Travis County Commissioners Court
July 11, 2006
Item 14
Number 14, to consider and take appropriate action on the proposed criteria for the design build project at the Travis County correction the complex including, a, project specifications and cost estimates, and b, approve and authorize issuance of rfp and associated exhibit and anopinion diss.
>> good afternoon, judge, Commissioners. I am director of the facilities measurement department. I have with today ken gavey, the project manager from facilities management and our consultant from metro k. And marvin and mark sefano from the sheriff > facility measure. And our consultant with like to present to you the documents and schedule and cost estimate. While the person in the office will present to you the rfp > a little background. On may 2005 the Commissioner court approved the contract for planning and programming services and preparation of the bridging document related to the replacement housing project for the Travis County correction the center facility. The contracts would require Commissioner court approval of the bridging document prior to their incorporation into the rf p. The project criteria has been developed by Travis County design build consultant, consult consulting management, to sheriff's office and it s. The project criteria present a schematic design level of information fortune indicating the design build respondant, the owner requirements and expectation for scope, design and level of quality of the project components. The project criteria will be an attachment to the rfp when it's issued for the design bid respondant. The project criteria include space program, design criteria, appendix a, which is for the ace asbestos abatement specification dated March 2006, appendix b, Travis County information and communication specifications dated April 2006, appendix c, technical study dated April 20, 2006, and the drawing. The original project was to design and build additional beds beds. During the programming and planning phase the county reduced the beds from 1,688 to 1 336 beds. The court approved the 1,336 beds in July 2005, which consisted of 1,112 male housing units and 224 female housing units. You have in your bacup the project criteria and the drawings. And we would like to answer any questions you have on the bridging document, the schematic level document. And then I will move toward talking a little bit about the schedule and the cost estimate. Do you have any questions on the bridging documents as submitted to your offices?
>> I don't know if it's ing document or what was--bridging documents or what was dropped off to me, just a matter so it's in the public domain here. So it had to do with how cost factors, the group c criteria, was going to be evaluated. There was a possible 400 points in that particular segment. The question I asked yesterday that I'd like to have asked publically now, so that if you have x and y who are the propos proposers and one has a better price than the other one, does somebody get all of the 400 points and the other person gets zero? Or is there an appropriation of the 400 points no matter what the price is that somebody has turned in?
>> i.
>> I will let this person answer the question.
>> marvin with the purchasing office. And you said there is an appropriation of the 400 points. The particular group you're talking about is group c, cost factors. There are about six factors in the group, simply because the cost may be lower that does not mean you receive all the 400 points. We would look at all the factors in the costing group. The way we handled with the rfq, although you don't see the points assigned to each individual subcategory, those will be assigned internally by the selection committee and the committee will determine what each one of those subcategories were and score them accordingly. And that will be determined before we begin to evaluate the proposals.
>> the question really goes to basically everything in this packet here. Does everybody being graded on their own individual merits of what they are being, what is being turned in, and not being graded in comparison to the other person's paper? So there's not a winner takes any particular line item. You get graded on the work that you turn in and so does the other person get graded on the work that they turn in, and then we see where we are?
>> each proposal is evaluated and judged on its own merit, ye.
>> okay. Thanks.
>> I have a few questions. The beds for the males are provided by categories, maximum, medium, minimum, and documents I saw yesterday seemed to indicate that the beds for the females were all in the same category. Is that in fact true?
>> no, no. We have 225 female housing, 224 beds in the female housing. 48 beds for maximum security, 48 beds for medium security, and 64 for the minimum security, the dormitory, and another 64 for the minimum, for dormitory. That's total beds of 224.
>> okay.
>> all right. Regarding the schedule of this project, the revised schedule--
>> I have a few more questions.
>> I'm sorry.
>> nice try, rod.
>> speaking of cost estimates.
>> yes, sir.
>> there is , a little deficiency or increase of about 10 million dollars.
>> yes.
>> and were you about to, you mentioned a schedule, otherwise I would not have stopped you. Were you about to cover the costs?
>> yes, after the schedule, I will cover the costs.
>> okay. Let me wait.
>> because with I thought the schedule is very easy.
