not going to finalize those until late, precisely because of what you said and we want to be sure that we are specifying what is currently the state of the art at the time that we open the doors. >> okay. >> just touching real briefly on the phase one schedule, we did mention this last week, that last month, that within the over all schedule, we are maintaining the october, 2017 date, for the start of rail operations and there has been some shifting of intermediate milestones by the start of the bus ramps and the completing of the bus ramps that has had impacts there as well as the over all completion of the design has been extended. and that the extension of the design and bidding periods has

had some cost implications for what yabiyas, predesign and also the contract with pelli, clark pelli and we emphasized that through the resequencing of construction we are currently maintaining the october 2017 date for the start up of the operations. >> we also just began last month the discussion of contingencies and reserves. and the categories listed here are those that are part of the initial base line which are included when the estimate is based on preliminary drawings or prelim concepts and there is

a contingency and it reflects the changes in the field and i know that you had a briefing on the claims, the claims ultimately that have resolved, and will be treated as change orders, and provided against it. the cmg which is within the construction budget and intended to address coordination issues between the contractors and schedule recovery and related issues and another potential source of funding for changes during the course of construction, so both the construction and the cmg contingency individually or in combination are used to address the changes to the contracts and then the program reserve which is independent budget category. and represents a reserve against the broad range of

program budget requirements outside of the outside of the construction budget and in addition to reviewing those, budget categories in the recommendations that we are looking at now, we are recommending and including a schedule contingency which is a reserve of funds that will be used to cover, program administration and soft costs, if construction was not completed on october of 2017. and again, at this time, that is the schedule that we the ste

and recovering an adjustment to address that and also to provide something or some kind of additional funding for potential future packages so in aggregate, you see here the upper portion of this slide, the current levels of contingencies and reserves and at the lower level, the adjustments that we were

recommending in those we will review before we bring it to the board but to talk about the steel package that we received and the steel bid that we received last week, and the process that we went through to estimate that work, and i am going to invite jess peterson of web corp. >> could i ask a question about the market recovery adjustment, it sounds logical, but when this schedule was originally built, there were expenditures expected at certain amounts of time and an escalation rate assumed. what was the escalation rate assumed and how do we get to this 55 million dollar figure? >> the escalation that was assumed in the 2010, when the revised budget was established, was for the balance of 2010, no

escalation. for 2011, 2 and a half percent, escalation and for 3 and a half percent escalation there after. and that was or those were the escalations that were included in the estimate at that time. the adjustment here, is not based necessarily on an escalation, but on a reestimation of the scope of the work based on additional information as i have described, particularly around the steel package about current pricing, and about the complexity of fabricating the larger members, in particular as it relates to the ability to get rolled wide, very large rolled wide members here in the united states. and some of the larger members

are going to be fabricated beams and that just, additional labor in providing a fabricated beam rather than a rolled section, so that additional labor, providing the steel members was shaping the pricing. >> so we are assuming 3 and a half percent per year? >> going forward, yes. >> and there, with regard to replenishing the program reserves, that implies that program reserves have been drawn down? >> and for what purpose? >> it has been applied across a number of issues that have arisen both on the soft cost side, on the program wide side and real estate as well as some of the other contractual services. like they can provide you an

update on all of those categories. >> thank you. >> with that i will invite jess to come up. >> good morning, board. we going to talk about the structural bid package and the process that we have used in reviewing and assessing the needs throughout the lifetime for the preconstruction period. and ultimately, the bids and the results that we have gotten here in the last month or so. and also, to look at some of the options going forward, for what we would do and continued our investigation. so this packaging really comes from several years of work in

the preconstruction process. and as a general contractor, it is really our responsibility to look at the project as a whole and bring in all of the parts and pieces and they could be concrete, steel, drywall, and all of those parts and pieces and for us to organize and understand the scope that it takes to do it and the methodology and needs and methods and so we have to be judicious and no one trade gets their way but it is our responsibility to make sure that there is a flow but there are needs and methods that predict how you do that. early on in the process, we compared the general information and we also reach out to our specific subcontractor and then the partners. meaning that they are the specialist and we are the generalist and the coordinator and we have the opportunity to bring them in and get their advice, so for the past several years as we have gotten more design information and more understanding of what the project means, we progressively go to those partners and ask

