Wednesday, July 13, 2005

School Project Costs

Delanco recently approved a referendum to pay for renovations to our middle school and an addition to the elementary school, anticipating growth from new developments. During the renovation of the bathrooms at the middle school, some unplanned work popped up as would be expected when gutting a 50-year-old bathroom. A pipe in the crawl space needed to be removed, since it was wrapped with asbestos.
This incident helps shed some light on why school projects cost so much. The project manager had to solicit bids for the removal of this pipe, which was a few feet long and no longer in active service. The total time on site for the winning bidder was about two hours start to finish. The bill: $6,100, plus another $2,000 to have the air quality tested after the removal.

Why did it cost so much?

  • Certainly not the labor to do the work - at a $100/hour it would take a week and a half to run up a bill that size.
  • New Jersey requires licensing of all asbestos abatement contractors. The renewal fee for such a license is $1,000. I'd bet the compliance costs are a lot more than that. Take a look at Monmouth University's Asbestos Management Plan to get an idea of the scope of regulations involved in this kind of work.
  • Asbestos liability is a huge unknown future cost -- Google the terms New Jersey asbestos lawsuit, and note how many law firm web sites pop up. Insurance against this liability has got to be astronomically expensive.
What can be done about it? My gut tells me that it's the insurance (and thus the legal) cost driving up the total here. The Congress is considering a bill (S.852), that would "create a fair and efficient system to resolve claims of victims for bodily injury caused by asbestos exposure." Several sites have more information, including The Asbestos Alliance and The Cato Institute. Go read up on the issue.