Dive Brief:
- California-based construction giant Tutor Perini reported its total 2015 revenue will be $5 billion instead of the earlier-projected high of $5.5 billion, largely due to a "major loss" on its Hudson Yards project in New York City, according to the Engineering News-Record.
- In what the company called the "first major loss for Tutor Perini on a fixed-price contract in the past 20 years," the construction giant reported an $8.7 million reduction in net income related to a 52-story multi-use tower — the first major building at the Hudson Yards development.
- Tutor Perini, which is expected to report its full 2015 results on Feb. 24, also cited project losses and a negative outcome on a court decision involving its subsidiary, Five Star Electric Corp, as a contributing factor to its lower-than-expected 2015 performance. The company said the stalled tunneling operations related to its joint venture on the $1.35 billion Alaskan Way Viaduct in Seattle also contributed to the losses.
Dive Insight:
Tutor Perini was awarded the contract for the NYC tower in March 2013, but new activity continues at the mixed-use Hudson Yards project. Developers recently announced a $5 billion financing package to build a 90-story office building, a one-million-square-foot mall and an observation deck there. The 10-year project is expected to cost $20 billion and will include more than 17 million square feet of office, retail and residential space. The company has not revealed further details about the reasons behind the Hudson Yards tower losses, according to the News-Record.
The Alaskan Way Viaduct, already a problem source for the company with its tunnel boring machine (TBM) delays, this month encountered another major setback in the form of a 35-foot-long, 20-to 25-foot-wide and 15-foot-deep sinkhole, which opened up behind the newly restarted TBM, dubbed Bertha. The Washington State Department of Transportation and Gov. