The school board also is developing change order guidelines this spring, meaning any proposed changes above $30,000 "the school board should be involved in," Mr. Steinhauer said.Current Policy FEG Construction Contracts, Bidding and Awards states:
The Superintendent is authorized to enter into contracts (including but not limited to change orders) by the District for construction and repairs which exceed Four Thousand ($4,000) Dollars, but are less than Ten Thousand ($10,000) Dollars, provided that written or telephone price quotations are requested from at least three (3) qualified and responsible contractors, or in lieu of obtaining price quotations, preparation and filing of a memorandum showing that fewer than three (3) qualified contractors exist in the school district's market area. Records of all price quotations and memoranda shall be maintained for a period of not less than three years.
Last I heard, the April 5, 2011 Policy Committee Agenda was going to consider raising that number to $15,000. Where did $30,000 come from? Remember how much damage was done when the limit was $10,000 during the elementary school renovations?
P.S. The next Policy Committee meeting is this Wednesday at 4:30 in the Jefferson Middle School Library. The Agenda does not mention Policy FEG.
Agenda
(Subject to Change)
February 8, 2012 (Second Wednesday)
1. Policy Review
A. GBCDD, Leaves of Absence
B. IJND, Network/Internet Use
C. AE, School Core Values
D. JLI, School Violence, Terroristic Threats, and Terroristic Acts
2. Questions and Comments from Residents
P.S. The next Policy Committee meeting is this Wednesday at 4:30 in the Jefferson Middle School Library. The Agenda does not mention Policy FEG.
Agenda
(Subject to Change)
February 8, 2012 (Second Wednesday)
1. Policy Review
A. GBCDD, Leaves of Absence
B. IJND, Network/Internet Use
C. AE, School Core Values
D. JLI, School Violence, Terroristic Threats, and Terroristic Acts
2. Questions and Comments from Residents
35 comments:
Yes, I well remember the elementary school renovation project during 2002-2005 that was to cost $44.5 million but ended up costing $52 million....and the *gaming* of the then $10,000 change order policy by the then Super when he *approved* over $1 million in change orders, each one just under the $10,000 limit, allegedly unknown by the then SB. The State Auditor General also noted it in a subsequent audit and issued a public rebuke !
How did or does the current SB justify going from the abused $10,000 policy to considering increasing it to $15,000 and then deciding on $30,000 ? What are the so-called *justifiable* reasons ?
Bill Lewis
Bill, I never even heard of a change order until I got involved with this project. I found this site:
Change Orders -- The Bane Of All Construction Projects
On Wikipedia, Change Orders lists common causes for change orders:
The project's work was incorrectly estimated.
Uh, remember how Nello was $8 million cheaper than the next lowest bid????
Bill, it just keeps getting better and better, doesn't it? But the SB thinks we're stupid and gets away with it all.
Elaine
I remember reading in the School Code that change orders are limited to $15,000. I wonder where the $30,000 came from?
Did you know there are so many construction project requests with the Pa. Dept. of Ed. that the State is backlogged on reimbursement dollars? Does this mean the reimbursement percentage will shrink as the change orders grow? Will that shortage cause job loss at the District?
John
Yep, Elaine...I cannot find anything in the PA Public Schools Code about change order limits. Perhaps PlanCon covers it, but doubtful....but knowing PlanCon, if it is covered, I'm sure there is a *check-the-box-for-an-automatic-waiver* provision on some form. Maybe a Commonwealth statute dealing with public buildings covers it somewhere ?
In any event, the fact that a substantial increase from the long standing $10,000 limit to a proposed $30,000 limit telegraphs that a multitude of change orders are likely, and they want to allow a greater number to be approved *under the radar* of otherwise publc disclosure in required public SB approvals. You bet.
Remember..promised "increased transparency" and "it's for the children"; and, the oft and over used "if we don't allow this people won't move here and home prices will decline...", and pigs will fly !
Bill Lewis
Good points, John and Bill. What makes it even more difficult is when residents like Bill Matthews are denied access to the plans, at least from the district side "for security reasons." I don't feel secure knowing that a person with a PhD and a music background is going to be approving change orders at any amount. When did Dr. Tim learn anything about construction? At one time, he didn't know that there were seven elementary schools. He wasn't sure if there were five or seven. That was said at a municipal meeting.
The public has no idea what the final plans include, do we? This board is so corrupt. No referendum. No regard to the petition. No respect to the stakeholders. Everything is a secret. We are powerless.
Elaine
People---or at least the ones the school board wants---aren't going to move here either if the taxes are through the roof.
