Budget Meeting Minutes 05/11/05 - Laserfiche WebLink

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Total construction cost for Fire Station #1 is now projected at $6,678,000, which is approximately $310,000 above the 2002 estimated cost of $6,370,000. While the size of the station increased about 20%, the total construction cost was held to a 5% increase. As a result, the total design and construction cost per square foot decreased from the original estimate of $271 per square foot to $238 per square foot. In order to stay within the overall budget for the fire projects, the increased cost for Fire Station #1 was mitigated through a combination of eliminating or reducing the cost of some building elements, commitment of project contingency to the initial contract and the shifting cost savings from other project elements to the Fire Station #1 construction projects. This approach was chosen by the design team as more cost effective in the long run than redesigning and re-bidding the project. In terms of specific budgeting measures, the change order total noted above included reductions identified by the project team that offset some of the cost for the additional project elements, such as finishing out. future expansion space. In terms of cost savings in other areas, savings were realized from reducing the utility and site work completed at the Live Fire Training Building and from lower than predicted fmancing costs. The amount committed to purchasing fiirniture, fixtures and equipment (FF&E) was also reduced. Finally, the balance was covered by reducing project contingencies which limited funds available for change orders that occurred later in the construction process. While these measures have been relatively effective in keeping the overall fire projects budget in balance, the attached table shows that the current project estimate is approximately $110,000 higher than the total project costs estimated in 2002. This is due to two factors. First, land acquisition costs were about $133,000 higher than predicted due to a combination of land and tenant relocation costs. Second, the current project estimate includes a remaining $132,000 in project contingency.. While this contingency is ,_ sufficient to balance the overall project budget if it were not used, it is likely that some portion of this contingency will need to be expended before the Fire Station #1 project is completely closed out. To be conservative, for estimating purposes the assumption is that the entire contingency maybe used. FY06 Capital Budget The proposed FY06 Capital Budget includes a $310,000 increase to the Fire Station #1 construction project. These funds represent the amount of interest earnings on the bond proceeds since the start of the project. Interest earnings on bond proceeds can only be spent for the same projects as the voters authorized in the bond measure, which means that these funds must be used for FS#1 or Live Fire Training Building costs. This additional project funding would be used in two ways. First, as noted above, approximately $110,000 is needed to fund the current estimated total project budget. The remaining funds would be used to partially reinstate funds originally budgeted for the Live Fire Training Building and for FF&E purchases, which contributed a combined total of approximately $287,000 to the Fire Station #1 construction budget. Because the combination of FS#1 budget requirement plus the amount of funds needed to completely reinstate project budgets for FF&E and the Life Fire Training Building exceed the $310,000 available from interest earnings, it is likely that the entire amount of those project budgets may not be restored. Specific Live Fire Training Building or FF&E expenditures would not be identified until the Fire Station #1 project is substantially complete, and a more firm estimate of remaining resources can be made. Lessons Learned One of the main lessons learned from this process is that development of the design for a major facility needs to be done before the project budget is set. This is especially important inbond-funded projects, in 12