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Capitol Building Restoration Oversight Group

Change Orders Boost Capitol Building Construction Cost, but Added Expense Balanced Out

Published on in Government spending/News
State Capitol
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By Ike Fredregill, Cowboy State Daily

The cost of construction work on the Capitol Square Project in Cheyenne is expected to run about $30 million over original estimates, due largely to changes in the project, according to state figures.

However, those extra costs were offset by reductions in other areas, keeping the project within budget, said Suzanne Norton, a Wyoming Construction Department project manager.

“We did not increase the budget,” Norton explained. “We just reallocated from within different sections of the budget.” 

The Capitol Square Project involves the restoration and rehabilitation of the Wyoming Capitol and adjacent Herschler Building, as well as the addition of a central utility plant for the two. The state started setting aside funds as early as 2003 for the project, when the cost was estimated to cost about $305 million. 

As of December, the value of contracts for work on the project was set at about $308 million, though that figure did not include requests for proposals currently under review which could increase the overall cost by millions of dollars.

Change orders

The cost of actual construction work on the project — referred to as construction services — was estimated at $223 million in 2015. In 2016, the Capitol Rehabilitation and Restoration Oversight Group first approved construction services contracts with a guaranteed maximum price (GMP) of about $219 million, Construction Department spokesman Travis Hoff said.

Mel Muldrow, a Construction Department administrator, said as of January, the project’s construction services contract were valued at about $248 million.

Increasing construction services costs didn’t happen overnight, but rather took place in increments throughout the course of the project, Muldrow said.

“Any building project — whether you’re remodeling your bathroom or the Capitol building — is going to have unexpected costs,” he said. “That’s why we have the contingency fund built into the overall budget.”

Muldrow said the GMP was slowly increased by a series of 53 change orders submitted between 2017 and 2020.

Change orders are primarily submitted by the contractor as the scope of work changes due to various unknown factors being revealed, such as increased abatement requirements or extended periods of bad weather.

“The way change orders work is you have a standard contract that says here’s what the contractor is going to do,” Muldrow explained. “But that contract is based off an estimate of work needed. If the contract was for the demolition of a single wall, but the contractor opened it up and realized two more walls need to be removed to complete the job as described, that may require a change order.” 

Once submitted, the change order is reviewed by the architect, the program manager, the construction department and if the change order request was more than $100,000, it required approval from the oversight committee, Muldrow said.

‘Shifting money’

Once approved, change orders can range in cost from a couple of thousand dollars to millions. 

Whatever the cost, Muldrow said after each change order, the construction department rebalanced the budget and reviewed new options for the project. 

“It’s a matter of shifting money as we move along,” he explained. “We’re constantly balancing the money.”

Change orders are commonplace on a large project, so options are built into an estimate to give contractors flexibility.

“This project had a number of alternates, and if we needed the money elsewhere, maybe we wouldn’t do some of those alternates,” Muldrow said. “We’d do what we call value engineer the project. We’re not downgrading, but we’re approaching it from an angle we may be able to save money on.”

The paper trail of 53 change orders is thousands of pages long, but Muldrow talked through the process of some of the project’s most and least expensive changes.

Change order No. 1: $3.5 million

Executed Jan. 27, 2017, the project’s first change order was one of its biggest.

“It included 220 tons of structural steel — additional steel needed for the project — which is pretty costly,” Muldrow said. 

Structural steel accounted for $1.6 million of the order and additional concrete added $1.2 million to the total. 

“When they got into the Herschler building demolition, they realized there was a lot more work to be done than originally anticipated,” Muldrow said, explaining the building was torn down to its structural bones. “Of the nine line items in this change order, six are demolition related.” 

In an email, Hoff explained not all change orders had a specific theme.

Change order No. 6: $2.9 million

Whereas most change orders have several line items, No. 6 was executed July 10, 2017, with a single line: structured and audio-visual cabling.

“In this change order, the architect and design group picked what pieces they wanted to install,” Muldrow said. “And when they did that, they issued a change order for a structured cabling package.”

Contractors give vendors a list of work, which vendors use to create a list of materials potentially needed for the job, he explained. Once given contract approval, Muldrow said the contractor returns to the vendor and modifies the parts order to fit his needs.

“The work was scheduled to be done,” Muldrow said, “but a cabling package had not been selected yet.”

Change order No. 11: $6,630

Some change orders remove projects while adding others.

