School district bond programs on CM at risk: what the board needs to see monthly

A school district passes a bond, hires a construction manager at risk, and signs a guaranteed maximum price for each school in the program. From then on, the board meets once a month and sees one report. Most of the board members are not construction people. They are parents, retirees and local business owners who said yes to a tax measure and now carry the responsibility for it.

That report is the only window the board has into the program. If it shows the GMP total and the amount paid to date, it shows almost nothing. This post lays out what a monthly bond program report should carry so the board can ask the right questions before the money is gone.

One program, several GMPs, one set of questions

A bond program is rarely one contract. A fictional $180 million measure might fund two new elementary schools, a middle school modernization and a district wide roofing package. Each gets its own GMP amendment, its own contingency, its own allowances and its own buyout. The board sees the program as one number. The money moves inside four separate contracts.

The monthly report has to do both jobs. It needs a program line that adds everything up, and it needs a line per GMP that shows where each one stands. A healthy program can hide one school that is burning contingency twice as fast as the others. The board needs to see that school on its own.

The five lines the board should read every month

First, the GMP as signed, frozen and versioned. The original number should never move on the page. Executed change orders sit on separate lines below it, so the board can see the original and the current side by side.

Second, contingency remaining, as a dollar figure and as a projected exhaustion date. A percentage means little to a board member. A date in the middle of the school year, before the building is done, means a great deal.

Third, change orders grouped by cause: owner scope, design gap, unforeseen conditions and coordination. A district that asked for a bigger gym should expect owner scope changes. A district that is paying for design gaps should be asking its architect questions. The board cannot ask those questions if every change is one line called change orders.

Fourth, allowances: what each carried in the GMP, whether it has been reconciled, and the variance. Fifth, the anticipated final cost per GMP and for the program, compared to the bond authorization. That last line is the one the superintendent will be asked about in public comment.

A fictional example of the contingency line

Take a fictional $48 million middle school modernization with a $1.4 million contractor contingency. By month ten, 55 percent of the work is complete and $1.1 million of the contingency has been drawn. The trailing rate of draws projects exhaustion in month thirteen, against a month twenty completion. That is the sentence the board needs to hear. The percentage, 79 percent drawn, says the same thing but nobody on the board will feel it.

Public money brings public questions

Bond programs in most states come with a citizens' oversight committee, an annual performance audit, and public records requests. Every draw on contingency, every change order and every allowance reconciliation can end up in a binder that a member of the public asks to see. The record has to exist in a form that someone can read three years later.

That argues for a ledger that belongs to the district, separate from the construction manager's Procore or cost system. The contractor's records are organized for the contractor. The district's record should be organized by GMP line, by cause, and by date, with the backup document attached to the entry. When the oversight committee asks why the contingency on the elementary school dropped by $300,000 in one month, the answer should be three entries with three backup documents, not a search through email.

Where the facilities staff fits

Most districts have a small facilities team, sometimes one director and a bond program manager, sometimes a hired program management firm. That team reviews pay applications, signs off on contingency draws where the contract requires owner approval, and assembles the board report. The report usually takes days to build from the G703, the contractor's contingency log and a change order spreadsheet.

A tool like Costwitness holds that ledger for the district, applies the contract's rules to each draw and change order, and raises a flag when an entry has no backup or no cause. It does not decide what the cause was. The facilities director and the architect do that. The board gets the same five lines every month, in the same order, with last month's figures beside them.

In the product

Monthly owner report, Contingency ledger, Change order register. Free tool: Contingency Runway, Change Order Exposure.

Keep reading

Earlier: University capital projects: GMP oversight across several buildings at once. Later: A second ledger is not accounting and not a replacement for Procore. All articles on by owner type.