>> leave the hard one for later.
>> the revised schedule assumes that the court would approve the bridging document and the rfp on July 11, which is today. Then the review and negotiation and the rfp and the cost would be completed in December 2006. Then the court approval of the contract award would be at the end of December 2006 and notice to proceed to the design builder would be on January 10, 2007. Finally the design and construction would be completed in 18 months, which is in the summer of 2008. That is the schedule if everything was approved today. What we did is turn into you the revised schedule. It was in your package, about you we made it simpler and easier. Now, I will move to the cost estimate, judge, and here they are. The cost estimates, the current budget of the new jail expansion design build project, the total project including design-build, is $63 million,750--$63,750. The current cost estimate is $74 293,940, which is a difference of $10,000,543,949, which is about a 17 percent increase > we gave you just now the spreadsheet which is the same as you have in your bang backup but permitted like the front here spreadsheet, and in which row number 120, if you refer to this sheet right here, row number one two and three is the design build project > this is including the male and female housing support area and the siting for the structure. What we have for the total budget was $57,691, 9,691, 000, now the cost variance from the budget is $9,691,000. The two increases I call technical increases and the other one is global increase and we'll talk about it in just a second about the global increase increase. Ed will present that to you. First I would like to talk to you about the site infrastructure, that's a big jump increase which is from neal $7,713,000 to $1,897,000. What I did here is I gave you the copy like this, called cost increase site work, in which I outlined item by item where the increase is for the site work. This space right here. It says first site work and earthwork increased by 610,000 because we got the geotechnical information after we have the initial cost estimate. Based on this new information, the cost for the earthwork increased by $610,000. Demolition is added to the project by $66,000. The landscaping, no change in the landscaping. The stormwater decreased by reducing the scope by $21,500. The wastewater increased by $7,8 $7,875 because of the future extension which would account for future expansion if anything would happen. The gas piping, the domestic system, the site electrical, no changes. The chilled and hot water, it did change up $350,000350, because we are going to bury pipe. Communication--$350,000, because we are going to bury pipe. No other increase. Total 1 million,822,000, and we thought the number, judge is not secure, the total site increase is 1,822,224. Added to that is 175,000 for additional roadway because the current project right now is going to be on top of the existing roadway. Then we have to provide additional turn around for dropping and picking up inmates. That's like a cul-de-sac area. And that would cost about $175 $175,000.
>> who is doing that for us?
>> pardon me?
>> this is a cul-de-sac type turn around.
>> yes, sir.
>> we think the best price we can get is $175,000.
>> yes.
>> even if we would do it ourselves it would cost that much.
>> no. If we do it ourselves, like if I would encage the county forces, it would be less than that. It's going to be material. That's gib to be less if we want to do it like in our department, it would be less.
>> substantially, substantially less, would I check into that. We're looking at a turn around. Not the cadillac version, we want a solid--
>> might make a little e point of clarification. That $175,000 includes the turn around plus other pavement. That's not just for the turn around. That's pavement that has been added to the project since last summer. Since the initial.
>> it would cost us 169,000, probably not enough to matter. Fit costs us 100,000, we could find something better to do with $735,000, I would say.
>> i--with $75,000, I would say.
>> judge, we will look into it. I will talk to don from tnr and try to see the costs on that.
>> okay. Hot water to the right, buried pipes. So we plan to bury the chilled and hot water pipes.
>> correct.
>> would it cost that much to bury them?
>> let me address that.
>> okay.
>> (.
>> the amount of piping that we would need would increase slightly.
>> come closer to the mike, please.
>> sorry.
>> thank you.
>> the other issue discussed earlier in the project out at dell valley was a series of open covered walkways. One of the solutions we had addressed of bringing the chill chilled and hot water piping from the central plant to the new housing building and eventually other building, was to run the chilled and hot water piping overhead using the support for the covered walkways as carriers for the piping. We're trying to balance what was the most reliable way of doing it. And the system at this point is to befory pipe. I think in the design build process, the design build contractors may propose some alternatives to that. But in terms of what we carry in the budget today, that was the more expensive of the option ons and then probably the most prudent, at least for this purpose in the planning process, the way to carry it. It may be that we end up with the overhead piping in the future. So this is more of a contingency factor, sir.
