Jerry Summers
A couple of usual disgruntled complainers have anonymously raised the question of whether the $79.5 million dollar announced cost of building the new baseball stadium to house the ‘Nooga Lookouts (Sorry, Joe Engel) was guaranteed not to go above that amount but has a “contingency” provision that might slightly increase the total amount of dollars, pesos, euros, etc.
They also were quick to point out that the original cost of building a new diamond palace in the borough of Knoxville had risen from $65 million to $114 million as the result of “cost overruns.”
Although the above figure of $79.5 million was announced with the usual optimistic amount of positive fanfare as part of the ongoing billion dollar downtown development another unidentified (but believed to be a reliable source) individual states that no final contract amount has been determined due to fluctuations of various costs by the economy.
The above term is one of several types of construction contracts. Others are “fixed price contracts, lump sum contracts, not to exceed price contracts,” etc.
One definition of a “guaranteed maximum price” (GMP) contract “sets a maximum price for a construction project beyond which the contractor absorbs additional costs. Sometimes called a construction manager at risk contract, this type of construction agreement minimizes financial risk for the owner because it sets a project cost limit.”
Whatever the final cost figures to be yet determined the tax paying public can be assured that the total economic benefits to be achieved will overcome the multiple deficiencies of the Joe Engel baseball castle on 3rd Street and the Hawk Hill stadium near the Tennessee River.
(Website and computer gurus can review the advantages and disadvantages of a GMP contract at their convenience.)
* * *
You can reach Jerry Summers at jsummers@summersfirm.com