Elaine, I suggest keeping a tally of all high school renovation expenses on this blog. Perhaps, as the figure continues to escalate, enough residents will realize what is going on and start complaining.
You could always use the old thermometer symbol for the appropriate effect. Remember, many costs have been incurred already.
Also, this blog's URL should be provided to the state auditor general and any other overseeing agencies.
Carole Brown
For those interested in a story on the State Auditor General's report concerning the District's elementary school project referenced by Mr. Lewis see "Audit finds no wrongdoing in Mt. Lebanon school project" from the P-G, 8 January 2007. Although the P-G's headline spins the positive outcome of the audit, the article quotes Jeffrey H. Gribb, director of the state auditor general's Office of Special Investigations, as saying that "the district 'had failed to exercise control in some areas of the contracting process.' Specifically the audit found that the district did not have 'a formal written policy' for approving change orders and reporting change orders to the board."
Hmmm, if the $45 million dollar elementary building project went $7 million over estimates then.......
using that as a guide, the current $113 HS project should come in around $17 million over the forecast.
In other words, just about spot on with the first bid!!!!!!!
Andy Bradford
I wish there was a high powered attorney out there who would take pity on us and would represent us pro bono to stop this ongoing corruption. You never know until you ask.
Elaine
The P-G reports that the total cost of the high school "renovation" is $109.6 million. Given the history of government building projects in general, and the relatively recent MLSD Elementary Schools renovations in particular, the probability of cost overruns approaches 100%. Of course we must wait to see the final bill.
Another factor to consider, if one is using the elementary schools renovations as a guide to predicting the final cost, is that the dollar has lost 15% of its value since 2005 (CPI inflation calculation from the Bureau of Labor Statistics, as of 2011). The contractors have likely taken inflation into consideration, but it is very difficult to predict costs up to three or more years in advance.
Would change orders be included in the budget? Where does that money come from?
Elaine
I asked someone "in the know" this question:
"Who does the superintendent get permission from at the state level for the change orders?"
Sadly, this is the reply:
Elaine:
I am not certain about this, but I do not think that the school district needs to get “permission” to approve change orders related to a school construction project. That being said, I would imagine that the entire budget must be approved with an approved set of plans, and that all expenditures must fit within both the line-items of the budget, and the overall aggregate cost. In other words, the budget and line items cannot be exceeded. Usually, this is done through a series of periodic budget and project reports, within estimate of work completed, and estimates of work remaining and monies remaining --- by line item. This is my experience of how state funded projects work. A consultant or state employee must approve reimbursements – based on the reports, against the approved plan.
Someone at the district must approve the change orders. Whether it’s the Superintendent, finance director, project manager, owners rep, school board, or whatever – some has to approve, sign, and certify the need and accuracy of the change order. Change orders are a reality, and not all of them are bad. Most are, but some are needed and preferable. Most are oversights or required expenditures because construction drawings re simply missing things that the contractors did not and could not estimate. (e.g., missing doors or walls,) or they are the result of things that are totally unforeseen, and are surprises that need to be taken care of (e.g., underground environmental hazards.) Either way, they are change orders to the project – and someone needs to REVIEW and APPROVE them.
It just shouldn’t be a Superintendent, who is schooled in education, not in construction or project management!!!!!
That’s a disaster in my opinion.
Does that answer your question?
Elaine
Elaine, typically Change Orders need to be approved by the Contractor, the Architect and the Owner (in this case, the School District). On this project, we also have a Construction Manager, who is probably equally involved in the review and approval of Change Orders on behalf of the School District.
The Architect (and perhaps the Construction Manager) will review the necessity and scope of all Change Order requests and advise the School District as to whether the same are warranted. Some will undoubtedly be refused or re-negotiated during the course of the project. Contrary to what your source has told you, construction contracts generally impose a heavy burden on contractors to identify conditions on the property etc in advance of submitting their bids and commencing work. If the contractor flat out forgot something, he won't be very successful in asking for a Change Order. Given the history of the bid process on this project, I'd be willing to bet that the burden on all of the contractors in establishing the need for a Change Order (and more money) will be pretty steep.
Also, I think it's a bit over the top to suggest that this is a disaster or something even close to a disaster. Of course people not versed in construction are not well-suited to approve Change Orders. But that's true for every construction project, and it's precisely why people hire Architects and Construction Managers. For example, when UPMC built the new Children's Hospital, do you think doctors and hospital administrators were huddling in a conference room to review Change Orders all on their own? Of course not - and to suggest that the District or Dr. Steinhauer will be "winging it" is simply not true.
Dave Franklin
This was emailed to me.
