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DFCM deep-dive finds rising construction costs; proposes clearer program studies and regulatory role
Summary
DFCM presented a multi‑stakeholder review of state construction practices, citing sharp post‑COVID price escalation and recommending more rigorous program studies, clearer distinctions between core needs and discretionary features, and a stronger regulatory role to produce itemized, comparable cost estimates.
DFCM presented the results of a cross‑stakeholder deep dive into capital construction processes and costs. The agency reported it administers thousands of state buildings and that over the last five years the legislature appropriated approximately $7.5 billion for capital projects through DFCM.
Presenters said the state faces notable price escalation: a study example showed a project-cost index where a $20 million building in 2015 would cost about $46 million today, with especially steep increases after the COVID-19 pandemic due to labor shortages, supply-chain delays, and longer lead times for long‑lead equipment such as transformers. DFCM recommended clearer programmatic studies that define core requirements (structural and safety items), programmatic needs (specialized labs, shop spaces), and "betterments" (optional finishes and amenities).
DFCM proposed strengthening its role as a regulatory reviewer that provides a menu of options and clearer, itemized estimates so policymakers can weigh core needs against agency-requested betterments. The division also recommended exploring prototype designs, standardized floor grids, and updated design standards to reduce custom, high-cost elements.
Legislators said they share concerns that state requirements and certain contract practices may limit midsize contractors' participation and increase project cost. Representatives Colford and Brooks said they have an active bill file to address the cost and process issues and will continue to work with DFCM on rule and statutory changes.
Next steps: DFCM, legislative fiscal staff and GOPB will coordinate to produce more granular cost estimates and draft potential statutory and rule changes for committee review.