In No. 11, executed Sept. 9, 2017, the allowance for elevator cab finishes for both the Herschler and Capitol buildings was reconciled by an additional $57,278 and more platforms and stairs were added for about $8,000. 

But the change order also removed an approximately $59,000 arched ceiling for the House Chamber. 

“They decided not to do it, creating a credit,” Muldrow said. “At the end of the day, the change order only turned out to be about $6,000.”

Paying the tab

The total for 53 change orders to date is about $29 million, but the budget only set aside $20 million in contingency funds. 

Because project allowances are constantly being reconciled throughout construction, Norton said it’s difficult to determine what projects were abandoned and what options were changed to make up the $9 million needed beyond the contingency funds.

“Those funds are all within the project,” she said. “It’s just a matter of reallocating from line item to line item.” 

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Actual Capitol remodel costs just higher than estimates

Published on in Government spending/News
Wyoming Capitol Square Project nears completion
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By Ike Fredregill, Cowboy State Daily

After nearly two decades of setting aside funds and working on design and construction, renovations to the state Capitol and Herschler State Office Building are nearly complete, a Wyoming State Construction Department spokesperson said.

“The Legislature started saving for the Capitol Square Project in 2003,” said Suzanne Norton, the state Construction Department project manager. “The projected substantial completion date for construction is Jan. 31 (2020). Final completion is typically 90 days after the substantial completion date.”

The Construction Department provided Cowboy State Daily with documents summarizing the cost of the Capitol Square Project as of Dec. 1, 2019. 

The square project is an extensive overhaul of the Capitol and Herschler buildings. A new central utility plant was also built to service both. 

While numerous aesthetic renovations were made to the Capitol, work also included several major infrastructure updates. 

“Before the project, only about 75 percent of the Capitol had heating and cooling,” Norton explained. “We also installed a complete fire suppression system throughout the building, which it didn’t have before.” 

On the Herschler side, crews peeled the building back to its bones, said Mel Muldrow, an administrator for the Construction Department’s Construction Management Division.

“The interior was all gutted out — that’s walls, flooring, electrical, everything except for concrete slabs — and replaced,” Muldrow said. 

Originally estimated to cost about $305.6 million, the value of the current contracts in place for the project total $307.8 million, according to Construction Department documents. 

While close to the original estimate, the value of the current contracts values does not include furniture for the Capitol, which is still in the request for proposal process and was originally estimated to cost about $4 million. 

“The project should not go above that cost ($307.8 million), but we are not done,” Norton said. “There are a number categories we are still working on getting contracts for.”

The state has paid about $289 million to date, with a remaining debt of about $19 million, not including contracts still in the request for proposal process.

Where did it all go?

The Construction Department broke down the projects cost into six categories: Owner’s overhead, construction services, equipment and furnishings, temporary facilities, relocation and contingency fund.

Construction services

Estimated at $223 million, the current value of contracts for construction services is $256 million.

“Construction services includes all the work done by our construction contractors and abatement companies, among others,” Norton said. “It’s all the nuts and bolts, plus some.” 

Accurately guessing construction costs and materials prices years ahead of time can be challenging, which is why the Legislature built a $20 million contingency fund into the project cost, Muldrow said.

Basic construction costs were estimated at $219 million, but contracts for the work are valued at $250 million, an increase of about $31 million or 15 percent.

A new parking lot that was slated to cost about $600,000 was never built, Norton said. 

However, the abatement estimate was about $550,000, but wound up costing triple at $1.5 million.

“Abatement is the removal of usually hazardous materials, such as lead and asbestos,” Muldrow said. “You can only guess at where you’ll find those materials. One example is when we took the exterior walls off the Herschler building, we discovered they were put up with hockey-puck sized chunks of glue material, which tested positive for asbestos.” 

Contingency fund

Construction Department documents state $20 million was set aside for the contingency fund, all of which was spent.

“One of the things you always want to have in a project is some extra money for all the little things that come up that you didn’t expect,” Muldrow said. 

Norton said contingency monies were dispersed to nearly every area of the project throughout the process.

Temporary facilities

During the approximately three years of renovations, about 750 state employees were moved out of their offices in the Capitol and Herschler buildings and into offsite state buildings or space leased from private companies around Cheyenne.  

The state estimated the cost of temporary facilities for those workers would be about $14.7 million, but the actual cost will be $15.2 million, Construction Department documents state.

The leases were originally estimated to cost about $7.6 million, but are currently valued at $9.1 million. In December, a Construction Department spokesperson said all relocated state employees were moved back into state-owned properties. 

