Managing Construction Contracts in Mission Viejo
Letter to the editor

On the eve of awarding a construction contract for the expansion of the Norman P. Murray Community and Senior Center, several issues confront our council. To begin the discussion, the original budget was in the $6.5-million range, which would have included $3 million from the state and approximately $3.5 million from Mission Viejo. Bids received came in at approximately $8.5 million or $2 million higher than the budgeted figure. The higher number is approximately 25 percent to 30 percent more than estimates and cannot be explained entirely on material cost increases alone. Time constraints due to deadlines with the state may prevent a re-bid process.

Based on the history of past construction contracts, our city has a poor record of managing contracts of projects coming in on or under budget. The community center expansion will require a serious review to ensure it stays within budget. All change orders by the city or the contractor will require review. All material cost changes, labor costs and architectural changes will need to be analyzed selectively so that the contract comes in on budget. A design review board comprised of city personnel and citizens should be designated to control costs and report to the council any changes that would affect costs. Cost containment should be designated from the beginning of the contract as a major goal and enforced throughout the contract by judicious monitoring.

Change orders during construction contracts are a major source of cost increases. When our city makes a change in the middle of construction, it affects costs, slows construction and results in increased burdens passed through to the taxpayer. Once the design is cast in stone, change orders should not be tolerated or accepted during the course of construction. Any change should require council approval, and cost containment should be reviewed periodically.

Let’s hope that the community center expansion can be the one contract that stays within the budget and does not become a burden to the taxpayer. Continual cost increases and contract cost overruns will do little to inspire confidence in our city’s ability to manage construction contracts. We must succeed in managing contracts within the designated dollar figures for the contract and make sure our citizens are not penalized by poor management.

James Edward Woodin
Mission Viejo