K12 facilities directors: reading the pay application in twenty minutes

A K12 facilities director runs maintenance for twenty buildings, manages a custodial staff, responds to a boiler failure at six in the morning, and somewhere in the week reviews a pay application on the new elementary school. The architect has already signed it. The construction manager is waiting for it. The business office needs it by Friday to make the board's consent agenda.

Twenty minutes is realistic. It is enough if the director knows what to look at and has a baseline to look at it against. This post gives the reading order, five checks, and what to write down so next month's twenty minutes are faster than this month's.

Before the first pay app: the baseline

The twenty minute review depends on one thing done once. When the GMP amendment was signed, the schedule of values in it was the baseline. Each line had a value. The contingency had an opening balance. Each allowance had a carried amount. The director needs that baseline in a form that can be set beside the G703 every month, frozen and never edited.

If the project is already underway and no baseline was kept, make one now from the amendment and the first pay application. It takes an hour. Every month after that, the review is a comparison rather than a reading.

The five checks

First, the G702 totals. Does the contract sum match the current GMP, meaning the original plus executed change orders? If the contractor's contract sum includes a change order the board has not approved, stop there. Check your contract and board policy for what counts as executed.

Second, the G703 against the baseline. Has any scheduled value changed from last month without a change order? Lines should not move on their own. If the mechanical line is bigger than it was, there should be a change order behind it.

Third, percent complete against what the director has seen on site. Pick three lines with large amounts billed this period and ask whether the work is that far along. Drywall at 80 percent when the framing inspection was last week is a question to ask, not a reason to reject.

Fourth, contingency. Find the contingency line on the G703. The amount billed against it this month is the draw. Does it match the contractor's contingency log? Is there a cause and a backup for each draw? Record the draw in the district's log with the cause, even if the cause is provisional.

Fifth, allowances. Any allowance line billed this month should have a reconciliation behind it. If the playground equipment allowance is 100 percent billed and the equipment has not arrived, ask why. If it reconciled over its carried amount, record the variance and where the overrun is being funded from.

A fictional example of check two

On a fictional $34 million elementary school, the director notices the site work line on the G703 is $120,000 higher than the baseline. There is no executed change order. The construction manager explains it as a reallocation from the contractor's contingency for unsuitable soils. That may be fine under the contract, but it is a contingency draw and it needs a cause, a backup and an entry in the district's log. Without the baseline, the line would have moved and nobody would have noticed.

What to write down

Four things, every month. Contingency draws this month with cause and backup status. Change orders executed and pending with cause. Allowances reconciled with variance. The anticipated final cost, which is the current GMP plus pending changes plus projected allowance variances, against the board approved budget.

Those four entries are the district's ledger. They are also the four lines the superintendent needs for the board report, so the twenty minute review produces the report as a byproduct. A director who keeps those entries for twelve months has a record that answers the bond oversight committee's questions without a research project.

Making next month faster

The review gets faster when the baseline, the contingency log and the change order register are in one place and the comparison is already done when the G703 arrives. Most directors keep those in separate spreadsheets or in the construction manager's exports, which means the comparison is rebuilt each month.

Costwitness holds the district's baseline and ledgers and raises a flag when a scheduled value moves without a change order, a contingency draw arrives without a cause or a backup, or an allowance bills ahead of its reconciliation. The director reads the flags, confirms the site, and decides the causes. The twenty minutes go to judgment rather than arithmetic.

In the product

GMP baseline, Contingency ledger, Allowance register. Free tool: Pre-GMP Readiness Score, Contingency Runway.

Keep reading

Earlier: Public owners and design gap recovery: keeping the record for the architect's carrier. Later: Family office real estate: oversight without a construction department. All articles on by owner type.