Budget Planning for Construction

By Rogers, Donna | Corrections Forum, March/April 2005 | Go to article overview

Budget Planning for Construction


Rogers, Donna, Corrections Forum


Very tight government fiscal situations have placed some correctional jurisdictions in a bind. Some have needed to place much-needed projects on hold; others have needed to spend years in planning to raise sufficient capital to get their project off the ground.

This is not necessarily a bad thing.

Yes, of course, you eventually want to get the beds built, but the luxury of time can result in doing things the right way. Having the time to analyze and plan every detail allows a corrections administrator to set priorities and make big operational changes that can set the course for the facility for decades to come.

We've all heard of facilities that have spent millions on a new facility just to have it sit dormant for lack of operational funds-which over the life cycle of the building is many times more than the cost of initial construction.

While a few administrators go through the construction and expansion process three or more times in their tenure, the vast majority only go through the process once in a career and can't be expected to be experts. It's easy to fall into pitfalls that may have long-term cost implications. Jumping hastily into a project is like throwing your hard-won capital into a money pit.

One of the keys to overcoming challenges is to "do your homework," stresses Susan Gary, VP Justice, DMJM. "Inadequate planning and prematurely announcing the cost of the project before doing your homework" are two of the biggest pitfalls for corrections managers who plan to build. "Once political people get the idea it's a set number, you'll have a very difficult time increasing that number."

Budgeting is the most difficult part of a project, concurs Arthur Thompson, director of the Criminal Justice Group, SMRT Inc. The reason is partly because there are two sides to the construction and design equation: capital cost projections and operating cost projections. "John Q. Public doesn't understand that 90 percent of costs are operating costs and only 10 percent is for construction."

Operations are truly a substantial part of the budget lifecycle-and operations are multi-faceted. For example, corrections facilities are "maintenance intensive," says Bob Eggleston, a project manager/architect with HLM Design, a division of Atlanta-based Heery International. "They are open 365 days and wear out three times faster because they're used continually. That goes for HVAC, foodservice equipment, and FF&E (furnishings, fixtures and equipment)."

Unfortunately, too, corrections budgets are arrived at through public referendums, not decided by prison providers. "The political nature of county government may drive it," explains Tim Gibson, also a project manager/architect with HLM Design/Heery. There's a lot of pressure keep costs low. Yet forward-looking counties may realize lower costs may not provide efficiencies, he adds.

"Tax payers usually don't keep in mind," adds Eggleston, "that operational costs may be higher because first costs are low."

In terms of size it often comes to a point where the expansion will eclipse the existing construction, continues Gibson. If the least cost option is chosen, it may cost exponentially more in the long run. Perhaps, for instance, individual rooftop HVAC units are used rather air handling units in a central plant. If a unit goes down, a whole housing unit may go down. In contrast, a central energy plant provides some redundancy and some room to grow, and doesn't give the inmate cause to file lawsuits for inadequate environment.

But to build a central energy plant, the initial cost may be $10 million, adds Gibson. "And there's shock value in that. It's always easier to put it off until later....Later is someone else's issue to deal with."

OPERATIONAL PITFALLS

While on average, 90% of costs incurred over the life of a facility are for operations-and according to experts, 70% to 75% goes to paying staff. It's therefore crucial to design to reduce staff. …

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