Vinton Shellsburg Middle School HVAC Project

Case Study: Vinton Shellsburg Middle School HVAC Project

Case Study Summary

Vinton/Shellsburg CSD paid an additional $160,000.00 to hire the Construction Manager at Risk than they needed too.  The CM @ Risk was unable to get the project bid into budget. It is said that CM’s @ Risk are supposed to be able to use their expertise to get the project into budget on bid day.  CM’s @ risk are supposed to be able to solicit many bids for the project.  None of this happened.  They were only able to get one bid on approximately 40% of the project.   Since Vinton/Shellsburg CSD already purchased almost $900,000.00 worth of equipment for the project they had no choice but to continue.  They had to find places to cut the project costs.  The biggest cut being the deletion of the building wide fire alarm system upgrade. 

Additional cost compared to lower bid
+$ 100 k

Fire Alarm System Upgrade was cut

Owners were forced to cut project needs to stay under budget

October 2022: 

Vinton/Shellsburg CSD hired a Construction Manager at Risk.  They paid an additional $160,092.00 compared to the low Construction Manager at Risk.  At the same time, they pre-purchased $878,830.00 of mechanical and electrical equipment for the project before they knew the total cost of the project.

February 2023: 

The Construction Manager at Risk received bids consisting of 3 mechanical bids, 1 electrical bid, and 1 general trades bid which was from the Construction Manager at Risk totaling a bid cost of $5,006,146.00 for a total project cost totaled approximately $6.4 million which was higher than expected.  Since the Construction Manager at Risk was not able to get the project into budget, cuts of approximately $368,000.00 had to be made.  including approximately $236,000.00 for the removal of the building wide fire alarm system upgrade.

March 2023: 

Vinton/Shellsburg CSD signed a guaranteed maximum contract with the Construction Manager at Risk for $4,637,331.00 which included $211,305.00 project contingency.   

August 2023: 

Monthly report to Vinton/Shellsburg CSD shows $132,315.57 of the project contingency remaining.  That represents 37% of the project contingency needed to be spent.

Conclusion

Construction Management at Risk does not provide any additional value as advertised.  There is no guarantee that the project will be in budget on bid day.  It does not generate the multiple competitive bids necessary to get a project into budget.  It does not stop change orders it just hides them within the contract by using a contingency allowance under the control of the Construction Manager at Risk . 

Construction Manager at Risk does not protect the Taxpayers of Iowa.  It lessens competition and raises costs.    

Applied Engineering Building University of Northern Iowa

Case Study: Construction Management at Risk used in Applied Engineering Building at UNI

Case Study Summary

The University of Northern Iowa used Construction Management at Risk for their Applied Engineering Building project.  The construction schedule shows the overall project is 9 months behind schedule. 

There is no “Risk” associated with CMR for the contractor.  The CMR is allowed to give a GMP price without any outside competition.  The owner has only one price with nothing to compare it to.  The CMR is allowed to come up with a schedule and then have no consequences when the project comes in behind schedule.  The CMR is allowed to include a construction contingency in the GMP to cover change orders even though they are being paid substantial money in CM Staff Expenses to make sure there are no change orders.  

Construction Management at Risk does not appear to provide any benefits to the taxpayers of Iowa and should not be used.
Behind schedule though paid $1.38 Million to CM Staff to complete job on time and without change orders.
0 months

Applied Engineering Building at
University of Northern Iowa

The University of Northern Iowa used CMR for their Applied Engineering Building project.  The project was awarded on April 12, 2021.  The CMR that was awarded the project was $428,675.00 more than the low bidder.  The guaranteed maximum price was contractually agreed to on April 29, 2022 at $31,310,965.00.  The schedule attached to the GMP stated Phase 1 would commence April 4, 2022, completing July 25, 2023.  Phase 2 would start May 5, 2023, completing April 12, 2024. 

