Case Study 13-2 — Four Lines: How Curtis Boone Bought Rivermont Elementary

All companies, people, and projects in this case study are illustrative composites.

Setup

The project. Rivermont Elementary School #12 — $22,400,000, hard-bid design-bid-build lump sum for the Rivermont Unified School District. Public owner, prevailing wage, certified payroll, 100% payment and performance bonds, 610 calendar days, liquidated damages, and a bid opening in a board room with the other bidders sitting in the same row of folding chairs.

The project manager. Curtis Boone. I want to be careful here, because the easy version of this story is wrong.

Curtis is not a villain. He is a genuinely skilled project manager — the best relationship builder in the company, a man who can walk onto a job where three trades are shouting at each other and have them laughing in ten minutes. Superintendents like working for him. Owners request him by name. He has never taken a dollar that was not his and he would be insulted by the suggestion.

Curtis is wrong about the model. He believes that a job is won by the person who wants it most, that a good PM can manage his way out of a thin number, and that documentation is what people do instead of building. He is charming, competent, and expensive, and by the time anyone can prove it, the money is gone.

The estimate. Curtis's team built the number the right way — division by division, with a general-conditions estimate, leveled bid tabs, and a contingency. Here it is as it stood at 10:15 a.m. on bid day, two hours before the final review:

General-conditions burn rate as built: $1,612,000 ÷ 610 CD = $2,642.62 per calendar day.

What happens

12:20 p.m. — the final review

Nadia Haddad is on a plane. The final review is Curtis, his estimator, and a division manager on speakerphone.

Curtis has a number in his head before the meeting starts, and that is the first thing that went wrong. He has been talking to the district's facilities director for eight months. He believes Bowen & Sons will be somewhere around $22.7 million. He wants to be at $22.4 million.

Notice the direction of travel. The honest sequence is: build the number, then decide whether you can live with it. Curtis's sequence was: pick the number, then find $465,000.

Here is what came out, in the order it came out.

Shave 1 — masonry, $96,000. Three masonry bids had been leveled by Curtis's estimator, who recommended carrying the second-low bidder at $1,684,000 rather than the apparent low, Fenner Masonry, at $1,588,000. Fenner had excluded cold-weather protection, cast stone sills and copings, and scaffolding for the 28-foot gymnasium wall.

Curtis: "Fenner's done three schools for me. I'll get that scaffolding worked out with Dale in the field."

Carried: $1,588,000.

Shave 2 — general conditions, $148,000. The assistant superintendent came out (7 months × $13,600 = $95,200) and two months of the project manager's own time came out (2 × $26,400 = $52,800).

Curtis: "I don't need an assistant super on a school. I've run bigger with less."

The duration did not change. Only the staff did. General conditions now read $1,464,000 over 610 CD — a bid burn rate of exactly $2,400.00 per calendar day.

Shave 3 — winter conditions and temporary heat, $74,000. Curtis's schedule showed the building dried in by November 8.

Curtis: "We're dried in before the weather turns. That line is insurance against a schedule I'm not going to miss."

Shave 4 — contingency, $147,000. Cut from 2.5% ($525,000) to 1.8% ($378,000).

Curtis: "Two and a half points on a school with a complete set of drawings is fat."

Total shaved: $465,000. Bid submitted: $22,400,000.

2:00 p.m. — the opening

Kestrel wins by $312,000 — 1.4%.

Curtis bought coffee for the estimating group the next morning. Everybody was pleased. It was, by every measure available on that day, a good outcome.

The comeback

Here is what the four lines cost over the following twenty-six months.

Shave 1: masonry — $96,000 taken out, $214,000 back

The estimator's leveled recommendation was $96,000 higher than the number Curtis carried. It was also $118,000 cheaper than what actually happened.

Shave 2: general conditions — $148,000 taken out, $286,000 back

The job finished 71 calendar days late. Twenty-two of those days were traced to an owner-caused utility relocation and were granted as compensable. Forty-nine were not.

And a smaller, sharper consequence that almost nobody sees coming. Curtis's bid burn rate was $2,400/CD, and the contract's extended-general-conditions recovery rate was set from the bid. When Kestrel claimed the 22 compensable days, it recovered 22 × $2,400 = $52,800. At the honest rate of $2,643/CD it would have recovered $58,146.

By shaving his general conditions, Curtis also shaved his own recovery rate. He gave away $5,346 of legitimate entitlement to make a number look better on a Tuesday. It is a small sum next to the rest of this, and it is the purest illustration in the case: a shave does not stop being real just because you stopped believing in it.

Shave 3: winter conditions — $74,000 taken out, $158,000 back

The steel package ran late — a submittal problem, the same species of failure that cost Northgate 23 days — and the roof followed the steel. Dry-in was achieved February 22, not November 8.

Read the line Curtis said again: "That line is insurance against a schedule I'm not going to miss." He was describing exactly what the line was for, and then removing it.

Shave 4: contingency — $147,000 taken out, $340,000 unabsorbed

The job experienced an ordinary amount of ordinary risk. Nothing exotic:

Available contingency at 1.8%: $378,000. Unabsorbed and straight to the bottom line: $340,000.

At the honest 2.5% — $525,000 — the unabsorbed amount would have been $193,000. The shave is directly responsible for $147,000 of that $340,000, which is exactly what was taken out. The remaining $193,000 would have hurt either way.