Please post this response anonymously:
Elaine:
Did Dave just fall off a turnip truck???? You must be kidding me on this.
Yes, the parties he cites must all “sign off” on any change order via approved forms, and express their consent and agreement. But that is totally, totally different from the proper REVIEW and APPROVAL of a request for a change order (RFCO), to begin with. I am not talking about simply signing the change order docs; I am talking about vetting the requests for changer orders and reviewing them for validity.
Its not good enough that the architect or CM reviews the change order. What happens if the RFCO is due to their errors? If the architect left something out of the documents, and the CM never caught it in time to properly adjust a construction schedule, and the contractor substituted a more expensive, but inappropriate material – who will “approve” the CO per Dave’s logic? That’s a joke.
Knowledgeable folks DO NOT rely upon the architect or the CM to scrub these details. They hire independent reps and internal QUALIFIED project managers with no conflict of interest, and incentives to hold the architect/CM to established standards and practices. I didn’t suggest the Super will be “winging it” with Cos. I suggested that the HS process, with the Super involved in a way that seems to be suggested by the Board – is simply dumb and expensive.
AND YES – DISASTEROUS.
My comment was intended to refer to the ENTIRE change order process, not just signing the form. The architect and the CM are - for the most part - looking out for the Owner's best interest within the requirements of their respective contracts, and they will certainly review the change order requests with the School District and counsel it as to whether it is necessary, fair, reasonable etc.
I might have just fallen off of a turnip truck, but I'm pretty certain Celli and PJ Dick have not achieved the professional success and the accolades they have by jamming their Owners on change orders. I'm also pretty certain that they understand their considerable exposure in their respective role.
Look, we can sit around all day and create ominous doomsday scenarios like the one suggested by Capt. Anonymous, but I'm pretty sure that's a waste of everyone's time.
Dave Franklin
Dave, if only you knew who "Capt. Anonymous" is, you wouldn't be so quick to argue. I tend to rely on experts for information. "Capt. Anonymous" doesn't try to practice law and you shouldn't go out of your area of expertise, according to "C.A."
Elaine
One more thing, Dave. It is said in the construction business that PJ Dick makes their money with change orders. Someone told me that he was in a marina one time and saw a beautiful boat named, "Change order."
Elaine
Just to clarify a few things:
1. PJ Dick is the construction manager and NOT the General Contractor. This means they will not make money from the change orders. In fact, the school board is looking to them to perform much of the function that an Owner's Rep would (which is the main reason they have not hired an outside owners rep).
2. The Board will most definitely lean on PJ Dick to help them determine whether a change order is needed and/or acceptable. To suggest that Steinhauer and/or the Board would do this without input from their hired professionals is just plain wrong. In fact, it is in PJ's contract to do just this.
I guess the issue is that you have to understand that change orders will not result in added fees to either the architect (who has a fixed contract) or the Construction Manager (who also has a fixed contract).
The one that has a vested interest is Nello. And yes, I think they will try to change order this thing to death. It will be interesting (scary) to see how this check and balance works out. But don't think this setup is any different than it is in any other large construction project. The CEO of a bank doesn't oversee the construction of the new 20 story downtown building. He hires people to oversee it and approves/denies changes based on his professional staff.
James
James, that is comforting to know that the SB did something right. Thanks for clarifying that.
Yes, Nello is the one to watch since they did the Public Safety Building.
Elaine
Jim, you and I must have fallen off of the exact same turnip truck!! However, you get a "thanks" while I get scolded for arguing with the anonymous "expert" . . . oh well.
Dave Franklin
Now, Dave. You know better than that. Why don't you say something about the private email exchange you and I had earlier this morning where I thanked you and asked you to post your private comment on the blog? It is amazing how this town is filled with spinmeisters. More on that in my next post.
Elaine
Dave,
I think I said it in my non-attorney voice!
James
Oh Elaine, I was kidding. But you did scold me for arguing with your anonymous expert and you did suggest that I was out of my area of expertise.
If anyone cares, here's what I told Elaine shortly before James submitted his comment, " . . . while I have not seen PJ Dick's contract for Lebo, CMs generally get paid a fee or an hourly rate determined up front so they don't have any real financial incentive to permit a lot of change orders."
Dave Franklin
And you did share with me your area of expertise includes matters like this in your email.
Elaine
Following up on James Fraasch’s comment, we don’t know whether the checks and balances provided by our CM will prove effective at warding off change orders. But, if we look to prior experience and research for guidance, they suggest that we are likely to see a lot of change orders. Agents (like our CM) are only partially effective at heading off problems like change orders, and that effectiveness wanes for more complicated projects (like ours).
