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Thursday, March 1, 2012

Sticker shock: Committee considers cuts to high school construction project after bids come in higher than expected



SOUTH PORTLAND — On Monday morning, South Portland Finance Director Greg L’Heureux sat in his office and described the reaction to bids opened the previous Thursday for the long-awaited high school renovation project.

“We all just sat there like this,” he said, letting his jaw fall open to its natural extent, then stretching it just a bit wider still, for emphasis.

The shocker was that the lowest of four bids rang in at $43.24 million, while the school department has budgeted just $39.26 million for construction from a $41.5 million bond approved by voters. The higher-than-expected price tag made necessary an emergency meeting of the South Portland High School Building Committee, which on Monday began a review of the project to see where costs can be cut.

That work will take place during March, culminating in votes at a pair of building committee meetings, scheduled for March 20-21. Initial discussion centered on the future of Beal Gym, and whether the final project will be able to accomplish the goals set out in the original renovation and expansion plan.

But first, the committee had to get past the sticker shock, which officials said was a result of the project’s long time frame and complexity, as well as the high number of large construction projects now under way in Maine.

“It’s been a really rough weekend” said Superintendent Suzanne Godin at Monday’s meeting.

“I know the emotions I felt Thursday at the bid opening,” said committee Chairman Ralph Baxter Jr. “You could say it was a tragedy. Yes, I was frustrated. I had to chill out, relax and catch my breath.

“I’ve since decided this isn’t a crisis,” said Baxter. “This isn’t a tragedy. This is a problem. And all of us volunteered for this committee to be problem solvers. Over the next two or three weeks, we are going to have to keep at it. We’re going to fix it. We’re going to go forward.”

And while most on the committee voiced support for the project, and confidence the new goal can be met, some expressed concern for what the final result might look like.

“I have no doubt that it will be a usable school, and that it’ll be an improvement over what we’ve got,” said committee member George Jones, a city resident who teaches history in Scarborough. “My main worry now is that we are going to end up with some utilitarian, Soviet-style building with no aesthetics to it.”

“It will be on budget and it will still be a great school,” assured Dan Cecil, the project architect-of-record, whose firm, Portland-based Harriman Associates, is collecting $2.55 million to design, engineer and oversee the project.

In November 2010, South Portland voters approved borrowing up to $41.5 million to tear down and replace most of the high school, while retaining Beal Gym and the original 1952 section at the corner of Highland Avenue and Mountain View Road.

Beal Gym has since risen as a particular bugaboo for the project. An original proposal was to build a new gym and retain the 1954 icon as a practice gym. That idea was shot down by voters, who wanted it kept as a focal point of the new school. However, according to Harriman’s senior project manager, Dan Robbins, the gym ended up being “in much, much worse shape than we knew before the [2010] referendum.”

Cecil said the total cost for fixing Beal’s structural issues may run to “more than six figures.” That prompted school board member Jeffrey Selser to suggest it might be cheaper to simply tear down the gym, despite its sentimental value.

“I think it’s important as we look at this, as we now make some very difficult decisions about what cuts we are going to make, that ultimately we are designing a building for the students,” he said. “It’s not for us.

“A small but very vocal part of the community may have ended up costing us a significant amount of money to preserve some people’s memories of a bygone era,” said Selser. “It’s important to honor the past, but we are building this school for the future.”

Meanwhile, City Councilor Gerard Jalbert suggested that “low-hanging fruit” could be plucked by passing on energy-efficient Leadership in Energy and Environmental Design certification, saving $125,000, while Godin declared herself “uncomfortable” with that direction in cost-cutting.

The total project, to take place through the next three years, is pegged at $47.26 million. However, the school department has $2.7 million sitting in a reserve account for secondary school facilities, $600,000 in usable budget surpluses, $678,350 in energy performance credits, and $1.78 million from an approved-but-as-yet-unused 2010 capital improvement bond for security and electrical systems at the high school.

That reduced the project to the $41.5 million bond approved by voters by covering most of the $3.33 million in fees and services (the largest chuck going to Harriman) and part of the $4.67 million in administrative costs, which includes a $1.67 million contingency fund.

