The Common Council met 08/03/2022. The first 45 minutes of the meeting were taken up with an update on the library project.
Director of Parks Recreation and Facilities, Dean Gazza, started things off by explaining that with all the economic factors the country was currently experiencing the goal posts were constantly changing and the city, the architect SOM, and Boldt Construction strategically looked at the project and tried to position themselves as well as possible to hit their budget on bid day. They didn’t know what would happen on bid day but he thought they did their best.
He turned things over to Jason from SOM, the architectural firm who designed the building and was overseeing the project. The library design had remained largely the same. They had however gone through a long list of line items in search of ways to save costs while maintaining the overall vision of the library.
They ended up creating a list of over 100 cost saving proposals across all the different design components of the building. They reviewed those more closely and determined which proposals they could implement and which they could not do. They did not want to sacrifice space or quality but were looking for creative ways to bring costs back in line.
He talked about the Value Engineering process. There were several category divisions, including things like interiors, exterior enclosure, structures, foundations, and roofing. They had to dig into the details of all of those things and analyze each of those systems both individually and as a whole.
During the entire design and development process SOM and Boldt performed cost estimates and made adjustments in order to try to bring the project back within budget when they saw it going over budget. [However, it mostly looks like it has been over budget, so I am very doubtful the final product is going to be within budget.]
Overall, they were trying to think creatively about ways to maintain the original design intent while saving money. They wanted to make sure that the cost saving decisions did not negatively impact the vision and overall success of the building.
They ended up with 98 total value engineered items that were intended to save costs. Some of them were very small and some of them were larger but not things that would significantly impact or change the vision of the library. He turned things over to an SOM colleague named Martin to review some of the specific items they had analyzed from an investment versus payback standpoint.
Martin said that since this was a public building that was publicly funded and would be used by the public for decade to come, they were very concerned about the long-term performance of all the value engineered items they looked at. They looked at them over a 10-, 20-, and 40-year time horizon.
They looked at things such as the exterior of the building, triple glazing, façade elements, and the structural and mechanical systems of the building and compared them to other less expensive alternatives and studied the long-term performance of the original design elements and the less expensive alternatives.
For triple glazing, as an example, they determined the energy model would provide a very quick payback period similar to geothermal, but for other items they couldn’t determine a similar economic benefit so those were items they eventually cut.
He talked about the changes to the bird-friendly design of the building. Buildings kill a lot of birds because birds are not able to see glass, particularly when it is very reflective, and fly into the glass. When they started designing the building, they had a bird friendly design in mind and had originally intended to include bird friendly fritted glass which came at an added cost. They decided they could drop the special glass because the design included other bird friend elements that made the building more apparent to birds such as the exterior fins which created visual noise, the low-reflectance glass, and overhangs which reduced reflection. Additionally, they faceted design of the building broke up reflections and they would also still have an automatic shading system that would automatically deploy through the day. [Getting rid of the automatic nature of the shades and just having library staff adjust them periodically throughout the day seems like a way to cut some costs as well.]
They analyzed the geothermal system and mechanical systems in general and determined that the geothermal system provided a huge benefit in terms of annual energy savings. Those savings would amount to around $13,000 in operating expenses for energy every year, so it was very apparent that investing in geothermal would be worth it, so they kept that system.
They also analyzed the impact of the fins on the solar radiation that came into the pavilions throughout the year. They based that analysis on weather data and the sun’s position throughout the year. Their analysis indicated that the shading provided by the fins reduced the solar heat gain by 11%. [I didn’t hear them explicitly state that the 11% reduction was great enough to warrant keeping the fins, but my impression was that they were going to keep them.]
They decided to not pursue LEED certification. They had been planning to pursue LEED certification and were in the process of targeting LEED Gold certification, but the cost came in quite high ($445,000). In the private sector, there is a measurable economic benefit to getting a LEED certification in the form of increased property value and lease rates. For public buildings, however, the benefit was indirect as a way of promoting green buildings. In the case of the library, they were already utilizing all of the LEED strategies, so forgoing the certification process itself was an easy way to save money.
A couple representatives from Boldt Construction took over to talk more about the details of the cost estimates. Paul from Boldt told the Council that in his 40 years in the construction industry he didn’t think he had ever dealt with as much volatility in pricing, supply chain issues, and hiring employees as they were experiencing now.
In light of that, they had doubled down on their efforts to help advance the library project and control costs. They were hopeful in thinking that the project will primarily be built in 2023 and that economic conditions would potentially be improving next year.
Darren from Boldt went over their cost saving efforts in more detail. Scheduling was a big part of the project. They needed to look at current lead times for materials and the availability of subcontractors and trade partners to figure out when to start the project and how to keep the project moving without costly delays.
Commodity volatility was an important factor. For a long time, construction pricing had been fairly stable and rose at a predictable 3%-4% a year. In the last three years, however those annual increases were closer to 20% which was something they had never seen before.
Over the last couple years, they learned a lot about how to mitigate some of those costs through value engineering and target value design.
Since Boldt first became involved in the project, they had gone through multiple rounds of budgeting and spent several thousand hours on pre-construction. The library project was a top priority for them to which they had devoted a lot of resources. They had also engaged over 50 specialty subcontractors to get their input on the project, its constructability, the availability of materials, and how they could make the most of this project.
He threw up a PowerPoint slide of the different bid packages. Often in public projects, there might be only 5 or 6 bid packages that encompassed large portions of the project; one company would put the whole building up, one would do all the finishes, etc. In this case, they were bidding every area of the project. This allowed for greater competition. Additionally, on bid day, they would have the flexibility to keep the project moving even if some of the bids didn’t come in where they wanted or didn’t receive enough interest.
The project was scheduled to go out for bids 08/08/2022, and the bids would be due back by the end of the month. There was already a lot of interest from companies in working on the project.
Director Gazza took over and reiterated that they took a very methodical and strategic approach to the project to make sure they were doing their very best on behalf of the taxpayers to mitigate against the current economic forces.
The bids would be due 08/31/2022. The results would be brought to the Finance Committee on 09/12/2022 and the Common Council on 09/21/2022. After that, they would issue contracts and begin construction.
He said he had heard some favorable things about doing the project in 2023 because people were looking to start work in 2023 rather than immediately. He was told it was beneficial the project was scheduled for then.
He opened things up for questions.
Alderperson Hartzheim asked what the strategy was if bids came in grossly over what they were expecting.
Director Gazza answered that because they were break the project into 40 different packages to be bid on, he wouldn’t expect all 40 packages to come back higher than anticipated. Some might be higher and some might be lower. He hoped they would average out.
He noted that in the case of the Expo Center, the bids for the electrical package came back very high. In situations like that they generally sit down with the highest bidder and try to get an understanding of why the bids were so grossly over what they expected. This allowed them to make adjustments and then rebid the package.
There were no further questions.
[My impression was that they were really laying the groundwork to come back in September and ask for more money from the Council after the bids come back overbudget. It should be noted that never once was the possibility raised during this meeting of taking more drastic steps such as downsizing the building somewhat if the costs turn out to be over budget. The focus of the presentation was explaining how the city was going to get everything they wanted in the building, just at a lower cost. Having given this presentation, they will be able to come back in September and say something along the lines of, “We put in all this effort to keep costs down but due to unprecedented economic circumstances outside of our control, costs exceeded the budget, so we need more money.” And I would expect the Council will approve that increased expenditure even though it will be an added hardship to taxpayers.]
View full meeting details and video here: https://cityofappleton.legistar.com/MeetingDetail.aspx?ID=980228&GUID=793B96BD-AF7D-42ED-A4D6-06887E2086F8
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