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.
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.
