Item B: City Council Goal - City Hall Complex

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ATTACHMENT A Cost Factors for City Hall, Police Patrol, Moving and Leasing and Occupancy The Cost of Construction There are many factors that contribute to the total cost of a typical construction project. While some may be adjusted to reflect specific project goals and priorities, many costs are fixed. The three primary cost drivers on any project are: Construction Costs , which are building materials, equipment, and labor directly related to the construction; Soft Costs , which are project costs indirectly related to construction costs such as property acqui- sition, permits, furnishings, design fees, design and construction contingencies, project manage- ment, and moving costs; and Escalation , which anticipates the effect of inflation on all project costs when construction is to commence at a future date. The best way to predict the likely cost of a project before it is designed is to create a cost model. This is done by establishing a baseline construction cost estimate which by necessity is based on many assump- tions about the expected size, performance and quality of the finished project. It is also based on com- parative empirical data from other similar projects. The Construction Cost is then magnified by a soft cost multiplier which, for a project such as the Eugene City Hall Complex, can be as high as 1.4. Finally this adjusted cost is increased again by an escalation factor which is currently predicted to add an addi- tional 8% per year to the total project costs. In trying to reduce the overall cost of a project, all three of the above components must be examined; but generally the greatest impact comes from construction cost reductions, which in turn reduce the other multipliers. The three ways to reduce construction costs are to reduce the size of the project, reduce the quality of the building materials and systems, and/or commence construction sooner to reduce escalation. Reducing the size of a project can have a negative effect on its overall success if it compromises basic functionality and program goals. For the Eugene City Hall Complex, the proposed building size is the result of a carefully considered and extensive programming effort which identified space needs for both current needs and projected growth (for 25 years). Reducing the quality of building finish materials and systems will usually have an impact on perform- ance, life cycle costs, and/or the building’s expected useful life. Because the Eugene City Hall Complex should be designed with a useful life of at least 75-100 years, the choice of building materials and systems needs to be carefully considered in the context of the project values, functional needs, and the long term impacts on performance, durability, and life cycle costs. The effect of escalation on construction costs is a factor that can be mitigated but not controlled. Because the last 4 years have produced unprecedented and sustained construction inflation, the cost models for the Eugene City Hall Complex use a conservative escalation factor of 8% per year. In attempting to reduce construction costs, the majority of costs associated with a building are for basic structural, mechanical, electrical, code and life safety requirements totaling as much as 65-70%. The remaining building components may be reduced in quantity and/or quality, but life cycle and performance issues must be considered carefully. Achieving a 5% reduction in overall project costs could likely be achieved while still satisfying project values such as sustainability, efficiency, and a long useful life that plans for the future. A 10% reduction in overall project costs could be achieved but would likely raise significant life cycle and performance issues.