The Applied Engineering Building, according to UNI press release published in the Northern Iowan has a Phase 1 completion date of March 18, 2024, which is approximately 10 months behind schedule.  Phase 2 is projected to be completed by December 2024 which is approximately 9 months behind schedule.  Within the GMP there was a construction contingency of $823,810.00 included.  This provides money within the contract to pay for all change orders within the contract thereby keeping them out of the public view. 

It does not appear that CMR can make any guarantees relating to budget or schedule.  The time risk remains with the owner.  The construction schedule shows the overall project is 9 months behind schedule.  How has the risk been transferred to the CMR?  The money risk has not been shifted to the CMR. It remains with the owner.   The CMR is able to include a construction contingency to pay for the change orders.  If the financial risk was truly with the CMR there would not be any construction contingency allowed.  What makes it worse is the CMR was paid over $1.38 million in CM staff expenses to complete the project on time and without change orders.  That does not appear to have happened.

Conclusion

Time risk and financial risk are still held by the owner in a Construction Management at Risk system.

CMR does not appear to provide any benefits to the taxpayers of Iowa and should not be used.

Four Academic University Buildings Compared

Case Study: Comparison of four buildings at universities

Case Study Summary

The four projects listed below are all academic buildings of similar construction and use, being built around the same time frame. Of the projects, three Design/Bid/Build projects with a square cost between $355.40 to $534.33 compared to the Construction Manager at Risk of $679.44. If you take the difference between the highest Design/Bid/Build cost and the Cosntruction Manager at Risk you get an additional cost for Construction Manager at Risk of $145.11 per sqft.

Additional Cost Per Sqaure Foot when Construction Management at Risk was used.
$ 100 / sqft
Additional Cost of the Project that used Contruction Management at Risk
$ 38163930

Levy Hall Academic Building University of Wisconsin Madison

This is a new multi-story 142,000 sqft academic building that will house 8 departments of the College of Letters & Science is under construction. The proposed building will include 13 classrooms ranging from 24 seats to 426 seats, along with offices and support areas of each department. The new facility will be a cast-in-place concrete structure. The exterior will be a combination of brick, architectural precast panels, aluminum curtain all and alumni storefront cladding. Interior partitions are primarily metal studs and drywall with cold core wood doors and hollow metal frames. Floors are primarily epoxy terrazzo, carpet, polished concrete and porcelain tile; ceilings are primarily acoustical panel lay-in, drywall, acoustical plaster, and exposed structure. This project is a Design/Build Build Project with a bid date of November 8, 2023. The contract amount for this project is $75,875,069 for a sqft cost of $534.33. Davis Bacon Carpenter rates for Dane County is $65.92/hour.  

New Health and Science Building University of Wisconson Eau Claire

There is a new multi-story 330,000 sqft academic building that will house 5 departments from the University is under construction. The building is cast in place concrete frame on deep foundation system connected to campus utilities. It is a five-story building with an additional 6th floor that includes mechanical equipment spaces, a greenhouse, and an observatory. Exterior enclosure is a rainscreen cavity wall with CMU and face brick, and curtain wall glazing systems. The building is by code a high-rise due to the site of the 6th floor level enclosed area. Interior spaces include teaching and research labs, offices and support spaces for multiple departments. The ground level includes a planetarium. This project is Design/Bid/Build Project with a bid date of April 18, 2024. The contract amount for this project is $163,309,000 for a sqft cost of $494.87. Davis Bacon Carpenter rate for Eau Claire County is $65.92/hour.

New Pharmacy building University of Iowa

This is a new multi-story 228,371 sqft academic building that house the College of Pharmacy was completed in 2020. The building consists of a six-story, rectangular shaped academic/research tower and an adjacent three-story structure that house the lobby, commons and large teaching spaces. Exterior enclosure is a combination of buff-colored terracotta panels, metal panels and glass. This project was a Design/Bid/Build Project that was bid in late 2016. The construction budget was $74,634,818 for a sqft cost of $326.81.

