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Schools Teach Construction Lessons, Too

Commercial real estate and public schools districts stand to learn from each other. For starters, commercial real estate can learn about accountability, maintaining a budget and keeping a tight schedule. For most large projects, a property owner can generally come up with more funding, while school construction projects are based upon hard-dollar contract amounts tied into a referendum. For an owner, returning to a board of directors in much easier than going back to the public to receive permission to sell more bonds or to raise taxes. Commercial real estate clients should take the attitude of the school district to heart—and realize the benefits of being more pragmatic.

K-12 school districts face unique challenges. Because a district builds new facilities infrequently, neither the administration nor the board can provide institutional knowledge for the previous project. The school district also relies almost entirely upon outside consultants and low bid contractors, and the process for obtaining them is often inadequate. Even though the final product is generally aesthetically pleasing, timing, money, design errors or constructions defects can mar the ribbon-cutting ceremony. And, the board and administration are often blamed.

Seven Steps to Success

A school district should consider taking the following steps to achieve success when building a new project:

• Step 1: Set up an effective planning process that includes defining the stakeholders, establishing involvement of the board, administration, community, teachers and students and developing a written definition of success. In handling a recently stalled construction project, it was imperative to determine that the district's overriding goal was quality, not timing, even thought the project was behind schedule. Establishing this priority was not easy because the board and administration were being criticized for tardiness. However, once established, a high-quality project was completed without the disruption and potential legal exposure of forcing low-bid, lump-sum trade contractors to accelerate.
• Step 2: Carefully prepare to select the architect and construction manager at the outset. Involving both professionals is essential since each play separate and critical roles. Base the selection process on well-defined criteria, and use the healthy tension between architect and construction manager to your advantage.
• Step 3: Carefully select a “point person.” Although it is possible to designate the director of buildings and grounds, the selection will depend on the district's ability to accomplish such a task without this person for the duration of the project. The better solution may be to hire an owner's representative. Although it is beneficial that the rep has construction experience, the most important skill is the ability to communicate. This individual's role is to provide information and know every planning detail and specific goals.
• Step 4: Acquire basic knowledge of contract terms that protect the school district. For the most part, the district determines the business and legal terms of each agreement. This is particularly true for professionals selected without bidding and contractors selected through a bid process under rigid legal requirements. With the help of contruction counsel, fair yet protective agreemnets can be obtained.
• Step 5: Understand competitive bidding and award the project to the lowest responsible bidder. New York's laws require that each construction contract be awarded to the lowest responsible bidder and does not allow prequalification. To disqulify an undersireable bidder, the district must demonstrate contractor failure on a technical requirement or a pervasive and legally provable pattern of poor performance.
• Step 6: Undertand project team dynamics and roles. Make sure each participant is performing and willing to take action if he fails.
• Step 7: Understand and appoint a top-notch financial team with experience in construction finance and with the state education department.

With appropriate knowledge and the right team, a school district can define and achieve a successful project. However, success is more likely if the formula is established at the very outset of the project.