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1. Did the original budget approved at Town Meeting in June of 2021 anticipate cost increases between that time and when all bids would be received?

Yes. The original budget included both a Design & Estimating Contingency ($8,618,276) and an Escalation/Market Condition Contingency ($5,688,062). These funds were fully re-allocated into the construction cost as the design and bidding processes progressed. Due to unprecedented rates of cost escalation, a budget deficit arose when the bids were received.

2. Why did the Town choose the Construction Manager at Risk process rather than the Design/Bid/Build process?

While each process has its advantages and disadvantages and each is authorized by State law, the benefits of the Construction Manager at Risk method include:

• Retaining the construction manager at an earlier stage of the project so that it can have input on the design details of the construction that it will oversee. This includes constructability reviews of the design and construction scheduling.
• Providing project cost estimates during design development. Gilbane did so at the detailed design phase, the 60% construction document phase, and the 90% construction document phase.
• Allowing an earlier start to site work.
• Establishing a Guaranteed Maximum Price (GMP), which typically happens after all bids have been received and evaluated and which is expected to be set this December if the additional appropriation request is approved at STM (and potentially at the ballot box). Once the GMP is established, the contract manager assumes responsibility for construction cost overruns, including for worked performed by all project subcontractors, thus greatly limiting future risk to the Town.

3. Why did the Building Committee choose to proceed with four early bids (site enabling, structural steel, concrete, and site work) rather than bidding the whole project at the same time?

Early bids are typical in a project of this size. The benefits include:

• Allowing the project to get started before full construction documents are completed and thus shortening the overall construction schedule.
• Accommodating items, such as steel, with long lead times for delivery.
• Taking advantage of the market at a more opportune time; waiting longer to bid these items likely would have led to higher costs.

4. Why are increases to contingencies recommended?

Contingencies are built into the budget to cover unanticipated conditions, particularly those which may be found during site excavation and demolition of the existing structure.  For example, a pipe covered with asbestos was found underground during site excavation that needed to be abated. The increases in contingencies correspond to the increases in construction costs and minimize likelihood of future budget shortfalls. If contingency funds are not used at the end of the project, they can be re-purposed by a vote of Town Meeting.

5. Is the deficit the result of mismanagement by the Town or its contractors?

No. The budget shortfall is a result of conditions happening throughout the economy and is being seen at numerous other school construction projects in the state.

6. Can the deficit be funded within the existing operating budget rather than adding to the budget and thus increasing property taxes?

Given the constraints of Proposition 2 ½, the full amount of the budget shortfall could not be funded within the operating budget without severely impacting Town and School services. Efforts are underway to refine and hopefully reduce the amount of money that will be requested at the Special Town Meeting. These efforts already have proven successful.

7. Will construction continue between now and Special Town Meeting?

Yes. To keep the project on track, contracts have been awarded for the specific trades needed to allow construction to continue between now and Special Town Meeting. However, unless there is an affirmative vote at Special Town Meeting, the additional contracts needed to complete construction cannot be awarded.

8. Would a delay in construction lead to lower costs for the Town?

A delayed construction approach is highly unlikely to lead to lower costs.  Much more likely is that it would result in increased costs. Even in non-inflationary times, construction costs tend to increase by 4%-6% annually. In this period of high inflation, costs are increasing much more rapidly. In 2021, for example, construction costs rose by approximately 15%. Even assuming a return to more typical increases, cost increases of more than $650,000 could be expected for each month of delay in construction.  Among the reasons why a delayed construction approach likely would lead to higher costs are the following:

• All the bids which were received at the end of August and the first part of September, and which have not been awarded – a total of more than 30 separate trades - will expire, and all work contained within those bids would have to be rebid. 
• Experience shows that construction costs consistently increase, even in non-inflationary times, and current trends point to continuing significant increasing costs. 
• Continuing inflation, supply chain issues, labor shortages, and the war in Ukraine make the trend towards higher costs very likely.
• Events like the recent Hurricane Ian have put an even greater strain on the availability of some construction materials and labor.
• Even if material costs were to decrease, labor costs almost always increase over time and recently have been increasing rapidly due to the current inflation, thus likely offsetting any possible decreases in materials. 
• The opening of the new schools would be delayed, thus requiring the continued use of the energy inefficient and expensive-to-maintain existing facilities. 
• The trade work that was awarded in September likely could not be completed given the dependence of that work on the work encompassed by the un-awarded trade and subcontractor bids, thus leading to possible downtime claims and material storage fees by those entities and additional start-up costs when the work resumed, thus further increasing costs.

