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.
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 .
