BENBROOK — A dusty driveway winds its way off of Jerry Dunn Parkway. The road leads up to an elevated patch of flat ground.
There, a new elementary school will be built over the course of the next year to open for the start of the 2023-24 academic year.
The costs for the new school and all other bond projects are a concern for Fort Worth ISD officials. Inflation is driving up the cost of supplies, materials and even labor for construction projects. However, administrators say the work that went into planning the $1.2 billion bond should be able to take on any price increases.
Knowing the exact impact of how inflation has affected district construction projects is hard to pinpoint, said Joseph Coburn, the interim chief of the capital improvement program office. Besides the new elementary school in Benbrook, most of the 2021 bond construction has yet to begin.
The biggest move happened Sept. 27 when the school board approved the hiring of 21 architecture firms to design 26 projects, including three new elementary schools. The cost to design the upgraded campuses is not to exceed more than $66.3 million.
Setting the maximum cost is one of the key methods the district uses to ensure taxpayer dollars are used and officials are delivering on the 2021 bond package, Coburn said. Another way to keep costs down is the district’s use of a construction manager at risk, an outside firm that analyzes prices and provides a guaranteed maximum price.
“That provides us with a level of cost control,” Coburn said. “In this market with the cost uncertainty, getting ourselves a measure of cost control is really important.”
Selecting a construction manager at risk is one of six ways state law allows school districts to pick construction services. Other methods include selecting the lowest bidder for each project and picking the best value among sealed proposals.
Using a construction manager at risk means construction can cost more, but districts also get more for their projects, according to a Education Service Center Region 13 presentation.
The rising cost of construction materials already is leading some districts to re-evaluate their bond programs. Richardson ISD officials expect a $77 million shortfall in its $750 million bond project because of how much construction supplies now cost, according to The Dallas Morning News. Richardson ISD officials are weighing their options, including seeking voter approval for a supplemental bond.
Good planning is the best way to avoid a similar situation, Coburn said. Fort Worth ISD plans for escalation and contingency costs to ensure projects can be completed. That process was completed when the district decided to pursue a bond in 2021 and is how officials ended up with the $1.2 billion figure voters approved.
“You try to make sure when you do cost estimates when you call a bond, that you’re not going to come up short,” Coburn said. “That’s one thing you know you can’t do for your community is not deliver on the promises that you made.”
The producer price index for new school building construction is at an all-time high, according to Federal Reserve Economic Data. The index looks at the price of goods, such as wood and metal, and how they have changed over time.
The index increased 20% since 2017, when voters approved a $750 million bond. In the past decade, the index jumped 55%.
Monitoring and ensuring taxpayer dollars are used wisely is one of the responsibilities for the nine-member Fort Worth ISD school board. Tobi Jackson, the school board president, also sees that as a priority.
“Every day the price of acquisition goes up. The supply chain gets tough. And every day that we wait, we get less for the dollars spent for kids,” she said.
Barry Brock is the president of Procedeo, a firm that manages construction projects for school districts, including Fort Worth ISD. Brock has a good sense of how to read the market, its ebbs and flows and estimate how much a school construction project will cost. That was in normal times, and the past two years have been anything but.
“When we plan a program, you have to look at it six years in advance,” he said. “Nobody has a crystal ball good enough for that.”
Brock typically tells school officials to budget conservatively when planning for a new school or a renovation. Individual project budgets also include a built-in buffer to cover unexpected costs that may pop up. Now, he advises them to be even more conservative as a precaution to pay for the ballooning cost of materials.
Earlier this year, Brock watched as the price of steel climbed. The price dropped a bit in the summer. The decrease, while not significant, was encouraging for Brock.
“When you see a trend going that direction, you feel a little better about it,” he said. “At least it indicates stability.”
Coburn echoed Brock. Still, the Fort Worth ISD chief is not counting out inflation and the market changing.
“The difference in some goods and services from two months ago to today would be considerably more favorable for a construction project than it would be two months ago,” Coburn said. “But who knows what it might look like two months from now? The volatility is like nothing the industry has ever seen.”
Another example of how the price of a good can swing is fuel. Months ago, gas prices soared to new highs. Now, in October, they’re at a more reasonable price. That means Procedeo and ultimately taxpayers are seeing a relief because bond dollars can be spent elsewhere, Brock said.
Brock expects to have a better idea of construction material costs early next year. If recent stability continues, Brock says he will be more comfortable in predicting how inflation may affect projects.
However, demand is high for construction materials in North Texas. Billions of dollars of school construction is planned in the Dallas-Fort Worth area. High demand will mean project managers and school officials will see a crunch on materials that nearly all construction work needs, such as concrete.
Sometimes soaring supply costs can surprise people. For example, Coburn pointed to summer 2020 when lumber prices skyrocketed. The cost of lumber has come down, but that situation shows Coburn what he and other people working in construction are dealing with: uncertainty.
“Rising costs have been a part of construction forever — it’s the uncertainty,” Coburn said. “How do you control uncertainty? You just plan as best as you can.”
Jacob Sanchez is an enterprise journalist for the Fort Worth Report. Contact him at jacob.sanchez@fortworthreport.org or via Twitter. At the Fort Worth Report, news decisions are made independently of our board members and financial supporters. Read more about our editorial independence policy here.
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