What does the price of steel in China have to do with the remodeling of a 50-year-old school in Arlington County? A lot, as school officials in the Washington area have learned in the past two years.
In 2002, Arlington voters approved a $79 million bond for renovations and construction projects at eight schools. Since then, costs for most of the projects have shot up, adding $11.5 million to original estimates. Bids for the final project, the upcoming renovation of Nottingham Elementary School, were almost 50 percent higher than projected.
Project manager Andrew Hooker works at the Kenmore Middle School construction site in Arlington, among the county's many school projects.
(Gerald Martineau -- The Washington Post)
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The reason, say officials in Arlington and other districts throughout the area, is an economic boom in China that has driven up worldwide demand for steel, concrete and other materials. That in turn has inflated costs everywhere, with steel prices rising 40 percent in one year, one school official said.
Recently, the Arlington School Board voted to accept a bid of $10.8 million from Henley Construction Co., low bidder on the Nottingham project. The original estimate to do the job, which includes moving the school's main office and adding rooms, windows and a sunshade, was $7.7 million.
Although board members voted unanimously to allocate the money, some said they were wary of the extra expense, especially in light of Arlington's next big school project, the $80 million reconstruction of Washington-Lee High School, part of which voters approved in a bond referendum in November.
Since then, prices have soared. "Even though we put in cost escalation factors, obviously we didn't count on changes in the construction market," said Arlington School Superintendent Robert G. Smith.
Arlington is not alone. Last year, Montgomery County, which had 10 school construction projects, ended up paying $10 a square foot more than projected. This spring, the county will put 16 projects out for bid, including four new elementary schools and one new high school.
In the fast-growing exurbs, where schools are springing up to keep pace with population, the problem is more alarming, officials said. "We've got some very worried school districts out there," said David Lever, director of Maryland's school construction program. "They're not sure they can complete their projects in the budget assigned."
In Prince George's County, he said, school projects have been delayed or even canceled.
In Howard County, which has six projects underway and six more planned, price escalation is easy to track because the district builds from prototypes, with only one design for elementary schools, one for middle schools and one for high schools. A design that cost $92 a square foot to build in 1999 costs $157 a square foot today, said Bill Brown, director of school construction and planning.
"In this bidding climate, every time we go out [to bid] with a project, the cost goes up," Brown said. With fuel for construction trucks coming from the Middle East and concrete from Brazil, he said, "It's a global economy. It really is."
Brown said labor costs have remained fairly steady, although he said he worries that an increase there might be next. For now, he said, the district is looking for ways to adjust for inflation. "We might buy the brick for an elementary school now even if it's six months before we're going to use it."
But planning ahead doesn't always work.
This year, Howard County allocated extra money for rising material costs, up to $176 a square foot, Lever said. "Unfortunately, we're afraid we might be on the low side. We've seen bids in Southern Maryland recently at $225 a square foot."
Not all school districts are having trouble meeting their budgets, however. Loudoun County, the fastest-growing county in the country, has built 31 schools in the past decade and plans to build 19 more in the next five years.
Schools spokesman Wayde Byard said the county tends not to surpass its budget on school construction projects, even coming in under cost on some of them.
One reason is that with 3,000 to 4,000 new students moving in annually, the county puts a bond question before voters every year and starts the projects as soon as the bonds pass. "We're in constant building mode," Byard said, adding that in one case, "We needed one but built two because we knew we would need them, and it would be a bargain at today's prices."
Loudoun also uses prototypes and often employs the same contractors for different schools, he said, "so it's a process that's familiar to them."
While some rural and semi-rural areas also offer room for districts to buy materials in advance and store them on site, in more urban areas, such as Arlington and Alexandria, stockpiling materials is not feasible. These districts must do what is called just-in-time construction, for which materials arrive only when they are needed.
In Alexandria, construction of a new T.C. Williams High School started recently. The project, which grew from its original $70 million cost estimate to $87 million, must be built around an existing school on a site with little room for storage.
The new Washington-Lee, where construction is scheduled to begin this summer, also will be built around the current school.
Sarah Woodhead, director of design and construction for Arlington schools, said the district is working on an evaluation of the Nottingham bid, "to make sure that anything we can know ahead of time we do know ahead of time." She said that escalation has been built into the budget for Washington-Lee. But the high cost of Nottingham raises the question of whether to bid projects farther in advance of the construction schedule.
The decision can be like choosing between a fixed-rate or adjustable-rate mortgage. "Would we rather have certainty upfront but possibly at a higher cost?" Woodhead asked. "Or would we rather bid it out over time and have the possibility of more accurate pricing, which might be lower and might be higher?"
