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Slow real estate market means bigger jail
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A depressed California real estate market has allowed Calaveras County’s jail project to regain some 16,000 square feet — and the project could still finish well under budget.
Kitchell Corp., the firm managing the nearly $59 million project’s planning, now estimates construction bids will come in 15 percent below initial projections, and those savings are going to pay for the additional square footage. The 15 percent cost drop is a conservative guess, according to Douglas Evans, a project director with Kitchell. He told county leaders Tuesday that bids for projects across the state are coming in 25 to 30 percent below expectations. One corrections project in Vacaville was estimated at about $36 million by both the architect and the state, but the winning bid came in at $18.7 million, he said. “It’s a very hungry industry right now,” Evans told the Board of Supervisors during a study session on the jail. However, other factors warrant caution. Contractors tend to seek out change orders — alterations to the agreed scope of work — when the bidding environment is so tight. That’s exactly how it works, said Supervisor Gary Tofanelli, who owns a construction business. “You bid it low and then you go in looking for change orders to make up the cost,” he said. The tough market also increases the likelihood of subcontractors going bankrupt, which can cause costly delays. To manage that risk for the project’s general contractor, all bidders must go through an approval process that verifies their solvency and capabilities, Evans said. By the same token, the potential increases for contractors to file claims — allegations that they were asked to do work not included in the project’s original scope. To cope with the possible variance, the project’s nearly $45 million construction budget includes a contingency fund of about $2 million. Kitchell has also identified about $4.5 million in items that could be removed to further cut costs. Leading the list is the project’s 80-bed dormitory at $3.1 million with the structure’s $1.1 million solar energy system in second. Also on the list are planned epoxy floors, solar collectors and skylights. California’s finances are also providing a measure of uncertainty. While voter-approved Measure J is providing $30.9 million for the project, it is also relies on about $26.4 million from state bonds sold through AB 900, a prison construction law. Jeanne Boyce, county administrator, said state representatives are “very confident” that budgetary gridlock will not effect the sale of the AB 900 bonds that are due to finance the jail. Yet the state won’t provide an “absolute guarantee,” she said. Without any unpleasant surprises, Evans said the project will begin construction in March 2011. Completion is expected in December 2012, but the building won’t be occupied until two months later. |