>> we talked about the chiller yesterday.
>> yeah. It's coming.
>> okay. The chiller went up from two million to $4 million because we need a larger one.
>> not necessarily a larger one. It has added capacity. But originally what we had, we, as you can see--
>> I'm talking about the pipe still. Talking about the pipes. Are you going to get to the reasons why the chiller went up. I'm saying $4 million for the chiller. These pipes are running from the chill [to-r] the housing --chill --chiller to the housing unit. How far?
>> about 1500 feet. I have that.
>> that, the exact distances here.
>> a little more--
>> 2100 is the length that right now we are carrying in the estimate for the chill water pipe and the hot water pipe from the central plant building to the housing building.
>> about half a mile.
>> quarter mile.
>> yeah. Now, that's total length of piping. That's the supply and the return return. The chill water comes from the central plant to air handlers in the building and then goes back to the central plant to be re rechilled again.
>> this is $350,000 just to put them on the ground.
>> yes, sir. And because they are of the type of pipe they are encased and insulated. It may not have to be done that way.
>> excuse me, judge. I think part of the increase in cost is not just to put them underground but also the length of pipe has grown since last.
>> what is the length? I have heard two different sizes sizes? What is the real length?
>> currently a little over 2,000 feet.
>> all over.
>> 2,124 feet.
>> if you all recall, part of the program for this project was to, the central chiller plant is located kind of a distance away from the new building. Rather than having chillers right there at the building, the idea being it's located over on the edge of the complex so that to make it easier, it's going to be a large central chill that are will ultimately be able to supply chilled and hot water for the entire complex. As new buildings are brought on line, the central plant will be able to handle the whole complex which will be a lot more efficient in the future. It's more efficient on energy cost, more efficient on maintenance and operation, and also right there at the edge of the complex which makes it easier for service vehicles, maintenance people, to come and be able to service. It's not in the complex. People can come service it without having to enter the secure complex. So there's a number of advantages in the long run for locating it as it has been located > part of the reason why that pipe got longer, I believe, was clarification between hok and the sheriff's office over the best way to plan for the future in this area because initially when these pipes originally laid out they were kind of cutting through an area that could be used for a future building, another housing building. So they got rerouted to allow more flexibility as we expand the complex in the future as we replace older building in the future with new buildings, it gives us more flexibility as it's currently designeddesigned.
>> you're blown away by seeing the $350,000--
>> don't worry about the ten million increase.
>> too, I'm blown away by the explanation of how do we get there. It may well be that these figures are the best we can do. I don't deal with them every day thank got. They strike me as being just big figures. I mean, I was trying to understand, putting pipes under underground, even if it's half a mile.
>> the frightening thing on this whole deal is that we're $10 million more to date. And this is even before you get down to the ntp, notice to proceed > if anybody thinks that $10 million is going to stay at $10 million, it ain't going to happen. Not with today's, you know, building costs > there's nothing that doesn't go up. In a week or two. You know, there's a question. There's no doubt that we are in a, you know, $70 million project and the multiplier on a $70 million project doesn't have to be a very high number for you to start ratcheting up, you know, costs on these things. It is--
>> do we have a pretty good fudge factor here?
>> we have included a contingency and an escalation.
>> that's one of the reasons you go with the design-build, you do lock in your costs. Then that's it. But one of the difficulties here is that when we were first scoping this project, even trying to get this down to the bond ballot, we're talking it's been a year. It has been a year. About August of last year we were finalizing the number that would appear on the November ballot. And we have seen this happen at every level in terms of whether it's tnr coming in with the cost of pavement, people coming in with the cost of gasoline. As difficult as this is, the longer this waits these numbers are only going to get worse [ph] terms of trying to lock them down. So there is something to be said for getting it locked down. Once it is locked down it is no longer our problem to manage. It is somebody else's. But you are right in terms of what is that number, that is the problem for the Commissioners court to manage. That was the problem. It's a year since the thing was scoped.
