Municipal owners: city halls, public safety buildings and the GMP

A city of sixty thousand builds a new police headquarters, a fire station and a library addition over a decade. None of them is routine for the city. The public works director has a roads and water budget to run, and the construction project is an addition to that job, not a replacement for it. The council hears about it in open session, on camera, from the director or the city manager.

CM at risk is common for this kind of work because it gives the city a number early and a contractor at the table during design. It also puts the city in the position of reading a GMP contract it signs once a generation. This post is about what a municipal owner should keep so that the council report is short, accurate and defensible.

The council sees the total and asks about the change

Municipal councils approve a GMP at a public meeting and then approve change orders above a threshold at later meetings. Check your contract and your procurement code for the threshold. Each change order approval is a public agenda item with a staff report, and the question from the dais is always the same: why is this not in the original price.

That question has four honest answers. The city asked for it. The drawings missed it. Nobody could have known. The trades did not coordinate. Each answer puts the cost in a different place. An owner scope change is the council's own decision and comes from the owner's contingency. A design gap may be recoverable from the architect. An unforeseen condition is the owner's under most contracts. A coordination issue is usually the contractor's. A staff report that names the cause gets a short discussion. One that does not gets a long one.

Public safety buildings carry specific risks

A fire station or a police headquarters has scope that most contractors see rarely: apparatus bays with specialized doors and exhaust, emergency power sized for the whole building, radio and dispatch systems, secure evidence storage, sally ports and detention areas with their own code requirements. Much of it is carried as allowances at GMP because the equipment vendors have not been selected.

On a fictional $31 million police headquarters, the allowances might cover security systems, dispatch furniture, radio infrastructure and evidence room fit out, totaling $2.4 million. Each needs a decision from the police chief's office by a date the contractor sets. A late decision lands as a premium or a schedule extension with general conditions attached. The city's allowance register should name the department head who owns each decision and the date, and the public works director should be asking about those dates two months out.

Essential facility requirements

Public safety buildings are often classified as essential facilities with higher structural and systems requirements. If the GMP was set before the structural design reached that level, the contractor's qualifications list will say so, and the difference will show up as design gap change orders. Read the qualifications list for this before signing, and record the design stage in the baseline.

The contingency belongs in a public record

A municipal contingency log is subject to public records law in every state. Any resident can request it. The log should be kept on the assumption that it will be read by someone who is unhappy about the project. Every draw should show the date, the amount, the fund, the cause, the backup reference, the city reviewer and the running balance. A draw with no backup should be recorded as approved with a flag, not left out.

The city should also keep the contingency as a projected exhaustion date, because that is what the council will ask about when the balance gets low. On the fictional headquarters, a $1.2 million contractor contingency with $900,000 drawn at 50 percent complete projects to exhaustion before the building is done. That is a council conversation to have in month twelve, not month twenty.

A small staff and a long record

The public works director cannot spend a week a month reconciling the contractor's pay application against a spreadsheet. Most cities hire a construction manager's representative or an owner's rep for a project of this size. Whoever does the work, the record needs to be the city's, structured to the GMP amendment, and readable by the next director.

Costwitness keeps the city's ledger on the GMP: the frozen baseline, contingency draws with causes and backup flags, the allowance register with decision owners and dates, the change order register grouped by cause, and the anticipated final cost the council will be asked about. The rules raise flags. The city decides what to do with them. The council gets the same page every month, which is the best defense against the long discussion.

In the product

Contingency ledger, Allowance register, Change order register. Free tool: Contingency Runway, Allowance Confidence Band.

Keep reading

Earlier: The monthly report an owner's rep hands to each client. Later: Community college districts: program management across campuses. All articles on by owner type.