R.W. Allen’s Guaranteed Money Pits

IMG_4374Owners like to use a contract delivery method called “Design Build” when they don’t know what the heck they are building, don’t want to take the time to design it before bidding it out, or have a site with too many unknown conditions.  Since they don’t know these things they put a fig leaf of protection against unlimited costs called a “Guaranteed Maximum Price” or GMP. Even in commercial or industrial construction, supposedly knowledgeable in cost controls and with fewer unknowns, GMP contracts are a challenge to administer, because the assumptions the contractor gives in quoting a GMP generally last only days or weeks. Owners would be better off with a pure cost-plus contract with great controls, but the owner’s internal politics command at least a fiction of a fixed price.

Imagine trying to catch a butterfly in a windstorm – that is how elusive the “guarantee” becomes.

In government there is no better money-hemorrhaging device than these contracts, hence perhaps GMP should automatically be understood by citizens as being “Guaranteed Money Pit.”

The City of Augusta, Georgia loves to squander money using GMP contracts, having thoroughly embarrassed itself with the things. Augusta  built a $30 million Convention Center across land the city didn’t own and then had to pay for it with Kitchen Equipment added by change order to a “guaranteed” price,  spent about $50 million on a Municipal Building Remodeling that was supposed to cost $20 million mostly covered by another GMP contract, and built houses in the Laney Walker district with maximum-price, not to exceed contracts that never were adjusted to actual cost.

There were only three finalists selected by Augusta for the Old Green Street Library remodeling, and two of the three had “Allen” in their name. The low bidder who didn’t have “Allen” in its name and who bid on the whole project in its bid, with a Guaranteed Price for all of the work, somehow didn’t get the award. RW Allen, LLC was awarded the work on a piecemeal basis, destroying any figment of a guarantee in this writer’s estimation.

John Allen, nephew and contributor to Congressman Richard W. Allen, is a principal in the Allen-Batchelor firm, which was also on the finalist listing.

District 8 Wayne Guilfoyle said it best “if all three firms are proposing this project the following including the proper scope, met the required schedule and fully capable of completing the RFP why are we selecting the highest bidder?” Then later Commissioner Guilfoyle said “So we’re approving something we don’t have a clue, only a partial.

It must be nice to be R.W. Allen LLC and to have Augusta push you into a yet another money pit where nothing is guaranteed but more profits.

 

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8 Comments

  1. Wonder why they haven’t learned, over the years that this is not good for showing fiscal control. Wonder if someone is getting “something” ??

  2. Allen-Batchelor got a “design-build, Guaranteed Maximum Price” contract for a South Augusta Marshall’s Station a few years back that brought forth questions, too.

    The Tee Center Contract was and is the mother lode, if people really want to fix Augusta, IMHO.

    These contracts generally have provisions to have the contractor break out change order pricing and for costs therein to be audit-able, but Augusta’s contractors never do.

    Back when we oldsters were in school, teachers made us show our work to thwart cheaters. Contractors, vendors, city administrators and subcontractors recoil at that.

  3. So lack of ethics and competence on and off the commission..

    • Not necessarily. Some districts are better positioned for new jobs from new manufacturers attracted by the new incentive of no sales tax. Then it is a matter of serving the district versus the whole.
      The position from this corner is that giving away established streams of revenue with nothing to replace it is not conservatism. The trouble is that the Chamber folks and development folks like to have big new announcements and don’t seem to care how much they pay. When Governot Perdue got the KIA plant, the cost per job was something like $164,000 for each $42,000 job. Good politics, terrible cash flow.

  4. Rick Allen’s affair with an employee?
    Rick Allen’s Govt Paid Chief of staff is also Chief of Campaign operations!

    • The Arrowflinger

      The first would be surprising and considered unlikely. The second should be expected. It is in the political mindset.

  5. listen to Tony Powers WEZO now

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