New Health Sciences Academic Building University of Iowa

This is a new multi-story 263,000 sqft academic building that will house 3 departments of the University is under constructions. The building is a combination of cast in place concrete and structural steel. It is six-story building with a 7th level for mechanical equipment spaces. The exterior enclosure is curtainwall glazing systems and aluminum panel. The space will include academic, research, administrative and clinical spaces. This project is a Construction Management at Risk a GMP date of November 2, 2023. The contract amount for this project is $178,689,688 for a sqft cost of $679.44. Davis Bacon Carpenter rate for Johnson County is $56.24/hr.

Levy Hall Academic Building University of Wisconsin Madison Health and Science Building University of Wisconson Eau Claire Pharmacy building University of Iowa Health Sciences Academic Building University of Iowa
Construction Delivery System
Design/Bid/Build
Design/Bid/Build
Design/Bid/Build
Construction Management at Risk
Total Sq Ft
142,000 sqft
330,000 sqft
228,371
263,000
Total Cost
$75,875,069
$163,309,000
$74,634,818
$178,689,688
Cost per SqFt
$534.33 per sqft
$494.87 per sqft
$326.81 per sqft
$679.44 per sqft

Conclusion

Of the projects, three Design/Bid/Build projects with a square cost between $355.40 to $534.33 compared to the Construction Manager at Risk of $679.44. If you take the difference between the highest Design/Bid/Build cost and the Cosntruction Manager at Risk you get an additional cost for Construction Manager at Risk of $145.11 per sqft.

At 263,000 sqft, that is an additional $38,163,930 to construct the New Health Sciences Academic Building at the University of Iowa. One has to wonder what the Tax Payers and tuition paying students of Iowa are getting for the additional $38,163,930 they are being asked to fund using their hard-earned tax dollar and tuition.

The increased costs of Construction Management at Risk is part of the reason that Wisconsin Legislature outlawed the use of alternative delivery systems, including Construction Management at Risk, and required all projects to be bid using Design/Bid/Build.

Atkins, Hiawatha and Solon Fire Stations

Case Study: Comparison between Atkins, Hiawatha and Solon Fire Stations

Case Study Summary

Two of the fire stations used Design/Bid/Build construction approach. The other used Construction Management at Risk. The three fire stations were designed by the same architect. The construction of each fires station is similar. The two that used Design/Bid/Build were most more cost-effective of contracting public work.

Design/Bid/Build used on the two fire stations saved taxpayers of Iowa well over $1,000,000 on EACH project.
$ 1000000 x2

Atkins Fire Station

In October of 2024, the City of Atkins requested bids for their new fire station. The overall building is 14,000 sqft. There is a portion of the building consisting of 4.200 sqft of offices, restrooms, kitchen, and training. There is a 2,400 sqft mezzanine. The remain portion of the building consists of a 7,400 sqft apparatus bay. Within the office area, there is a reinforced concreate storm shelter. The building is a pre-engineered metal building with a combination of metal siding and masonry exterior. The City of Atkins utilized Design/Bid/Build to receive 11 bids from general contractors for the complete project. The bids ranged from $3.3 million to $4.1 million. The general contractors were able to solicit many sub-bids for each portion of the project. The low bid was $1.1 million under budget. The final cost was $3,376,000 w/ alternatives.

Solon Fire Station

In May of 2021, the City of Solon requested bids for their new fire station. The overall building is 17,210 sqft. There is a portion of the building consisting of 6,800 sqft of office, dorm, restrooms, and training area. The remaining portion of the building consists of a 10,0000 sqft apparatus bay. The building is a combination of pre-engineered metal building and conventional wood framed with a combination of metal siding and masonry exterior. The City of Solon utilized design/bid/build to receive 9 bids from general contractors for the complete project. The bids ranged for $3.2 million to $3.9 million plus alternates. The general contractors were able to solicit many sub-bids for each portion of the project. The final cost was $3,624,000 w/ alternatives.

