Cost overruns spur dispute – Dade, arts center builders at odds; Shiver works to avert delay

Cost overruns spur dispute – Dade, arts center builders at odds; Shiver works to avert delay

Source: http://www.floridacdc.org, April 29, 2003
By: Andres Viglucci

If paid for by the county, the $25 million in potential cost overruns would consume all of the contingency funds set aside for the arts center project. The county says the builders should absorb the cost.

When Miami-Dade County Manager Steve Shiver recently described construction of the grandly ambitious Performing Arts Center as ”a train ready to wreck,” more than a few people in the audience were surprised.

Until then, few outside the complex enterprise erecting the $260 million, publicly financed project knew just how far the Performing Arts Center train was teetering.

What Shiver didn’t say publicly is this: Construction had been embroiled for months in disputes among county officials, builders and designers over more than $25 million in potential cost overruns, and over who was to blame.

The disagreements threatened to put the project, already nine months behind schedule, even further behind, causing costs to escalate even more, some participants say. Supporters were concerned that the squabbling could jeopardize the project’s future.

”That was my sense of urgency, so that we don’t fall down a slippery slope of costs,” Shiver said in an interview. “In construction, time is money. There’s a very finite timeline. The more that timeline is pressed, the more dollars you’re talking about.”

To end the finger-pointing, Shiver has instituted several measures — including appointing a mediator and a ”performance team” to monitor the progress of construction — designed to get work flowing more smoothly while the cost disputes and other related issues are sorted out.

The biggest potential claim: about $10 million in alleged overruns caused by a glitch in the design of the steel girders that form the skeletons of the center’s two performance halls. In simple terms, the flaw meant that the walls of the fan-shaped halls would have been so misaligned they would have failed to close.

The flaw had to be corrected before the girders could be made, causing a four-month lag in delivery and prompting a cascade of related delays.

But it’s unclear who is responsible: The builders say the county and its designers may be to blame. The county says the builders are at fault because they failed to coordinate the job properly with their steel subcontractor.

At this point, no one involved believes the disputes will derail the project. After the initial delay, the steel frames of the halls are rising rapidly, and project managers say they’re confident they can make the revised scheduled opening in October 2005.

All sides involved in the project note that some disagreements and unanticipated problems should be expected in a project of the size and complexity of the Performing Arts Center. They say they believe Shiver’s measures can keep a lid on costs and avert further delays.

”Performing arts centers are very complicated buildings under anyone’s test,” said Parker Thomson, a Miami lawyer and chairman of the Performing Arts Center Trust, which will administer the center. “Even if they did everything right from now on, they can’t catch up much. But if they can meet the new date, we’re still OK.”

But one key question remains, and may be resolved in court: Who will pay for the overruns — taxpayers, or the construction companies putting up the buildings?

The precise amount of overruns, and how legitimate the claims may be, is unknown. The builders, a consortium of three construction companies, have yet to give the county documentation for most of what they claim. But they have warned the county that the amount could substantially exceed the $25 million they claim to date.

BUILDING CONTRACT

The conflict stems in part from the construction contract the county signed with the builders — Odebrecht Construction, The Haskell Co. and EllisDon Construction.

Under the ”at-risk” contract, the builders are responsible for controlling costs. That means they must build at the agreed-upon price, nearly $255 million, and absorb anything above that ceiling — unless the county makes changes that add to the price.

The builders had six months before the contract was signed to review plans and raise questions or issues about them.

The builders raised no major problems during that preconstruction period, said Gail Thompson, the county’s project director. Thus, she maintains, the builders are largely responsible for the overruns and should absorb most of the extra costs.

But the builders now contend that the overruns were unforeseeable and should be covered by the county.

”We disagree with the county or we would not have submitted them,” said Steve Halverson, a principal in the consortium.

Covering the extra cost could prove tough for either the builders or the county. The county has precisely $25 million in contingency funds for the project, meaning it would have nothing left for any other unforeseen costs.

For the builder, absorbing the full amount would not only wipe out its expected fee of $15 million, but likely force it to dig into its corporate pockets.

”I don’t think that’s going to be the case,” Halverson said. “But that would be bad.”

Right now, some arts center supporters say, it’s impossible to say who is right.

”We’re not construction people, and we can’t say whose fault it is. But delay is a cost, and somebody is going to have eat some of it,” Thomson said.

The gargantuan performance halls are so complex and the technical issues so knotty that even experts have trouble figuring them out. The plans for the structures comprise thousands of pages of technical drawings and engineering calculations.

So intricate is the scheduling of each day’s construction that even small mistakes can throw the timing off — and set different teams at the site to blaming each other.

STEEL PLANS

Take, for instance, the apparently flawed steel plans.

The steel subcontractor, ADF International, ”concluded there were errors in the design documents that made their job harder, and they want more money,” Halverson said.

But, he added: “We’re still evaluating that and asking the subcontractor for information. It’s not a simple issue nor simple to explain.”

To the county, however, the issue is clear: Thompson contends the builders waited too late to get the steel subcontractor on the job.

”If they had brought the steel company in early enough, they would have sorted out the issue” before it caused a delay, she said.

While responsibility for various claims is determined, Shiver set up a $13 million fund to ensure subcontractors continue to be paid and work proceeds without interruption.

In the meantime, participants hope mediation and tighter monitoring will help smooth over relations between the county and its partners.

”My intent is to depersonalize this and get people working for the common good,” Halverson said.

Thompson, the county’s project manager, said working relationships remain good despite the cost disputes.

”We should all be proud of this at the end of the day,” she said.

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