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.