Law Changes School Construction

New guidelines established for public school construction just might make it easier for a district to manage a project and its budget. The new guidelines make it easier for schools to select general contractors for construction management services, rather than having to use a contractor in a competitive bid situation.

But the guidelines also change the way architects and contractors traditionally work together on school projects. Private sector clients have used construction management for years.

“We are really neutral and try to stay objective about this subject because we have every kind of method [of construction] going on in-house,” said Larry Perkin, partner in Hight-Jackson Architects PA in Rogers.

The Arkansas General Assembly passed Act 2154 in April 2005 and became effective in December. It seeks to clarify original legislation passed in 1995 about school construction.

“The 1995 law allowed schools to select construction managers,” said David Cauldwell, business manager for Rogers Public Schools. “It was not a very specific law, though, and there were a lot of questions as to what construction manager actually meant. These new laws broke out those various methods.”

“There has never been a true standard for school facilities in the history of the state of Arkansas,” said Scott Copas, executive vice president at Baldwin & Shell Construction Co. in Little Rock. “It was a one-page document and now it is about six inches thick.”

Arkansas Act 1181 passed in 2003, creating the Joint Committee on Educational Facilities, which consisted of six members each of the Arkansas House of Representatives and Senate. One of the things the committee did was define the project delivery methods, which are now listed in Chapter 5 of the Arkansas School Facility manual.

Cauldwell said, up until this year, he hadn’t seen many schools negotiate work with a general contractor but rather awarded the construction project to the lowest bidder in a competitive bid process.

He said school districts have acted as their own general contractors or construction managers before, but some poor construction jobs in the early 1990s caused Arkansas lawmakers to establish stricter guidelines. With school construction projects today, especially in Northwest Arkansas, Cauldwell said there was a general feeling that something needed to be done to give schools more flexibility in construction management.

Cauldwell said most school districts have used the competitive bid process to build new facilities.

Cauldwell served on a task force of more than 100 people to the Joint Committee on Educational Facilities that established the new guidelines in the Arkansas School Facility Manual over the course of about a year from 2004 to 2005.

Perkin said one of the advantages to building with construction management is that it establishes a team approach between architect and contractor.

And it creates a “healthy debate” environment.

His firm is the architect on the estimated $35 million Rogers High School remodel project scheduled to be complete in fall 2008.

Perkin said, in the ideal construction management situation, the contractor steps up to the plate with valueable engineering ideas, whether those suggestions come in the form of materials used or methods.

He said the process also makes contractors more accountable.

“They are interviewed in a competitive way and asked to present fees up front,” Perkin said. “They have to be great handlers of their subs all the way through.”

Perkin said one of the benefits of construction management is that the project can be designed as a whole, but then the drawings can be sent out in packages. In other words, all of the drawings do not have to be complete before construction begins.

For example, the contractor can start the site work and foundation ahead of the complete plans being finished, thus speeding up project delivery time. But phased projects also make it harder to make changes once construction has begun.

Contractor

Darryl Harris, vice president of the Springdale office of Flintco Inc., said his firm has done design-build public school projects in other states for more than 10 years. Flintco Inc. of Tulsa is the parent company to the Springdale office subsidiary, which opened in 1992. Engineering News-Record in 2005 ranked the Flintco Cos. the 33rd largest contractor in the United States and the firm has contracted more than $500 million in educational work in the last 18 months.

“We’ve determined 95 percent of the opportunity to save time and money occurs during the design phase of the project, before the contractor ever breaks ground,” Harris said.

Harris said the new Arkansas legislation that went into effect in December allows school districts to hire a construction manager in several different capacities, in addition to having the option of design-build.

A traditional design-build project means the architect and contractor are paid under the same contract, rather than the owner contracting the architect and contractor separately.

The task force established under the Joint Committee on Educational Facilities defined methods of construction management in three categories: agency, at risk and construction manager-general contractor.

Flintco is now the construction manager-general contractor for two Springdale school projects, in addition to being the agency for the new Rogers High School.

Proponents of construction management say that when the architect and contractor work on the project together from the onset, money can be saved because the process lessens the number of change orders.

“The problem with that [hard bid process] is that the contractor had no input on the design,” Harris said. “There were a lot of change orders after the fact, driving the cost of the project up.”

Traditionally, schools have had an architect design the project from start to finish, then competitive bids are sought from general contractors for the entire project. The contractor with the lowest bid usually wins.

But the school might not actually win because unforeseen problems in the contract might cause the winning contractor to submit more change orders later, thus driving up the cost of the project.

“When you hire the construction manager and the design team at the same time, by the time the drawings have progressed, the construction manager and the architect have worked out the problems and identified any gray areas,” Harris said. “Changing materials, etc., are things you don’t have the opportunity to do on a hard-bid project.”

Cauldwell said by using construction management and being able to choose the contractor, the school district can also eliminate the possibility of having to work with a contractor that didn’t perform well for the district in the past.

He said being able to establish a guaranteed maximum price and working out the details of the project with both the contractor and the architect benefits the budget.

“A lot of it comes down to materials,” Cauldwell said. “We know that a terrazzo floor is much better than a tile floor. We know that over a period of years a terrazzo floor will be economical, but we know the front-end cost for a terrazzo floor is more than with a tile floor.

“A general contractor can give you some choices about savings, and the owner wants to be able to see his choices to make those decisions,” Cauldwell said.

A construction manager general contractor will establish a guaranteed maximum price for the project and from there, the owner can see savings if he decides to change something, he said. In a hard-bid situation, if the general contractor finds out something will cost less, the school wouldn’t see the savings.

Construction manager fees can range from 3 percent to 6 percent of the total cost of the project, and architect’s fees can range from 4 percent to 7 percent of the cost of the project.

Cauldwell said he doesn’t think the school district ends up paying more for the project because of construction management fees.

“The construction manager fee would be [the general contractor’s] profit on a hard bid,” Cauldwell said.

Jack See, principal with Wittenburg Deloney & Davidson in Fayetteville, said his firm is working on the two Springdale elementary school projects with Flintco. See said the contract for those two schools is probably the first of its kind since the new law went into effect.

The new construction legislation also allows schools to use design-build. A traditional design-build project means the architect and contractor are paid under the same contract, rather than the owner contracting the architect and contractor separately, such as in construction management.

Doug Eaton, director of Arkansas public school academic facilities and transportation, said he doesn’t think most school districts will use the design-build approach because he sees it as a process that saves time but not necessarily money.

Eaton said he thinks construction management is a good tool.

“Many times, architects don’t know how the pieces fit together as far as time goes,” Eaton said. “The contractor can see the end project and tell you how to get there. My advice to school districts is to bring the architect on board as you bring the contractor on board.”

Cauldwell said he would be hesitant to use design-build on a project with a scale such as the new Rogers High School. But on a smaller, less complicated project, such as a metal storage warehouse the school district recently built, design-build probably would have worked.