School Construction Projects Face Delays

Market pressure are leading to rising costs.

Source : Unsplash

August 20, 2023

Author : Alex Bustillos

Schools across the United States are being forced to delay or downgrade construction projects due to market pressure driving project costs above the early estimates or agreed costs. Schools have always struggled with budget woes, and adding to it now are supply chain issues, inflation, and labor shortages. These problems are leading to growing budget woes.

According to Tracy Richter, a former teacher and current vice president of planning services for HPM, a management company that coordinates district construction projects, they've had to re-think the size of their portfolio and facilities for school development projects

According to a survey by the Associated General Contractors (AGC) of America and Autodesk, severe construction workforce shortages in the U.S. could derail infrastructure projects.

93% of firms say they have open positions they are trying to fill, and 91% are having trouble filling at least some of them, particularly in the craft workforce that does most onsite construction work. The AGC claims the shortages are preventing the industry from completing projects on time and hampering the correct allotment of funds.

These challenges are affecting both new and old projects. Districts that started the construction of new facilities before the pandemic are reevaluating their future plans for the projects. 

Additionally, the projects launched during or after the pandemic break larger projects into smaller ones.

In addition to districts competing with each other to finish identical pandemic construction projects across the country, which is raising the cost of contracting services, contractors are also being forced to raise employee wages. 

Elleka Yost, director of advocacy for the Association of School Business Officials International, said, "If contractors have to increase wages to hire sufficient professionals to do the work, those increased costs get transferred to districts, too."

Districts partly dependent on the ESSER (Elementary and Secondary School Emergency Relief) Fund for their facility upgrades are rehabilitating their projects because of supply chain delays extending into Federal commitment deadlines. 

For ESSER II, the looming deadline is September 2023, and for ESSER III, it is September 2024. 

According to Yost, districts must revise their projects into smaller phases to finance them via ESSER or other local funds after ESSER expires. Thus the districts may have to prioritize their projects depending on their immediate needs. Longer-term or more ambitious construction projects might be postponed for now. 

Districts have started looking for additional competitive funding sources like grants and local sources.

Another factor impacting the school district with no connection to any external factors is enrollment. Enrollment influences whether the districts decide to undertake significant facility investments or not. The pandemic's aftermath resulted in a decrease in public school attendance nationwide. Birth rates have also declined since the pandemic, making the foreseeable future bleak.

In the previous year, for instance, a decrease in enrollment prompted districts worldwide to consider school consolidation and closures. Reduction in revenue is also correlated with declining enrollment. However, the effect of enrollment drops on school construction projects differs locally.

Variations in school building planning affect the district's long-term plans and connections with the local community. 

According to Anthony Dragona, interim board secretary and school business administrator for the Union City Board of Education in New Jersey, if the construction work is neglected, it is more likely to impact the community's relationship and trust in the school district. Even small-sized projects like window replacements or rooftop air conditioning units can help the school district gain community trust.

One way to keep the community engaged is by being transparent with the community and telling both residents and officials where they stand on the funding front.

Category : Market Watch Material Costs Schools

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