For those who are interested, here’s a summary of the research I could find. (And, yes, I provided the following information to the school board when they were considering whether to switch back to multiple prime contracts.)
Construction Delivery Systems: A Comparative Analysis Of The Performance Of Systems Within School Districts (2004 Masters Thesis, University of Pittsburgh). Found that among projects costing over $10 million (14 single prime, 12 multiple prime, 14 multiple prime w/ agent), none of the single prime projects had litigation problems, but 57% of the straight multiple prime projects did, as did 21% of the multiple prime projects w/ agents (this is the class comparable to our multiple primes w/ P.J. Dick acting as our agent).
Single vs. Multiple Prime Contracting (2007). This study seems to substantiate the common wisdom that multiple-prime contracting has lower associated bid costs (average ~ 4%). But the study does not consider indirect costs, where single-prime contracting purportedly makes up for this difference and overtakes multiple prime, and therefore doesn't inform us about whether multiple prime is likely to be less expensive, all in, than single prime.
A Review of the Effects of the Pennsylvania Separations Act on School Districts (2007). Among the conclusions from survey results from 11 Pennsylvania school districts with recent construction projects (7 single prime, 4 multiple prime): “Negative experiences with high staff involvement, litigation, multiple change orders, and schedule overruns were almost six times higher when school districts used the multiple prime delivery system than when they used the single prime delivery system.”
All of these studies, unfortunately, suffer from poor statistical technique. Worse, the final two come from organizations that we can expect to have a preferred outcome; both make unsupported claims, often conflating association and causation.
Nonetheless, the data behind the studies do suggest that the following conclusions are more likely to be true than false:
– multiple-prime contracting is associated with slightly lower bids
– multiple-prime contracting is associated with higher risk of unanticipated difficulties (with or without an agent)
– multiple-prime contracting is associated with dramatically higher litigation risk than single-prime contracting
– multiple-prime contacting with an agent is associated with lower litigation risk than without an agent, but it’s still much higher than with single-prime contracting
In sum, choosing multiple-prime contracting is equivalent to taking a bet that your up-front bid savings will exceed your unanticipated back-end costs. As your project becomes riskier, that bet becomes less likely to pay off.
Because our project seems about as risky as one could imagine – e.g., it’s unusually expensive and complicated – I suspect that for us multiple primes is a losing bet.
But only time will tell.
Last summer I wrote the District concerning single vs. multiple prime contracting, pointing out that the multiple prime was less efficient and open to increased change order problems. For a perspective on public contracting efficiency see Testimony of William W. Warren, Jr. before the PA Department of Education MandateWaiver Task Force, October 16, 2008 - along with Mr. Moertel's links above, it is interesting reading. Mr. Warren is an attorney with 20 years of experience in public construction. In his testimony before the PA DoE, Mr. Warren, addressing the efficacy of single prime contracting, said, "The owner and its architect can look to a single, general construction contractor who is required to deliver the project on time and in conformance with specifications"
It is clear that the MLSD is taking a calculated risk that the high school project will come in, when all is said and done, at or near the budgeted amount.
I never did get a reply from the District.
Mr. Franklin, keep an eye on your "glass half full," someone's spiking your kool-aide!
If Moertel's and Gideon's comments don't send up warning flags, perhaps this might.
"A Review of the Effects of the Pennsylvania Separations Act on School Districts
The PA Economy League of SW PA
11/8/07
http://www.alleghenyconference.org/PEL/PDFs/PASeparationsActReport1107.pdf
"Single Prime Delivery System Case Study: Kennett Consolidated School District –... ...this district had simultaneous experience with using a single prime delivery system and a multiple prime delivery system. The following points summarize the issues reported through their survey responses.
Improved Communication with Single Prime Projects – Communication was reported as being “absolutely” improved in the single prime project with fewer disputes, better (less costly) dispute resolution, completion of all tasks, fewer change orders, better quality of work, and more timely and complete site clean-up.
More Time to do Daily Jobs with Single Prime Projects – The district noted that a significant amount of project management time was spent on every multiple prime project, affecting staffs’ ability to do their daily jobs, compared to the very little project management time needed to support single prime projects. The single prime system was noted as being, “no question – better”, than multiple prime projects.
Single Prime Project Completed Two Months Ahead of Schedule – The high school single prime project was completed two months ahead of schedule, compared to a reported schedule overrun on two out of four multiple prime contract projects.
Single Prime Projects are Less Expensive – The single prime high school project was noted as having an estimated overall savings of $282,000, while the multiple prime middle school project has incurred additional costs for change orders, legal fees and damages.