>> going on what the judge said, I'm to see that much of a-- a--shocked to see that much of an increase. That is significant to me. I hear what everyone is saying here, but just seemed on to me, I don't know, I'm just not comfortable with that increase, a significant increase.
>> nobody needs to be blown away by the fact that in a year's time you have a 15 percent increase. There is nothing that we have built, that we have gone out for in a year, you would love the fact if you could keep it at 15 percent.
>> Commissioner, I don't know what you are buying that you bought last year that the not more expensive than this year, especially when you start taking a $60 million project to a 70 million.
>> that's significant.
>> between escalation and the contingency?
>> an escalation is an attempt to identify a number that the construction cost increases. Every month we're seeing an escalation in the construction cost price based on the market > a contingency is like a savings account that the county has for unforeseen conditions or changes in scope or other issues > but the escalation is an attempt to predict what the construction market is going to be at bid time for this project.
>> on the site work increase. Just the site work increase, there is half a million dollars of escalation.
>> yes, sir.
>> just on the increaseincrease. On top of that there is a contingency added of about 125 125,000.
>> yeah. Actually, there were two numbers for the escalation. One is the 207,000, which is the escalation on the increase. The 394,000 is the escalation on the portion of the project that had no change. So the total is 500.
>> then we took the new total and did a four and a half percent contingency on it.
>> yes, sir.
>> looks like three contingencies.
>> yes, sir, it does. And again, I think Commissioner Daugherty was beginning to address this issue, how conservative should you be. When you identify a number like a contingency and put it in your budget, that's only to protect yourselfprotect from surprises. And one of the things in the beginning of this project that we heard very clearly, you didn't want surprises. So you build in a factor that to some degree protects from you that at the end of the line. Now, the hope is you don't use the contingencies, that the project ends up coming in under the budget.
>> all rightment let me ask you this. I don't think I can take much more. Instead of an escalation on different increases, why wouldn't it make more sense to take the same amount and put it in the contingency?
>> there are a hundred ways to do it. That would be. The way our estimators work, they identify a number that the owner is comfortable with for a contingency. Then they try to look at the market trend. I've got some additional information I'm going to share with you in a minute.
>> okay.
>> it shows the escalation issue issue. The difference is, your savings account, pass book balance, versus looking in a crystal ball and predicting what's happening in the future. So they like to do it as two separate items because there's two separate factors that go into their methodology.
>> can I just hear the explanation of the increase on the chiller.
>> sure.
>> this would be on the second page. It's called cost increase central plant.
>> that's what we got today?
>> yeah.
>> okay. On this one, the cost increase on the central plant as you can see, demolition of the utility concrete and structure foundation has not changed. On the technical issue two items the plant equipment. We dropped $129,631 and electrical 465,500. That is supposed to be in the original budget was dropped out. The original budget reported this to be 2,500,000. So actually it should be a 3,950 131. The net construction does not include anything in the design, generally condition or contingency or escalation. That's why those factors added up to what you see, judge, to $1 the 72,894 increase in the central plant buildings. And do you have to add anything to it.
>> originally omitted means what what?
>> originally--
>> it was a goof. Cut to the chase on that, sir.
>> on the original estimate breakbreakdown sheet, the summary sheet that you got initially, for all of the housing units, we used gross numbers that included the construction costs, contractors overhead and profit design cost, contingency, and all of those factors, weighted factors that take a net construction dollar and make it a gross budget cost. When we got down to the line item for the chiller plant, our budget at that point had $2,5 $2,500,000 as a line item for the chiller. We failed to burden that number with the grossings factors of the contractor's overhead and profit and design cost and those things. So on the sheet you were presented we had gross numbers, which have proven to be pretty accurate for the housing unit, but the number that was included for the central chiller plant was in fact the net construction cost, and what mr. Okury was saying, in the final estimate after we had design work and sized chillers and all, the $2,5 $2,500,000 budget in the current estimate is $2,695,000. So we have only seen as the scope became more clearly defined, an extra 100 and something thousand dollars in the chiller plant at the net number. And then when you add all of the burdens, the design fee, generally conditions, overhead and profit, condition contingency and escalation, that's the biggest part of the difference in the price. So we take--
>> why weren't those includeded initially? It was an oversight--
>> it was an oversight.
