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$92 million for JCI?

Here's what our expert Robert Aho said: By the way the Duluth News Tribune did not feel his commentary was worthy of a news story. Maybe that's because the District has suddenly set about $150,000 aside (three teachers) to advertise the glories of the Red Plan

The below is based on the statement that the AE contracts will be separate.  Since proposals were not yet received at the time of the master agreement, it stands to reason that the vague language runs in their favor.

Because of this vague language, there are many possibilities.  What I did was pretty simple.  I looked at the most obvious interpretation of the reimbursements:

  • 2% base flat fee +
  • 8% for managing architectural services +
  • 1.5% for managing engineering services (1.5% of the total cost is typically an engineering fee.) +
  • 2.5% for commissioning +
  • 5% for Construction Management.


Total: 19%, or $55 million

Most of the work is renovative work, so this is the base that I looked at.

My initial take on this was only $20 million.  Then I started to question the vague nature of the contract verbiage and some of the line items such as:  “If professional services are required that have not been defined above, or which differ from those defined above, the Parties agree to negotiate reasonable fees based on typical industry standards.”  The architectural services and engineering services were not defined, therefore, it stands to reason that the fee will be 19%, not including additional design professional services.  It also explicitly states that JCI has the right to use subconsultants, while not mentioning whether or not this is an additional reimbursable expense.

It is reasonable and likely that they will push their luck on the fee requests. 

The high number could be $60 million or more.  The low number is $20 million or 7%, which is actually fairly normal for CM work.

Another issue that has come to my attention involves JCI using their influence to secure various subcontracts for various portions of the work.  Again, this is not crystal clear, however, it is likely to assume the following about the JCI contracts involving construction:

      ·         Temp Control: $20M (this would be a conservative estimate)
·         Chillers: $10M
·         Door Access: $7M

Total: $37 million.

Grand total $92M

This does not include long term maintenance of said systems.  As you can see, there is a significant amount of money to be made, or squeezed out of public coffers, if you like.

By the way, Its been reported that JCI technicians will be paid $165/ hour to monitor the equipment that they have installed or roughly three times what a typical electrician is paid for similar work.

If you care about Duluth and its schools 
don't put your faith in the Duluth News Tribune
The last word on the Red Plan can be found on Harry Welty's blog:
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