The first phase of construction for the new Armstrong Student Center (ASC) may be underway, but the cost of the project is still uncertain. Construction bids for the ASC were nearly $8 million higher than Miami University originally estimated.
Miami, along with BHDP Architecture, a Cincinnati architecture firm, estimated the ASC would require a $50 million total budget with $31.8 million of that budget going to construction costs. However, the lowest bid by any of the construction companies was $39.6 million, according to David Creamer, vice president of Finance and Business Services.
This poses a problem for the university since state rules do not allow the university to accept bids that are over 10 percent of the original estimate, according to Creamer. The bids, made by multiple construction companies, were more than 25 percent over the original estimate.
"This certainly was a surprise to us," Creamer said.
In spite of this, Miami will continue construction on the ASC as planned.
After receiving the much higher than expected bids, Miami examined what led to the variance in the cost estimates. The university discovered two problems in the original estimate. The first problem was a recent spike in the price of construction, according to Creamer.
"The construction environment has had a lot of pressure on it," Creamer said.
The second problem was an increase in the price of materials, in particular the price of steel, used for the construction.
The project for renovations and improvements on the residence halls and dining halls will likely see a similar situation where the construction bid is much higher than the original estimate, according to Creamer.
To continue construction on the ASC, Miami will pull funding from other areas of the budget to cover the cost gap. Over $2.3 million of the utility work that is scheduled for Rowan and Gaskill Halls will now be pulled from the Utility Enterprise budget, according to Creamer. The same amount will be taken from the Capital Renewal and Replacement funds.
The university plans to match the rest of the cost gap through fundraising. It hopes to obtain an additional $5 million in pledged gifts and $17 million in naming opportunities in the building.
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Creamer presented the news about the construction bids to the University Senate Monday.
"Usually when I come here, it's not the best of news and this time is consistent with that," Creamer joked at the beginning of his presentation.
The faculty in the senate chuckled at Creamer's joke, but followed up with very pointed questions about the potential cost increases for the ASC. Most of the questions focused on where the original cost estimate for the ASC went wrong.
"Looking back is there any internal control that you need to change in your department?" asked James Kiper, chair and professor in the department of computer science and software engineering.
Creamer, along with Robert Keller, the university architect, said the cost gap came from unforeseeable events, not from any mistake by BHDP Architecture.
"We've had a very good track record for quite a while," Keller said. "This occurred strictly from market volatility."
The university often works with outside architecture firms and engineers and very seldom has issues with estimate and bid differences, Keller said.
This is another chapter in the long saga of the ASC. Funding for the ASC was hotly debated among Miami students and Associated Student Government members when the new student center was originally planned. The ASC was originally slated for completion by 2013, but budget constraints and feasibility issues have pushed the completion date to January 2014.
The Board of Trustees will have to approve the changes to the budget before the university can start pulling funds from the Utility Enterprise Budget and the Capital Renewal and Replacement Funds budget. The Board of Trustees will meet 9 a.m. Friday in the Multipurpose Room of the Shriver Center.
In 1980, The Miami Student reported that seven Iranian students who were studying at Miami University had retained their student visas, despite the US government revoking visas as a result of the Iran hostage crisis. The report stated that the students were able to retain their visas because they had not yet completed their undergraduate degrees.
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