UPDATE: November 28, 2018: After reviewing responses to its Request for Proposals, the Alberta Ministry of Infrastructure has handed over the $763 million Grand Prairie Regional Hospital project to a new construction manager, Clark Builders, headquartered in Edmonton, Alberta. Turner Construction Co. holds a 57% stake in Clark.
"Clark Builders provided an excellent submission to our RFP and has a proven record in completing complex health care facilities," the Ministry said. The agency noted that Clark's fees fall within the existing project budget. Prior to leaving the project, Graham Construction had completed 100% of the exterior and 75% of the interior.
Construction, with 300 to 400 workers on site, should be in full swing by January, a timeline that gives Clark time to mobilize, establish a new schedule for completion and execute agreements with subcontractors. The Ministry said it intends to give existing trades the chance to work with Clark under new contracts and, if necessary, will take bids from local contractors and vendors to fill in any gaps.
Dive Brief:
- The Alberta Ministry of Infrastructure in Canada is looking for a new contractor for its CA$763 million (roughly U.S. $588 million) Grand Prairie Regional Hospital after firing Calgary-based Graham Construction, the company it hired as construction manager in 2011. Costs have grown to approximately three times the original budget, and the project has experienced several delays.
- On July 30, after Graham had submitted an allegedly unsubstantiated change order for CA$120 million to add to its contract of CA$510 million, Alberta Infrastructure officials issued a notice of default and gave the contractor 15 days to come up with a plan to get the project back on track. Graham submitted its mitigation strategy to the ministry on Aug. 17, but officials said the proposal "did not provide the certainty that was needed in terms of timeline and budget to complete the project." The ministry will now issue a request for proposal and has halted construction until a new contractor is selected and on site, a process that is expected to happen during the next few months.
- Graham fired back in a Monday statement, claiming the firm had been transparent and vocal about the project's costs all along and that at the ministry's action is simply a refusal to accept accurate project cost estimates based on the ministry's own changes to design and scope of the project. "Until the scope changes stop and sufficient budget is provided, no construction manager can properly establish a final cost or properly plan and complete the project."
Dive Insight:
Typically, contractors will work hard to make a customer for a project happy, and owners are usually reticent to make a contractor change for huge initiatives such as the Grand Prairie facility. But termination of the owner-contractor relationship by either party does happen, even when it pushes the plans back to the drawing board or causes delays.
In late 2015, the Massachusetts Bay Transportation Authority fired the joint venture of White-Skanska-Kiewit from its Green Line light-rail extension project after estimated costs ballooned around $1 billion past the established budget. The authority redesigned the project, hired a new construction and design group and just this past June — almost three years later — held the official groundbreaking.
That termination didn't result in a legal battle between the construction team and the authority, but not all contractors are willing to walk away. New York City contractor ICS Builders has asked the Supreme Court of the State of New York to keep Brooklyn developer Fortis Property Group from terminating its contract for a luxury condominium construction project. ICS maintains that the alleged wrongful termination will enable Fortis to file a claim against the performance and payment bonds it secured for the project, thereby negatively affecting its credit, reputation and ability to obtain future bonds. The company is also seeking payment for almost $3.5 million it claims Fortis owes.