>> I appreciate your candor.
>> a nonand a half, 1.7 million oversight?
>> yes.
>> on a $2 million chiller?
>> yes, sir. We used the net line item from the estimate for the chiller plant for $2,500,000, we did not add all of the burdens that were the below-the-line factors to that number.
>> the burdens will another $2 million.
>> yes, sir.
>> that's what it boils down to.
>> help me understand this then. If we have built in contingencies and escalations, why have, and then you get a total, why put another 4.35 percent con tin gin--4.5 percent contingency on top of that?
>> you don't have to. We are advising you to do that to protect yourself so that--
>> why do I need that protection protection? Why aren't we protected by the time we get to that total without the additional four and five percent contingency?
>> the proof is going to be in a relatively short period of time when we get the prices from the bidders. Our anticipation of the need for the contingency may not be well founded. We may get prices in that are below or budget. One of the attractive features of the design-build process is where we are right now is the product of working with the sheriff's department, facilities management and the consulting team on selecting systems k products, materials, and sizes of space. We're going to have a fresh pair of eyes from two different bidders with architects, engineers, and contractors looking at this again, and they may be able to find either more economical systems or more efficient approaches to it that may save us more money.
>> our problem is that we don't have $10 million sitting in some account waiting to be spent.
>> right. But you're not being asked to approve a construction contract right now. What we're asking you to do is to approve proceeding with the process to get that number on the table.
>> if you proceed with the process and issue the rfp for the design-build, won't the responding firms want to noel well, what's your budget?
>> well, it's public record. Yes, they will know.
>> that's my point. And so, I mean, if we think that we got a $67 million project, we will spend close to that. I mean, the bidding firms would be foolish to come in significantly lower because if they think there is something we missing overlooking if we come up with a $55 million estimate. Wouldn't they see say, let's see how close we can get?
>> that's the reason you want multiple bidders, the competitive process. You still have a competitive market here. But there's no question that I think that where we're headed with this thing, judge, is to get us to a spot where we have some reasonable idea. You know, reasonable may not, I mean, this 67 may look pretty nice and reasonable by the time, you know, to proceed gets here.
>> I am still not sure. It may take a week to get me this answer or we may have to meet in a private room and go back to the basics with me. I'm sitting here thinking, if we have the different pieces, escalators and contingencies, then we add up and get a total, why then add another contingency and get another grand total? Why don't we just end up with our total? When you add up the escalators and contingencies built in, you really get up to the 20-30 percent range. And the four and a half million is pride to like a 58, 59 million figure. So four and a half percent ends up being a substantial amount of money.
>> that's correct, judge. If I may clarify that issue about the contingency. As you know, on the sheets right here I put the contingency between parentheses, business, which is right here at 8.5 percent, that what we have in all our costs, which means we know what the construction, you know, estimate would be, but we added a contingency for bid. Probably the bidder will come less or more. If it come more, we already cover with the initial, with the total cost estimate for the project. Then the contingency, the 4.5 percent, that we'll call it the owner contingency at the end, that's reserved for any change order down the road, which we hope we don't have many changes with the design-build, that's why the shall here. We're saying the contingency included that 8.5 percent of the construction estimate we did on this project. So the bidder would come with the number, about like 8.5 percent more, we are already covered with that bid. Then the 4.5 percent is for us to manage the project and move forward. Again, as ed said, we don't know exactly the number until we send it to the two proposers and they come back or the three proposers and then come back with their hard cost estimate. At that time we sit down and look into the project as a whole from the cost perspective.
>> I might also add something to try to answer one of your questions, judge. You asked about what's to keep these proposers from just saying gosh, looks like they have got plenty, a big budget, let's just throw that number out at them in our proposal. One of the things we're asking for in the rfp is for these proposers, along with their proposal, the cost, based on the bridging document, we're also asking them to provide us some value engineering options that they see in the project from looking at the bridging documents, where do they see some possibilities where we might could reduce the cost without reducing the quality. And that will be part of their submittal, the proposal submittalrs and it will be judged, it will be evaluated along with their costs and all the other information they will be providing. And it will be used as a factor in determining who is actually giving us the best value. If a firm just office us just-- just--offers us just a cause and that's it without any options, ways that we can try to work with that cost, reduce it or improve the project, they are not going to score as high on that point as another firm who will give us some good value engineering options to choose from. As ed said too, one of the beauties of the design-build project, ultimately they can lay a proposal on the table. If it's higher than what we want to see, kwee still work with them on--we can still work with them on finding weighs to bring the cost of the project down before we finalize a contract with them.
