MADISON – The Board of Selectmen and Board of Education Chair Scott Klaskin met with a senior project manager at Colliers to discuss progress on the new elementary school, which is over budget by about $2.4 million.
Adam Levitus, a senior project manager for the real estate services firm, updated local officials on where the project currently stands.
“The project is nearing the final stage of design,” Levitus said. “We just received drawings and specifications from the architect and the design team and those will go through reviews and cost estimates to see where the project is in terms of budget.”
The new elementary school, which is planned to be located between Greenhill Road and Corinth Drive, was originally budgeted at about $61.1 million, he said.
“It was developed in early 2021 with prevailing market information,” he told local officials. “It contemplated escalation but not quite the escalation that came through later in 2021 and 2022. Then there was rapid inflation…particularly in the construction industry.”
Levitus told local officials the rapid inflation and factors beyond their control had resulted in a $5.9 million of added costs to the new elementary school project. At the same time, the Polson Middle School project is under budget, and $3.5 million of that money in June was used to partly offset the added costs. Both projects are part of a larger $89.2 million school project bond that was approved in referendum in Feb. 2022.
But a request by the town to transfer $2.4 million from the town’s undesignated fund to cover the remainder of the overage was voted down at a July 24 town meeting.
Levitus attributed the added costs to increases in enrollment, and the need for additional classroom space, after the original referendum.
“If those were known when the project was first budgeted there would have been an additional $2.4 million,” he said.
He said the unaccounted for shortfall doesn’t leave the project dead in the water, but does put a heavy strain on the project scope.
“There’s been a lot of scope that’s been cut from the project to ensure the project keeps moving forward,” he said. “Reductions are required. Funds held in contingency. Line items to be reconsidered.
“The plan is to proceed,” he said. “The ultimate decision is to continue with the project as designed. In terms of overhauling the design that has not been the recommendation. No major redesign is intended.”
Levitus said the Board of Education has drafted a letter re-confirming their request for four additional classrooms.
He also warned that at this point a complete overhaul of the planning would come at significant cost, including months of time to redesign the project and at a cost of missing the window to open in time for the 2025-2026 school year. Levitus estimated that consultancy fees, redesign, and additional costs would total about $1.4 million, in addition to operating costs of the old schools.
“Delay is not desirable,” he said.
The question then becomes, he said, is how to resolve the deficit.
“The team is still looking, but it’s very unlikely $2.4 million is going to come out of simple design engineering,” he said. “That type of money would need some substantial redesign at this point in the project.”
One solution, he suggested, was rearranging the budgeting.
Levitus suggested, for example, “the architect fee had a value placed at the beginning of the project. The fee came in a couple hundred thousand dollars under budget and can be shifted to construction to cover some of the construction estimate.”
Another option, he suggested, was taking from the contingency funding.
“Right now the owner’s contingency is $5.2 million,” he said. “Typically, these funds, you don’t use until you’re in construction.”
The idea would be to “make up the remainder by shifting money from the owner’s contingency to the construction budget. It’s a net zero change to the project.”
Levitus suggested that the $3.1 million remaining in the contingency would not be “scraping the bottom of the barrel.”
Bruce Wilson, a Republican selectman, raised concerns about how budgetary money was being shifted around, asked why the contingency hadn’t been suggested before pulling money from Polson, and suggested the idea of a pause.
“I’m losing track of it. I don’t understand it. I have visions of a school where you open the bleachers and you can’t see the floor. There’s already been millions of dollars of value engineering. When do we take a breath and not hold ourselves to this deadline for the school year? How do we know this is the right school to build? This is a 50-year building and it’s important that it gets done right to the true needs of the district as opposed to a calendar date.”
Democrat Selectman Al Goldberg said he didn’t see the value in waiting on the project.
“It seems to me, let’s get the bids and see where we stand,” he said.
Levitus agreed, warning that delaying taking the project out to bid was rarely beneficial.
“Standing still and not proceeding to get those bids rarely works out because you’re gambling against the market for it to be favorable at a later date,” he said. “I’ve never had a client who said yeah I’m glad we waited to redesign, because you’re trying to cut just to get savings. Inflation doesn’t stop while you’re trying to redesign the building.”
Klaskin said the Board of Education was in agreement that their biggest priority was ensuring the school could meet projections of increasing enrollment, which required the four additional classrooms.
He said there were three major items the board was willing to cut in favor of those classrooms.
The Board of Education agreed to find savings of about $653,000 by downgrading the fire protection system, trimming the budget for kitchen equipment and eliminating radiant flooring – spending that could still be returned to the project if savings were found elsewhere or the contractors agreed to lower their costs.
Klaskin advised waiting to see how the bids for the project come in, but not to delay.
“We’re talking about an entire district realignment,” he said. “If we don’t hit the deadline it’s going to be very costly and very difficult to conceive how to move the parts around. It’s an unappetizing possibility. We are encouraged that we may have turned a corner in construction and supply costs and we’re hoping ours being a more attractive project, we might get decent bid prices. We should come in where this needs to land. We don’t see a need to delay.”
Peggy Lyons, the Democratic first selectman, suggested that given the transfer of the Polson project money and the flexibility of the owner’s contingency, the town can fill the $2.4 million gap and allow the state to okay the project to go to bid.
“It’s important we know how we’re proceeding,” she said. “Hopefully the bids will fall within budget. That’s a clear line of where we proceed. I know this has been a struggle and disappointing. So much work and effort has gone into this and in an uncertain time with the construction market. I think we’ve found a good path forward and trying to turn unknowns to knowns before final decisions are made is a good thing.”