Sep 24 2022

OPINION: Pool Complex Cost Overruns Threaten Financial Crisis in Piedmont

Piedmont City Council and City Staff need to take Project Management Seriously –

“…, we have exceeded the original $15M estimate by a whopping $7.5M or 50%.” 

While cost overruns on public projects are sadly nothing new, the Pool project’s overrun before construction bids have been received and after scope reductions have been made is hard to fathom and extremely disappointing. 

With that in mind, consider that the City will soon have to face up to the State’s mandate to bring Essential Services Buildings or ESB ( police, fire and city offices ) up to State code requirements.    For comparison, consider that the Pool project is heading toward a $22-23M price tag while the ESB project costs, as compiled by the City Staff in April, 2020, was estimated to be between $80 to 100M – and that was with very preliminary plans and scope.  Without vastly better methods of cost control for the ESB projects, overruns of the scale of the pool project could easily cause a financial crisis for our small town.

A little background.   In the lead up to Measure UU, the Pool project was represented as a $ 15M project with a $4.5M Contingency added to cover latent conditions, change orders, scope changes, etc.  That resulted in the $19.5M Measure UU Bond. The $4.5M Contingency was prudent and warranted given the status of the plans at the time.

Now plans have been fully developed (and modified once to reduce the cost) and yet residents are still being asked to fund an additional $2.6M to complete the project.  There is also a separate special funding plan seeking $500K to install Heat Pumps to make the project all-electric.  So the project is currently about $3M over budget.   If we add the original $4.5M Contingency to the current $3M overage, we have exceeded the original $15M estimate by a whopping $7.5M or 50 %.   That is quite a miss and underscores my main message – that Piedmont must adopt a more rigorous and professional Project Management model.

What is that model?  It is one where the design team, the project management team and the estimating team all have equal weight and input into the project from the very early stages.  The team needs to avoid iterative design exercises – where a design is completed and then estimated and then often redesigned and estimated again.  The design and estimating processes must go forward simultaneously.  This management model is not new.  It is a model used by most major corporations or entities which have a significant building programs.  But these are top down decisions.  The Owner, in our case the City Council, must lead and require this model of Project Management if the City hopes to avoid replicating the Pool experience in the future.

Regarding the Pool project, it is up to the City Council to establish accountability for how the Pool project got to where it is.  I maintain that the issue is poor project management and definitely not hyperinflation as claimed by some.  ( Hyperinflation is defined as monthly inflation of 50% or more.- we are not experiencing that. )  No, our problem, our issue to resolve, is our current method of Project Management.   It is not serving us well.   We should not, cannot, continue to exceed our budgets and then go hat in hand to our residents to bail out our projects.

How Piedmont manages the Pool project moving forward and the ESB projects in the very near future will depend largely on the will of the City Council and City Staff to chart a different path.

Respectfully submitted,

Donald Chandler  AIA, Piedmont Resident

Editors’ Note: Opinions expressed are those of the author.

4 Responses to “OPINION: Pool Complex Cost Overruns Threaten Financial Crisis in Piedmont”

  1. After the undergrounding cost overruns, Council adopted a Risk Management Policy, spearheaded by Council member John Chiang. That policy put in place internal reviews and project management policies to ensure that major cost overruns do not occur. It definitely set up a series of “checkpoints” to assess the cost of the project to determine how to proceed. Presumably it’s being followed, but I have not heard it referenced in council or BAFPC discussions. A Facilities Capital Fund was recently established, siphoning off $8M from the maintenance fund. Perhaps that is being set up to address cost overruns.

    Whether it’s hyperinflation or not, building costs have risen. Staff should report out on the Mountain View electric pool project. It’s nearly the same as Piedmont’s, and last I checked was over $25M. They are further along in that project and may have useful insights to project cost.

  2. This has been obvious ever since the project was first proposed. In view of other critical needs, making a swimming pool the city’s #1 infrastructure project is a gross failure by the city’s leadership.

  3. Once again the Piedmont taxpayers have been “hoodwinked” into another tax measure that is seriously under funded. As in the past, the project will be too far along to stop. This will lead to a demand for another bond to make up the short-fall. I say NO!!!!!

  4. While rigorous project management is a prerequisite, I suggest re-bidding the work. As the recession takes hold, perhaps some of the ridiculous construction pricing we have seen lately will abate a bit.

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