Hiawatha Fire Station

In November of 2022, the City of Hiawatha issued a request for qualifications for construction manager at risk services for the construction of their new fire station. The City of Hiawatha received 9 statements of qualifications. They reviewed and scored the proposals and selected to interview the top 3 CM’s. The city then revied and scored the interview and chose a CM at Risk. The overall building is 14,785 sqft. There is a portion of the building consisting of 8,4000 sqft of office, dorm and restrooms and training area. The remaining portion of the building consists of a 6,385 sqft apparatus bay. The building is a combination of pre-engineered metal building and conventional wood framing with a combination of metal siding and masonry exterior. In July of 2023, the City of Hiawatha receive one bid from the CM at Risk in the amount of $6,0015,466. The city did not receive many sub-bids for the packages. The CM at Risk was the only bidder on the three packages the CM at risk is self-performing. The final construction cost was $5,709,404.77 after contingences were returned without documentation.

Atkins Fire Station Solon Fire Station Hiawatha Fire Station
Construction Delivery System
Design/Bid/Build
Design/Bid/Build
Construction Management at Risk
Total Sq Ft
14,000 sqft
17,210 sqft
14,785
Total Cost
$3,376,000 w/alt
$3,624,000 w/alt
$5,709,404 w/alt
Cost per SqFt
$241 per sqft
$211 per sqft
$386 per sqft
Bids
Many sub-bids received
Many sub-bids received
Few sub-bids received

Conclusion

The taxpayers of Iowa saved well over $1,000,000 on each Design/Bid/Build project.

Design/Bid/Build requires contractors to compete not only against the project budget but also each other. Construction management at risk only requires the contractor to complete against the budget. Design/Bid/Build solicits many more sub bids because the contractors need to complete against each other as well as the budget.

In fact, it is to the Construction Managers at Risk’s financial benefit to get the construction cost as close to the budget a possible since their fee is a percentage of the construction cost.

University of Iowa Hospital & Clinics North Liberty Medical Office Building

Case Study: University of Iowa Hospital & Clinics North Liberty Medical Office Building

Case Study Summary

The project was contracted as Construction Manager @ Risk. The original budget was $315,000,000 with a construction budget of $180,000,000 million. During the course of construction, the budget was increased twice to $525,628,000 with a construction budget over $362,810,000.

Increase to Original Construction Budget under Construction Manager at Risk
+ 0 %

Construction Manager At Risk

The University of Iowa Facilities Management issued a Request for Qualifications for Construction Management at Risk services for the North Liberty Medical Office Building Development on November 10, 2020. The RFQ stated the project budget was $315 million with an estimated construction budget of $180 million. The University of Iowa contracted with a Construction Manager at Risk in January 2021 with a contract amount of $13,675,611.00.

The Construction Management at Risk company asked for the budget to be increased twice after being contracted. The Construction Manager at Risk did not guarantee the original budget or the first revised budget. It’s hard to believe that a 100% increase in the construction budget can be attributed to construction inflation.

Project budget was increased 2 times

The budgets were never guaranteed

Project increased from $315 million to $525 million

Original Budget 1st Budget Increase Final Budget
Construction Budget
$180,000,000
$252,374,000
$362,810,000
Total Budget
$315,000,000
$395,000,000
$525,628,000

Conclusion

The taxpayers of Iowa paid $13,675,611 to the Construction Management at Risk company. With a construction budget increase of over 100%, it makes you wonder if it was money well spent.

Marion Independent School District – Francis Marion Intermediate

Case Study: Marion Independent School - Frances Marion Intermediate Renovations

Case Study Summary

Frances Marion additions & renovations project was originally going to be bid using CM Agency. Marion Independent School decided to bid using the traditional General Contractor.

The low and accepted using Design-Bid-Build bid was $131,000 under the revised budget.

If a construction manager was involved, the Marion Independent School District would have paid an additional $708,000.