I show the full $340,000 in the chapter's summary table because that is what hit the job. If you prefer the strictly attributable number, the four shaves cost $805,000 against $465,000 saved — a ratio of 1.73 to 1 instead of 2.15 to 1. Pick whichever you like. Both of them are losses.

Analysis

The bottom line

Kestrel spent twenty-six months, one project manager, one superintendent, a bonding line, and a piece of its single-project aggregate capacity — and paid $214,000 for the privilege.

Now the arithmetic that should stay with you. To earn back $214,000 at a 3.5% fee, Kestrel must go win and successfully perform, with no overruns:

$214,000 ÷ 0.035 = $6,114,286 of additional work.

A forty-minute meeting created a $6.1 million hole.

And the counterfactual is the sharpest part. If Curtis had bid his real number of $22,865,000, he would have lost to Bowen & Sons at $22,712,000 — by $153,000 — and Kestrel would have been $214,000 better off for not building a school.

Why it happened, mechanically

Look at the four shaves together. Every one of them shares a structure:

None of these is a lie. Every one is a belief about the future stated as a fact about the present. That is the actual mechanism of buying work, and it is why it does not feel like cheating from the inside. Curtis was not padding a claim or shopping a sub. He was being optimistic in four places at once, in a room with nobody in it whose job was to be pessimistic.

Compare that to the legitimate reasons to move a number, from §13.9 of the chapter: a plug replaced by a real leveled quote, a named risk retired by an addendum, a duplication found, a schedule improvement that removes time-dependent cost. Every legitimate reason names something that changed. Not one of Curtis's four names anything that changed. What changed was that Curtis decided he wanted the job.

The structural failure, not the personal one

Curtis made the calls, but a company let him.

Nadia Haddad was on a plane. At Kestrel, nobody but Nadia moves the number — and on this day the rule bent because a flight was delayed and a deadline was not. That is a governance failure, and it is the one Kestrel actually fixed. The policy now reads: if the authorized executive is not present, the bid goes in at the built-up number or it does not go in.

The second structural failure was quieter. Curtis's estimator had leveled the masonry bids correctly, produced the right recommendation, and been overruled. Nothing in the process required that overrule to be written down with a reason. It was a conversation. Six months later, when the cast stone showed up as a change order, there was no document saying "we consciously accepted the risk of Fenner's three exclusions, and here is who accepted it."

That is Theme 5 arriving at the estimating desk instead of the field. Contemporaneous documentation is not only for delay claims. A decision to depart from your own analysis is exactly the kind of thing that must exist in writing, because it is the kind of thing that becomes invisible the moment it turns out badly.

What Curtis would say

I asked him, two years later. He said: "I'd do the schedule differently."

That is the honest answer of a man who has still not seen it, and it is the reason this case study exists. Curtis believes the winter line failed because the schedule slipped. He is not wrong about the causation. He is wrong about the category. The winter-conditions line was never a prediction about the weather — it was a priced hedge against a schedule assumption, and its whole purpose was to be there on the day the assumption failed. Removing a hedge because you are confident is removing it precisely when it is worth the most.

Discussion Questions

1. Curtis's estimator leveled the masonry bids, recommended the second-low bidder, and was overruled in conversation. Design the smallest possible process change that would have created a record of that decision without adding bureaucracy to bid day. Who signs it, and what does it say?

2. The general-conditions shave reduced Kestrel's own extended-GC recovery rate from $2,643/CD to $2,400/CD, costing $5,346 on the 22 compensable days. Are there other ways a shaved bid line comes back to bite you contractually rather than just financially? Name at least two.

3. Of the $717,000 of risk events, $470,000 was "accumulated productivity losses across the interiors sequence" — the vaguest line in the case. Is that a legitimate contingency draw, or is it a bucket for costs nobody tracked? How would you tell the difference, and what would you have needed to do in month three to be able to answer?

4. Kestrel's fix was a governance rule: no authorized executive present, no departure from the built-up number. What does that rule cost the company on the bids where the departure would have been legitimate? Is it worth it?

5. Curtis is good at his job in every way except this one. If you were Nadia Haddad, what would you actually do with him — and what would you not do? Consider that firing him removes a person who is genuinely better than most at running a field organization.

Your Turn

You are the estimator on a $14,600,000 hard-bid fire station. Your built-up number is $14,915,000. Your project manager wants to be at $14,600,000 and has proposed four reductions:

1. Carry the low earthwork bid at $1,240,000 instead of the leveled second-low at $1,318,000. The low bidder excludes dewatering and off-site haul permits. (−$78,000)
2. Reduce general conditions by removing a field engineer for the last five months. (−$61,000)
3. Reduce the temporary-facilities line, because "the owner's letting us tie into the existing building's power." There is no written agreement. (−$34,000)
4. Reduce contingency from 3.0% to 2.0%. (−$142,000)

Produce:

1. A table classifying each reduction as finding a saving (name what changed) or buying the job (name the risk being accepted and who now owns it).
2. For each item you classify as buying the job, a plausible estimate of what it comes back at, with your reasoning. Use the 2:1 rule of thumb from this case as a starting point and then argue for a higher or lower multiple based on the specific risk.
3. The four sentences you would say to your project manager — written out, in a form you could actually say to a superior without it becoming a fight.
4. If the PM overrules you on all four, the two-sentence memo you write and where you file it. Be specific about who is copied and why.