Fewer Cost Overruns with Single Prime Projects – When dealing with the middle school multiple prime project, the district cited cost overruns of 1-3 percent. The factors that led to the overruns were change orders, schedule overruns, lack of coordination among contractors, and litigation. The district did report cost overruns for their single prime project, but noted that it was due to the fact that the high school was built in the 1930s and there were some unknown construction details that arose as the project advanced.
Less Litigation with Single Prime Projects – The district reported no litigation to date for its single prime project, however it estimated that they experience litigation in two out of four multiple prime projects, which typically adds $1 million to $5 million to the total cost of the project. For example, the middle school multiple prime project had an estimated $400,000 in legal fees and $1 million in damages (poor construction, repairs), which was ultimately resolved in a closed settlement after two years of litigation."
This runs through the Review: "The factors that led to the overruns were change orders, schedule overruns, lack of coordination among contractors, and litigation."
Now then Mr. Franklin, while I suspect you may secretly covet some Honorary Letter in Cheerleading from the district, I have to ask why do you feel its a waste of everyone's time?
Do you know something we don't?
Something wrong with keeping watch?
If we uncover nothing and the board/administration/contractors are as true as you believe, whom have we hurt?
Are President Posti/the board omnipotent, infallible?
Thought these things, "weren't a big deal." Apparently, observing the amount of time you spend defending them, they are.
We have 3 contributions contradicting the multiple prime decision and the change order process. Could you supply us with some rebuttal documents.
I'll read them.
Andy Bradford
DO NOT FORGET MR. FRANKlIN THESE ARE- WITH FEW EXCEPTIONS- THE SAME PEOPLE THAT SENT US A GLOSSY FAQ PROCLAIMING THE ORIGINAL DESIGN WOULD BID IN 20% BELOW THEIR ACT 34 DECLARED LIMIT OF $113 MILLION!
"Not a big deal!'" I'll sleep better knowing their optimistic, "educated guess" was off by only $27 million dollars. Sleep tight, Dave!
Andy Bradford
Mr. Bradford (or whoever you are), the single vs. multiple prime contractors decision is water under the bridge at this point. I don't see any benefit in debating it now. You can show me articles etc from anyone you want. Can you change it? I sure can't. As for the letter in cheerleading, my wife has me beat. She received hers from Lebo in '85 and '86. That's enough for one house.
Dave Franklin
Wow. Andy "ALL CAPS" Bradford, take a breath. Call it a coincidence, but you're supporting Mr. Cannon [Sr's] thesis.
And why aren't you screaming at Mr. Fraasch?
Dave Franklin
The subject is change orders Mr. Franklin!
According to the article multiple prime projects have more changes, higher cost and more litigation.
You ought to love it!
Andy Bradford
Use a couple more exclamation points Mr. ALL CAPS. It makes you sound smarter. I'm done.
Dave Franklin
Now that we've dispensed with that nonsense, here is the key point from and the key reason for submitting the Economic League survey here.
"Section 5 – Multiple Prime Delivery System Survey Results
As noted previously, every school district that responded to the survey had previous experience using multiple prime contractors, hence all were able to comment on the multiple prime delivery system. Construction projects with multiple prime contractors were consistently reported by school districts as difficult to manage because they frequently entail multiple channels of communication, are a drain on the school district’s administrative and financial resources and require many hours of direct site supervision. Specifically, seven districts reported having higher staff involvement and multiple change orders when using the multiple prime delivery system. Seven districts reported that they are either currently involved with litigation or had experienced litigation due to multiple prime contractor disputes in the past. Four districts said that their multiple prime projects had run over schedule, eight had experienced multiple change order requests and nine out of eleven districts reported experiences with their multiple prime construction projects being over budget."
Once again - "are a drain on the school district’s administrative and financial resources and require many hours of direct site supervision."
"eight had experienced multiple change order requests and nine out of eleven districts reported experiences with their multiple prime construction projects being over budget."
Thought the district was looking for ways to minimize expenditures and maintain programs. Now that we're locked in, do we just let it ride?
Andy Bradford
Don't forget the link I have on the lebocitizens.com home page
http://www.mbawpa.org/8524_MBA_mag_v5.pdf
Read what our own solicitor, Tom Peterson, had to say about multiple primes -we were lucky. I hope our luck has not run out.
Elaine
Is the $120,520 "Asbestos sampling and testing" contract being awarded at Monday's meeting a "change order"? Shouldn't such asbestos sampling and testing have been part of the project's budget?
Post a Comment