The Squeeze Play Cost containment and budget control

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The Squeeze PlayCost containment and budget
control

• Leigh A. Coop, Director of Facilities
• Vacaville Unified School District
• Bill Savidge, AIA, Director of Facilities
  Planning
• Fremont Union High School District
• Jay C. Davison, AIA, Managing Partner
• Capital Program Management Group

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A District-wide approach to equity

• Get Board to adopt District-wide priorities for
  expenditure of funds
• Agree on a base condition level to which each
  campus will be brought
• Provide each site a guaranteed scope rather
  than a guaranteed budget

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Design standards defined scope

• Develop a set of district-wide design/materials/sy
  stems standards to guide all design work
• Provide design teams with very specific written
  scope of work for each project

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Project budgets

• Budget all of your projects before starting any
  of them.
• Verify that the scope relates to the available
  dollars.
• Budget appropriate contingencies at the project
  level
• Assign appropriate program costs to a program
  budget

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Simple project cost ratios

• Excluding costs of site purchases
• Modernization Construction bids represent about
  70 of project costs
• New construction Construction bids represent
  about 75 of project costs

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Contingencies

• Prior to bid allow a design contingency of
  10 of construction budget to allow for award, or
  maintain a program reserve
• Post bid allow construction contingencies (for
  design errors omissions, and unforeseen
  conditions) of
• Up to 5 for new construction
• Up to 10 for modernization (more if unknown
  dryrot or termite damage is suspected)

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Costs assigned to program

• Inflation (construction cost escalation)
  historical average is 4 per year
• Encroachment on other District operations (e.g. M
  O)
• Prevailing wage compliance
• Program management, including District staff
  assigned to program

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Costs assigned to program (cont.)

• Budget tracking reporting
• Outside audit costs
• Oversight committee support
• Informational website
• Web-based project control system
• Program contingencies

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Recommended program contingencies

• Program contingency comprises three major
  categories
• Major catastrophe (e.g. dryrot or toxics)
• Litigation
• Board changes priorities
• Set aside an unallocated reserve account to
  balance budgets

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Did you remember inflation?
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Effects of program time on escalation cost6 years
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Cash Flow and Bond Issuances

• Prepare realistic cash flow projection in as much
  detail as you can
• Consult with financial advisor
• Make sure that you have allowed adequate
  contingencies at each level
• Invest the money you dont need right away in
  short-term notes

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Cash Flow and Bond issuances
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Spending efficiently effectively

• Prototypes and fee structures
• Timing of bids
• Prequalification
• Alternate delivery methods
• Project controls
• Grouping of projects and purchases

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Leveraging your local funds

• State funding cycles
• Short-term investment (arbitrage)
• Other potential funding sources
• Short-term financing
• Cost of bond issuances

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Peace among fiscal systems

• Most school district fiscal/accounting systems do
  not adapt well to construction projects
• Construction budgets should be kept in a separate
  system but
• The design of the second should reflect the needs
  of the first and
• The budget system must maintain an audit trail

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Example of a project budgeting system
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Budget audit trail example
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How it all fits together
Program
Construction budgets



Pre-construction Budgets
Post-construction budgets

Budget
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Questions?