Contractor can't meet jail cost limits

McCOOK, Nebraska -- A senior project manager of the Lincoln, Nebraska company hired by Red Willow County to be the construction manager for its new law enforcement center and jail told county commissioners Monday morning his company cannot build the project for $4.3 million.

Commissioners had grown impatient with what appeared to be a lack of cooperation on the part of Sampson Construction of Lincoln with architects Prochaska and Associates, and at their weekly meeting Oct. 15 informed Sampson Construction that the county intended to terminate Sampson's contract as the jail project's construction manager.

Sampson's senior project manager Chuck Richter told commissioners Monday morning that his company -- he blamed himself -- "made a mistake" and did not budget accurate mechanical and electrical costs. "We've worked as hard as we can, but we're still quite a bit over," Richter said.

Richter said his company's costs were accurate on sections of work such as concrete, reinforcement, masonry, erection, steel and precast, security and detention, "but we were off on mechanical and electrical in our budgets."

Richter said that although a new jail in Red Oak, Iowa, is nearly the same design and it came in at about $4 1/2 million, "it costs more to build here than it does in Red Oak, Iowa." He explained, "We looked at historic numbers, and they weren't accurate" for Red Willow County's project.

Richter assured commissioner Vesta Dack that Sampson was working with plans drawn by Prochaska, but explained that the initial plans that Sampson received from Prochaska "were extremely schematic, and our budget was based on those. Our mechanical and electrical numbers were not accurate although we said (initially) that our mechanical and electrical numbers were our biggest unknown."

Working with architects Prochaska and Associates since June 8 and with subcontractors since June 11, Richter said, Sampson engineers have worked to revise and/or offset what turned out to be higher than presented electrical and mechanical costs. Sampson presented various recommendations and alternate plans to Prochaska and bidders, Richter said, "looking for mechanical and electrical cost savings to get closer to the budget ... to (find) savings without impacting the quality of the project."

Richter said that Prochaska staff asked that Sampson not present the county with estimates that exceeded a "Guaranteed Maximum Price" of $4.3 million. He said, "We wanted to make sure that as a team, we were working to get into the budget." Not keeping the county informed of the situation and the extensive efforts Sampson was making to rectify it "was not a smart move," Richter admitted to commissioners.

(County voters okayed bonds of $5.1 million for the construction of the new 24-bed jail and law enforcement center. The difference between $5.1 million and the $4.3 million figure ($800,000) is the 15 percent traditionally reserved for contingencies, Richter explained. Although Richter did not disclose how much the Sampson budget is over $4.3, he did say that the contingency fund won't cover the difference between the electrical and mechanical estimates and anticipated bids.)

Richter told commissioners, "Sampson doesn't think it can be built within $4.3 million with the plans as they're drawn now."

McNutt said, "There's not a lot to cut out of the project. It's pretty bare-bones."

Richter said Sampson "would love to continue with this project," that it's pre-construction costs won't change.

Commission Chairman Earl McNutt asked Richter "is there is any way" to get to the $4.3 million, and Richter answered, "I don't feel we can get to a $4.3 million construction budget."

Richter said Sampson has firm bids on 70 percent of the project, "but it doesn't get us to $4.3 million. I don't see how we'll get there."

"What we have bids on, we cannot reach $4.3 million," he said.

McNutt asked, "Is it a fair statement that you really, truly don't see how your firm can reach $4.3 million?"

Richter replied, "Yes." And he added, "Not with how the project is drawn now."

Richter said that Prochaska told Sampson that "anything over $4.3 million was 'unacceptable'." And McNutt said that commissioners knew they could not go over the amount okayed by voters. Voters were assured that the jail would not cost more than $5.1 million.

Sampson was given a seven-day notice from receipt of a letter of termination mailed by county attorney Paul Wood on Monday, Oct. 15. Richter said he received the letter Wednesday, Oct. 17. Wood told commissioners Monday morning that the only issue "today" is whether to continue with the termination of Sampson's contractor or withdraw the county's request for termination.

Dack told Richter, "We are the keeper of the funds. We have to stay within our $4.3 million." And she, McNutt and Steve Downer voted unanimously to continue with the termination of Sampson's contract with the county.

Wood will write to Sampson a second letter explaining Monday's motion to continue with the termination of contract. McNutt said, "We need to explore more options."

McNutt told Richter, "I'm sorry we got into this predicament. We appreciate Sampson diligently working for us, even though we didn't see the events behind the scenes."