The Alexandria School Board has awarded the construction contract for the new T. C. Williams High School to Hensel Phelps, the country’s ninth largest construction contracting firm.
The maximum guaranteed price of the contract is $89.8 million and the target price is $87 million. Hensel Phelps will begin a 90-day value engineering and cost reduction exercise immediately. If, at the end of those 90 days the target price of $87 million has not been achieved, the school system can accept the current guaranteed maximum price; accept a new guaranteed maximum price between $89.8 and $87 million or begin negotiations with another firm. The purpose of the value engineering and cost reduction exercise is to find ways to cut costs without affecting the functionality of the project.
“If we cannot agree on a new guaranteed maximum price at the end of the 90 days, the contractor will not be paid for any of the value engineering and cost reduction exercise,” said John D. “Jay” Johnson at the July 1, School Board meeting where the award was made.
Johnson told the Board that there were two bidders for the construction contract. “Both were highly qualified and prepared competitive bids,” he said.
Competitive, that is, with the independent cost estimate that the school system obtained prior to reviewing the bids. “That independent cost estimate for the T. C. project was $91 million,” Johnson said. “We just felt that Hensel Phelps offered us better value for our dollars.”
THE CITY HAS approved a budget of $80.5 million for the T. C. project but recently authorized the school system to use $10 million in K-12 contingency money from the state over the next four years and to re-program money that is currently allocated for other capital projects throughout the school system.
“It has been clear for some time that the school architects underestimated the cost of this project,” said Mark Jinks, the assistant city manager for finance. “Also, the climate has changed over the past several months for this kind of project.
“The price of steel has increased significantly and the number of contractors who are capable of taking on this type of project are busy and thus, less available. The costs, then, are higher,” Jinks said.
If the target price of $87 million is met, Johnson estimated the need for an additional $12 million in soft costs for fixtures, furniture, equipment and the like. This would bring the new estimated cost of the project to $99 million. “We would use $2.5 million each year for the next four years from the K-12 contingency and would re-program $8.4 million from other projects,” Johnson said.
The city approved this plan. “They have found a way to complete the project that is going to cost more than they estimated without using additional city tax dollars,” Jinks said.
The guaranteed maximum price does not include all possible change orders. There is a five percent contingency for such changes built into the current estimate but other changes are possible as the project moves forward.
“Anyone who has ever built a house understands that changes are likely,” Jinks said. “Five percent is a reasonable contingency for where they are in the project at this time.”
CONSTRUCTION will not begin until Dec. 1, of this year. “The project will still be completed in March, 2007,” Johnson told the Board.
The decision about which school capital projects will be downsized or simply moved to fiscal years 2009 or 2010, will be made after a public hearing before the Sept. 23, School Board meeting.
“I think we should hear from folks about what they think,” said Sally Ann Baynard, the chair of the facilities committee, who recommended that the public hearing be scheduled for this date.
Hansel Phelps is a well-known company that has worked on such projects as rebuilding the Pentagon; constructing the Pentagon Metro entrance; The Clarendon Market Common and the Southeast Tennis and Learning Center in Washington, D.C. The company’s mid-Atlantic District offices are located in Chantilly.