Page 56 - Annual Report 2016 - Cover & Divider Pages.indd

H I G H E R E D U C A T I O N P R A C T I C E

Executive Summary
FY 2016 brought many of the same challenges we have faced, in previous years, in terms of a
decrease in workload and, therefore, revenue, and a dwindling number of new project
opportunities. While the State of Illinois’ financial troubles and budget impasse are the most
immediate and evident source of the economic woes and uncertainty affecting us, long term
demographic changes are also underway that affect the Midwest in general and Illinois in
particular.

The Olive-Harvey College Saga
Our Transportation, Distribution and Logistics (TDL) Center at Olive-Harvey College, one of the seven
City Colleges of Chicago, is a poster child of sorts for the remarkable financial and political mess
Illinois is in. Our client, the Capital Development Board (CDB), halted the construction of the
building on June 30, 2015, with the facility approximately 65%-complete. The “stop work” letter we
received indicated this action was necessary, because no appropriation bill was passed by the
General Assembly and, therefore, CDB could not make any payments.

Approximately a year later, in June 2016, with construction still on hold, the City Colleges of
Chicago (CCC) seemed to embark on an effort to “take over” the project. CCC issued its own RFQ
to select a new design team, which would prepare a set of bid documents to complete the
building. CCC also planned to bid and award the remainder of the construction work to a new set
of contractors. After receiving CDB’s blessing to respond to the CCC RFQ, FGM prepared a set of
qualifications, proposing to use our same team of consultants to complete the project we had
begun under our contract with CDB. We never had the opportunity to submit these qualifications,
however, since CCC has postponed the submission date eight times since the RFQ was originally
issued. The current due date is February 28, 2017. Apparently, CCC is using its own selection process
as a “threat” to force the State to finish the project.

Meanwhile, on August 31, 2016, CDB issued a letter rescinding the “stop work” letter and noted the
project budget had been restored. FGM and its consultants were asked to submit a fee proposal to
cover additional services associated with restarting the project. We submitted our proposal, which
was quickly approved and signed, and returned the formal Contract Modification on October 20,
2016. No further communication was received from CDB until January 13, 2017, when we were told
to stop all restart activities due to insufficient funding.

Creative Financing
In the midst of funding shortfalls, public universities are turning to alternative project delivery
strategies in an effort to move capital projects “off the balance sheet.” Public-Private Partnerships
(P3) are being considered for student housing at the University of Illinois Chicago (UIC), Illinois State
University (ISU), and, unfortunately, Southern Illinois University Carbondale (SIUC). The latter began
as a typical Design-Bid-Build project in 2013, when FGM and our associate architect, Mackey
Mitchell, were hired to do up to five new residence halls over the course of ten years. After
concluding the Schematic Design Phase for the first two residence halls, the project went on an
extended hold. Last year, we learned the University had hired a consultant to evaluate using a P3
approach for the project, but were heartened when the consultant’s report advised against it. The
project then showed signs of coming back in its original form, and, happily, we began forecasting
revenue in the first quarter of 2017. Just before Christmas, however, SIUC’s Housing Director advised
us that the Board of Trustees is likely to approve a P3 approach for student housing at its February
meeting. Although we are exploring options to participate in the project as part of a developer’s
team, it is frustrating to lose a project we have won for a second time.