Metro area governments in charge of large, multimillion-dollar projects are increasingly turning to a different construction delivery method to control costs and manage tight deadlines.
An approach called “construction management at-risk contracting” was chosen by Ralston for its $36 million hockey and concert arena, by Sarpy County for its Werner Park minor league baseball stadium, and most recently by Papillion for its $8 million public works complex.
The method has long been used by private developers and for new school construction. It requires a general contractor to collaborate on the design process and keep a project on time and on budget in spite of fluctuating costs for materials or labor or for weather delays.
The selected contractor is expected to be at the table from the beginning, working with developers, architects or engineers. Often the contractor guarantees a maximum price that puts a cap on project costs, although recent experience has shown that even that doesn't always prevent costs from running up.
“It creates a great deal more certainty in terms of managing costs,” said Darren Carlson, Papillion community relations coordinator. “You have an agreement going in about what's going to be delivered and on what timeline.”
A 2008 state law allows public entities such as universities, cities and counties to use construction management at-risk methods for certain projects.
The Papillion City Council voted last month to choose the method for its public works building and plans to select a contractor in mid-October. In advertisements, the city said interested contractors “must be able to meet an aggressive timeline and schedule” and finish construction by November 2014.
Carlson said Papillion officials found a construction management at-risk system to be the most cost-effective, with less likelihood of expensive change orders or delays. “Any time you have people at the table together early in the process, in our experience, those are the projects that go well,” Carlson said.
Traditionally, an architect and contractor are chosen separately. Because the contractor is selected after the design phase is completed, he or she has little input on project specs. Designing, publicly bidding and then starting construction can take months, a luxury that projects such as Werner Park and the Ralston Arena didn't have.
George Schuler, vice president at Boyd Jones Construction, the construction manager for the Ralston Arena, said the greatest benefit of the construction management at-risk method is in creating a “working partnership between the owner, architect and contractor.”
“The contractor is able to provide constructability reviews, cost estimating and scheduling support throughout the process,” Schuler said, “leading to more accurate budgets and timetables as well as increased knowledge of the project before construction begins.”
But while the contractor is generally given a fixed cost and deadline, that doesn't always translate to huge savings. Some analysis of construction management projects find that they're slightly more expensive than projects handled the traditional way.
Public projects following the traditional model typically are required to select the lowest responsible bid — a requirement that construction management at-risk contracts can bypass.
Recent history shows that projects can still fall prey to contingency costs, which are often built into contracts. Sarpy County spent the majority of its $800,000 contingency fund after determining that initial estimates for the $26 million Storm Chasers stadium were too low.
Sarpy County Administrator Mark Wayne said unforeseen costs such as soil compaction altered the budget, and the construction time crunch meant that contractor Weitz Co. didn't weigh in as much on the design phase. “It didn't put as much of a burden on the contractor as it should have,” he said.
Weitz did catch other costs during the design phase that saved money, Wayne said. Less brick was used for the facade on Weitz's recommendation, and heating and air conditioning in several bathrooms was scratched so the county could meet its part of the budget.
Still, Wayne said he is unsure if the county would use the method again unless it had another large project with a short turnaround.
Ralston officials ultimately green-lit about $800,000 in change orders for its arena and wound up spending roughly $4.25 million over budget to add amenities and equipment such as locker rooms and Zambonis when more tenants signed to the arena, which opened last October.
Depending on the terms of their contract, contractors can be held liable for cost overruns or blown deadlines. Schuler said owners can control costs by agreeing early on a fixed price and how to handle unanticipated costs.
Ralston Mayor Don Groesser said the method helped Ralston meet its tight 15-month construction deadline in time for the start of the Omaha Lancers' hockey season.
“The timeline and the dollars were so crucial, that seemed to be the only option that really felt possible to make it go forward and get done on time,” Groesser said.