them for assistance and help to just look at it and give us general guidelines and this does two things, one is we advertise broadly and since we let anyone come in to take a look at what is taking place in the project and to go ahead and lend their advise and also to get up interest and the contractors to be excited about the job and more that they get it and more they come out to the bidding process and it is not just a package that they see for the first time and they have to figure out how to build it. it is something that they are involved in and i have the final detail and figure out what the price is. that is the process leading up to the methodology and bringing in the partner and working with us on the methods of construction and what the productivity would be and the obstacles are and how we lace the beams that are holding the hole open in between the steel that has to go in and how we pull that out and how we erect the steel efficiently and find the ways to do that and certainly for the trades that

are the largest, that have the most impact and have the most cost on the job, we are going to certainty want to favor the benefits from those trades and how to get them through what they need to do to erect it. that is what we talk about the preconstruction process that is really the extensive communications and recommendations that we get back and north and of course as we get through that process, we get a different set of design package and comment it on it from the design instructbility and to the team and the tjpa and we provide pricing and budgeting as well as davis langthen who is the estimator for the design team. we reconcile those estimates and we both looked at it from different ways and reconcile the comments and we advise them what to do in the next generation of design. so the preconstruction process has done throughout and we have it on the structural steel side

and it has been a market that has been hungry for work and until recently, they have continued to express great interest and, then we went ahead and went through a process to ultimately decide who is qualified to bid on this job. and so, the prequalification process, is just one and i have a date wrong, we actually advertised it in may of this year. >> at this time or throughout the process? >> i guess that either. what we are hearing is that what came in that was different from the estimate and i was wondering if there was variation in the estimates that we had received? >> the two estimates were prepared by web corps and by

david langden who is underneath the pelli contract, and so the language is the official engineers and the web course and preparing the estimate based on constructbility. and a contractor approach to the work, where they are actually defining the crew sizes and so forth and so it is a very rigorous process. and generally, the bids or the estimates at each milestone have come in at five percent of one another and we have gone through the process working with the pmp c team and tbd who is a cost consultant under the team to reconcile the two estimates. so that at each milestone, we have had a consensus estimate of cost for the over all project. and is that estimate changed much over time? >> it has changed over time as we have, you know, as more information has been built into the drawings, we have had scope

changes, program changes as we developed the design and it has changed and each time that we have done an estimate, there has been some differences in the way that the contractor and the architect's estimator have estimated things but as i said, we have gone through the process at each milestone to reconcile those discreptcies, quite often they are bringing more information to the estimate on logistics and general conditions and what it is going to take to build the work. where the davis langen cost estimators are approaching things more from an industry perspective and looking at current cost data, and the materials and types of systems being installed. so they are coming at it from

different approaches. and then we have gone through the process of reconciling them. so, they have tended to move together, each time that we have had an update there have been minor discreptcies and we have gone through the process to reconcile those. >> and the trend up over time or up and down. and i mean, back in 2009 and 2010, it was kind of flat, and on the steel side, and at one point, we actually saw, a dip in pricing in the early estimates because the initial estimates were done at a time where particularly the overseas steel market was very hot. and so, a lot of steel was being consumed in the advance of the 2008 beijing olympics and so some of the earlier cost estimates that we had even higher numbers than we had in 08, 09 but then obviously the market has shifted and we have

continued to update that as we went forward. >> thank you. >> any other questions before we move? >> so the prequalifications, so the prequalifications stage is really is, making the final solicitation, and bringing those in. we actually received six prequalifications submissions and after reviewing them, we deemed that five of them would be prequalified and continue on into the bidding round. so, there were many of those who had worked with us originally in the preconstruction process or i should say the majority who were working with us in the preconstruction process who were also, having seen these things for several years working through this and understanding them. so, we, of course, enter into the bidding process, and there is naturally questions that they were going to come about, sometimes these are technical questions and other times they are questions about general

