Dive Brief:

• Skanska USA Building has filed a lawsuit against the $300 million Phillip and Patricia Frost Museum of Science in Miami amid claims of unpaid bills for work the contractor performed after it took over the project in 2014, according to the Miami Herald. Skanska does not specify a dollar amount in its legal filing, but Michael Brown, the company's executive vice president and general manager in Florida, said in a statement that the past due amount is in the millions.
• Skanska is arguing that FMOS stopped payments in November 2017, with some work still incomplete, after the museum received its final occupancy permit, and that the nonprofit expected the contractor to work for free in wrapping up some tasks. The firm wants to be paid for work it supervised and is also asking the court for money due to subcontractors. Museum officials hired Skanska to finish construction after they terminated a contract with Suffolk Construction. Suffolk also is suing the museum for $800,000.
• The officials said the outstanding scope is minor, covered under warranty and that it will not overpay for work on the primarily taxpayer-funded project.

Dive Insight:

Contractor lawsuits are not the first financial challenges FMOS has faced in the last few years. In January 2016, museum officials announced they had run out of funds and could not pay Skanska $5 million to $7 million due to the company at the time, forcing the Frost family to step in and provide short-term financing until BankUnited and the county stepped in with money to fill the gap. FMOS officials said the museum board had not met their fundraising goals, and the Frosts asked for the board's resignation.

Skanska was on a fixed-payment schedule until March 2017 and then was to be paid on a time-and-materials (T&M) basis contract from that point forward. T&M contracts and cost-plus construction contracts provide transparency to the owner and can reduce risks for contractors if there are unknown conditions on the project.

However, there are potential downsides for both parties. If owners don't have staff with construction experience overseeing the project, there is a risk that the project will go over budget. Inexperience on the part of the owner and staff can also negatively impact contractors if they have to constantly explain the construction process or end up butting heads over issues the client might not fully understand.

Regardless, for a T&M or cost-plus project to be successful, it's critical that the owner and contractor maintain a good working relationship so that they can work out their differences and don't, unlike Skanska and the Miami museum, end up battling in court.