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State construction staff outline project budgeting methodology and report construction‑cost trends
Summary
Staff described how the department develops project budgets—direct construction costs, soft costs, contingency, and inflation adjustments—explaining use of historical trends and external cost‑estimator firms. Committee members and contractors raised questions about inflation, tariffs and regional price comparisons.
State construction staff walked the committee through the department’s project cost budgeting approach, how it sets anticipated hard‑bid construction costs per square foot and applies soft costs and contingency, and how staff track historical final costs to refine future estimates. John Rexes and Director Dale McComie described a multistep budgeting approach: determine allowable square footage (using enrollment projections and the department’s square‑footage calculator), estimate direct construction cost per square foot from industry trends, then apply historical percentages for soft costs (architect/engineer fees, testing, owner’s rep) and add project‑specific items such as off‑site infrastructure, wells/septic in rural sites, and demolition/asbestos abatement where known. Rexes told the committee that when demolition scope is uncertain, the department prefers to delay asking for abatement funds until it has professional estimates rather than guess—and cited Campbell County High School demolition as an example. The department also described tools and steps to control cost risk: tracking historical final costs against initial bids, using outside cost‑estimating firms (the director said the department recently engaged four firms), and using value engineering to identify alternatives that reduce cost while maintaining adequacy standards. On construction‑cost trends, the department presented a chart of historical hard construction cost per square foot and a scatterplot of projects vs. final costs. Contractors in the room said some nonresidential construction prices have risen year‑over‑year: “nonresidential construction costs rose 2.6% year‑over‑year,” Kelly Little of the Associated General Contractors quoted Bureau of Labor Statistics producer‑price data. Committee members and staff discussed signs of stabilization in some residential markets, uncertainty around tariffs and supply chains, and regional comparisons with neighboring states. Staff also showed a deployment schedule that allocates currently available funds by quarter through the project pipeline; one example the department provided was a projected $41,406,500 in expenditures for 2025 based on project schedules and available funds. What’s next: staff will continue to refine per‑project estimates as designs advance, rely on outside cost estimators and value engineering where feasible, and monitor supply‑chain/tariff developments that could affect specific trades or materials.
