Funding for Facilities: Cost Break Down of Construction on Campus

by   Posted on December 1st, 2009 in Uncategorized

Amanda Cheek, News Editor

With some students attending George Mason University who have never seen the campus without construction, building projects have been causing quite a ruckus on campus the past few semesters.

From traffic jams to waking students before their alarm clocks in the morning or simply blocking normal paths students take to class, construction seems to be changing campus significantly.

Danica Wysocki, freshman marketing major, was not exactly sure how to respond when asked where she thought the funding for all the building on campus comes from.

“Maybe donations? Every building is named after a person so maybe they donated [the funds for the building]…I think funding comes from partially student tuition and donation,” said Wysocki.

Tom Calhoun, the vice president of Facilities at Mason explained that money for campus building projects comes from a number of places, and has to go through a complex process from estimate to approval before the funds can be accessed for construction on campus.

“We try to keep money coming from the same source for the same project,” said Calhoun. “It’s our responsibility to manage within the budget.”

Calhoun explained that funding comes from many places. Among those, the state came in second only to university debt.

Money borrowed from the state has to go through an approval process that starts with the six-year capital.
This plan is updated and revised every two years due to the changes in the state budget.

The plan is comprised of a list of several projects which are funded by capital. University planners and engineers make a rough draft of plans for each project and come up with a number and list of costs for each project.

These costs lists are extremely detailed and include the costs of everything that would accumulate from the project including the construction, utilities and furniture among others.

A list is created of all the projects drafted, and several groups review the estimates within the list of projects. The committees prioritize the projects into another list in case the state does not give all the money for all the projects.

The presidents of the university and Board of Visitors ultimately approve the six-year capital plan and add it to the complete budget for the university and submit it for approval by the state.

Once the budget reaches Richmond, it is assessed by several state agencies including the State Council of Higher Education in Virginia (SCHEV) that assesses if the capital plan is really needed at Mason.

If approved, Mason’s budget is added to the governor’s budget for subsequent consideration before full approval by the legislature.

Calhoun said that the state does not usually approve all the university asks for, but generally approves fewer projects than requested.

Calhoun said that for the projects that are approved, the authorized funding levels are usually close to what Facilities estimates.

University debt is how most of the construction projects on campus are funded. Calhoun explained that selling debt for projects is really just building revenue-funded projects, meaning that the university builds something that it will ultimately pay for itself.

Revenue funded projects include buildings used for housing, dining or parking, which create revenue.

Calhoun said that other sources of money for construction on campus include grants, student fees, university cash and private gifts among others.

Calhoun said that money has come from Arlington County for campus construction in that area, and that the federal government has given some funds for projects in Prince William County.

For research buildings that are constructed on campus Calhoun said, “A certain percentage of grant money goes to paying off the debt of the building.”

Masonvale had no university money involved because the land was leased to a private company, said Calhoun.

“I think there is a common misconception that money from building projects can just be moved to other places. Some faculty or staff might say for example ‘Since we haven’t gotten a raise in three years and you’re building like crazy, why not stop a project and put the money towards raises?’” said Calhoun.

“Students could ask a similar question about limiting tuition increases by canceling a project. We get money from the state for a specific project. We can’t transfer money from one project to another or from capital plans to another account within the university,” said Calhoun.

Calhoun explained that the funds are set up in a line item budget, meaning they cannot be moved around from one project to another.

When asked what happens when mistakes or extenuating circumstances occur during a project, Calhoun explained when it is the responsibility of the contractor or the university to pay and where that money comes from.

There are two common forms of contracts that Mason awards to contractors.

Design/Build contracts are where university planners and engineers set a scope of money for the work, and teams approach the university to negotiate a price for the job. The final price is a locked price, and problems are the responsibility of the team.

Traditional contracts are drafted and offered in a bidding process to companies who may want the job. When a traditional contract is awarded, it is at the bid price offered and there is no negotiation.

Calhoun said that there is always a certain amount of money set aside for change orders, modifications or adjustments within project, to cover things that may happen such as finding things in the ground that slow down the construction process.

“There are always contingency funds or rainy day funds set aside within a project from the beginning, so when something happens – because it always does – we’re covered,” said Calhoun.

Rework that is needed on a job, such as poor quality on part of the project, is always on the contractor to pay for, said Calhoun.

According to Calhoun there is an average 5 percent change order rate on projects.

“When you see things torn down, about 99 times out of 100 those things are at the contractor’s cost,” said Calhoun.

About two to three projects are currently running over budget.

Calhoun said that when a project runs out of money, two ways to solve the problem are to either ask the state for more money or sell more debt in revenue funded projects.

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