9. What would the educational impacts be of a delay in construction?

Teachers, staff, and administrators at both schools provide excellent education to our students. However, there are inherent limitations at each of the buildings that impact the overall quality of education that can be provided, and which will persist for as long as those schools remain in operation. These limitations include:

• At the current West Elementary, there is a lack of suitable space for:
  1. Small group instruction. 
  2. ELL programming. 
  3. Special education services such as for physical therapy, occupational therapy, and sensory processing.
  4. Long-term, hands-on projects and other authentic learning experiences.
  5. Teacher collaboration.
• At the current Shawsheen Preschool, there are significant accessibility issues and a lack of needed equipment and appropriate design to provide the desired supports for special needs students.

10. If the Town Meeting vote is not successful, what are the options for how to proceed?

The two basic options are: 1) to adjust the scope of the project and complete it within the original budget; or 2) to seek funding at a subsequent Town Meeting so that a project of similar size and scope as the currently proposed school could be completed. Both options have significant negative consequences. 

• Under the first option, a significant re-design of the project would be required and at least a temporary pause to construction would be necessary while that redesign was taking place. Thus, the cost factors noted above related to a delayed construction approach all would be in play during the period of redesign and until construction could be resumed. In addition, the following factors should be considered: 
  • Most, if not all, of the additional value engineering items previously noted would have to be removed from the project. This would result in a cost savings of less than $25 per year for the average price home, would not fully address the budget shortfall, and would have the following impacts:
    • Turf field: this was a major factor for many residents and a significant reason why many supported the project; elimination of that would require the installation of a grass field which would have its own, although lower, installation costs, and would result in greater maintenance costs than would a turf field.
    • Site improvements and landscaping: These could not be fully eliminated and thus those costs would not be reduced to zero; reductions in this area would make the school a less attractive and welcoming place. 
    • Operable gym partitions: removal would result in a less favorable learning environment.
    • Gym and athletic equipment:  If eliminated from this project, they would have to be purchased through another funding source. 
    • Greenhouse: elimination would detract from our science curriculum and our ability to build a sustainable culture among our students and staff.
    • Window treatments: removal would pose security issues and would detract from the building’s energy efficiency and from the overall educational environment.
  • Significant additional reductions to the size and scope of the project would be necessary, with an inevitable impact on the education of West El and Shawsheen students, including students in the Bridge autism program. For example, to stay within the original budget, it might be necessary to not fully build the preschool wing and to have our pre-K students remain at the existing school, with obvious major educational impacts on those students. It might also be necessary to eliminate the funding for new furniture, fixtures and equipment, and for technology, and instead move and reuse those items in the new school, again with major educational impacts.
  • Additional architectural fees would be incurred to conduct the redesign.
  • Depending on the nature of the proposed reductions, at least some of the MSBA grant of up to $38 million could be threatened. For example, any proposal to lower the capacity of the new West El or to reduce the size of classrooms would be at odds with our MSBA funding agreement. Not fully building the preschool wing likely would lead to at least a partial reduction of the MSBA grant.
• Under the second option, a renewed request at the 2023 spring Annual Town Meeting would require a halt to construction of at least six months. Thus, the cost factors noted above related to a delayed construction approach all would be in play during that period, with a likely cost increase of more than $4 million due to the delay.

11. How likely is it that an additional funding request beyond the current request will be required?

If the additional funds are approved at the Special Town Meeting, the remaining contracts needed to complete construction will be awarded and a Guaranteed Maximum Price (GMP) will be agreed to with the construction manager, Gilbane, at which point the risk of construction cost overruns, including for work performed by subcontractors, shifts to the construction manager. When combined with the recommended increases to the contingency funds, these factors make it highly unlikely that there will be a need for any future budget requests, if the current request is approved.

12. Will the Town need to borrow all the money that Special Town Meeting approves and, if not, how will that impact the increase in property taxes?

The Town does not need to borrow all the money that Special Town Meeting approves. If the Town borrows less than the authorization, the impact to taxpayers will be less.

13. What happens if all the money borrowed isn’t needed to complete the project?

Town Meeting can vote to re-purpose funds from a previous borrowing authorization.

14. Can the second elevator in the West El wing or other items removed during earlier Value Engineering be restored?

We considered this option and determined it would not be appropriate to add to the scope of the project at this time, even though these items were included in the original design. However, we are hopeful that the installation of the second elevator in the West El wing will eventually be funded through other mechanisms.

15. Can funds for the installation of solar panels at the new school be sought as part of the STM funding request?

Like the above, we do not think it is appropriate to add to the scope of the project. However, we are hopeful that solar panels will be added at some point through other funding mechanisms.