conditions, and we averaged about 50 questions a week because we wanted or we really invite them to really dig into the drawings and understand how it is going to effect them. and understand how we are going to build it and understand some of the risks and liabilities that come through that. so, we have washed through most of those and did that for a while and we are trying to make accommodations. to the extent that they are the only one on the job site and it would be something that they would do to go ahead and manage the toilets. they did not want to and we take that out. and we would be perscriptive about how they protect the cars passing through and don't want to be so restrictive and so it is performance based. it is a give atake to what we think is important to them and palletable for what they want to take on. >> we also had a series of addendums that come through, there will be updates that come through and we reissue it to the bidders, after two months in the bidding process, we were advised by the bidders that

they were no longer going to go ahead and participate in the bidding process, or that they were considering withdrawing. and that continued for you know, a couple of weeks and what we did out of the five bidders, we had three of the bidders and you know, formally advice us that they were now not considering putting a bid in on the project. >> we have 15 minutes until noon and actually more than half of the presentation is left at this point. >> okay. >> i am really concerned about time but i do have questions of this area and i appreciate the stories and details but i don't think that we have the time for it at this point. i do have a questions to the bidders. >> you said that we had six and we went down to five and how many bidders have dropped out since then? >> three have dropped out. >> we have two. >> we have two and received one bid. >> why did three bidders drop out? >> they sent us letters, or someone actually called to advice us and it was a variety of conditions.

the most notable being market conditions change. >> this is a job that is very large, even for the projects or some of the vendors who are out there like a hericor a chef that are typical and there is resurgence and they come on quicker and smoother and don't tie up the shops as long and the majority of those ended up preparing subbids and ultimately bidding to scanka who is the single bidder. >> i have concerns about this because i think that it impacts our competitiveness within the bids and as the folks drop out, of course, that gives us less options. and i have heard off line, that sometimes their processes might be a little bit more complicated than it needs to be. either with the addendums that come in midway, or additional

paperwork. and i get that the scale of this project is much more complex and more larger than an office building or which there are many in the south of market but i do think that as much as possible, we as a body need to think about how we can simplify the processes and still have them address the complexity of the project to maintain as many bidders in this process. director metcalf? >> sorry. >> just, my apologies, i am going to have to go at noon. so i want to just cut to the chase, while i really appreciate you taking time to be here and i know that you have a big company to run in addition to this project. we are looking at 214 million dollar cost over run so far. minus 50 million in new revenue that has been found, 164 million to figure out, i assume the costs are going to continue to go up. we have heard at length this

the team does not believe that we should do cost cutting from safety, we have got a 17 million dollar saving on the facade that we will hear about later in your professional judgment where should we be looking to reduce the cost of this project? >> the entire project? the thing that we have to really keep in mind is time. and schedule. we are now in a escalation area, environment and these construction cycle and to back up too far to redesign needs to be studied heavily and there are things that can be done and that was the last part of the recommendation is that we need to look at deeper in the bids to understand what is driving us being over budget to look at what would be potential redesign opportunities and repackaging in different ways to gain additional competition. many times i have seen the people step back and say let's

redesign something saying that we can do xmillion doing this. we redesign and put it out for bid and because we are in an escalation cycle, it is the same cost and you have less value. >> it is a complicated question, i know that you are looking for something quick. >> you are going to try to get or rethink the steel package. >> we want to investigate deeply with the current bidder and understand his pricing structure throughout and we want to look at what the next steps would be to make a recommendation. >> are there any other packages where it makes sense to focus given that we are in a time and costs are going up from delay? >> possibly, we just need to look at if we were to change this, how long will it take to make that change design wise and go rebid it and then what does that time element do for us or not for us. >> all right and we are doing that just i think, that you director and direct share

person are asking the same question. we are going back and we are going to be looking very closely at web corps and the teams of the package that came in and at the bid that came in at the steel because we do want to have competition and should we repackage everything into smaller package and put out the cast notes first and then the shop drawings and do the rest of it. but in parallel with that, we are looking with fred clark and the design team, was it the specifications? is there something that we can do simplify things? but we need to sit down with scanka who submitted the bid to understand what was driving their bid price. and so we are doing that because we agree that we want more competition. and to your point, director metcalf in addition to what jess said, we felt that we have changed a lot, and we changed the kaoelgs and recommending that we are changing the skin and looking at the steel again and we are doing everything that we can and because it is