Design-Bid-Build was under the Revised Budget
$ 0
Using Design-Bid-Build money was saved in CM Fees
$ 0

CM Agency vs. Design-Bid-Build

The CM budget was $5,059,000 with an additional $708,000 in CM Fees for a total of $5,767,000. This budget was created in May of 2021 before major construction inflation hit the United States economy.

The Marion Independent School District bid the Frances Marion project on February 2, 2022 using the traditional Design-Bid-Build approach. They increased the construction budget to $5,500,000. to cover construction inflation. They received 8 complete bids ranging from $5,369,000 to $6,307,000.

  • The owner received 8 complete bids for the project.
  • The bids ranged from $5,369,000 to $6,307,000.

Conclusion

Using the Design-Bid-Build, they chose the lowest bid which resulted in saving the owner $839,000.

University of Iowa Residence Hall Comparison

Case Study: University of Iowa Residence Hall Comparison

Case Study Summary

Two similar residence halls at the University of Iowa built project 2 years of each other constructed by the same contractor. One project used traditional Design-Bid-Build while the other project used Design-Build.

Design-Bid-Build (Traditional)
Cost per Sq Foot
$ 0
Design-Build (Alternative)
Cost per Sq Foot
$ 0

Delivery System Comparison

The following information came form University of Iowa bid tabs and the University of Iowa Campus Spaces which describes each building on campus.

Mary Louise Petersen Residence Hall

Design-Bid-Build (Traditional)
Cost
$33,664,611.00
Gross Square Footage
178,906 sqft
Cost per Square Foot
$188.17/sqft
Population
501
SQFT/Student
357 sqft/student
Year Built
2015

Elizabeth Catlett Residence Hall

Design-Build (Alternative)
Cost
$77,999,997.00
Gross Square Footage
315,459 sqft
Cost per Square Foot
$247.26/sqft
Population
1049
SQFT/Student
300 sqft/student
Year Built
2017

Conclusion

Using the Design-Bid-Build, the cost per square foot was more cost effective.
Saved with Design-Bid-Build
≈ $ 20 /sqft

Dallas Center-Grimes Middle School

Case Study: Dallas Center-Grimes Middle School

Case Study Summary

The Dallas Center-Grimes Middle School project was bid in two different delivery systems: Construction Management Agency and Design-Bid-Build.

Using the Design-Bid-Build system saved the school $1,022,277.

Saved by Using Design-Bid-Build
≈ $ 1 M

Summary Comparison

Construction Management Bid Packages
Total of CM Pkgs
$14,281,721
Alt.#1
$455,229
Alt.#3
$24,265
Alt.#5
$96,200
Alt.#8
$12,808
Alt.#11
$90,678
Alt.#12
$7,776
Alt.#13
$214,000
Subtotal
$15,182,677
Architect Fees
$916,569
CM Fees
$1,327,300
Total
$17,426,546
Design-Bid-Build
Total of General Bid
$14,460,000
Alt.#1
$498,000
Alt.#3
$53,000
Alt.#5
$88,000
Alt.#8
$12,700
Alt.#11
$104,000
Alt.#12
$12,000
Alt.#13
$260,000
Subtotal
$15,487,700
Architect Fees
$916,569
CM Fees
$0
Total
$16,404,269
Design-Bid-Build saved ≈ $1 Million
$ 900000

Schindler Education Center Remodel – University of Northern Iowa

Case Study: Schindler Education Center Remodel

Case Study Summary

The University of Northern Iowa remodeled the Schindler Education Center using Construction Management at Risk (CM @ Risk).

The firm chosen included an estimating/bidding contingency & construction contingency cost that adds up to $1.5 million dollars or 5% of the contract.

Those extra costs are controlled by the contractor, not the owner.

The firm also only provides ONE BID for the project.

