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Higher school construction costs in Houston blamed on competitive market

Audit concludes that heavy competition in construction industry was the main factor forcing Houston to exceed its capital budget by $211 million.

Heavy competition in Houston's construction market drove up costs last year and cost the Houston school district an additional $211 million for its bond projects, an audit concluded.

The Houston Chronicle reports that the audit by KPMG also found that district administrators have not been providing enough oversight of the $1.9 billion building program.

The audit's conclusions counter the key finding in an October 2015 report from Richard Patton, the district's chief internal auditor. He said that inflation was not the main reason for the projected shortfall.

The KPMG audit says the Houston district "is not providing sufficient internal oversight into subcontractor bidding activities." The district said in its written response included in the audit that it was nearing completion of written procedures to tighten oversight of the subcontracting process.
HISD trustees had mixed reactions to KPMG's findings.

Patton, the internal auditor, filed a whistleblower lawsuit against the district in August, contending that the school board suspended him in March because he reported suspected illegal activity in the district. School Board President Manuel Rodriguez has denied that the board was retaliating against Patton.

The school board called for internal and external audits of the bond program last year after then-Superintendent Terry Grier sought $211 million more for the bond program, which included rebuilding or renovating 40 campuses. Grier and his chief operating officer, Leo Bobadilla, blamed inflation for increased costs.

The KPMG audit found that conditions in the construction market were "the largest contributing factor" driving up the project budgets, though multiple issues played a part. The other "cost drivers" included the district's budgeting process and the permitting of community advisory groups to drive each school's design.

The district took school staff and community members to visit campuses across the nation to get design ideas.

TAGS: Bond Issues
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