MORE BACK-TO-SCHOOL SHOPPERS IN L.A. ARE TURNING TO DISCOUNT OUTLETS
When there’s no air conditioning in the classroom, windows matter.
So in Santa Monica, where public schools rely on ocean breezes to keep students cool, it almost goes without saying that officials looked forward to replacing aging windows, many of them thick with layers of paint, aged by years of salty ocean air, and hard to open.
But it’s not going to happen even though the Santa Monica-Malibu Unified School District has $83 million in bond money to spend on improvements that initially included plans to replace the windows.
School officials there and throughout L.A. have discovered that with unprecedented levels of school construction underway throughout the state, as well as a flurry of private-sector construction activity, they’re getting less bang for their voter-approved bucks because contractors are in great demand and charging more for the work.
As a result, costs in the specialized school construction industry are up as much as 15 percent, said Gaylaird Christopher, a principal at Perkins & Will, an architectural firm in Pasadena.
Ironically, the same record-breaking economy that has voters willing to open their pocketbooks to support school bonds has exacerbated the school improvement situation by tightening the construction market in general and reducing the availability of subcontractors and laborers.
“It’s not the most attractive work to bid on,” said Pat Spector, who heads the school construction unit of Jacobs Engineering Group in Pasadena. The company is currently working as a construction manager with the Santa Monica-Malibu school district and plans to work with L.A. Unified on 12 new schools in the San Fernando Valley.
“The regulations and requirements of doing public work are quite a bit more complex than doing private work,” Spector said. “It is no secret that many contractors would go after large-scale private work before they would do schools.”
Officials at districts throughout the region say they’re also feeling the crunch.
Long Beach Unified School District, the third largest district in the state with more than 90,000 students, has fewer bidders to choose from for construction work, said Kevin Barre, the district’s director of facilities planning and management. “Over the short term, we’re going to do the projects we need to do to house our students,” he said. “Over the long term, that may mean we’re spending more funds now and we’ll run out of money sooner.”
The situation has forced many districts to cut back their construction plans. For example, after opening bids for work at Santa Monica High School, officials realized they could only afford eight new classrooms instead of 12.
And when bids came in as much as 30 percent above estimates for work at 16 Santa Monica-Malibu campuses, the district had to go back to the drawing board, redo the projects on a smaller scale, and put the bids out again, according to Assistant Superintendent Arthur Cohen.
“We’ve lost a complete summer of work,” he said. “We thought we’d have all of our projects underway before the summer began.”
Choice of projects
Most companies with the expertise to do school construction choose only large projects in districts that have a track record for working well with contractors. Any red flags and those contractors often choose to walk away.
“There is so much work around that we have to pick and choose,” said Terry Zinger, vice president of Bernards Brothers Inc., a contracting firm in Pasadena. “We can’t do it all.”
The situation also means districts have less leverage to negotiate favorable contracts. For example, districts often must pay a premium for setting tough performance standards and deadlines, said Ray Godfrey, a facilities consultant for the state Department of Education who is working with the Los Angeles Unified School District on state funding for new projects.
“If you try and insulate yourself from (construction) problems by writing tougher contracts, many contractors will walk away,” Godfrey said. “It’s too easy to get work at other districts.”
The run-up in school construction costs has yet to be reflected in cost indexes kept by the state Office of Public School Construction. Industry observers say the lag causes the index to temporarily mask the increase.
Bruce Hancock, assistant executive director at that office, said he has heard plenty of anecdotes about increasing construction costs but has yet to see that reflected in statistics kept by his office.
The main reason for the run-up is the flood of money now available for school construction. A state bond measure in 1998 set aside $6.7 billion for the construction and renovation of K-12 classrooms. Thus far, $4.1 billion of that money has been handed out.
In addition to state dollars, voters in L.A. County school districts (excluding the L.A. Unified School District) have approved more than $2.52 billion in bond measures since the start of 1996. When the LAUSD is included, the figure approaches $5 billion.
Further complicating the situation is that school districts must break ground within 18 months of receiving the state money or risk losing it. An additional $2 billion still to be handed out for new construction could tighten up the market even more.
The rush has left many school districts in a dilemma. Staffs are small to begin with and few have the expertise needed to plan and oversee major construction work.
“For many school districts, (facilities staffers) perhaps haven’t done construction for 15 or 20 years. They have to rely on their architects to advise them,” Hancock said.
Doing the homework
Some districts, such as Glendale Unified School District, have managed to stay ahead of the curve. The district has 20 projects in the pipeline at its 30 schools.
Though the district can’t keep costs from rising, Assistant Superintendent Stephen Hodgson said it is benefiting from longstanding relationships with contractors, its reputation for paying on time, and having a staff in place that has overseen steady growth since the 1980s.
Glendale Unified has also saved money by buying expensive electrical equipment and air-conditioning units itself and then supplying them to subcontractors rather than letting subcontractors supply the equipment at marked-up prices.
On its largest project, a new, $45 million high school, the Glendale district has opted to use a construction manager in lieu of a general contractor. In fact, a number of districts are turning to that same option.
By using construction management companies, districts can cut costs by eliminating the need for a general contractor. A construction management group is hired for a fixed fee to act as a go-between, enlisting subcontractors to bid on work while managing the project through completion.
A number of major construction companies and some architectural firms have made the leap into construction management, including Bernards Brothers.
In the past, construction managers focused on monitoring general contractors, but changes in state law now allows them to work directly with school districts, sometimes with mixed results.
Godfrey said the relationship eliminates any chance for general contractors to increase prices while falling behind on work schedules. “Many contractors are sincere and good. But there are far too many that aren’t,” he said.
Construction managers also can stay with a district and handle years of projects without bidding on each one individually, as general contractors must do. (Bernards Brothers now has agreements with 16 districts to handle anywhere from one to 20 projects that total hundreds of millions of dollars.)
Another break for school districts could come with state legislation in the works that would expand their ability to use a design-build model when soliciting bids for construction projects, a practice common on federal and city projects.
Under a normal scenario, a district draws up plans for a project, runs it past state officials, then puts it out to bid. Design-build projects allow contractors and architects to work together early on, speeding up the process and reducing costs.
While design-build gives districts more power over projects, it can also cause problems.
“It may produce some great successes,” said Zinger, a member of a construction management association that originally backed the legislation but eventually withdrew its support because of changes in the bill. “Where it’s poorly handled by districts, it may provide some of the worst wrecks.”
