On the Green Valley Ranch Library (our DBB project), we have just officially finalized the contract with the General Contractor (GC). Now the “rubber meets the road”, and we get to see how the GC will deliver the project for the amount bid. It should be noted that the contract amount came in roughly 30% below the budget and the low bid contractor has seen the other bid totals. At this time the two pros listed in our previous blog regarding DBB have been realized:
- The process provided a lower price for the Owner
- The process allowed more contractors to bid the project
The design team incorporated many alternates into the bid documents with the hope of accepting at least a few of them at the time of bidding, as stated, the market netted bids well below the estimate provided by the design team. All of the alternates were immediately accepted and others have been introduced since the bid day. With the CM/GC process it is often common to have alternates priced as bids can often come in lower than the progress pricing, however, it is highly unlikely that they would come in 30% lower using the CM/GC process. At this point the Green Valley Ranch team is scrambling to introduce alternates that were excluded at the time of the bid, including upgraded finishes and other items. The architect will now be compensated to draw these additional alternates, and we are now concerned we may see change order pricing in lieu of hard bid pricing for these options. If the CM/GC process were used, we may not have received the 30% savings, but the building would have likely been designed closer to the program due to the fact that we were receiving market and sub-contractor rates as progress pricing was provided throughout the design process. This proves without a doubt that it is a tough time for estimators as fluctuations in pricing and historical data, including cost per square foot are difficult to gauge.
Another challenge now facing the project team is that now that the project is under budget, there is a request to put the savings back into the general bond instead of the using it specifically for the project. From a Client’s perspective this is not the ideal situation, as they know they get only one chance to create a project such as this. Now that the building is designed and priced, they are not able to make significant changes to the building, including adding back the square footage they eliminated during the design process to stay within the budget.
All of this said the Client is thrilled that such aggressive pricing has been received, and that many contractors were given an opportunity to be part of this great project. Conversely, they are disappointed that the pricing was so far off from the original budget estimates that they lost the opportunity to make the enhancements that they could have made were they armed with more accurate market pricing information during the design process.