Enhancing Proposition 39 Construction Bond Programs with CBOC Expenditure Reviews
By Stephan Bacchetti, Moss Adams Partner and
Anton Jungherr, CABOC Co-Founder & Executive Director
• • • November 21, 2023 • • •
Topics in this article include:
- Proposition 39 Overview
- Citizens' Bond Oversight Committee Purpose
- Improving Expenditure Reviews with Best Practices
- Construction Delivery Methods, Construction Contract Type Selection, Cost of Work Definitions, and Right to Audit Clause
- Strong GMP Cost-of-Work Definitions
- Address Potential Red Flags and Report Publicly
- Be Curious and Constructive
- Looking Beyond Standard Performance Audits
- Next Steps: Checklist for CBOC and Performance Auditors
Excerpt: Construction bond programs are often the largest expenditure of a school district’s capital and operating budget. With bond program costs ranging from millions to several billion dollars, citizens and stakeholders want to know where and how funds are spent. …
Construction Delivery Methods, Construction Contract Type Selection, Cost of Work Definitions, and Right to Audit Clause
Educating your CBOC members on the technicalities within construction bonds increases their ability to effectively evaluate expenses and spot inconsistencies or issues. Here are the primary technical areas and what they include.
Common Construction Delivery Methods
Work with Bond Counsel and District Management to ensure compliance with Public Contracting Code and Policies and Procedures. We recommend districts formalize construction delivery methodology strategies and controls within their policies and procedures to establish appropriate approval controls and compliance with Public Contracting Code.
Common construction delivery methods include:
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Design-bid build. This method is where the district accepts competitive bids from contractors based on a completed project design. This methodology requires the district to contract with the lowest responsive and responsible bidder. Based on our experiences, this methodology has risk of higher change order costs absent strong change order audit rights, definition, and controls.
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Multiple prime. This is when design is split into multiple subcontractor packages and the district competitively bids each separately. Based on our experience, this requires higher district supervision and significant construction management experience, but when done effectively on less complex jobs, it can potentially reduce overall cost. When done ineffectively, it can result in significant budget overruns. Districts considering this methodology need to understand the risks and rewards associated with its use.
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Design build. This methodology engages both the designer and builder for pre-construction phases of major capital projects to ensure collaboration through construction completion. This delivery methodology can streamline communication among the project team and reduce project cost, change order exposure, and timelines. Complying with the various PCC requirements and using the right contract type is critical to compliance and cost containment.
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Lease-leaseback contracts. Refer to Davis v. Fresno Unified School District (April 27, 2023, S266344) for latest ruling and impacts to using this delivery methodology. ...
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