Impact of Rising Construction Costs
on the Measure B Bond Program
Chabot-Las Positas Community College Measure B Bond Program
Chabot-Las Positas Co mmunit y College Distr ict Measure B Bond Program
2
Agenda
CLPCCD Measure B Bond Program
Program Cost Overview/Status Update
• Program Cost Estimate Baseline/Schedule
Program Cost Estimate Baseline/Schedule vs.
Actual Market Conditions/Impacts
• Updated Cost Projection per College
- Estimating Basis/Assumptions and Approach
•
Chabot College
Las Positas College
Chabot-Las Positas Community College Measure B Bond Program
3
CLPCCD Measure B Bond Program
§ Purchasing power has been significantly diminished due
to market conditions
§
As a result, the District needs to reassess program
scope and budget allocations
Chabot-Las Positas Community College Measure B Bond Program
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Actual + Projected Escalation
% Escalation
60%
41%
30%
2% - 4% / YR
te
a
tR
e
k
ar
M
al
e
R
jection
o
r
P
Bond
12%
Years
1999
2003
Chabot-Las Positas Community College Measure B Bond Program
2005
2007
5
2009
Program Re-Estimated Cost vs. Timeline
$ Millions
$775.4
$577.1
Ac
tua
lE
sc
ala
tio
n
Total Dollars
P
ed
t
c
e
roj
ion
t
a
l
a
Esc
$497.6
03/04
11/05
04/07
09/09
(Rev. MDPT)
Reflects Program duration from 03/04 through 2012
Chabot-Las Positas Community College Measure B Bond Program
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09/11
09/13
Bond Base Value
Based on 9/01/03 cost basis
• Based upon a seven year Program duration
• Assumes a 3% Annual Escalation Factor to mid-March ‘07
•
Original Bond
’07 Dollars
(March ‘07)
Chabot College Projects
$240,548,271¹
Las Positas College Projects
$208,236,275²
$48,864,873³
District Wide Projects
$497,649,419
Total
As of 04/20/05 (Reassignment of two IT related projects to District-Wide Category)
¹ Remove Project 552550, Classroom/Labs/College Services (CC)
² Remove Project 553840, Computers & Equipment for Classrooms & Labs (LPC)
³ Add Projects 551011 and 551012 to Total
Chabot-Las Positas Community College Measure B Bond Program
$12,616,616
$ 9,088,371
$21,704,987
7
Components of Capital Costs
Land
•
Hard Costs
•
Soft Costs
•
Contingencies
•
Escalation Factors
•
Chabot-Las Positas Community College Measure B Bond Program
Land Costs
• Surveys
• Demolition
• Sitework
Brick and Mortar
• Furniture, Fixtures &
Equipment
A/E
• PM/CM/Testing & Inspection,
etc.
Design
• Construction (C.O., unforeseen
conditions)
Actual
• Projected to mid-point of
construction
8
Re-Estimating Basis/Assumptions and Approach
§ The original Bond budget (September 2003) was
analyzed to compare the original assumptions on
escalation and assumed mid- point of construction with
the current data on escalation and projected mid-points
of construction (based on the development of a master
schedule).
§ The building costs of elements in each building were
reviewed and updated for current market conditions.
Chabot-Las Positas Community College Measure B Bond Program
9
Re-Estimating Basis/Assumptions and Approach
§ The various markups for Overhead and Profit and bid
and project contingencies, were revisited as appropriate.
§ Where hard data was available on projects already
committed and bid, these figures were incorporated into
a matrix.
§
The assumed escalation rates are based on a
reasonable assessment of projected market conditions.
Chabot-Las Positas Community College Measure B Bond Program
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Re-Estimating Basis/Assumptions and Approach
Objective:
To update the projected Construction/Project costs to
reflect the current market conditions and anticipated
escalation moving forward.
Escalation:
Actual Escalation
§
Actual escalation to November 29, 2005 was built into
the current construction costs and escalation rates for
future time periods to mid points of construction were
isolated by project to arrive at a total projected
construction cost
Future Projected Escalation
§
§
§
Escalation to the mid-point of construction has been
included with each building or sitework package.