>> when will we know how much money we need to fund the contract?
>> we anticipate that we would know around October, November. We will, I think the current schedule--
>> November.
>> what does the schedule say?
>> it's negotiation, we will know something about it by end of November 2006.
>> when we receive the proposals those proposals will have a cost plus some value engineering options. That will give us an initial indication right then. We will know the actual financial costs around the end-- end--final costs around the end of November.
>> around November we will know how much, if any, above the 63.7 63.75 million we need.
>> sure.
>> and at that time we need to go and get whatever it is.
>> that's correct. At that time we'll know what the number is, the hard number, and we can work with it. Now, as we said, we can do lots with the design-build, of value engineering, scope reductions, alternatives way to bring the project back into our budget. If the proposers' numbers are higher than hours. Now, besides, the two proposers or the three, they are going to compete against each other. Not going to compete against our number. They are going to compete the number that they will be comfortable with, they are going to make a profit out of, and comply with our requirement and project criteria and plan. So we will sit down in November.
>> okay. Part of your rationale today is that it's better for the number to be larger than we need than smaller.
>> that's correct.
>> what mr. Okury said.
>> although five near heart attacks.
>> all this is, do you want to know a number now or do you want to know a number in November. What you don't want to know in November is that 30 percent over what we're telling you know. What this exercise is, is kind of, you know, getting you a little loose for what you're going to see in November. That's my read.
>> that's correct.
>> and the only thing that is worse than that is what we had on one of our other projects a little earlier from now. We knew internally that prices had shifted on our gardener best project. That was not shared with anybody anybody. So it went through the process. Lo and behold every single one of the proposers came back and it completely buzzed the project and--busted the budget. And a lot of folks who put in a lot of good work, we threw them all out because we didn't find out the answer until the very end. This is a heads-up saying without one bit of value engineering there are issues based on the market factors of what happened when this was priced, almost a year ago, and today. Doesn't mean that's where we're going to land. But that is a benchmark which hopefully the two proposers are going against each other k kind of like playing blackjack, not against the other hand, it's against the house. There are some possibilities here. But I'd rather hear this bad news now and people can be thinking collaboratively and creatively and value engineering I'm looking forward to that as opposed to you wind up finding out, have you two proposers that go, you all are crazy. They were saying a year ago that the budget we had established was tight. And now a year has passed and, you know, a year ago I thought we could never pay more than 2. 2.25 for gasoline and it was close to three bucks in houston this last weekend. Shocking what the happening to the prices.
>> Karen, I agree to a degree. But even though it's distressing to have somebody tell me, we just didn't add that. That is not, that is not something that any of us like to hear. Anymore than I like to hear, we've lost one of our bidders. I mean, what I'm the most concerned about from these bridging documents forward is that we have no more issues like that. I mean, I just, because we don't have any place to retreat now. We have two and we need more than two. But we're not going to get more than two. So heaven help us if we get into a situation where somebody thinks that, you know, this is just not a deal that we want to mess with. Because then we really are back at the table with one bidder, and it being more time. So from my standpoint, whoever it is that makes the calls from this point forward, I don't want anything brought to me where I've got somebody calling me and going, what are you doing? Why are you doing it that way? I think that we went into this thing, this design-build, because we were all sold that it was the way to do it. I mean, and I sure hope that this team that I got in front of me can look and can carry this thing forward and we not have, you know, not casting any blame on what the happened to date but I'm obviously not thrilled where we have got--about where we have gotten to. We know we have numbers that are moving further up than what we are comfortable with. That just means that we need to make no mistakes with regard to what we hear this point forward. Nobody is going to be happy come October-november if all of a sudden we are just blown away. I can really justify a way, a big number--away a big number. Because if you're building anything, you know, and I have built a couple of things in town I mean, it's pretty frightening when you are at the top of a market like you are right now. You don't see many people running around. Not that this is not a sizeable project. A $70 million deal, not everybody in town can do it. We sure need to make sure that we don't, that we cut the faux pas and anything out. Not that I'm telling you don't come back and be truthful with us of that's the reason I said I appreciate your candor. That's pretty good for somebody to say, you know what, we should have had that number in there and we didn't put 245--that number in there.
