University Center construction expenses have exceeded estimates by millions, and even though the construction budget has been increased twice, administrators are still being forced to cut costs by redesigning some parts of the project and completely eliminating others.
Among parts deleted by cost-control measures was an outdoor amphitheater, which had been planned for construction near the Rose Theatre Plaza.
The UC construction budget, which is being funded entirely by the student debt service fee, was originally estimated at $42.3 million when Inman Construction was selected as the project manager in May 2006. The Tennessee Board of Regents increased the budget by $8.6 million since then - to $45.9 million in November 2006, then to $50.9 million in October 2007.
According to Page Inman, president of Inman Construction, costs are exceeding estimates partly because of rising material costs, particularly steel, and unexpected difficulties in finding subcontractors to perform labor.
"Contrary to popular belief," Inman said, "the commercial construction market is very busy. It's not always easy to get multiple bids in many trades. The (subcontractors) have got all the work they can handle."
Tony Poteet, assistant vice president of Campus Planning and Design, said that they received no bids from subcontractors willing to install the elevators or terrazzo flooring, and of the bids they have received, many are higher than Inman's estimates.
Despite the growing budget, Poteet said the total per-square-foot costs for The UC are still comparable to other universities across the country.
TBR executive director Jerry Preston said the project is still being completed within the current debt service fee.
"We've tried to maximize our capability through the existing debt service fee that we have ... The fee is the driving point of limitations," Preston said.
To offset increased expenses, the project is undergoing a process called "value engineering," where costs are reduced in controllable areas.
An example of value engineering, according to Dean of Students William Porter, was changing the walls in the auditorium from hardwood to a painted sheetrock. But more extensive reductions and cuts have been made in other areas.
Officials have tried to limit the scope of value engineering, but sometimes, large parts of the project have to be cut to control price, Poteet said.
"We tried to keep it where it didn't have an impact on the functionality, durability or aesthetics of the project," Poteet said.
The original plans included an outdoor amphitheater in the Rose Theater Plaza as an additive alternate - an optional project partly based on available funding - but it has been cut from the plans due to its $750,000 price tag, Poteet said.
"We're going to maximize it to get what we can," Poteet said. "If we don't get that amphitheater, and boy, I pushed that hard. I did not want to lose that, but right now it's out. We'll have to come up with an alternative plan to maybe fund that a different way."
According to Poteet, costs were also cut by changing ceiling and floor materials and deleting an arbor over an outdoor dining area.
Porter said even though cuts were being made, the overall value of the building to students should be unaffected.
"Our highest priority here is to get the best building we can for the students," Porter said. "This building is going to be available to students, essentially, as has always been discussed, and even promised, and it's going to be within the fee that has been approved. I think that's really the key here ... It is a real challenge to get there, but that's what's going to be."
The state is employing a non-traditional construction process for UC construction in an attempt to speed up construction and maximize the value of the building.
Using this process, which is known as the "at-risk" construction method, Inman Construction serves as the project manager and general contractor. Their role is not to build the facility, but to coordinate with the owners and designers and manage the subcontractors who perform the actual labor.
According to Mike Fitz, Tennessee state architect, at-risk construction has been used on several other state facilities and has some advantages over the traditional one-bid construction method.
"It brings together a closer relationship between the designer and contractor for working out problems," Fitz said. "The selection process is such that it brings about an advantage for obtaining better qualified firms instead of just the low bid."
Fitz said that with the traditional bid process, a contractor can do a marginal job and still get later jobs - the only thing that matters is who gives the lowest bid.
Using the at-risk method, contractors are chosen based on their qualifications and experience. Rather than a bid process, they are selected to manage the project and then limited to a "guaranteed maximum price" which is set during sometime during the construction and design process.
Fitz said that the state has determined the "at-risk" construction method generally results in a higher quality final product, but it may be more expensive.
"It's hard to say, but my gut reaction is you are going to be a little more expensive on the front end. But on the back end, the quality you've got for what you've paid will be equal to or better than what you get with a traditional process," Fitz said.
The guaranteed maximum price for The UC should be set some time in January, Poteet said.
Some of the capital for The UC construction project is being raised through the sale of 30-year state bonds that will be paid back with the student debt fee.
Even though student debt rather than taxpayer money is paying for The UC, Poteet said state committees are no more likely to allow uncontrolled expense increases.
"They do not want student fees to go up, and they are just as cautious as we are about the cost of construction," Poteet said.
