The Impact of Construction Escalation Costs on School Bond Plans

Your Project escalation costs can make you or break you.

After you've gathered your school district requests for capital improvements, new facilities and programs, it's time to start working on the financial estimates associated with each one.

Your assessment data probably includes financial estimates, but maybe not. It is not always the case for every request, as these can also be submitted by staff that work within a facility. 

After those estimates are applied, contingency costs need to be considered to cover cost escalation. Cost escalation is a factor applied to a cost estimate to account for the rise in material and labor prices over a period of time. Cost escalation is most impactful during long-term capital planning projects like schools.

A recent story about Bainbridge Island School District in Washington describes the impact better than I can. 

This is not a unique event. Unfortunately, we have heard this story many times. There's an example out in the west Texas town of El Paso. There was a "miss" in applying construction escalation costs to a project, leading to a $20M shortfall. That's not pocket change, and the impact reached far beyond the ability to construct a school. It affected careers. Not pretty.

So what do you do?

Get BondPlanner, of course!

We have contingency rates built right into our platform, populated with default values that you can assign, even at the project detail level. A recent customer had a percentage that he assigned for nearly all of his project Architectural and Engineering Fees, but for a few projects, the percentage was different. He did the same for his FF&E fees.

You may not use all of the contingencies that we have built into BondPlanner, and that's totally up to you. Just know that there is much more than construction escalation costs to consider for your projects.

Want to know more? Of course you do!

Click on the button above to learn how BondPlanner can help make your school district bond planning process faster and easier. We're easy to do business with and there's never any pressure.