Inflation rates and supply chain issues in 2021 are beginning to impact the design of the Ballwin Police building proposed for a site located roughly adjacent to the city’s Vlasis Park and behind the Regions Bank located at 14915 Manchester Road.
At the Nov. 8 Board of Aldermen meeting, Jennifer Kissinger, project director with Navigate Building Solutions (NBS) noted that delays in the construction market and cost escalation are real issues being faced on every single project.
“I advise staff to maintain a 10% contingency,” Kissinger said. The Ballwin Police building has about a 13% contingency overall.
“You can see that about $1.2 million of this budget is contingency,” Kissinger said. “We’re going to just wait and see where it comes in and see what we need to do to adjust.”
She said overall NBS is getting bids coming in that are higher than expected.
“We just bid three projects yesterday in St. Charles County, and two of them were 20% over the cost of the exact same facilities that were built just two years ago. So, prices are going up,” Kissinger said. “I’m not saying that to scare you, but that’s why we’re still carrying a 13% contingency at this point for this project.”
Alderman Mark Stallman (Ward 2) asked if rising costs and supply chain disruptions are likely to push the finished project well beyond its anticipated spring/summer 2023 occupancy date.
“We should be anticipating delays,” Kissinger said. “We certainly don’t know where we’ll be in 16 months. But I can tell you that we are experiencing budget issues on every single project right now. We kind of expected it to happen during COVID in 2020, but it’s been quite delayed. So, what we’re going to do, and we’ve been doing on projects for other clients, is we’re asking the contractor to propose the schedule as part of their bid event.
“So, we can evaluate both schedule and price on bid day and decide which way you want to go. It also eliminates a lot of the risk for the city because the contractor is proposing this schedule, which would include all the weather delays and should include any of the procurement delays they’re anticipating.”
She said what NBS is finding is that large owners like Amazon are “buying up and having things mass-produced so they can continue building their facilities, and everyone else is being pushed aside. So, it’s really kind of an uncontrollable situation for the little guys.”
“So, how on the contract would you cover concerns for unanticipated or unavoidable escalation?” Roach asked.
Kissinger responded, “I have some language that I proposed to your legal counsel. We’ll go through that and decide if that’s something you guys want to include. Then, whatever language is agreed upon will be published in the bid documents so whoever is bidding on your projects will be agreeing to your terms.”
Alderman Frank Fleming (Ward 3) referred back to an earlier finance meeting and asked, “In the bid, is there going to be a typical way that you suggest it to be paid for, based on milestones or time? We’re trying to make our financial decisions and have the money available when it needs to be available. Is there anything you’re doing now that kind of gives us a better expectation of when we can expect those costs?”
Kissinger said that what NBS does for almost all of their clients is to help build cash flow projections of when payments have to be sent. She said she will contact Ballwin’s vendors and find out if certain vendors need a deposit, when that deposit needs to hit, and when the final payment needs to be made. It’s the same with NBS services, JEMA’s services, and any other professional services. NBS will build the cash flow and can update Ballwin monthly or quarterly.
Kissinger added that she can do an estimate prior to a bid but would have to update that with real numbers after the fact of dealing with an anticipated number of five to 10 building construction bidders.
Fleming said he would definitely like a general estimate in the near future to match up that discussion with the just-completed finance meeting.
“The finance committee met tonight, and the staffers presented a plan by which we will fund the building of the police station, and without going out and borrowing any money,” Fleming said. “Everyone agreed that was how we should move forward.”