1 Resulting Program Structure Project Complexity Project Project - PDF document

Construction Management Arnon L. Bazemore Presentation Outline Project Introduction Project Introduction Inherent Inherent Conditions Conditions Construction Construction Payment Method Payment Method Predecessor PDS Predecessor PDS Integrated Delivery Alternatives Integrated Delivery Draft Budgets (Arena Maintenance & Draft Budgets Operations) Operations Value Engineering Assessment Operations VEA Construction Cost Reduction Construction C/R Thesis Presentation Cost/ Benefit Analysis Cost/ Benefit Analysis Conclusion & Questions Conclusions Sears Centre @ “Glance” Program Requirements Project Project Introduction Introduction The village of Hoffman Estates is seeking to generate Program Requirements & Fixed Constraints direct & indirect revenue from a highly competitive Inherent Inherent � Fixed Date- (9/18/06) #1 Constraint Conditions Conditions arena entertainment market. � Fixed Budget – ($ 51,000,000) #2 Constraint Construction Construction Overall Plan will require a facility for: � Quality Patron Suites Payment Method Payment Method � Grade Level Parking � Mid-to-Large Scale Sporting Events Predecessor PDS Predecessor PDS In addition to the program requirements/ fixed constraints, Integrated Delivery � Minor League Hockey/ Lacrosse/ Arena Football Integrated Delivery the Village of Hoffman Estates has expressed a need to Draft Budgets Draft Budgets � Concert Events and Family Entertainment provide a building of comparable quality and accessibility Operations VEA Operations VEA for patrons of Northwestern Chicago. � Trade Show/ Convention Center Uses Construction C/R Construction C/R The ultimate project goal is to draw consumer base from � Grade Level Patron Parking Cost/ Benefit Cost/ Benefit aging facility and neighboring competitor (Allstate Analysis Analysis Arena). Conclusions Conclusions Sears Centre @ “Glance” Key Project Constraints Project Project Introduction Introduction The project will primarily consist of : Key Project Constraints: Inherent � Project Budget-“Fixed Budget” � 11,000 seat sports and recreation facility Inherent Conditions Conditions � Commercial Loan Pay-back Duration � 2,500 + spaces for patron parking � Building Maintenance/ Facilities Operations Cost Construction Construction � Approximately 42 acres of landscaping and � Project Turnover Date Payment Method infrastructure Payment Method Predecessor PDS Predecessor PDS Items to be obtained before project conception: Do to “high-risk factors” associated with undertaking a plan � Secured Land/ Developmental Rights Integrated Delivery Integrated Delivery prototype, a partnership between (3) key project players was � Project proximity close to affected customer base Draft Budgets Draft Budgets created for successful programming implementation � Partnering Entity (Joint Venture) Operations VEA Operations VEA � $ 50,000,000 Commercial Construction Loan Ryan Companies (Design Build Entity) Construction C/R (30 Yr Payback schedule) Construction C/R CCO Entertainment (Joint Owner) � Developer Cost/ Benefit Cost/ Benefit Sears & Roebuck Corporation (Joint Owner) Analysis � Facilities Operator Analysis Conclusions Conclusions 1

Resulting Program Structure Project Complexity Project Project Introduction Ryan Companies US, Inc. Introduction � “Just-In-Time” Facility Delivery (Must be (Minneapolis, MN) Owner Inherent Inherent obtained to eliminate liquidated damage Conditions Conditions $ 51,000,000 consequences) The Village of Construction Loan Hoffman Estates Construction 30 yr Cycle Construction � Cost incursions (Additional design and Payment Method Payment Method Financing Entity construction cost beyond commercial loan/ Predecessor PDS Predecessor PDS bourn by D/B firm) Partnering Entity Integrated Delivery Integrated Delivery Facilities Project Delivery Structure / Operators Contract Structure Owners/ Client � Quality implementation greater than “All-State Draft Budgets Draft Budgets Representative Current PDS Arena” within prescribed budget Operations VEA Operations VEA Design-Builder Design Build/ GMAX Construction C/R Alternative PDS Construction C/R � DDO PDS Scheme (Possibility of merging CCO-Sears Partnership DBOM ? Cost/ Benefit Cost/ Benefit Design-Delivery-Operations ) Analysis Analysis BOT ? Conclusions Conclusions $$ Construction Budget Schedule Duration Project Project Introduction Introduction Utilities Possible Cost Savings $ 8,000 Total Project Duration 422 Days Inherent Inherent Excavation/Foundation $ 2,545,000 Conditions Conditions � Pre-construction Services 180 Days Superstructure/ Exterior Cladding $ 7,855,000 Construction Construction � Village Approval Process 100 Days Roofing Waterproofing $ 430,000 � Bid/Award/Procurement 157 Days Payment Method Payment Method Interior/ Equipment/ Food Service $ 8,296,000 Predecessor PDS Predecessor PDS Construction Duration 315 Days MEP + Fire Suppression System $ 8,618,000 Integrated Delivery Integrated Delivery � Excavation Foundation Masonry 85 Days FF&E $ 577,000 Draft Budgets Draft Budgets � Pre-cast Erection 96 Days Seating $ 1,103,000 Operations VEA Operations VEA � Steel Erection 132 Days Scoreboard/ Visual/ Audio $ 2,037,000 Construction C/R Construction C/R � Interior (Building Systems) 147 Days Cost/ Benefit Ice Package $ 803,000 Cost/ Benefit Analysis Analysis Plaza Site $ 549,000 Conclusions Conclusions Possible Cost Overruns Payment Method/ Project Financing Understanding Payment Option Project Project Introduction Introduction Project Sourcing for sports recreational facilities can be Mortgage Rate(s) provide by Bankrate.com (Bloomberg Finance) provided from a myriad of sources. Inherent Inherent Rates given as Current (includes (1) Month (3) Month (6) Month (1) Year percentages (%) Prior Prior Prior Prior Conditions Conditions BPP) 15-Yr Mortgage 5.57 5.46 5.34 4.90 5.10 Three Primary Sources from recent Arena Developments Construction Construction 30-Yr Mortgage 5.88 5.81 5.74 5.34 5.52 Option #1 – Government Entity/ Private Financing Split 1-Year ARM 4.89 4.61 4.52 3.95 3.82 Payment Method Payment Method Note: (bps = BPP is 0.01% of 1 percentage point) “237 bps/ 100 = 2.37% or 0.0237 Option #2 – Private Donor/ Conglomerate/ Corporation Predecessor PDS Predecessor PDS Current Value of $ Money Integrated Delivery Option #3 – Commercial Construction Loan Integrated Delivery Indicator Interest Value Draft Budgets Draft Budgets Prime Rate 7.50 Funding for the Sears Centre was provided by option #3, 30 Year T-Bond 4.70 Operations VEA a commercial loan similar to a mortgage structure. The Operations VEA 10-Yr Note 4.66 life span (payback) period for this construction loan will Construction C/R Construction C/R 91 Day T-Bill 4.53 total 30 yrs. Fed Funds 4.55 Cost/ Benefit Cost/ Benefit 12 Month LIBOR 4.94 Analysis Analysis � Analysis for this method will assume a 10 yr. refinancing 30 Yr Mortgage 6.24 term Conclusions Conclusions 2