>> there's still the other question though. Let's say that we do go out. Do we feel like there are enough contractors out there who are available to bid on this project project?
>> after.
>> after that, all the fox that we need to have on site in order to get to work.
>> one of the reasons, Commissioner, that the construction costs have escalated to the degree, several factors. I've got a brief presentation that I'd like to go through on that. But one of the factors has been that the subcontractor market in Texas has been very busy and they have not been forced to be as competitive as they may have been in years past and they can be selective of the jobs they bid and they can be generous with the markups they put on their bid prices. So that's just a factor that we have considered in the escalation as to what the market is right now.
>> we have been through that before too.
>> that's correct. All your skilled labor is in very short supply right now. Electricians, plumbers, all of those kinds of trades.
>> that doesn't make me feel comfortable either.
>> they are very busy.
>> back to presentation.
>> I'll try to make it brief. As mr. Okury said, two factors, the technical factors, the that is that were changes of scope or omissions or things like that were here. This next part, and I think, do I do this? How do I get this on the screen? Okay. Great. These are the other factors. Essentially this is the market condition. We have gone through this. I'll just skip through these. This is the scope of the project right now. Again, the cell distribution. This is the current estimate. This is just a very brief history of the four major milestone estimates we have had on the project, the 79 million was when we still were going for the 16888 beds, the current 67 million > I want to talk about the history of escalation. From 1994 through 2001 we averag averaged approximately 3.6 percent per year in construction cost is . In 2002 and--cost escalation. In 2002 wan 2003, the industry was almost flat, escalation less than one percent and the construction market very thin. Beginning in 2004, we saw the market correct itself and about 5.4 percent escalation. These numbers I'm sharing are national numbers. I have had discussions with the chief ec mists in washington for the some--economists in washington for the association of generally cock contractors and got these numbers. Each market, Texas, louisiana, new york, is going to be slightly different. 2005 we had a net increase of 9. 9.5 percent for that year. But that represented about three percent to September and the six and a half percent from September through December of that year africa trina--after the hurricane katrina. 2006, we have seen an average of 17 percent in construction cost es. This is just the market. So a total since katrina of approximately 24 percent. Depending who you talk to, I have seen the number from 20-30 percent. The cost of oil another very significant factor. The construction market activity is a major factor playing in this right now. Material shortages, surprisingly construction in china. China right now consumes one half of the world's cement, a third of the steel, a quarter of the copper and ten percent of the oil. All of these factors have come into play in the last two years. Had we done this project in 2001 or 2002, they would not have been affected by these numbers. Just the biggest component of construction cost that's gone up has been materials. Labor costs have not gone up to any degree approaching the cost of materials. But copper as an example has gone up 94 percent between may of last year and may of this year. Ace asphalt is 29 percent increase in just the material cost. Since September of last year already in the katrina-rita area from Texas through mississippi, $45 billion has been put into the construction market. That's taken contractors and subcontractors from all over the country out of their local market doing work in that area. Another interesting statistic there is that 7.35 billion board feet of lumber--7.5 billion board feet of lumber was destroyed in managed timber forests that louisiana pacific, georgia pacific, all of the big timber companies operate in louisiana ap mississippi. That has had an effect on the price of materials. That is going to continue. The estimate are at least another $200 billion there construction will be spent in that area associated with storm reconstruction. This graph shows what I was just saying about the cost through 2001 at about 3.6 percent, for 2002, 2003, relatively flat market. Then we begin to see a spike. The 9.5 percent in the year 2005 really should have been a broken line. Before katrina and post katrina. 2006 by the end of the year we estimate another, I mean since the end of 2005 and today there's been a 8.5 percent and we estimate another 8.5 percent before the end of the year. So that's 17 percent this year. Going out past this year, maybe the high range is 12 percent per year and the low range is six percent per year. This is something to go back to what we were talking about earlier about the need to proceed with this project in its normal pace. If we look at the low end of maybe a half a percent month escalation to a high of one and a half, there's a range of 3 300,000 to a million dollars a month that a delay in this project could cost us. If we assumed the median there, we're talking about this project growing at about $700,000 a month if we delay the project. What are our options right now? I think one, the primary option, we ought to use the dine-build process--design-build process and use it to value engineer the project, driver costs down, be as careful as we can with the selection of the materials and the quality. Initiate an intents value engineering process. Between ken and I i we have come up with 38 items in the last several weeks that we think can be reduced from the scope that's in the manual now or at least put on the table to discuss. The other options are reduce the project scope and reduce the construction quality. I don't think anybody associated with the project can recommend those. Then finally, our recommendation to you today is to proceed with the design-build process, let's see what it can do for us, continue with the value engineering process, and then evaluate the options when they come in as a package and make the financial decision as to how how--final decision as to how to proceed with the project when the cost is on the table and the materials and systems are defined in the proposal we get from the design builders.
