gronberg@heraldsun.com; 419-6648
DURHAM — Administrators say they’ll save more than $1.2 million on repairs to three city recreation centers by using traditional bidding to find contractors, instead of assigning the work to a single construction-management firm.
The savings on the W.D. Hill, Edison Johnson and Weaver Street centers will enable the city to go through with planned repairs to two other facilities that budget shortfalls formerly jeopardized.
And it looks like even when the added work at the Campus Hill and East End parks is complete, the city will still be $701,094 to the good. That’s money it can use later to bring other Parks and Recreation Department facilities up to par, General Services Director Joel Reitzer said.
The savings come because Reitzer in late September decided it didn’t make sense to farm out the first three repair projects to a so-called “construction manager at risk,” Skanska USA Building Inc., that would coordinate work on each.
At the time, it looked like Skanska could complete them for about $2.4 million.
After seeing the prices Skanska could guarantee, “Joel came to me and said, ‘I really think it’s time to try the market,’ ” City Manager Tom Bonfield said. “He thought he could bring it in for a better price.”
With no shortage of firms willing amid the recession to bid, offers for the three projects ran to a combined $1.2 million.
The W.D. Hill bid came in at $480,260, compared to the $880,134 offered by Skanska. The City Council is scheduled to approve awarding a contract to the lowest responsive bidder, C.T. Wilson Construction, on Monday.
The Edison Johnson contract will reach the council for its Jan. 7 work session. The low bidder there offered $477,282, compared to Skanska’s $942,657.
Thanks to a recent policy change, Bonfield is able to approve the Weaver Street bid on his own, without a council vote. The low bidder offered $218,800, compared to Skanska’s $581,947.
Briefed on the numbers, council members were stunned. “Wow,” said Councilwoman Cora Cole-McFadden.
Bonfield in April signaled that he wasn’t sure about continuing to use firms like Skanska to manage parks projects. At the time, he was pressing the company for answers regarding delays to a number of such projects.
Since then, it’s become obvious that Bonfield and Reitzer have a different philosophy than their predecessors about using outside construction managers.
Former City Manager Patrick Baker and former General Services Director Mark Greenspan sold the council on the idea of using construction managers to handle some $95 million in projects voters approved as part of a 2005 bond issue.
They reasoned that General Services at the time couldn’t handle so large a construction program as fast as was needed to avoid having rampant inflation undermine budget estimates. Outside firms like Skanska offered more predictability, in their view.
To entice them to step in, Baker and Greenspan “bundled” projects, assembling a dozen or so for each firm so the aggregate value of the deal would make it worthwhile for them to get involved.
But Bonfield said he and Reitzer, based on their experience elsewhere, question whether bundling works. For small projects, it “doesn’t bring the economies of scale you might think,” Bonfield said.
Reitzer said hiring construction-management firms is worthwhile for large projects, generally those individually worth more than $5 million. He singled out the Skanska-built Durham Performing Arts Center as the kind of complex structure meriting that approach.
Smaller projects like the rec centers, however, vary so much in details and requirements that “it almost became inefficient” overhead-wise to rely on one firm to build them, Reitzer said.
But administrators also note that many things have changed since 2006, when the council approved the Baker/Greenspan approach.
For starters, the end of the real-estate bubble has made inflation in the construction market a thing of the past.
In 2006, labor and materials prices were rising an average 10.6 percent a year. In 2009, they dropped an average 8.4 percent, according to an industry-standard index published by the Turner Construction Co.
By Turner’s reckoning, construction prices peaked in the third quarter of 2008 and have tumbled 12.6 percent since.
The recession also has builders scrambling. For example, C.T. Wilson was one of eight firms to put in for W.D. Hill renovation. But until the economy tanked, “not that many contractors were interested in doing city work,” Bonfield said.
Concurrently, General Services has beefed up its in-house capabilities.
At Baker’s urging, the council hired consultants to train staff and in some cases pinch-hit in supervisory roles. And in recruiting for top-level hires in the department, Bonfield put project-management skills at the top of his wish list.
Now that the initial rush of bond projects is over and General Services has a full complement of in-house project managers, it also doesn’t face the bottlenecks it did only a few years ago, Reitzer said.