State improvements to the temporary facilities were estimated to cost about $4.8 million, and the contracts’ value is currently $4.1 million.  

“When you move a government office out of the Capitol, and you want to hold a legislative session in an old retail store, it’s not an apples-to-apples fit,” Norton explained. “Some changes will need to be made to the new property.”

Not everyone was pleased with the tenants’ improvements, however. Wyoming Financial Building owner Wayne Voss sued the state in 2017 for failure to pay almost $1.5 million in rent. State officials argued they were withholding rent because the state had to make improvements to the building, but Voss said the state never sought his permission to make those improvements as required in the contract.

Owner’s overhead

Before hammers can pound nails, pens need to scratch paper and the owner’s overhead category of the Construction Department’s cost summary is an accounting of all the time and ink spent to facilitate the project’s construction efforts, Norton explained.

“There’s research you have to do, permit fees, legal advertising, design costs and a host of other non-construction costs,” she said. 

Estimated to cost about $7.3 million, the owner’s overhead category received funds under the “miscellaneous” line item recommended by the Capitol Square Project Oversight Group, which eliminated the contract value cost and created a credit of about $94,000. 

The funds were ultimately reallocated within the project budget to be spent on actual construction items such as abatement, concrete repair, roof repair and replacement and fire suppression piping that were not originally included in the project scope, Norton said.

Design services is included in the overhead category, but separate from the overhead items in the red.

Estimated at about $30 million, design services included the architect costs and materials testing, which are currently valued at $31.5 million.

Equipment and furnishings

“Furniture, fixtures and equipment are generally defined by design and construction industries as anything that would fall out if you picked up a building and shook it,” Norton said.

Estimated to cost about $8.3 million, the current contracts’ value is $4.1 million. Norton said $3.7 million was spent on furniture for the Herschler building, but no contract has been signed for Capitol office furniture, so the cost of that furniture is not included in the contracts’ value.

Artwork for the two buildings was estimated to cost $100,000, and to date, about $336,000 has been spent on artwork, the department’s documents state.

Relocation 

The estimated cost to move people, furniture and technology to and from the Capitol and Herschler buildings was about $1.9 million, and the current contracts’ value is about $1.2 million.

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Capitol’s new furniture might not be delivered until after 2020 Budget Session

Published on in Government spending/News
2519

By Ike Fredregill, Cowboy State Daily

Months after Wyoming hosted a grand reopening of the state Capitol building, legislative and executive staffers are still working with folding tables and temporary furniture.

During a Capitol Building Restoration Oversight Group meeting Nov. 15, group members voted to rework a Request For Proposal (RFP), which could provide furnishings for the newly renovated building. 

Oversight Group member Sen. Eli Bebout, R-Riverton, said the group originally hoped to see the Capitol furnished prior to the 2020 Budget Session. But reworking the proposal could prevent that goal. 

“We’ve had several issues that have arisen out of our original RFPs,” Bebout explained. “We specced this RFP to a certain greater quality, but the manufacturer that could meet those specs went out of business.”

Additionally, he said the group wanted to ensure Wyoming furniture suppliers had an opportunity to bid on the reworked proposal. 

“The original RFP went out about 3-4 months ago,” Bebout said. “It’s a long RFP, because it gets into the specifics.”

Bebout did not have the specifics on hand at the time of his interview, but instead, directed Cowboy State Daily to the Wyoming State Construction Department for details regarding the furniture RFP.

Construction Department spokesperson Travis Hoff said the agency declined to comment on the RFP details, process, amendments or creation, because the document was being reviewed by the Wyoming Attorney General’s office. 

In an email, Hoff provided the state statute used to create the RFP, which specifies that the agency issuing an RFP can ask for certain specifications or products. However, the law also states if the specified product is not available to “responsible Wyoming resident suppliers,” that fact cannot be used as a reason to prevent Wyoming vendors from submitting bids.

Hoff also confirmed some staffers were currently working in the Capitol on temporary furniture, and while no agencies were still renting space outside state-owned buildings, some had yet to move into the Capitol.

Wyoming Legislative Service Office Director Matt Obrecht said his staff moved into the building earlier this summer.

“We’re working on folding tables and have been since June,” Obrecht said.

Bebout said he wasn’t fond of the situation, but he didn’t place the blame at anyone’s feet. 

“I thought we would probably have it done before the budget session, but there’s really nobody to blame,” he said. “If we don’t get (new furniture) by the time the budget session starts, then we’ll use the old furniture and make it work.”

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