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11/16/2006 1:27:03 AM

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Section 5: OPA Board
Subject: Community Center Contract Msg# 389712

From:

Gene Ringsdorf

Joined 7/7/2004

To:

Janet Kelley (Read) Past OPA Board Member

Joined 8/18/2004

Janet

14% Contingencies 900,000

Just another view about contingencies.

Many of the more enlightened corporations (that may leave out OPA) no longer allow contingencies to be included in project cost estimates because they are a totally meaningless line item which does absolutely nothing to control the costs of a project. In fact, contingencies often result in unapproved expenditures being made to cover up sloppy original construction estimates.

OPA is NOT going to contract for and acquire $900,000 of contingencies. Contingencies are NOT tangible or intangible goods or services. Contingencies are NOT permits, taxes, insurance or "spot o pots". They are no more than a costly but convenient "out" for project managers to avoid having to come back to an approval authority for more funding if circumstances prove that their original estimates were wrong.

BTW, when the corporation I worked for finally did away with contingencies in project cost estimates, we got much better controls on project costs. Our managing engineers were not happy, but our stock did better as we got very good at controlling costs and getting the most for each dollar spent.

Again, just another view about contingencies.

Gene

For reference, the above message is a reply to a message where:

Why not post a message with your detailed list of all costs to show it is over $6 Fritz,

Fritz,

Ok.

It concerns me that this information didn't get seen.

I have also included the correct defination of just the "construction cost" per prospectus:

The 3.9 Million Construction Budget Includes the
budget covers all site preparation, the requisite permits and
legal expenses, all construction materials, access from Cathell
Road (only), a brick exterior, landscaping, furniture,
equipment, 14% contingencies and, of course, labor.”

Construction Costs + 5.3M- 5.5M
Total Costs +6M
____________________________________________________________
JUST THE CONSTRUCTION COST ESTIMATES

Site Work / Blades 3,912.500
Permits / Bonds 83,995
14% Contingencies 900,000
Furnishing Equipment 300,000
Builders Ins. suggested price 150,000 *
Soule Estimate 30,000
Plus Costs that are not yet known but :include:
Legal,Impact Fees, Additional Labor and Cut from
Catell Road
_________________ Construction Costs +5.4 M
_________________________________________________
NON- CONSTRUCTION COST ESTIMATES
Cost not included in the defined construction costs
Construction Management/SPN 244,400
DAL 89,089
General Testing 257,050
Engineering 91,000
DAL 30,000
Gym Floor upgrade 30,000 ? **may have been deleted since compiled

$741,539 Plus
TOTAL COSTS OVER $6 MILLION

* notes a number that when asked, SPN did not deny as being correct.

Addition Costs May Also Include,Soil Replacement If Needed

Regards,

Janet

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