Unexpected expenses have swelled construction costs for ISD 2142, but the district should still come in under budget, according to Randy Anderson of Johnson Controls Inc.

Anderson, who provided an overview of the project expenses during a study session with the board on Tuesday, said the district had budgeted $78.8 million for construction and remodeling, including $11.872 million to Johnson Controls for the design and management contract. He expects the actual total to be $77.833 million, leaving a cushion of $1.316 million.

In addition, the district will earn $350,000 in interest from the bond revenue that was invested. That’s significantly less than the nearly $800,000 originally projected, according to Business Manager Kim Johnson, who said record low interest rates reduced the payoff.

Cherry exceeds budget

Although the district as a whole remains under budget, the Cherry School exceeded its construction budget. Costs for that project are expected to total $10.479 million. The school’s original budget was $9.9 million, but was later supplemented with an additional $400,000 from the district’s contingency fund. Even with the additional money, Anderson said the project is expected to be $179,178 over budget.

Anderson called the Cherry School remodeling “challenging,” noting that bids for the project came in 20 to 40 percent higher than anticipated and unexpected issues such as the removal of contaminated soil added to the project costs.

Cherry’s fire suppression system also added costs, requiring installation of an underground tank instead of a water tower as originally planned. The system price tag rose to $350,000 with the addition of the sprinkling system and fire pumps, which had to be approved by the state.

Meanwhile, other improvements that had originally been planned, such as fixing the Cherry School parking lot, were scrapped as money was diverted to other needs. Those improvements and others ended up on a list of optional projects totaling $450,994. Just paving the parking lot with a two-inch overlay would cost $124,000, but Anderson did not recommend taking that approach. He said the overlay would likely last two to three years at best and said a complete overhaul of the parking lot is needed. That would likely cost about $300,000.

Other projects on the list included $51,000 for new lights for classrooms, $55,000 for the installation of digital temperature controls in the school’s high school wing, $45,000 for classroom upgrades, $75,000 for additional site work and $17,310 for placing sheet rock over the bricks in the school’s main entrance and painting the sheet rock.

Anderson explained that the last project was suggested by Principal Jeff Carey, who said it would brighten the entrance to the school. But Zelda Bruns questioned the need for placing sheet rock over bricks, noting that the bricks themselves could be painted.

Anderson agreed, noting that he had suggested the same thing but had been told by architect Katie Hildebrand that would not do.

Superintendent Charles Rick said the additional projects proposed for Cherry should wait until the district has substantially completed work on its other schools. Rick said the board could decide then whether to use remaining bond funds to do work at the school or schedule it for later in their three- to five-year capital improvements plan.

Board member Chet Larson suggested that schools that come in under budget should have a first crack at money left over in their budget allocations before the contingency fund is opened to the district as a whole.

Remaining funds

The other remaining projects are all expected to come in under budget with Northeast Range leading the pack, spending $4.335 million out of project budget of $5.1 million — a difference of $764,256. The North Woods School is expected to come in $544,215 under its budget of $29.4 million while remodeling at the school in Tower is expected to cost $164,707 less than the $5 million budgeted.

The savings at the South Ridge School will be substantially less — $72,680 — due to numerous unexpected costs. Land acquisition for that school was expensive, costing the district $550,000. Part of that high expense was the need to purchase more land to meet zoning restrictions at the site after the district’s request for a variance was denied. But the cost of the initial land purchase was higher than normal, as well. “We were robbed,” said Chet Larson.

Winter construction costs added at least another $600,000 to expenses due to the need to heat the construction site with propane and thaw the ground.

Meanwhile, numerous change orders — to the tune of nearly $50,000 a month — increased costs.

Chet Larson noted that not a single change order had gone before the board for approval. “I’ve never been involved in any bond project where the board didn’t have to okay change orders,” he said.

Anderson responded that the contract with Johnson Controls did not require board approval for change orders, but said it could be modified if the board wanted to have prior approval on change orders.

Larson said he thought the board should have set a specific dollar amount — perhaps up to $5,000 — for change orders that could be okayed just by the superintendent’s consent. But change orders exceeding that amount should have been brought to the board.

Bob Larson noted that early in the process, the board had discussed establishing a three-member committee to review construction bids. That committee could have kept an eye on change orders, he suggested, but the establishment of it fell apart and the board never revisited the issue.

Anderson noted that weekly construction meetings were conducted where the issues of change orders could have been addressed.

Meanwhile, Anderson said lessons learned from the South Ridge construction should result in fewer change orders for the North Woods School. In addition, he said, most of the North Woods School construction will occur in the summer, which will also save money.

Construction on the North Woods School could be delayed if Field Township is successful in seeking a temporary restraining order to stop work at the site. The town had adopted an interim ordinance that temporarily prohibits construction of the school and the issue could wind up before a judge.

If the ordinance or restraining order delays work on the project, Anderson said it could add up to $1 million to the project cost by forcing more work into the winter months. Contractors would also have to rework their bids to take into account any increases in obtaining materials for the construction project.

Legal fees have also taken a toll on the district’s construction budget. Johnson said that legal fees thus far have topped $200,000 and put much of the blame for that expense on opponents of the school restructuring plan.

Some board members expressed similar complaints and Anderson said it was a shame that the money that went to legal fees and added costs due to construction delays could have been used on schools instead.

But others contend that the fault for the delays belongs to Johnson Controls, which failed to complete the necessary Environmental Assessment Worksheets and did not take into account zoning issues when selecting sites for new schools.

As for the legal expenses, several said the board might have avoided much of those costs had it been more willing to work with northern communities, which had overwhelmingly rejected the district’s restructuring plan in the December 2009 bond vote.