URBANA — A major residence hall project at the University of Illinois is the latest to be affected as competition for Champaign-Urbana building contractors continues to send bid prices through the roof.
UI officials said Monday they plan to postpone for now the second half of renovations planned at the Illinois Street Residence Halls in Urbana because bids came in about $12 million higher than expected.
The combined budget to renovate both Townsend Hall and the smaller Wardall Hall was originally estimated at $55.5 million, then later increased to $59.5 million.
But the bids came in at nearly $72 million, and UI administrators are recommending the campus proceed only with the Townsend portion for now to stay within budget. Just that piece will cost $50 million, officials said. Bids for the additional work at Wardall totaled another $21.88 million.
“The unusual number of large construction projects in the Champaign-Urbana region has led to shortages in the regional market and to higher bids,” Vice President and Chief Financial Officer Avijit Ghosh told UI trustees at a committee meeting Monday.
Unexpectedly high bids have also plagued Champaign school renovations because of competition with the ongoing MCORE road improvements, new high-rise apartment buildings and UI construction.
“Any way that you turn in Urbana-Champaign, what do you see? Holes in the ground or construction cranes,” Chancellor Robert Jones said Monday. “It’s a very hot market at the moment. That just drove the price of everything up.”
The UI considered rebidding both parts of the residence hall project, but that would have delayed the work on Townsend, which closed this summer for renovations and is currently “gutted,” Jones said.
“It is uninhabitable at the moment,” Jones told trustees.
The campus needs the space at Townsend to house students in fall 2020, as well as the $7.1 million revenue it generates through housing contracts and summer conferences, he said. Townsend houses about 627 students, while Wardall holds 550. Jones said the university still plans to rebuild Wardall, which remains open this year. It is scheduled to be renovated during the 2020-21 school year after Townsend reopens.
“We’re just going to delay it, hopefully for only a short time,” until the bidding environment improves, Jones said.
Trustees Don Edwards and Ramon Cepeda asked for more information about the scope of the original work before the board takes a final vote next week on five construction contracts for Townsend totaling more than $27 million. Cepeda worried that the UI is “kicking the can down the road.”
Edwards repeated concerns raised at two earlier board meetings about the need to improve construction planning and bidding to avoid this problem.
“I just want to re-emphasize that these are large-dollar projects,” he said. “We consistently get increases in the project budgets.”
Edwards noted the university has hired outside managers to oversee general contractors to prevent costly change orders, but he said more is needed. UI President Tim Killeen said the university is implementing other changes recommended by an outside consultant that could trim costs by 6 percent. Killeen said too few contractors submitted bids for the residence hall project. The UI hopes to incorporate more small businesses into the bidding process, including those owned by minorities and women, he said.
It will also be doing “post-project audits” for the first time, to see how a particular company performed on a project, he said. And it’s pushing for legislative changes that would improve the UI’s flexibility when bidding projects, he said.
Edwards suggested the university be more “proactive” in soliciting contractors from around the state to open offices in Champaign-Urbana or help them relocate workers here, given the large number of campus construction projects planned over the next 10 years.
“I continue to believe there’s an opportunity here,” he said. “It’s an area where the administration needs to show their stripes, because it’s an area we can improve.”
“It’s a big-dollar category,” Cepeda agreed.
Avijit said the UI is already reaching out to contractors in Bloomington and other parts of the state to encourage them to bid. It’s doing the same with minority-owned businesses, “because we don’t do very well in that respect,” he said.
“We have to intensify those efforts,” he said.
In other business
Trustees reviewed a $6.97 billion budget and spending plan for fiscal 2020, which runs through June 30. That’s up $141 million, or 2.1 percent, from last year. About $5.25 billion of that is revenue controlled by the UI, an increase of $194,000, or 3.8 percent, over fiscal 2019, Ghosh said. The other $1.716 billion consists of “payments on behalf” from the state for UI employee pensions and other benefits, he said.
State appropriations make up only 12 percent of the $5.25 billion. Tuition income accounts for 25 percent, the UI Hospital and physician practice generates 20 percent and sponsored programs contribute 15 percent, Ghosh said. Of the nearly $1.33 billion in tuition income, 61.2 percent comes from the Urbana campus, 36.2 percent from Chicago and 2.6 percent from Springfield.
Salaries and benefits are the biggest expense category, at nearly $2.69 billion, or about 51 percent. That’s up 4 percent over fiscal 2019, in part because of the addition of John Marshall Law School at the UI Chicago, Ghosh said.
By function, academic instruction now accounts for 19.8 percent of expenses, up from 19.1 percent last year, and research takes up 15.3 percent, up from 14.5 percent — both good signs, in that “more of our expenses are going to the core mission,” Ghosh said.
Ghosh said stable state funding, enrollment and tuition growth, strong fundraising and control of expenses are four key challenges moving forward.