Recommendation to Approve a Guaranteed Maximum Price Not to Exceed $50 Million for the STEAM Building and Performing Arts Building

TO: BOARD OF EDUCATION
FROM: FACILITIES STEERING COMMITTEE
DATE: February 25, 2019
RE: Recommendation to Approve a Guaranteed Maximum Price Not to Exceed $50 Million for the STEAM Building and Performing Arts Building

The Facilities Steering Committee1 meets regularly to discuss the District’s capital projects and bring diverse community viewpoints and professional expertise to the oversight of these projects.  Occasionally, the Committee makes recommendations to the Board of Education. Based on a careful review of project budgets and program priorities, the Committee unanimously recommends that the Board approve a “Guaranteed Maximum Price” not to exceed $50 million for the STEAM building and performing arts building (which will house the new Alan Harvey Theater).  The scope of and rationale for the Committee’s recommendation are discussed below, and members of the Committee will attend the Board of Education meeting on February 27 to answer questions that may arise about this recommendation.

Summary

In 2016, the Piedmont voters authorized the District to borrow $66.1 million to begin implementing its Facilities Master Plan (which was estimated at the time to cost roughly $137 million to fully implement).  Although escalating construction costs and other extraordinary market conditions limit how far this bond money can be stretched, the District has plans to achieve the Plan’s most pressing priorities within the $66.1 million bond authorization.  Further, though it is not guaranteed, the District has positioned itself to leverage this investment of bond money to obtain an additional $4 million to $6 million in State matching funds, which would be used to address additional needs.

The Facilities Steering Committee and its Value Engineering Subcommittee oversaw the District’s rigorous review Overaa‘s project bids for the STEAM building and performing arts building.  Overaa, the District’s general contractor, obtained multiple subcontractor bids for each component of the work (for example, mechanical, electrical, plumbing, and roofing) to ensure competitive pricing.  Although higher than originally estimated, the project budgets represent good value in the contemporary construction market.

District staff thoroughly reviewed the bids and Overaa’s preliminary Guaranteed Maximum Price (or GMP), which is essentially a cap on “hard” construction costs.  Overaa, District staff, and subcontractors have worked to reduce the preliminary GMP through value engineering and deferral of certain work, and the District will further reduce costs by self-performing certain work.  

As of the date of this memo, the District is completing its final budget review so precise numbers are not included here.  The Committee recommends that, at the Board of Education meeting on February 27, the Board authorize staff to negotiate a final GMP not to exceed $50 million.  This would allow the staff to finalize the project budgets and GMP with precise numbers not to exceed $50 million, and allow the STEAM project to proceed on the current ambitious schedule.

If approved by the Board, the STEAM and performing arts projects will consume most of the remaining bond funds, but the District will have addressed its major objectives for this first phase of implementing the Facilities Master Plan.   

Accomplishing Key Objectives

In May 2016, this Committee recommended to the Board that it present a facilities bond measure to the voters to implement the highest priority projects in the Facilities Master Plan.  The Committee wrote to the Board:

Recognizing that it is not possible to address all of the needs identified in the Facilities Master Plan within the current bonding capacity, the Board of Education should prioritize the work in roughly the following order.   . . .

The following is a rough prioritization because smaller, less costly projects may be combined with larger projects in a way that achieves the most value even if not in the direct order of priority.  

  1. Modernization of Piedmont High School, including creating state-of-the-art STEAM facilities, upgrading antiquated building systems, increasing energy efficiency, and improving teaching and learning spaces. . . .
  2. Addition of Piedmont Middle School classrooms, and improvement of existing PMS classrooms to provide more learning space and reduce noise transfers among classrooms, to the extent practicable given requirements imposed by the State.    . . .
  3. Improvements at each elementary school to support extended-day kindergarten and address classroom climate issues.    . . .
  4. Other issues addressed in the Facilities Master Plan.

These other issues include creation of specialized facilities to sustain, improve and expand course offerings, creation of private meeting space for Wellness Center programs, and improvement of athletic facilities.  

The District has followed these recommendations.  Over the last few years, as the District prepared plans for the new high school STEAM and performing arts buildings, the District completed the following:

  • Installation of new heating and cooling systems in 15 classrooms at the elementary schools (thermostat data was used to identify the classrooms in greatest need of climate control).
  • Improvements to the learning environment at the middle school, including the reduction of sound transfer in classrooms and improved climate control.
  • Renovation of special education facilities and restrooms at the middle school.
  • Installation of new safety and security features at the middle and high schools consistent with the District’s Safe Schools Plan.
  • Creation of a new high school computer lab.

Over the next few years, the District is on track to complete several more projects, including:

  • Construction of a new high school STEAM building for the study of Science, Technology, Engineering, Art, and Mathematics.
  • Construction of a performing arts building with a new 487-seat theater and a drama classroom.
  • Replacement of failing HVAC systems at the high school.
  • In the 20s and 30s buildings, modernization of high school classrooms and reconfiguration of old science labs to general classrooms.
  • Replacement of the failing drainage system and turf and track at Witter Field, which are at the end of their useful life. 

The District expects to complete the work listed above within the $66.1 million in bond funds except some of the improvements to the 20s and 30s buildings and the Witter Field renovation, which can be completed with the expected State matching funds.  When the above projects are completed, the District will have addressed the priorities outlined by this Committee in 2016 with the exception of kindergarten facilities, which is discussed below.  

