Which is the better way to do business?

Update August 6, 2011 http://jposti.blogspot.com/2010/07/single-prime-approved.html What changed from this 2010 Center Court post?
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Check out this article http://www.mbawpa.org/8524_MBA_mag_v5.pdf and read what our solicitor says about using single-prime contracts.

When the discussion among school district boards turns to the Separations Act, the “Districts say that when multiple prime contractors are hired to work on a job, they often are not used to working

with one another,” says Tim Allwein, Assistant Director for Governmental & Labor Relations,

Pennsylvania School Boards Association. “This creates difficulties in creating a cooperative relationship among the contractors, problems with change orders, and can prolong construction

—which can add costs.”

“Running a job single prime is a simple way to save money and get the same quality product,” comments Tom Peterson, Solicitor for the Mt. Lebanon School District. Competition for school district work is quite strong and so are the time constraints around getting the job done. Because of the tight scheduling, “selecting a single prime contractor to manage the job would get the work done on time.”

Which Is the Better Way to Do Business?

“School districts in particular have many places to spend the savings that are realized when the job is run through a single prime contractor,” explains Peterson. “The private sector has the option to choose the most cost effective way to run their projects, but public entities have only one option.”

And Allwein agrees that cost savings is one of the biggest factors for school districts when they

apply for the waiver: “Bidding out the job to multiple prime contractors adds cost and increases the price of the project, which directly affects the school district and the taxpayers.” The State saved over $28 million in the two years operating under the mandate waiver program.

SAVING MONEY BY DEPENDING ON THE GC’S EXPERTISE

School districts often employ the expertise of a construction manager on larger, more complex projects. Mt. Lebanon’s elementary school renovations job is being run under multiple primes,

for example, and is so large that the district hired a construction manager for the first time. When school districts can waive the Separations Act and bid out their construction work to single prime contractors, the single prime contractor is responsible for handling all of the subcontracting work: “The GC knows the schedule and how each of the subcontractors work, ensuring a smoother operation, a drastic reduction in change orders and fewer unforeseen problems,” says Johnston. “This process is much easier on the school districts” and more cost effective. “But the costs aren’t always limited to actual project costs,” states Tom Landau, President, Landau Building Company. “When projects fall under the Separations Act, the GC is ‘assigned’ to coordinate and take responsibility for how the project runs. But the GC doesn’t have leverage to make the other contractors perform because the money doesn’t go through the GC,” says Landau. The issue: “The owner depends on the GC to make the project work, but the GC has no control.”