Guaranteed Maximum Price (GMP), Explained

Because of the construction of the New JCHS and the talk of bids, managers, contractors, and more becoming the talk of many Board of Education meetings here are some significant elements of the process explained.

Construction Manager at Risk

The Construction Manager at Risk (CMAR) program is authorized by State statute and designed to help school systems with a guided process for construction initiatives. It includes a Guaranteed Maximum Price (GMP) cost control feature of mutual benefit to stakeholders.

The CMAR contractor is responsible for soliciting competitive proposals subject to audit and, based on best value selection criteria, bringing a GMP to the Board of Education for approval. The GMP includes a State approved CMAR fee.

GMP

GMP is the maximum price the Board can expect to pay for a construction program and includes alternative project options. If the Board opts out of an alternate cost element and when project work comes in lower than the GMP, by statute those savings are returned to the District.

Being able to opt out or select alternates is how the District and CMAR are able to manage a construction program to budget. Just like a home budget, the District will buy the items it can afford and may not be able to purchase items it wants but does not need.

Construction

The New Junction City High School includes three phases of construction that will generate three GMP figures requiring Board approval. To date, the Board has approved a GMP for Phase One Earthwork and Phase Two which includes Paving and Utility Work.

Through the competitive bidding process, the Phase One GMP came in at $3.5 million and is a little more than $500,000 below budget planning estimates.

The Phase Two GMP approved by the Board on April 8, 2019, came in under $6.3 million and is about $21,000 below budget planning estimates. Phase Two reflects multiple subcontract awards which represent the total GMP.

“Fourteen firms received the Paving & Concrete package with five returning proposals.”

During Phase Two, construction companies were given the opportunity to submit proposals on paving and concrete as a bundle or separately. It was made clear that the District reserved the right to make a split award.

The Utilities package was issued as a stand-alone solicitation for proposals. Fourteen firms received the Paving & Concrete package with five returning proposals. Two concrete contractors also submitted proposals. A Utilities Request for Proposal was issued to 13 firms resulting in two competitive proposals.

Based on the Phase Two GMP approval by the Board, subcontract awards are being made to Bayer Construction (Paving), Kolde Concrete, and Nowak Construction was awarded the Utilities portion.

The Next Phase

Request for Proposals for Phase Three, which includes the high school building and athletic facilities, will be issued to industry professionals in the June timeframe. A GMP with an estimated value of more than $80 million is scheduled to be presented to the Board for their approval during the August Board of Education meeting.

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