again for symantics since we need to move things along, and the neck time i know that the director has to leave. >> i have one final question on this, though. on the steel. >> oh, sure. >> does the 164.5 million estimated additional revenue required include the cost that the steel bid came in at or not? >> no. that cost includes the engineer's estimate that was a combination of the work done by web corps that the director asked about earlier. >> okay. >> and then pelli's cost estimator. >> the steel bid does not come down significantly? >> we are rebidding. >> not over, and the amount of money in deficit this project has will be greater than $164.5 million. >> no. we are trying to keep it at this amount and so we had a recovery line item of $55 million that is why we are going to be talking if we can't

get that number down we are rebidding in smaller package and that will be the recommendation. and again, it is a policy call on how much we want to have in reserves and contingencies. you can make the policy call to drop that number down, we are just rolling the dice as the director reiskin is attest to you. >> we will be coming back to the board on march 25th with a recommendation of what to do further with the steel bid after the team has had a chance to look at the bid more closely. >> we have only 7 minutes left at this point, before we lose quorum because two more of our members need to leave. so, i am not... we are not going to make it through the presentation, and so, i don't think as a board i get the sense that we are going to be ready to adopt anything on march 25th. >> so i am not really, i am just going to at this point i am going to ask the board members what their thinking is. i think that we have to end the

presentation at this point. so, directors any thoughts? >> my only thought is that i would like to be presented with options that the team believes would be appropriate to move on, not only options that the team believes would not be appropriate to move on. >> so i understand the team does not want to cut on the rva analysis, again, i do not want to second guess that. so how about being presented with options that get the number down that the team believes would be constructive? >> we actually we are going to present you on this. >> as part of this presentation. just a reminder to everyone, we are on march 25th, we will be looking to present to you is an action item to recommend to allow to give the design team allowing to move ahead for the rva and we have to move on the rva because the construction

documents are due may 31st and the longer we put that off the more expensive this project becomes and it defeats everything that director metcalf is looking to do which is save money. the seconds thing that we are going to come back to you on march 25th. was a recommendation on what to do further with skanka, do we ask the board to allow us to negotiate further? reject the bid? and they will have a recommendation for you then, we are not coming to the board on march 25th, with the recommendation to adopt the reserves and contingencies we can at this point because we need to give web corps times to relook at the whole structural steel, do we repackage everything? do we redesign the steel in some way to be able to give the response that you asked for. so march 25th, would be allowing us to move so that the design team could finish and that would just include the direction on the rva and the direction of what to move forward and that is it for march 25th and changing the

facade from the grass to the metal and we can do that presentation as well. i would ask the board to consider maybe starting our meetings at 9:00, we have a very complex project and i understand, we have never had a time limit for when this board meeting would attend but it appears that most need to leave at noon and i would ask for consideration that we could start earlier, i can start as early as anybody can available and but we really need to start thinking about starting earlier, because there is a lot and it is a huge project and a lot of material and we don't want to keep disappointing the public that we are going to present something and we don't have the time. please allow us some consideration. >> i think that is an important request. any other... i am happy to start the board meetings at 9:00 a.m. if there is no objection, we can certainly. >> and i want to apologize to those of you who are here and not getting to present. >> i also just asked the board members if they can let me know in advance when they have meetings schedule afterwards so

i can give staff a good sense of when our meetings need to end by, these presentations are great actually. i really appreciate the incredible level of detail, but i think that we don't need to go over it orally. i think that it is important for us to see visually. >> i think just to that last point, it would be helpful to get these in advance so that then we have, you know, for us and the public to be able to review and we don't have to go bullet by bullet. i am glad that hear that we are not going to need to try to contemplate a full budget adjustment at the next meeting because we will not be ready for that. what would be helpful in addition to what the previous director's mention, one would be an understanding of what the change process is within the program. i don't know if there is a change board or a configuration board. because it seems like there is a lot of things that have kind of moved along the course of the program, and it ul