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Building to Budget During Inflationary Times

by Matt McGregor and Sean Duncanson

This article first appeared in the April 2024 issue of Wisconsin School News.

In the intricate landscape of school district construction, aligning the design and execution with budgetary constraints often proves to be a daunting task. Building during a fluctuating economic cycle poses an especially complex set of concerns.

When your district is conducting pre-referendum planning–with construction slated for two or three years in the future–how do you ensure that your budget addresses prospective financial shifts?

Superintendents, school board members, and other school leaders must recognize that, in the planning and implementation process, particular items will likely need to change to accommodate scheduling or meet budget. Considerations such as inflation and supply chain issues, not to mention availability of skilled workers, have substantially impacted the construction environment. The following four considerations can lead you on the path to success.

"Most school building projects that are completed on time and on budget have benefited from coordinated planning from the start."

Matt McGregor

Director of Project Management

Strategic prioritization

It’s important to establish a clear hierarchy of objectives from the project’s inception. Some portions of the project may be non-negotiable, so it’s critical that your team is aware of the district’s objectives. Keep in mind that if everything is a priority, nothing is a priority. Be practical and forthcoming about what matters most.

Clearly define which items are non-negotiable. Some district’s projects are focused on strengthening student safety, while others strive to improve a specific curriculum or improve facility infrastructure. Conversations with key stakeholders in the planning stages will provide a much-needed guide for your construction priorities.

Embrace flexibility

In the construction world, adaptability serves as a linchpin for success, especially amid the current economic conditions. Be mindful that, due to supply chain irregularities, installation of particular components may not follow the typical order of construction sequencing that would logically provide maximum efficiency. For instance, a ceiling grid may be installed before walls are painted, deviating from conventional practices. While not ideal, as it may cause minor issues or a small amount of rework in the future, it keeps the project moving. Another example might include a readiness to install the HVAC units, but the power supply is not yet operational. If the units are ready and the installers are available, we might proceed. It’s not the order we desire, but we must be agile and remain ready to adjust continuously.

It’s vital for the project team to know where they have the capability to be flexible, and what activities must occur precisely as scheduled or planned. It needs to be evident what must be completed to ensure a school can open on time, and what items can be addressed at a later date.

Constructing sequencing

Breaking down the project into discernible segments offers a pragmatic approach toward managing complexities and uncertainties. This provides the district with the options necessary to modify scope or pivot to stay on budget or schedule.

Holistically looking at your school’s master plan will allow you to envision how you might shift if circumstances call for it–moving projects to a different season, for example–while possibly utilizing your same referendum budget, or other funding sources. Supplementary funding sources have included Elementary and Secondary School Emergency Relief funds, interest earnings and capital improvement funds, such as Fund 46 or Fund 10.

It’s common for districts to break up large school projects by grade, or sometimes by classroom. Site work is regularly considered a separate portion, but it can further be broken out into areas such as playgrounds and parking. When challenges and obstacles appear, it’s simpler to adjust if these have previously been divided up.

Effective communication

In the intricate web of construction endeavors, effective communication is the cornerstone of collaboration, taking on heightened significance during tumultuous times. Always communicate potential issues to the entire project team to engage more minds in generating solutions.

A prime example would be that subcontractors who regularly bid, install, and service equipment can often offer valuable insights and advice. Mechanical, plumbing, and electrical engineers may be unaware that specified systems and fixtures might be tough to obtain. Subcontractors may have a keen knowledge of relevant supply chain issues, allowing them to offer effective alternatives. When administrators communicate with a multi-disciplinary team–including construction, engineering, and design professionals–they benefit from everyone’s involvement. It’s also likely to increase the likelihood that the plan is executed effectively.

A case study in nimbleness

Clintonville Public School District in northeast Wisconsin provides an excellent example of how to align construction and execution. The district completed planning and pre-referendum work in 2020, bid the project in 2021, and built over the course of 2022 and 2023. This spanned the height of the COVID-19 pandemic, supply chain trials, labor challenges, and inflation.

The district was aware that these issues could have harmed the project. Therefore, the district and the Hoffman Planning, Design & Construction team took the following measures to keep the project on track:

1. We emphasized the positive.

We looked for opportunities to engage students, teachers, and the community. Considering the length of time that it takes to complete a project, stakeholders need to see, hear, and experience progress. Keep them informed–consistently and continually. If all they experience is inconveniences and delays, they may create or share disinformation or misinformation.

With the Clintonville project, we made the raising and placing of the final beam a community-wide event. For a different school district, we asked students and staff to sign the concrete floor prior to placing the wood gym floor over it. These activities created energy, synergy, and excitement.

2. We purchased materials early to ensure that critical items were available when needed.

We had to identify and obtain storage space that was larger than usual. This can be done either at the construction site or at a different location. Just remember that security is paramount.

We obtained extended warranties, considering that many materials wouldn’t be utilized as quickly as usual. This gave the school district peace of mind and longer-term protection of their assets.

3. We proactively addressed lead-times for manufacturing of bar joist and decking.

During construction, it was ascertained that the lead time to obtain bar joist and decks was roughly 12-16 months. Early in the design process, we brought a manufacturing slot to make certain the materials would be available in time for construction. This is an arrangement made with manufacturers that guarantees a slot, while providing time for the design team to determine the exact specifications that will be required. It takes forethought, established relationships with manufacturers, planning, and communication.

4. We pivoted to accommodate challenges related to the chiller.

This project was scheduled around the cooling season needed for the building. With constant scheduling delays from the manufacturer, we had to be nimble and extend  the project to the next season. Be sure not to start a project, or aspects of a project, until the essential materials or equipment are on site. Failure to do so can easily lead to frustration and, in some instances, significant challenges to facility operations.

Overcoming the hurdle

To prepare for issues, build in allowances, contingencies, and inflation factors, based on the complexity of your project and the current market. Tackle each obstacle and be certain to establish priorities, maintain flexibility, break your project into manageable portions, and communicate continuously. Then, the budget hurdle will be one more challenge you’ve conquered as you guide your school district to greater success.