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JCPS eyes 'wrap-up' to save on high school projects

JCPS eyes 'wrap-up' to save on high school projects

October 4th, 2017 by Phillip Sitter in Local News

Jefferson City Public Schools is exploring options to save money and maintain control on the costs of construction insurance for its two high school projects.

"There's builders' risk insurance that we would normally carry. If you're building a house, you'd have builders' risk insurance. But then, during the construction process, there's also insurance," JCPS' chief financial and operating officer Jason Hoffman told the district Board of Education's facility committee at a meeting Tuesday.

"Historically, with smaller projects like we've had in the past, each subcontractor brings their own insurance to insure what they're doing and the general contractor has insurance, but it's a whole bunch of different pieces of insurance, and all of those are priced into the cost of construction," Hoffman continued.

"With a project as big as the one we're working on, there's a product called a 'wrap-up' program," he said.

One benefit of a wrap-up is it bundles together insurance coverage and places the liability on the owner or general contractor of a project — what's known as OCIP for the owner-controlled option and CCIP for the latter.

This means individual contractors and subcontractors don't need to include insurance costs in their construction bids, leaving only labor, materials and overhead. That means lower-priced bids and savings for the owner.

Hoffman's projections estimated a savings of hundreds of thousands of dollars — approximately $250,000 in savings on an example $100 million project. The renovation of the existing high school at 609 Union St. and the construction of a second one at Mission Drive off Missouri 179 are projected to cost $130 million.

"But the biggest part is the minimizing of litigations, ensuring coverage for all participating (subcontractors)," Hoffman said. "Savings is the smaller part. This gives us way more control in the coverage."

Given the high school projects' "very aggressive timeline," he explained, "if we get into construction, if we have an issue where there's a claim and this contractor says, 'It's not my claim; it's this contractor's claim,' and you have a dispute, that could potentially hold up construction. But if you have this overarching umbrella wrap-up program, (then it) doesn't really matter who was at fault. You have a claim, we're covering it, and so you don't have those disputes."

Taking on the responsibility of overall risk for insurance and freeing subcontractors from that financial burden should increase the likelihood more local contractors will be able to take part in the projects, he added.

"I think our experience is that we have relatively (few) injuries (on construction projects). That said, they happen; that's part of life, and we certainly want to make sure they're covered, and if we have maximum exposure, we still save money," said Rich Aubuchon, school board vice president and chair of the facility committee.

The consensus of the committee Tuesday was the rest of the board should be involved in deciding whether to purchase an owner-controlled or contractor-controlled wrap-up from American Contractors Insurance Group via Nabholz Construction — the likely construction manager at-risk for the high school projects.

A board work session likely will take up that discussion later this month.