Pennsylvania public K-12 districts are tasked with delivering programs that fulfill the goals set forth in their mission statements, such as educational excellence, student success, and community involvement. At Reynolds, we understand the opportunities but also the challenges created when undertaking such critical and important missions.
Districts are faced with constraints of reduced state aid (such as PlanCon funding) and increased public sensitivity to local taxation. This fiscal environment can present revenue challenges, even for the best administrators and school boards, who are tasked with managing the delicate balance between operational and capital needs.
As schools’ opportunities and challenges have evolved, so has the Pennsylvania public school construction industry’s responsibility to deliver the high-quality experience and demanding expectations of students and communities.
The Evolution of Public School Construction
In 1994, a Pennsylvania Supreme Court ruling allowed the delivery of agency construction management services on public school construction projects that are required by statute to utilize a multi-separate prime design/bid/build model, where the agency is the general contractor. While there are aspects of the current statute framework that are beneficial (e.g., competitive bidding), it often puts school districts in an unenviable position of legal liability management, change order exposure, and project schedule management. As an agency construction manager, Reynolds has been assisting PA school districts with the management of multiple-prime contractors, change orders/cost overruns, and project schedule maintenance for 25+ years.
However, 25 years ago, neither Reynolds, school administrators, nor policy-makers could have foreseen the challenges districts would face to balance the delivery of high quality academic curriculums with increasing operating expenses and rising utility prices. All this, coupled with constant capital project demands and the pressure to maintain a budget that limits increasing taxes, became a prominent challenge during the economic recession of the late 2000s.
In 2008, Reynolds responded to the needs of PA K-12 public schools by creating Reynolds Energy Services, Inc. (RES) to deliver Guaranteed Energy Savings Agreements (GESA) to provide school districts with budget neutral and/or cash flow positive ways of addressing critical infrastructure needs and capital improvements. This was a service we offered in response to the shifting demands of public schools. Gone were the days where PlanCON funding and state monies were available for new school facility construction projects. The focus was addressing deferred maintenance projects to extend facility lifecycles.
The Hybrid Construction Solution
More recently, economic recovery, increasing school security demands, and other socio-economic factors have shifted the facility needs of PA schools. While economic resurgence has prompted districts to consider facility modernization, these projects are occurring in the absence of PlanCon funding and state monies. A new tool school districts can use to strike the delicate budget balance is hybrid construction.
Hybrid construction is the use of a Guaranteed Energy Savings Agreement in conjunction with traditional design/bid/build public procurement methodology. The benefits of hybrid construction include:
- Expedited construction and project implementation that minimize project-related interruptions, allowing the teacher and student to maintain daily routines and focus on academic achievement.
- Subcontractor selection for work performed under the GESA scope that recognizes ‘best value’ contracting, rather than low bid.
- Reduction in project soft costs. Construction work under the GESA can be delivered using design-build methodology, reducing the number of costly hours designers attribute to projects.
- Guaranteed energy savings that contribute to both principal and interest payments.
- Collaborative construction processes.
Hybrid construction maximizes value-added services, meaning schools pay less and obtain more in project scope and quality. Contact Reynolds to learn more about how you can make hybrid construction meet your school’s construction needs.