The price tags of professional service agreements for three separate construction projects caught the attention of Gillette City Councilmen Everett Boss and Robin Kuntz during Monday’s meeting designed to give city council members a preview of the agenda for the upcoming city council meeting on February 21.
According to one bid award, Construction of the east parking lot at City West will cost $346,293. The professional services agreement for that bid award, however, is $47,920.
These construction administration costs are generally estimated to be around 10 percent of the actual cost of construction for budgeting purposes. Councilman Boss wanted to know why this particular professional services agreement is nearly 14 percent of the actual cost of construction.
Engineering and Development Services Director for the City of Gillette Dustin Hamilton responded by saying several factors go into the price of a professional services agreement.
“Basically it’s based on the scope and complexity of the project, as well as the duration of the project,” explains Hamilton.
Hamilton says the city is charged for the consultant’s time and their service to be on the project.
“Regardless if it’s a $1 million project or a $100,000 project, if the length of the project is the same duration or contract days are the same – say 20 contract days – we’re going to pay the consultant the same amount for each of those projects because we’re paying them to be on-site for those 20 days,” says Hamilton.
Councilman Kuntz also asked for additional information, noting similar concerns over the cost of the professional services agreements for the Country Club Road improvements and the Dalbey Park East Entrance.
As it currently stands, the city council will consider a bid award on February 21 of approximately $1.6 million to improve Country Club Road, while the cost of the related professional services agreement is 14.6 percent of the cost of construction, or $236,450.
Meanwhile, the cost of the professional services agreement for the Dalbey Park Entrance ($30,650) is 27 percent of the actual cost of construction ($113,487).
“When we end up looking at the cost per day we have requirements for the frequency of materials testing as well as when the city would like to have the engineer on-site to verify the inspection,” Hamilton says.
To reduce the costs of the construction management fees, Hamilton says they reduced the inspection time to 4 ½ hours per day.
“The cost per day typically ranges between $1,100 and $1,600 a day depending on the complexity of the project,” describes Hamilton. “In the case of the Dalbey Park East Entrance and the City West east parking lot that cost per day is approximately $875 per day, so those are below the norm for a typical project due to the fact that is part-time inspection and not full-time inspection.”
City of Gillette Mayor Tom Murphy says he believes the city staff did their due diligence in the process, and says even though the costs of these professional service agreements exceed the 10 percent the council likes to keep them at, he believes these charges are in order.
“Typically construction services by an engineering firm run about 10 percent of the total cost of the project, unless of course you get down there were the total project is only $100,000 or $130,000 in this case, the time is still there to have a gentlemen in a pickup with the testing credentials to monitor the job to make sure that quality construction is being done,” the mayor says.
Hamilton adds the 10 percent rule of thumb sometimes has a few ironic twists.
“In the case of a very large project ironically the fees can tend to range below that 10 percent,” Hamilton says. “On smaller projects based upon the length of the project the fees can well exceed that 10 percent.”
On a more positive note, however, Hamilton says some of the bid awards the city received are below the engineer’s expectations.
“So far we’ve opened a handful of projects and to date the city is receiving favorable pricing on the construction projects and in some cases we’ve come in at six figures below the engineer’s estimates,” says Hamilton. “We certainly hope to continue to see the favorable pricing as everybody in the community benefits from that.”
