of Southern A&E said while he has not noticed local asphalt subcontractors including escalation clauses in their bids or contracts or them backing out of their contracts because of prices, there was a development years ago when the steel and PVC pipe trades suffered through similar escalating prices for their raw materials.

With those trades, project owners negotiated with the bidders to pay any upcosts incurred with the raw material cost.

But as far as local asphalt contractors, "They know what the pricing is, and they know how many days they can hold that price," he said.

Runyan said Florida subcontractors are including escalation clauses, but he just hasn't seen it in Georgia's market because there are so many contractors competing for the work.

"Right now, the construction industry is still very hungry, enough that they're passing along their costs," he said, clarifying that the pricing still remains economy-driven.

While subcontractors are hungry for the jobs, they don't want to bid it so high that they price themselves out. But they also don't want to bid it so low, that they do go hungry.