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.
