Blossom Plaza is a $100 million residential and mixed-use development in the heart of Chinatown in Los Angeles, California. The project consists of 237 residential units, 18,500-square feet of retail space, parking, and a pedestrian plaza connecting the Chinatown Gold Line station to Broadway.
Spire’s consultants assisted the owner by completing a cost review of the contractor’s Guaranteed Maximum Price (GMP) and Design Development (DD) estimates. The project included reviewing the scope, quantity, and price of each line item in the GMP and DD estimates; performing conceptual level review of contract, plans, specifications and construction schedule; checking quantities in the DD estimate against drawings and details; comparing pricing in the DD estimate to Spire-sourced pricing for projects of similar size, scale, location, and detail (in-house cost data, National Electrical Contractors Association [NECA], MCA, etc.); generating cost review spreadsheet; and developing a Cost Review Report summarizing Spire’s analysis and findings.
Based on the analysis, Spire determined the contractor’s direct costs and total construction costs were 8% and 7% below Spire’s fair market estimate, respectively. Spire informed the client that the contractor’s estimate appeared to be competitive and a good value if the contractor can deliver on the prices. Spire also provided the client with several risk mitigation strategies in the event the contractor was not able to achieve the GMP. Spire’s recommendations included:
- Review and discuss areas of the work identified by Spire as possibly underpriced
- Confirm with contractor that escalation rates are included in GMP
- Confirm with contractor that it included any additional costs associated with Los Angeles Housing Department (LAHD) requirements
- Clarify and document what is and is not covered by the 3% construction contingency
- Establish and maintain an owner contingency account