On August 19th the following question was received from Board Member Sandra
Richmond regarding Board Item PM6 William T. Dwyer HS Academy Project
Modifications:
Question: What is buy out savings?
Response: The construction manager prepares estimates for all categories of
work (ex. concrete, plumbing, electrical, etc.). When he receives bids from
subcontractors sometimes the lowest responsible bid is less than the
construction manager’s estimate for that particular category of work. Once the
bids are received the construction manager meets with the lowest responsible
bidders for each category of work in order to clarify the scope of the bid
submitted. Buy out savings result when the lowest responsible bid is below the
construction manager’s estimate and/or it is determined that the subcontractor
has included items in his bid that are not required or have been included in
another category of work and/or procured from a different subcontractor. Buyout
savings are not taken out of the contract until late in the project’s life because the
savings from one category of work need to be available for another category of
work should those bids come in higher than expected.
Unlike hard bidding where the general contractor gets to keep any buyout
savings, using the Construction Management at Risk project delivery method all
buyout savings revert back to the owner.
Joseph M. Moore
Chief Operating Officer
561-434-8510