The market giveth and the market taketh away. That’s the reality Oak Park District 97 board members and administrative staff are now grappling with after discovering that the planned new administration building may prove significantly more costly than they initially estimated.
At their Aug. 25 meeting, the District 97 Board of Education discovered that the direct project costs of the roughly 22,000-square-foot, two-story building at 260 Madison St. were turning out to be around 19 percent higher than what they were in a preliminary project budget drawn up in March.
“This is extremely disappointing,” said board member Graham Brisben, referring to the unforeseen cost overruns.
Brisben said the “optics” of the overruns don’t reflect well on the district’s financial stewardship, particularly with a possible referendum less than two years out.
But the district’s construction management firm, Bully & Andrews, as well as members of the administration, noted that the cost overruns were largely attributable to a construction market currently in recovery.
“The market has become very robust,” said Therese O’Neill, the district’s assistant superintendent for finance and operations, “whereas, two or three years ago, we were the recipients of significant savings because the market was slow and we got very competitive bids, in addition to a lot of people bidding. Now, the market has changed.”
According to a preliminary budget summary, the district had estimated in March that direct construction costs on the administration building would be around $5.9 million, with a total project budget — including soft costs, fees and other expenses — of around $8.5 million.
At the Aug. 25 meeting, the board was presented with a revised direct construction budget of around $6.4 million at the 50 percent construction design phase and $6.9 million at the 90 percent construction design phase.
At that rate, total project costs of the building by the time it’s complete could go from an estimated $8.5 million to around $9.5 million.
According to Mortensen Construction’s construction index, Chicago area building costs in the second quarter of 2015 are up more than 4 percent over this point a year ago. The data suggest that the area is experiencing its busiest year in commercial development since 2008.
“What Graham expressed is a frustration felt by the board, the administration, our architect and our construction manager,” said Chris Jasculca, the district’s senior director of policy, planning and communication.
“As a collective, we’re trying to bring this project as close to our projected budget as we can, but what’s also not realistic at this point is trying to put additional dollars into this current building,” he said.
Jasculca and O’Neill both pointed out various ways that the district is attempting to keep construction costs down. Those include hiring district painters instead of contracting them out and rejecting several bids that have been too high.
O’Neill said that the district had identified roughly $306,000 through deductions and by seeking alternate, more cost-efficient bids. She also noted that the district’s architectural firm, STR Partners, has agreed to effectively reduce their fee, which would generate another $40,000 in savings.
But the cost deductions aside, district administrators said the district, as well as the Village of Oak Park, will likely end up benefitting from the rejuvenated construction market in the future.
As part of the project, the village will take over the current administration building at 907 Madison St., in addition to the district’s maintenance facility at 541 Madison St.
O’Neill said the combined properties have the potential to attract significant development.
In addition, the district’s maintenance department will move into a shared facility at the public works building and enter into a 50-year lease, which could save the district around $1.2 million over that period, O’Neill said.
“While the market is affecting the construction of our new building, we’re hoping the market will reap us benefits in terms of the sale of the existing administration building, as well as the sale of the 541 Madison property,” said Jasculca.
CONTACT: michael@oakpark.com