 Good evening. Thanks for the opportunity to update town meeting on the new municipal facility at 51 Grove Street As part of this update, I will quickly review the budget presented to town meeting this past November I will outline the current project pricing based on bids obtained by the construction manager as well as review the current market conditions and outline what has changed in the last six months and Finally, I will summarize the cost control measures on this project that are being proposed as well as an additional funding request to cover higher costs being driven by the current market conditions This slide provides an overview of the October 2020 estimate that was presented to town meeting in November Which identified a total project cost of approximately thirty eight point nine million dollars Following town meeting in November the design drawings were finalized and the construction manager obtained pricing for the project this past March Based on the final drawings and the current market conditions, the final cost came in at approximately forty three point nine million dollars This resulted in the project being five million dollars over the current authorization In addition based on these higher costs the construction contingency, which is being carried is too low for a project of this complexity in these market conditions It should be reassessed accordingly The project team evaluated the bid price to find what was causing this overrun So we could communicate the driving factors and identify potential cost-cutting measures based on this analysis The single largest increase was related to a surge of material costs Which also directly contributed to the overrun associated with the estimating variances What I would like to do at this point is briefly discuss these material cost increases and how they are impacting this project This is an example of actual historic stale pricing over the last two years You should note that the estimates for the municipal facility project were prepared in March of 2020 and again in October 2020 With town meeting falling in November As you can see from the graph the stale prices generally remain flat during the time that the estimates were being prepared for the project But as was mentioned earlier as the economy began reopening the demand for construction material increased exponentially And as a result so did the cost of stale as shown here This spike began soon after town meeting in November and resulted in a 30 to 35 percent increase in just a few short months We found that this trend was consistent across most construction material markets There have been numerous articles documenting this including a recent Wall Street Journal report Which identified significant surges in lumber to other materials such as paint roofing and flooring as well as copper For the answer to why the construction market is seeing these surges the answers were consistent Including factory production had dropped significantly in 2020 due to the pandemic They are still not running at capacity and there continues to be supply chain hiccups across the country And according to the Associated General Contractors of America the AGC the short answer for the cause of these surges is the pandemic In fact the Associated General Contractors recently issued a rare construction inflation alert to contractors and owners alike As shown by this graph beginning in November of 2020 there has been a steep incline in price changes for steel, copper, brass, lumber and diesel fuel Which all have a significant impact on projects such as the new municipal facility Working closely with the project team we identified cost control measures that we determined would not result in any impact to the original scope or the operational intent of the project These cost saving measures included among others reducing the number of ballads on site to changing the construction type for the salt shed To eliminating several of the program evolution items such as the snow melt system, roof monitor and small mezzanine We reviewed each of these with the town and then worked with the construction manager to identify a total savings of approximately $1.8 million Taking all this information into consideration the following is the current budget status As reviewed earlier the current cost stands at approximately $43.9 million We have identified a total of approximately $1.8 million in cost savings as reviewed on the previous slide And are recommending that the owner's construction contingency be increased by $2.25 million To take into consideration the higher overall cost of the project, the complexity of the project as well as the continued volatility of the market It is important to note that if the construction contingency is not used it will be returned to the town This results in a revised total project cost of approximately $44.3 million compared to the previous authorization of $38.9 Resulting in an additional funding request of approximately $5.4 million So in closing to summarize the information that has been presented, the scope has been scrubbed to maximize cost saving measures We have received competitive bids which reduces the uncertainty associated with the market volatility We are proposing an increase in the contingency to address future unforeseen conditions And the additional request allows the project to proceed without removing any key program elements It is also important to note that the cost of waiting could result in significantly higher costs With continued material cost increases, material shortages and the potential for labor shortages As the federal government introduces stimulus and infrastructure funds into the economy Thanks again for the opportunity to present this information to you