That leaves $39.26 million for actual construction, rehabilitation of retained structures and site development. PC Construction of South Burlington, Vt., was the low bidder, at $43.24 million.

“It seems like a hard number, but it’s doable,” said Cecil, who recommended that the building committee not attempt to re-bid the project.

“[PC Construction’s] bid is valid,” he wrote in a Feb. 27 memo to committee members. “They are an excellent contractor with a proven track record on large projects. We believe that the gap between bid and budget can be closed through good faith negotiations and reductions in scope.”

Formerly known as Pizzagalli Construction, PC is based in South Burlington, but maintains an office in Portland, led by South Portland resident Joe Picoraro. The company worked with Harriman on the $27 million renovation to Scarborough High School in 2003-04, drawing some complaints from the public and town councilors there over post-project mold, ceiling leaks and foundation cracks. Bruce Brown, a former clerk of the works at the project, described the work site as an "insane asylum,” while an independent engineering report released in September 2005 found enough issues to urge that the town purchase a long-term insurance policy as a safeguard against potential future problems with the building.

Godin, Cecil and others representing the school met with PC Construction principals “for more than eight hours” on Monday to review the bid and scope of work.

Cecil blamed much of the bid miss on PC hedging against future fuel and materials costs, given present uncertainty in the Middle East and the long, 33-month construction cycle. Cecil also said that the way in which the project is being phased to accommodate students, who will continue to use the school, forced the contractors to set up and break down work sites multiple times during the life of the project. He also urged the city to find some climate-controlled building within its borders that can be used for material storage, particularly drywall.

However, Cecil said, the single most important reason for the higher-than-expected bid is one that might at first seem counter intuitive. The conventional wisdom since the national recession hit in 2008 is that contractors are hungry for work, and will bid low to secure it.

However, Cecil said, the opposite is now true. Ticking off a host of current or scheduled projects, including a new $285 million hospital in Augusta, a $25 million overhaul to the Cumberland County Civic Center, a new $26 million corporate headquarters for Idexx in Westbrook, $25 million project at Bates College and the $39 million replacement of the Wentworth Intermediate School in Scarborough.

“So, there’s actually quite a bit of work in Maine right now,” said Cecil. “One thing we heard is that fewer subcontractors bid than we would have expected. One example is a big drywall company, in business for 25 years, who didn’t bid at all because he’s completely booked up with the hospital job.

“That hospital, in particular, seems to be gobbling up a lot of contractors,” said Cecil, adding that many contractors prefer such work to the South Portland High School project, which promises to be longer, more complicated and “not at all cookie-cutter.”

“So, I guess the lesson here is that the market has bottomed out and the market is on the rise,” said Cecil.

The school board was scheduled to hold a special meeting Wednesday night, after the Current deadline. However, the board was expected to grant Godin authority to negotiate with PC Construction moving forward. Following informational meetings on March 8 and 15, the building committee will meet to make cuts in the project on March 20 and 21.

“They will be taking a look at this to determine where they need to make some adjustments, based on this [bid] number, to bring it in to a place where it would meet our bonding capacity,” said Godin.

There were five “add-ons” for which PC also submitted quotes. The building committee would have chosen from among them had the base bid come in under the $39.26 million ceiling. Although dollars seem scant now, Godin said it’s too soon to give up on these extras – which include an equipment storage building, courtyard landscaping, a greenhouse, kitchen equipment and an irrigation system for the athletic fields. That’s because the building committee might find ways to save by choosing less costly finishing materials than those previously selected for the new school.

“We can’t say without looking at it all,” said Godin.




A CLOSER LOOK
Construction bids opened Feb. 23 for the South Portland High School renovation project, for which the school department had budgeted $39.26 million from a maximum approved bond of $41.5 million:

JCN Construction, Manchester, N.H.: $46,674,000
Harvey Construction, Bedford, N.H.: $46,569,000
Eckman Construction, Bedford, N.H.; $45,998,000
PC Construction, Portland: $43,244,000


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