Inflation to reduce the scope of school improvement projects
By Avi Rutschman avi@theacorn.com

Project Management Integration (PMI) met with the Simi Valley Unified School District Board of Education last week to discuss budgeting alternatives for the Measure C4 construction program.The goal of the measure is to upgrade the 32 campuses within the district.

PinnacleOne, the original bond fund manager, was replaced by PMI in September 2005 after the school board discovered the change could save them $5 million.

Believing that the original inflation models may have been too low, PMI warned the board that the planned $186 million in funds will not be enough to cover the costs of all planned projects. Based on historical models and a projected inflation rate of 14 percent, PMI has placed the new estimated cost of the modernization project at $243 million, nearly $60 million more than the original figure.

Measure C4 was passed in March 2004. The bond initiative was designed to raise $145 million in funds to help upgrade all SVUSD campuses. The additional projected $40 million would be covered by state funds.

Even after shortening the length of the project to six years from 10, PMI still expressed concern that high inflation may hurt later projects. If the school board were to adhere to the original budget, eight projects totaling $52 million would not be completed.

PMI and the school board decided to pursue a budget alternative that is designed to build to equivalent value. Funds from earlier projects will be reallocated to later projects in order to offset rising costs due to inflation.

While this will inevitably lessen the amount of work done on each campus, it will guarantee that all campuses have an equitable amount of work completed.

Under both budgets, funds are insufficient to complete all projects according to their original scope.

In order to save money, PMI has also revised the scheduling of school renovations and has planned them to be completed in a single start-to-finish approach rather than through multiple project phases. The bond management company is hoping this will not only reduce expenditures, but will help to decrease disruption on campuses as well.

Under the revised schedule presented by PMI, two construction projects will be completed in 2006, eight in 2007, nine in 2008, seven in 2009, and eight in 2010.

Priority will be given to those improvements required by law, those considered mandatory by educational standards, and projects that meet state aid requirements or construction efficiencies.

Such projects often include Americans with Disabilities Act requirements, fire-life safety projects and power and technology upgrades.