>> does anybody build lease sales? Central in the business to building sales? There there are companies that will build, lease, operate, manage, do everything for you out there--the thing that I think is important for Travis County to understand is that if you build the same building and staff it with the same staff, somebody is making a profit on top of that and the county doesn't have to make a profit.
>> .
>> it's interesting you--
>> jails.
>> it's interesting you mention the one item we have debated and it's potentially on the table is doing just that with the central chiller plant with potentially outsourcing the construction, operation and maintenance of the central chiller plant. That would remove construction dollars that we need right now but we would end up probably paying a bit more in the long run because we would be buying chilled and heated water from some other entity that would be running that plant for us.
>> if we decide in November that the prices, the two design build firms or three, make available are higher than we believe they should be, are the schematic design documents detailed enough to be bid documents?
>> not as they are now, . Part of the design-build process will take those documents to a more complete stage. These are bridging documents, not bid documents.
>> okay.
>> what you're saying, once you get to the bid and somebody bites off on the bid, that gives us $700,000 a month, we can't act like that doesn't exist because that's exactly what a contractor is going to do.
>> yes, sir.
>> the contractor is going to use that multiplier and say, okay, we're starting this thing in January of '07, I mean it's a 18-24 month, what is it?
>> eighteen.
>> a 18-month buildout. You're talking about $700,000 times 18, you're talking about 1 11, 12 million more.
>> yep.
>> on top of a 10 million that we have here. So we very well could be looking at something that's going to cost us $25 million more. I mean, realistically. By the time we get it, we have ten million now. If they take and put another ten or 12 million on it, you are talking, you know, realistically just look at it. You may be talking about a $20 million more project than what we thought.
>> Commissioner, I hope not. I think what we have used for our escalation factors are not escalating to today's price. Estimating to the intended construction time frame. I we have taken that into consideration.
>> once you get to those numbers you say hello, lime stone county county. You start talking about a cost of of-benefit analysis of shipping folks off site.
>> what else did we need to see today? What else can we stand?
>> I would like the approval to move forward with the present document and move toward the rfp and send the rfp to the respond respondant and take it from there.
>> .
>> vote for approval.
>> second.
>> that's basically 14 b.
>> a and b.
>> a and b. B is the rfp.
>> okay. Specifications as explained in the documents before today.
>> that's correct.
>> okay. Any more discussion? You all would issue, put together the rfp?
>> it's just about ready to go.
>> when does the court say the r rfp?
>> you have it now. You have a final draft now which was provided to you with the agenda package last week.
>> that's what you would issue then.
>> yes, sir, pending any changes from the court and some minor changes.
>> corrections.
>> corrections from the county attorney.
>> anymore discussion? All in favor. Commissioner Daugherty, Commissioner Sonleitner, you are voting in favor?
>> Commissioner Gomez voting know. Thank you all very much.
>> thank you.
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Last Modified:
Wednesday, July 12, 2006 10:47 AM