Navigating Troubled Waters With School Construction

Effective planning, focused decision-making, and the ability to use strategic legal advice are the keys to solving problems with school construction projects as they arise.

By John E. Osborn, Esq.

The press has widely reported the disastrous experiences of school districts throughout New York State and the country in constructing and renovating schools. Current headlines highlight water leaks that lead to mold contamination, asbestos abatements that delay renovations and drive up construction budgets, and contractor bankruptcies and failures to meet deadlines for school openings.

Studies, such as the 1999 study of school district construction projects carried out by PricewaterhouseCoopers LLP for the New York City School Construction Authority, confirm the consistent pattern of delays and cost overruns in school construction and examine proposed reforms.

Industry commentators have focused on three areas to explain why school projects often depart significantly from the initial budget and schedule - inflexible and reform-resistant bidding laws, inexperienced or volunteer decision makers working with fixed budgets, and design/construction teams for school districts repeatedly making the same mistakes.

Public Bidding Laws

Critics focus on two public bidding laws that prevent on-time, on-budget delivery of quality projects, the Wicks Law and the law requiring the award to go to the lowest responsible bidder.

In effect for more than 90 years, the Wicks Law requires at least four independent prime contractors on each public works project: General construction, HVAC, plumbing and electrical. Critics charge that if the requirement were abolished, the school district could then bid the work to a general contractor who could exert much more effective control over the construction trades' coordination, schedule and cost. Those who oppose abolishing the requirements believe the change would result in poor quality and more expensive work by MEP trades who would then be subservient subcontractors to a general contractor.

The 1999 PriceWaterhouseCoopers study found that the Wicks Law costs public construction $30 per sq. ft. in New York City. Other commentators have estimated that eliminating Wicks would save 10 to 20 percent on school construction, leaving school districts throughout the state looking for the type of exemption from the Wicks Law that has been afforded to the NYCSCA.

There is no impetus to end awards to the lowest responsible bidder, but school districts complain there isn't an effective way to eliminate low bidders with unsavory or incompetent track records. The school district can throw out a low bid only in the most extreme set of circumstances. Suggested reforms include a prequalification process preceding public bidding.

Problems Specific to School Districts

Owners, such as school districts, that build infrequently are inherently at peril. There is no institutional memory that links organizational needs to project execution. There is no in-depth, in-house staff that understands the process. In addition, the decision-making process is often diffuse, and key decision makers are often volunteers.

As school superintendents, school business officials and board members increasingly understand the immense responsibility and powerful influence they have on the success of the school construction process, these individuals become progressively more sophisticated and educated about the process. This heightened awareness and focus leads to increased success. It is our belief that Boards of Education and school officials who prepare themselves with lessons learned from other school districts and who focus on the basics can be effective.

Deadly Construction Sins

Projects with design errors and omissions, construction defects, schedule delays or cost overruns are suffering from basic and commonly encountered problems that can be prevented. For school district projects, in particular, we find that problems are typically not related to the bid laws but rather to one of the following four deadly construction sins:

• Basic failings in advance planning, integration, coordination and commitment of key consultants, including the architect, engineer, construction manager and environmental consultant.
  
• Failures of communication among the team members, including the construction manager, architect, contractors, the school district's facilities department and the Board of Education.
  
• Failure of each team member to designate an appropriate point person.
  
• Failure to bind together the team by developing accurate contract documents with accurate scopes, responsibilities and dispute resolution methods.

Dealing With Problems As They Arise

Focusing on problem avoidance creates the ability to recognize danger signs of an imminent problem. With effective upfront planning and carefully tailored owner-oriented contracts, the school district's attorneys are in a position to craft an effective solution to get a project back on track by terminating ineffective design professionals for convenience, by taking away work from poorly performing contractors and by negotiating favorable resolution of outstanding claims.

John E. Osborn, Esq. is a partner in the New York City and Chappaqua, New York, law firm of John E. Osborn P.C.