Center expansion faces cost overruns

The builders of the Spokane Convention Center expansion project are searching for ways to save money after bids on the largest construction contract came in $6.2 million over budget.

After two weeks of talks, the cost overrun has been cut down to about $4 million, said Dave Garske, operations manager for Hoffman-Bouten, the general contractor. The company will present proposed solutions to the budget problem to the Spokane Public Facilities District board on Dec. 14, he said.

PFD Executive Director Kevin Twohig said any cost overruns are Hoffman-Bouten’s responsibility because the contractor has guaranteed a maximum construction cost of $55 million for the project.

“They’re definitely carrying the load right now without any question,” Twohig said. “We relied primarily on the general contractor’s cost estimate.”

However, Garske said, additional costs resulting from a change in the project’s scope fall to the PFD to pay. That could include any additional features added to the project after that maximum construction cost was guaranteed.

The project will remain on schedule as long as bids are awarded by Christmas, Garske said.

Bid package No. 4, which was opened on Nov. 19, is by far the largest of the project. It encompasses all the structural steel work, mechanical and electrical systems for the 100,000-square-foot exhibit hall and the connecting walkway to the rest of the Convention Center. More than 150 subcontractors submitted bids for the work, which the general contractor had budgeted at $27.5 million, Garske said.

Cost overruns for a project this large are usually no more than 2 or 3 percent, Garske said. This bid came in 22 percent higher than projected, however. And a $6 million cost overrun is more than 10 percent of the total $55 million construction cost.

“It’s higher than normal,” Garske said.

Three factors led to prices coming in higher than expected, Garske said. The language in the request for proposals may not have been clear about what precise services were needed. The scope of the project could have changed from the original designs. Or market conditions could have changed, including, most notably, the skyrocketing price of steel.

Only one company bid on the steel work, which came in much higher than expected and contributed significantly to the $6.2 million, Garske said. Subcontractors are nervous about committing to a price for steel right now due to the fluctuating prices, he said. The cost for insulation also came in several dollars more per sheet than expected, he said.

The contractors, architects and staff of the PFD will spent the next two weeks scrutinizing the bid package, looking for areas where costs can be cut. Some parts of the work may be sent out for bid again, Garske said. Costs savings could come from using different materials, but the look, size and features of the project will not change, Twohig and Garske said.

“We’re not going to dumb down the project,” said board member Larry Soehren. “We believe there’s an obligation to deliver a specific type of building and it’s our goal to deliver that.”