Ohio State President E. Gordon Gee, who has a well-documented appetite for construction, has voiced support for proposed state construction reforms that he said will spur job growth and save millions of dollars.
“The issue of construction reform is, quite frankly, one in which I feel an unparalleled sense of urgency,” Gee wrote in his testimony to the Ohio Senate Finance and Financial Institutions Committee in December.
The proposed reforms were generated by the Ohio Construction Reform Panel, a group that includes contractors, trade unions, designers and state entities, including OSU. The panel was assembled at the behest of Gov. Ted Strickland beginning in August 2008, and produced a report in April 2009 detailing their recommended reforms for publicly funded construction.
A key element of the proposal is the introduction of construction management practices that are used in most states.
Ohio uses a “multiple prime” system, in which state projects costing more than $50,000 are usually broken into pieces — such as electrical work and plumbing work — and bidding is opened to contractors for each separate aspect of the project.
Under a “single prime” system such as the “construction manager at risk” system, the state would only contract with a construction manager. The construction manager would hire subcontractors and would be responsible for the entire project. This system would shave six months off of the time required for a project, according to the panel report.
“Time is money in construction, so being able to complete projects more quickly is one big advantage,” said Bill Shkurti, OSU senior vice president for the Office of Business and Finance, in an e-mail. “Another is being able to hold one construction manager or general contractor accountable for the project as a whole, so the University isn’t left holding the bag when something goes wrong and all the contractors on the job blame each other.”
There are four main methods of managing a construction project in the U.S., including construction manager at-risk and multiple prime contracting, Shkurti said. Although each is appropriate in some cases, he contends that none is appropriate in all cases.
Ohio is one of only seven states that does not allow “single prime” contracting systems for public construction, according to the Associated General Contractors of America Web site, and is the only state that uses the “multiple prime” system exclusively, according to the Akron Beacon Journal.
“What OSU seeks is the ability to make that decision [about construction management style] for good business reasons rather than be forced into a one size fits all use of multiple primes by a Soviet style outdated State law,” Shkurti said.
Gee compared Ohio’s stubbornness to change its construction rules — the law has not substantially changed since the 1870s — to the resistance he faced at OSU when he pushed for a conversion to semesters from quarters.
“Some members of our University claimed that we were in the right, and all of the rest were in the wrong. But the fact is that the rest of the world was operating in a new way, and we had simply dug in our heels,” Gee wrote in his testimony. “The time has come to consider whether Ohio, as the nation’s single outlier in construction rules and processes, has really got it right — and 49 other states are wrong.”
Gee has a vested interest in the reform proposals. Looming largest among his building projects is Project One, a $1 billion update to OSU’s Medical Center.
The project will be funded without state money, relying instead on private funds, hospital revenues and university bond issues, but because OSU is a public university, it will not be exempt from Ohio contracting requirements.
The project’s success could be hindered by “the archaic construction regulations set forth just a few years after Abraham Lincoln signed the act establishing land-grant colleges … this is where my job seeking more than $75 million in private support for Project One is made much more difficult,” Gee wrote in his testimony.
“Put simply, I will not have a satisfactory answer when prospective donors ask me whether their money would be caught up in inefficient, centuries-old regulatory processes,” he wrote.
So why hasn’t the law changed since the time of Lincoln?
“There are a lot of folks who have become very accustomed to the way business is currently done in Ohio as it relates to public construction,” said Ron Sylvester, the Ohio Department of Administrative Services’ director of communications and external relations. “It’s more difficult than one might think to convince them that doing construction in a different way will not hurt their business or their interests. The groups who have protested the loudest about reforming the construction laws are … simply not wanting to change the way they do business.”
The Ohio Construction Reform Panel included representatives for contractors and trade unions, which could benefit from an increase in available state projects if the reform proposals are passed.
Chancellor of the Ohio Board of Regents Eric Fingerhut is working on three demonstration projects using the construction delivery methods proposed by the panel, Sylvester said.