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APPROPRIATION COMMITTEE REPORT TO THE NOVEMBER 2012 STM The primary cost drivers are listed in the table below; note that this is not a complete inventory of cost increases. However, the two main drivers appear to be material costs especially structural steel and greater regional construction activity reducing the number of subcontractors available. Source: Denisco Design Partnership A second estimate was developed to compare with the contractor's estimate. This estimate, provided by A. M. Fogarty and Associates, Inc., is approximately $800,000 higher than estimates provided by Shawmut, making potential cost increases closer to $2,800,000. Variances are also expected, though they have not been quantified, in the costs for demolition of the existing building. In September, the Town (Public Facilities Dept., Permanent Building Committee, School Committee, etc.) worked with Denisco Design Partnership and Shawmut Construction to identify areas for potential cost reduction and identified $652,400 in cost reductions. In October, the School Committee, with input from the Permanent Building Committee, voted additional value engineering adjustments totaling $858,252. Though the remaining gap of $1,252,674 could be reduced with the use of construction contingency funds, it is inadvisable to apply these contingency funds at this point in the project given the inherent potential for actual vs. estimated cost variances and for market forces to result in additional cost increases. Also, aggressive bid timing and the complexity of MSBA involvement warrant that a buffer of funds be put in place to assure that the project stays on track. The project schedule shows 100 % - complete bid documents are due in late November 2012, with bids due in late December 2012. With the final GMP due to be negotiated by December 30, 2012, and subcontracts to be awarded the first week of January, the Committee concurs that it is prudent to provide the necessary funds to keep the project on schedule through this critical phase. Even though a definite number for the request has not yet been set, the Committee voted 8 -0 to support a request of up to $2,800,000, an amount at the upper end of the range of preliminary estimates that were current during our deliberations prior to press time. This vote is not intended to place a ceiling on the proper amount to be requested; rather it merely is a statement on our knowledge of the amount to be requested. If the request is for an amount higher than $2,800,000, the Committee will deliberate and vote on the higher request. The Committee recommends approval of this request (8 -0). 11 Preliminary 60% Constr. Difference Explanation Design Documents Concrete Foundations / $3,881,502 $4,585,651 $704,149 Demand for steel. Reduced Structural Steel capacity of suppliers Increase in materials costs. Masonry $1,111,955 $1,242,816 $130,861 Reduced number of pre- q ualified sub - contractors Interior Woodwork $801,754 $1,021,559 $219,805 Union carpenters costs Membrane Roofing $375,630 $695,925 $320,295 Design scope underprice Windows $307,900 $442,499 $134,599 Increased materials costs Reduction in bid submission Electrical $2,342,050 $2,871,480 $529,430 from sub - contractors. Increase in materials costs. SUM OF PRIMARY $2,039,139 COST INCREASES Source: Denisco Design Partnership A second estimate was developed to compare with the contractor's estimate. This estimate, provided by A. M. Fogarty and Associates, Inc., is approximately $800,000 higher than estimates provided by Shawmut, making potential cost increases closer to $2,800,000. Variances are also expected, though they have not been quantified, in the costs for demolition of the existing building. In September, the Town (Public Facilities Dept., Permanent Building Committee, School Committee, etc.) worked with Denisco Design Partnership and Shawmut Construction to identify areas for potential cost reduction and identified $652,400 in cost reductions. In October, the School Committee, with input from the Permanent Building Committee, voted additional value engineering adjustments totaling $858,252. Though the remaining gap of $1,252,674 could be reduced with the use of construction contingency funds, it is inadvisable to apply these contingency funds at this point in the project given the inherent potential for actual vs. estimated cost variances and for market forces to result in additional cost increases. Also, aggressive bid timing and the complexity of MSBA involvement warrant that a buffer of funds be put in place to assure that the project stays on track. The project schedule shows 100 % - complete bid documents are due in late November 2012, with bids due in late December 2012. With the final GMP due to be negotiated by December 30, 2012, and subcontracts to be awarded the first week of January, the Committee concurs that it is prudent to provide the necessary funds to keep the project on schedule through this critical phase. Even though a definite number for the request has not yet been set, the Committee voted 8 -0 to support a request of up to $2,800,000, an amount at the upper end of the range of preliminary estimates that were current during our deliberations prior to press time. This vote is not intended to place a ceiling on the proper amount to be requested; rather it merely is a statement on our knowledge of the amount to be requested. If the request is for an amount higher than $2,800,000, the Committee will deliberate and vote on the higher request. The Committee recommends approval of this request (8 -0). 11