December 2005-06 California increases in construction 7%
Future years – California increases in construction 5% per
annum
Chabot-Las Positas Community College Measure B Bond Program
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Program Manager’s Estimate
November 2005
• Based upon a nine year Program
• Used Escalation Factor 7% First Year, 5% Thereafter from
December 2005
•
Value
Chabot College Projects
$427,500,000
Las Positas College Projects
$299,000,000
District Wide Projects
$48,900,000
Total
Measure B Funds
<$498,000,000>
Loss of Purchasing Power
Chabot-Las Positas Community College Measure B Bond Program
$775,400,000
$277,400,000
12
Cost Escalation Resulting from Market Conditions
§ Expansion of construction activity (Public and Private) in Bay Area
and Northern California
§ Competition from other Bond Programs and Public Works Projects
§
§
§
§
§
College of San Mateo
Contra Costa College
Diablo Valley College
Los Medanos College
San Ramon Valley Center
§
§
§
§
§
San Joaquin Delta College
Evergreen Valley College
Foothill-De Anza CCD
West Valley-Mission CCD
Dublin Unified School District
§ Demand for construction materials for:
§
§
§
§
Rebuilding for Hurricanes
Iraq War and Rebuilding Efforts
Afghanistan Rebuilding Efforts
Global expansion in China, Asia, India and Eastern Europe
Chabot-Las Positas Community College Measure B Bond Program
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Cost Escalation Resulting from Market Conditions
Materials
§
§
§
§
§
§
§
Steel and steel component products
Aluminum and aluminum component products
All wood products: Timber/Boards/Composites/By-products
Concrete
Gypsum Products
Petroleum Based Products: Asphalt/Paints/Sealants
PVC Pipe and Conduit
Labor Costs
§
§
§
§
Workforce availability
Hurricane reconstruction
Local and national infrastructure replacements
Engineering and construction workforce retirements
Chabot-Las Positas Community College Measure B Bond Program
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San Francisco Building Cost Index*
4800
+6.3
4700
4600
+9.9
4500
4400
4300
4200
+1.7
+0.5
4100
+3.7
-0.5
4000
+3.1
3900
-0.7
+4.8
3800
3700
+2.0
3600
+1.2
3500
12/95
12/96
12/97
12/98
12/99
12/00
12/01
12/02
12/03
12/04
11/05
*ENR Index tracks skilled labor of bricklayers, carpenters and structural ironworkers for twenty (20) cities; including San Francisco.
Also included in the index: supply cost (non-installed) of structural steel, Portland cement and lumber.
Chabot-Las Positas Community College Measure B Bond Program
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Unit Rate Comparison (’99 – ’03)
Unit rates are installed costs including subcontractors overhead and profit
Item
Concrete in place
Rebar
Steel Deck
Steel Stair
Ext Door
Drywall
Suspended Drywall
Steel Ductwork
Ceramic wall tile
Paint to walls
Watercloset
Overhead and Profit
1999
Mid '03
Difference
%
Average
Annual
Increase
120/CY
.60/lb
2.00/sf
7,000/flt
1,000/ea
5.40/sf
6.00/sf
5.70/lb
10.00/sf
0.60/sf
900/ea
10%
$135/cy
0.65/lb
$2.00/sf
$8,000/flt
$1,200/ea
$9.50/sF
$8.00/sf
$6.15/lb
$11.0/sf
$0.75/sf
$950/ea
12%
$15/cy
$0.05/lb
$1.5/sf
$1,000/flt
$200/ea
$4.1/sf
$2.00/sf
$0.45/lb
$1.0/sf
0.15/sf
50/ea
5%
13%
8%
0%
14%
20%
76%
33%
8%
10%
25%
6%
20%
3%
2%
0%
4%
5%
19%
8%
2%
3%
6%
1%
5%
Sources of data:
Analysis of bids/estimates received from contractors
Reconciliation of estimates with contractors
Quotes received from suppliers/vendors
Chabot-Las Positas Community College Measure B Bond Program
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Unit Rate Comparison (’03 – ’05)
Unit rates are installed costs including subcontractors overhead and profit
Item
Mid '03
Nov '05
Concrete in place
Rebar
Steel Deck
Steel Stair
Ext Door
Drywall
Suspended Drywall
Steel Ductwork
Ceramic wall tile
Paint to walls
Watercloset
Overhead and Profit
$135/CY
0.65/lb
$2.00/sf
$8,000/flt
$1,200/ea
$9.50/sf
$8.00/sf
$6.15/lb
$11.0/sf
$0.75/sf
$950/ea
12%
$200/cy
0.90/lb
$3.50/sf
$15,000/flt
$1,500/ea
$12.0/sf
$13.00/sf
$8.50/lb
$13/sf
$.85/sf
$1300/ea
17%
Difference
$65/cy
$0.25/lb
$1.50/sf
$7,000/flt
$300/ea
$2.50/sf
$5.00/sf
$2.35/lb
$2.00/sf
$0.10/sf
350/ea
5%
Sources of data:
Analysis of bids/estim ates received from contractors
Reconciliation of estim ates w ith contractors
Quotes received from suppliers/vendors
Chabot-Las Positas Community College Measure B Bond Program
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%
48%
38%
75%
88%
25%
26%
63%
38%
18%
13%
37%
42%
Average
Annual
Increase
24%
19%
38%
44%
13%
13%
31%
19%
9%
7%
18%
21%
Escalation Impacts
§ State Chancellor’s Office proposes to Department of
Finance (DOF) a +30% adjustment in the building
guidelines effective with 2006/2007 FPPs.
