URI goes to bid again

09/04/08 - A reworking of state regulations on construction projects is delaying the building of the University of Rhode Island's new pharmacy building, and could add as much as $2 million to the project. The method under question, construction management at risk, is one the university uses in less than 5 percent of its projects, Vice President of Administration Robert Weygand said earlier this week. Although A.F. Lusi Construction of Smithfield is suing the state administrative department, not the university, the lawsuit still affects URI, and its future construction projects.

"This isn't about Lusi and URI, this is about how the state procures construction for buildings," Jonathan Flynn, spokesman for the construction company, said earlier this week. "It is our feeling that if you're going to deviate from the traditional preferred method that you should have real reasons for it."

The new pharmacy building was scheduled to be finished in 2010, but is now targeted for 2011, nearly six months after the expected date, because it is using the construction management at risk method for the bidding process.

The main difference between construction management at risk and the more traditional "design-bid-build" method is that there is a greater equality between the consumer and the employees. In design-bid-build, the project is designed, the contract goes out for companies to bid on, and the company that best fits the needs of the employer is granted the bid. The project is then built, and additional costs are discussed as the project moves along.

In construction management at risk, a maximum price for the project is set before construction even begins, and an incentive is given if the project is completed ahead of time. In addition, a monetary penalty is given if the employees fail to meet scheduling requirements, which are also set before construction begins. The contractor is responsible for finding additional staff for menial tasks such as putting in floors and drywall.

But in order to use construction management at risk, the employer needs to justify why it is deviating from the more traditional methods, typically by a request letter. A.F. Lusi Construction did not agree that there was a valid process to determine if a project needs construction management at risk, versus other more traditional methods.

In its first lawsuit against the state, the company argued that these methods were too vague, and more strict guidelines for applying for construction management at risk were needed. In Superior Court, Judge Michael Silverstein ruled in their favor, and emergency regulations were put into place that were supposed to be more specific.

The pharmacy building was designed during this nine-month period in 2007, before A.F. Lusi filed suit a second time for even more specific regulations, after Gilbane Building Company was selected from the bidders. Once again, the judge ruled in favor of Lusi, and Gilbane was never officially awarded the bid.

Since the regulations are still being drafted, the bidding for the construction of the pharmacy building will have to be redone, which takes up to two months.

Weygand said the reason the pharmacy building - a $70-million construction project - needs construction management at risk is because the building is so complex. He referred to the laboratories and special sections the building needs, and said extra costs are bound to occur.

Flynn said, "The problem with the complexities issue is there is no definition of complex. What does it mean by 'complex?' Any building these days [is] complex."

Flynn continued to say the way the state awards its contracts is subjective. If the lawsuit had not been filed, Gilbane would have been awarded the bid.

In the past, A.F. Lusi Construction and Gilbane have both done construction management projects with the university, and the more traditional design-bid-build.

A.F. Lusi has worked on the building of Boss Arena and the University Library, both using construction management at risk. Flynn said Lusi has the capabilities to do construction management at risk but "he likes to do traditional contracting."

He did not specify whether Lusi had originally gone for the bid on the pharmacy building, or if the company was planning to when the bids go out in October.

Director of Capital Projects Paul DePace said in a separate interview that he did not feel that Lusi would have been awarded the bid since he did not meet the university's expectations in this type of project.

"He could have responded ... but he would not, in my opinion, have been qualified to the things that we want a construction manager to do," DePace said.

He said later, "It's a science building, there's a lot of nuances in it that require specialty experience."

But the lawsuits themselves have delayed the pharmacy building about half a year, since the bids won't even go out until October, DePace said. Because of the delay, the university will see even more costs because of inflation.

"The inflationary cost would be awful," Weygand said. He estimated the construction inflation at about 6 percent per year, equaling about $1.5 million to $2 million additional in the project. Extra costs would also come from rising costs of materials and transportation.

Weygand and Flynn both described the relationship between the university and Lusi, and did not indicate any problems between the two.

"We've had our traditional tug of war with any contractor, you go back and forth arguing about certain things," Weygand said. "They've provided us with the kind of quality work that we want."

Because of the delay, Weygand said the construction company - whichever one is awarded the bid - would not be able to break ground until Thanksgiving, but there is a possibility it would be delayed until the spring semester.