In Contingency Costs
$ 0 M
Only One Bid Provided
1

Construction Management at Risk

The University of Northern Iowa remodeled the Schindler Education Center using CM @ Risk. Notice the two items labeled Estimating/Bidding Contingency and Construction Contingency. Those two amounts add up to over $1.5 million dollars which is almost 5% of the contract. Those two items represent the contingency for that project. The Board of Regents say that CM @ Risk lowers the change orders on the project. That is correct since the CM @ Risk includes a roughly 5% contingency in the Guaranteed Maximum Price. Any change orders that occurs goes against the contingency already included in the Guaranteed Maximum Price resulting in no change orders.

Under Design-Bid-Build, the contingency is not included in the contract amount and completely under the control of the owner and architect. The Board of Regents and architect determine whether a change order request is justified. When the contingency is in the Guaranteed Maximum Price under CM @ Risk it is controlled by the contractor. It is unclear if the Board of Regents and architect have any control over the justification of a change order using Alternative Delivery Systems.

If CM @ Risk really lowers the change orders there would be no need for contingencies built into the Guaranteed Maximum Price.

Bid Line Item GMP Estimate
Subtotal
$24,834,972
Estimating/Bidding Contingency
2.5% $620,874
Construction Contingency
3.0% $745,049
Total
$26,200,896

Provides Only one Bid

When using CM @ Risk the Board of Regents determines the successful bidder from three proposals. The only financial components of the proposals are the sum total of the general conditions and total fee for the project. The Board Of Regents have no idea of the project cost at this point. Only the budget that was determine when the RFP were sent out. The firm chosen then provides the ONE AND ONLY BID for the project that becomes the Guaranteed Maximum Price. It is difficult to determine how the GMP is determined because bid tabs are not necessarily publicly released.

Conclusion

CM @ RIsk

1 Bid

CM @ Risk provides only ONE BID that includes the project contingency’s that is under the control lof the chosen contractor.

Design-Bid-Build

Multiple Bids

Design-Bid-Build provides NUMEROUS BIDS that do not include the project contingencies. Since the contingencies are not inlcuded in the bid it remains under the control of the Board of Regents and architect.

Marion Independent School District

Case Study: Marion Independent School Stadium

Case Study Summary

The school district originally bid the project using a Construction Management Agency. The Construction Management company bid was over budget and not complete.

The Marion Independent School Board terminated the construction manager and rebid using Design-Bid-Build which saved taxpayers $1,497,070.

Saved by Using Design-Bid-Build
$ 0 M

Construction Management Method

Marion Stadium was bid September 28, 2021. The project was bid using a construction manager agency. The construction manager produced a construction budget of $5,784,000.00. The Construction Manager bid the project using 13 separate bid packages. 

The resultant bids were $1,073,428.00 over budget

The bids did not include concrete paving

There was also an additional $745,000 payment to the construction manager.

Bid Package Bid # of Bids
Masonry
$374,825
3 bids
General
$1,799,000
4 bids
Roofing
$326,400
2 bids
Bleachers
$594,430
2 bids
Elevator
$91,000
2 bids
Mechanical
$179,000
7 bids
Electrical
$864,215
7 bids
Grading
$683,000
4 bids
Asphalt
$563,000
1 bid
Concrete Paving
?
0 bids
Track
$167,700
1 bid
Field Turf
$918,600
2 bids
Site Utilities
$269,000
2 bids
Package Total
$6,831,070
CM General Requirements
$426,000
CM Fee
$260,000
CM Insurance
$59,000
TOTAL COST
$7,576,070

CM Terminated: Changed to Design-Bid-Build Method 

The Marion Independent School Board decided to terminate the construction manager and rebid the project using the traditional Design-Bid-Build method. The owner and architect revised the construction budget to $6,582,000 and bid the project without a construction manager.

  • The owner received 10 complete bids for the project.
  • The bids ranged from $6,079,000 to $7,650,000.

Conclusion

Using the Design-Bid-Build, they chose the lowest bid which resulted in saving the owner $1,497,070.