Hourly Pay Rate for Civic Arts Plaza Project Called High : Thousand Oaks: Industry sources say the city paid workers of the supervising firm about 20% more than usual during first phase.
The city of Thousand Oaks paid significantly higher than usual hourly rates for mid-level employees of the company supervising work at the Civic Arts Plaza during the first phase of the project, according to industry sources.
Lehrer McGovern Bovis Inc., now the target of a federal and county fraud probe for suspected double-billing, agreed to cut its hourly rates considerably for the second phase of the project, which started in July, 1992.
But even the reduced rates substantially top the fees charged by another construction management firm, CRSS Inc., at a comparable public project--the county’s $53-million Todd Road Jail.
The city’s willingness to pay higher-than-average rates on Lehrer McGovern Bovis’ $7.25-million contract surprised executives at several construction management companies that work on government projects in Southern California.
Lehrer McGovern Bovis’ rates for mid-level employees floated roughly 20% higher than the industry norm, said Steven Davis, an executive at Irvine-based High-Point Construction Management and regional president of the Construction Management Assn. of America, the industry’s trade association.
Referring to the hourly fees, another executive with a large construction management firm said, “It’s a little unusual to have so many people in the $100 range. Their middle-range rates are higher than what you’d normally expect.”
The discrepancy between Lehrer McGovern Bovis’ fees and industry averages distressed Councilwoman Elois Zeanah, a longtime opponent of the Civic Arts Plaza, who exclaimed, “Oh my goodness” upon hearing of the inflated rates.
“The public deserves to understand where and how its money is being spent,” she said.
Zeanah, who was not on the council when Lehrer McGovern Bovis was hired in 1989, declined to comment further on the firm’s hourly charges. “There’s nothing I can do about it now,” she said.
But City Manager Grant Brimhall defended the first-phase contracts.
“The fees seemed appropriate given the breadth of the project,” he said. “The fees we negotiated in the overall project . . . were reviewed by experts in the field and deemed to be a fair and acceptable total.”
Industry representatives contacted by The Times, however, said Lehrer McGovern Bovis’ hourly fees for mid-level employees--including construction managers, estimators, schedulers and secretaries--were at least $10 to $20 higher than the regional average.
Still, they emphasized that price alone should not dictate selection of a construction management firm.
Because construction management is considered a professional service, government agencies are not obligated to take the lowest bidder. And a good rapport with on-site supervisors can be just as important as a good price, industry sources said.
“You want the best people who will work most effectively and efficiently with the owner,” said Trent Anderson, the southwest area manager for Heery International, an Atlanta-based construction management firm that was a finalist for the Civic Arts Plaza work.
“We’ve been chosen for jobs because our team was compatible with the owner--that happens every day,” Anderson said. “It’s not strictly a cost consideration.”
Thousand Oaks Councilman Frank Schillo, who made the motion to hire Lehrer McGovern Bovis in late 1989, said he weighed several factors in choosing the firm over 10 others vying for the contract.
“Their rates were competitive,” Schillo said. “Also, they had a lot of experience doing construction of auditoriums, which is a very specialized area. They have great skills and bring a lot to the job.”
But that expertise cost the city a hefty sum--especially compared with similar construction management work at the Todd Road Jail outside Santa Paula, a five-year project scheduled for completion in early 1995.
A field manager at the jail, for example, bills the county at just under $52 an hour. In contrast, comparable personnel at the Civic Arts Plaza charged the city roughly $100 per hour for the first phase of work and from $60 to $90 for the second phase, depending on experience.
At the Todd Road Jail the county pays $56 an hour for an estimator with mid-level seniority, but Thousand Oaks doled out $80 an hour at first for an estimator, and $70 an hour when Lehrer McGovern Bovis dropped its rates.
In another personnel category, the county pays less than $31 an hour for an administrative secretary’s services on the Todd Road Jail project. But similar work set Thousand Oaks back $50 an hour, later reduced to $45.
All construction management firms fold their overhead costs and company profits into the hourly wage schedule. Thus, personnel generally earn only about one-third of the amount billed, industry officials said.
Lehrer McGovern Bovis’ regional president, Joseph Scarano, defended his company’s fees as reasonable. “Obviously, we’re a firm that competes constantly in the marketplace, so we couldn’t keep our rates high,” he said.
Contradicting that claim, several industry sources said that only one of Lehrer McGovern Bovis’ personnel rates matched or beat their own fees. The sources did not want their firms’ names attached to specific price quotes because they all compete in the Southern California market.
Lehrer McGovern Bovis’ sole average-to-low charge was for the firm’s top on-site executive, who started billing at $125 an hour and then dropped to $95 an hour.
Peter Roy, CRSS’s project manager at the Todd Road Jail, said government entities sometimes deem it reasonable to pay upper-end prices to ensure that very experienced professionals will work on the job.
“For the extra money, you may be getting people who have done big projects before, and that can make a tremendous difference,” Roy said. Experienced construction managers can spot subtle glitches during the design and building phases and save millions of dollars by suggesting alternative plans, he said.
Lehrer McGovern Bovis won the contract to oversee the design phase of the Civic Arts Plaza after the city evaluated 11 firms and interviewed four finalists. In recommending the company, the selection committee emphasized Lehrer McGovern Bovis’ experience and its ability to mesh with city staff and establish a working relationship.
The FBI and Ventura County prosecutors are investigating Lehrer McGovern Bovis for suspected double billing practices at several project sites across California, including the Civic Arts Plaza and a Calleguas Municipal Water District project in Thousand Oaks, as well as the U.S. 9th Circuit Court of Appeals in San Francisco.
Construction Contract Comparison
Hourly rates charged by Lehrer McGovern Bovis Inc. at Thousand Oaks’ Civic Arts Plaza and by CRSS Inc. at Ventura County’s Todd Road Jail. LMB reduced rate took effect in July, 1992.
LMB LMB Original Reduced CRSS Inc. Top on-site executive $125 $95 $127 Senior field manager $105 $85 $ 52 Estimator $ 80 $70 $ 56 Administrative secretary $ 50 $45 $ 31
