One percent of a million here and a million there and pretty soon, you're talking about real money.
The Warren County School District may have found a way to save one percent on upcoming major renovation projects.
Representatives of the insurance industry and the Pennsylvania School Board Association (PSBA) detailed an Owner-Controlled Insurance Program (OCIP) for the school board.
Gary Meinen of Willis of Pennsylvania, the company that administers the program for PSBA, said it is typical for contractors to include insurance costs in their bids for projects. That cost generally runs from 2.5 to 4 percent of the whole project. The average is about 3.5 percent.
"We can replace all the individual policies that they provide," Meinen said. "Workers comp, general liability, excess liability... Typically it's better insurance than contractors provide."
The OCIP program does not include builders risk insurance.
The PSBA program covers all of the insurance for the job and runs in the range of 2.5 to 2.7 percent of the project cost, according to Meinen.
PSBA will provide a bid of about 2.7 percent for its insurance that can be put up against bids from the contractor. Or, if a district is willing to go with PSBA without going through the bid process, the PSBA cost will be about 2.5 percent, Meinen said.
The program is intended for construction projects of $10 million or more. Warren County School District has already bid the Beaty Warren Middle School renovation, so that job does not qualify. However, the renovation of the existing Eisenhower Middle High School and expansion to make the building a K-12 facility meets the dollar requirements at close to $25 million. It is possible that the district could piggy-back a $5 million K-12 project at Sheffield Area Middle High School on the Eisenhower project.
If the PSBA insurance program saved a district one percent on a $30 million project, the savings would be $300,000.
In addition to the direct savings, Sean Sabol of PSBA said the program saves districts time and money when there is a significant problem. The program does not differentiate between contractors when it pays a claim. If there is a problem, the insurance pays without the possible delay and inconvenience of working out which subcontractor was responsible, he said.
The board members expressed interest in the program, but were not willing to jump on board without a good look at the numbers.
Board member Nancy McDanel asked Meinen and Sabol how they can be confident the program saves an average of one percent in cases where the contractor is not asked to present a bid.
"Nancy and I don't want to take the insurance company's word for it," board president Arthur Stewart said.