§ DSA Advised 11/18/05:
§
Project size x <$5,000,000 (smaller/less complex) Review time: 3-5 months
§ Project size x > $10,000,000 (larger projects) Review time: 6+ months
§
Award of Bid No. 05-05 Construction of the MultiDisciplinary Education Building, Las Positas College:
§ “Considering the unfavorable bid climate and building price increases in the
construction industry, the bids were very competitive…many other Districts
are receiving bids that exceed their costs estimates by 25% - 30%”.
Chabot-Las Positas Community College Measure B Bond Program
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Problem Statement
“As a result of an unprecedented
increase in construction costs,
the voter approved $497M program
is now estimated to cost $775M”.
Chabot-Las Positas Community College Measure B Bond Program
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Strategies
§ Develop more detailed Program definition
§ Confirm scope and facility requirements based upon the
College Educational Master Plans
§ Accelerate the construction of new facilities to a five year
timeline and schedule
§ Define Project Re-Prioritization
§ Project Delivery: Combine Projects into Procurement
Packages/”Economies of Scale”
§ Procure Bulk Purchases of Equipment and Materials
§ Reassess level of LEED Certification
Chabot-Las Positas Community College Measure B Bond Program
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Strategies
§ Conduct Continuous Program Reassessment to Match
Local Market Conditions
§ Include Bid Alternate Opportunities
§ Manage realistic expectations of facilities/projects that
can be implemented
§ Develop Project Scope and Budgeting based on State
Chancellor’s Office and Title V Community College
Space and Capacity Standards
Chabot-Las Positas Community College Measure B Bond Program
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Example of 5-Year Accelerated Schedule
Cash Flow Requirements
$600,000,000
$600,000,000
$500,000,000
$500,000,000
6
Months
$400,000,000
$400,000,000
11 Months
3rd $100
Million
2nd $100
Million
$300,000,000
$300,000,000
14 Months
$200,000,000
$200,000,000
To Complete 1st
$100 Million
$100,000,000
$100,000,000
$84,000,000
Est. District
Yearly Budget
Chabot-Las Positas Community College Measure B Bond Program
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Conclusions
By implementing the proposed strategies, the District can:
§ Maximize number of projects with available funding
§ Minimize future loss of purchasing power
§ Manage Stakeholder expectations
§ Complete projects faster
§ Reduce Program Management level costs
Chabot-Las Positas Community College Measure B Bond Program
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Articles
§
“Construction Costs Skyrocket, Forcing Districts to Cutback on Prop. 39 Campus
Projects”, The News, Summer 2005, Community College League of California
§
Fact Finding Report – Executive Summary, Swinerton Management & Consulting ,
January 9, 2006
§
“Resolution of lawsuit allows community college upgrades”, San Jose Mercury News,
December 13, 2005
§
CLPCCD Award of Bid No. 05-05 Construction of the Multi-Disciplinary Education
Building, Las Positas college, June 21, 2005
§
“Construction at Colleges Corralled by Costs.” Los Angeles Times, August 23, 2005
§
CLPCCD Facilities Planning & Management Monthly Report – Measure B Projects –
November 2005
§
“Focus on Escalating Costs and Market Conditions” “Is there anything we can do?”
Construction Management Association of America (CMAA) News; Winter 2005;
Southern California Chapter
§
“Worrying about Labor Shortages” ENR Sourcebook – November 14, 2005
§
The Colleges of Contra Costa County, Board Report, October 26, 2005
Chabot-Las Positas Community College Measure B Bond Program
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Budget Analysis
Chabot-Las Positas Community College Measure B Bond Program
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Budget Analysis
Chabot-Las Positas Community College Measure B Bond Program
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Year 2 / Jan – Mar ’07
Chabot-Las Positas Community College Measure B Bond Program
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Year 2 / April – June ’07
Chabot-Las Positas Community College Measure B Bond Program
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Year 2 / July – Sept ’07
Chabot-Las Positas Community College Measure B Bond Program
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Year 2 / Oct – Dec ’07
Chabot-Las Positas Community College Measure B Bond Program
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Year 3 / Jan – Mar ’08
Chabot-Las Positas Community College Measure B Bond Program
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Year 3 / April – June ’08
Chabot-Las Positas Community College Measure B Bond Program
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Year 3 / July – Sept ’08
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Year 3 / Oct – Dec ’08
Chabot-Las Positas Community College Measure B Bond Program
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Year 4 / Jan – Mar ’09
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Year 4 / April – June ’09
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Year 4 / July – Sept ’09
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Year 4 / Oct – Dec ’09
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Year 5 / Jan – Mar ’10
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Year 5 / April – June ’10
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Year 5 / July – Sept ’10
Chabot-Las Positas Community College Measure B Bond Program
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Year 5 / Oct – Dec ’10
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Year 6 / Jan – Mar ’11
Chabot-Las Positas Community College Measure B Bond Program
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