If the Board approves the GMP, a simplified breakdown of the $66.1 million bond program budget would include:

  • $50 million for hard construction costs for the STEAM building and performing arts building;
  • $8.7 million for “soft” construction costs (including architectural and engineering fees, State fees, and consultants);
  • $2.5 million in contingency funds;
  • $900,000 in work self-performed by the District;
  • $900,000 for furniture, fixtures, and equipment for the STEAM and performing arts buildings; and
  • $3.1 million for the completed projects listed above, HVAC replacement in the 30s building, and projected program costs over the duration of the bond program.

The Committee would have preferred a larger contingency fund for the STEAM and performing arts projects but recognized that the expected State matching funds can, if needed, serve as added contingency funds.

Program Priorities in Light of Funding Limitations

Costs of the STEAM building and performing arts building are higher than originally expected.  This increase is due to a number of factors beyond the District’s control, including but not limited to escalating costs of construction labor and materials, and findings by California’s Geological Service specific to the geologic conditions of the Magnolia Campus site.

As discussed below, the Committee believes that the District has obtained the best value available in the current construction market and recommends that the Board approve the project budgets.  

Although the District’s needs as identified in the Facilities Master Plan always exceeded what the $66.1 million in bond funds could cover, increased costs for the STEAM and performing arts projects prompted the Committee to revisit and restate its top priorities as follows:

  1. Complete the STEAM building and performing arts building.
  2. Replace the failing heating, ventilation, and air conditioning (HVAC) systems in the 20s and 30s buildings.
  3. Upgrade classrooms in the 20s and 30s buildings.
  4. Replace the failing drainage system and turf and track at Witter Field.

In May 2016, when this Committee recommended priorities for use of the bond funds, the District offered only half-day kindergarten.  This Committee recommended:

. . . that a portion of the [bond] funds be used for improvements to support extended-day kindergarten at each elementary school.  The District is one of the few school districts in California that does not already offer extended-day kindergarten. To do so, additional classrooms are needed.

Nonetheless, starting in the 2017-18 school year the District has implemented extended-day kindergarten at each of the three elementary schools without adding classrooms.  Some of the classrooms are undersized and lack interior bathrooms, and the District is considering possible improvements that do not involve construction (including classroom reassignment and flexible furnishings).  The Committee noted that adding or modifying classrooms is not easily done and unanimously recommended that any modification or addition of kindergarten facilities be deferred until the four projects listed above are completed.   

Best Value Through Competitive Pricing and Value Engineering

The Committee and its Value Engineering Subcommittee have overseen the District’s bond program budget development and cost reduction process, which have been thoughtful and thorough.  Although higher than originally estimated, the Committee believes that the STEAM and performing arts budgets represent best value in the contemporary construction market.

The District’s general contractor, Overaa Construction, was able to attract multiple, competitive bids for each category of work (such as mechanical, electrical, plumbing and roofing), including work that Overaa intends to self-perform.  This competitive pricing is worth noting because of the difficulty that many public school construction programs are having attracting any bids.  District staff did a detailed review of bids and Overaa’s preliminary GMP.  

The Subcommittee then spent considerable time with District staff reviewing bids and discussing alternative “means and methods” to reduce costs.  This process also revealed instances where subcontractors inadvertently omitted scope or deviated from the project plans and specifications. The Subcommittee also reviewed and concurred in the District’s proposals to defer certain work (such as the purchase of solar panels and equipping the drama classroom) and self-perform other work (such as site utilities work and landscaping) to reduce costs.  The guiding consideration throughout value engineering was to save money without compromising educational programs or the student experience. Overaa then went back to the subcontractors and obtained revised bids. This has been a rigorous and transparent process that resulted in significant savings.

Despite the multiple competitive bids and value engineering, project costs remain high, primarily because of escalating construction costs and other extraordinary market conditions.  With respect to the performing arts building, the Committee noted that much of the cost is related to the quantity of structural steel and concrete needed to meet the State’s seismic safety requirements for an open-interior structure on the Magnolia Campus site, and these costs could not be reduced.

Furthermore, because of its almost infinite color selection and longevity, Aluminium Cladding UK is a great option for external building envelopes.If you want a material that will last for a long time with minimum upkeep required in terms of money and time, aluminum cladding is a sort of cladding produced from a thin layer of outside aluminum coating. For additional information, go to www.aluminumcladding.co.uk.

Recommendation to Approve a GMP Not to Exceed $50 Million for the STEAM Building and Performing Arts Building

The Committee unanimously recommends that the Board of Education authorize staff to negotiate a final GMP not to exceed $50 million.  In doing so, the Board would: set the budgets for the STEAM and performing arts projects and for the overall bond program; address the major objectives for this first phase of implementing the Facilities Master Plan; and allow the STEAM project to proceed on the current ambitious schedule.

1 The Facilities Steering Committee was created more than ten years ago and has played an important role in guiding the District’s Seismic Safety Bond Program and Facilities Modernization Program.  The Committee has changed in composition over time and now consists of: Angel Fierro; John Gibbs; Grier Graff; Brad Hebert; Robert Hendrickson; Doug Ireland; John Lambert; Jonathan Levine; Jane Lin; Stacey Merickel; Jason Meil; Bernard Pech; Rebecca Posamentier; Rick Raushenbush; Clark Thiel; and John Welch.  Board of Education members Andrea Swenson and Cory Smegal serve as liaisons to this Committee.