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Front Page » Top Stories » Arts Center Contract Gives County Options But No Final Pricetag

Arts Center Contract Gives County Options But No Final Pricetag

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Written by on December 21, 2000

By Marilyn Bowden
Miami-Dade County’s award of an at-risk construction management contract to Performing Arts Center Builders Tuesday still leaves the county without a final price or a secured construction contract for at least six months.

The contract asks the construction consortium of Odebrecht Construction, The Haskell Co. and Ellis-Don Construction to come in with a maximum target price at or below $255 million at the end of a six-month evaluation period — more than $20 million below its initial guaranteed maximum bid of $275.1 million in August. The price is still $50 million above the county’s ceiling set earlier this year.

The contract calls for a review of documents in search of discrepancies and asks for ways to cut costs by using less expensive materials.

Also, said Project Director Gail Thompson, the management pact calls for division of the 42-month construction project into subcontract bid packages to initiate aggressive bidding.

She said the only risk the county would incur would be for design discrepancies that should be corrected during pre-construction.

Performing Arts Center Builders will be paid up to $2 million for these efforts — subtracted from its fee if the company is hired — but is not guaranteed the job, Ms. Thompson said.

If the final guaranteed price is above the county’s $255 million ceiling — and the county reserves the right to reject suggested value-engineering ideas — commissioners may choose not to proceed, find more funds or downsize the project.

Some commissioners expressed concern the project’s budget has yet to reach its zenith.

"I get the feeling we’re not getting a definite answer about the maximum cost," said Commissioner Miriam Alonso.

As of today, financing for the project will require redirecting $22.7 million in operating subsidy payments toward capital financing and spending another $45.3 million in convention development taxes, or $68 million in addition to the $205 million already earmarked for the center.

The evaluation period that begins this week is to include a review of contract documents in search of discrepancies, both singly and with subcontractors; value-engineering input, or suggested ways to cut costs by using less expensive materials that will not affect quality or contract time, and the division of the 42-month construction project into subcontract bid packages to initiate aggressive bidding, said Ms. Thompson.

Performing Arts Center Builders will be paid up to $2 million for these efforts — subtracted from its fee if the company is hired — but is not guaranteed the job, Ms. Thompson said.

The use of a guaranteed contract for the arts center proposed for Biscayne Boulevard in the Omni area initiates a process that will still leave commissioners with three basic options in June.

If the final guaranteed maximum price is above the county’s $255 million ceiling — and the county reserves the right to reject suggested value-engineering ideas — commissioners may choose not to proceed.

That most likely would start the bidding all over again and push the oft-delayed start of construction still further into the future.

Or, the county would have the option of seeking approval for the higher figure.

A third option, according to the proposed new contract terms, would be to abandon the project altogether.

Still, according to a source within the construction industry, contracting construction services through a guaranteed maximum price proposal usually gets the owner — in this case, the county — a better deal than a lump sum agreement.

Basically, a construction industry expert said, it’s the difference between hiring a general contractor and signing on a construction manager.

Using the guaranteed maximum price approach a construction manager provides input from a builder’s point of view on such issues as feasibility of construction, value engineering and identification of long-lead procurement needs, resulting in better coordination for installation of integrated systems and complex equipment.

With a lump-sum agreement, any savings are kept by the general contractor, whose accounting records are not accessible to the owner. Under terms of a guaranteed maximum price contract accounting is an open book and savings go to the owner or are shared using a negotiated percentage.

If the construction group’s target price is lower than $255 million, Ms. Thompson said, the county might use the funds to reinstate such items as the $1 million concert organ.

A general contractor’s fee is included in a lump-sum agreement, the industry source said, but in a guaranteed maximum price agreement the fee is usually a negotiated percentage of total construction costs.

Finally, the guaranteed maximum price arrangement allows maximum control over subcontractor quality, cost and scheduling.

Assistant County Manager Bill Johnson said he doesn’t know of a single project that came in at the exact target price, but it still helps to keep costs down.

Additional fees are due project architects Cesar Pelli & Associates, whose 1996 fees did not envision a six-month pre-construction stage, he said.

He said that money will come out of the existing project budget and will be addressed at a Jan. 23 commission meeting.

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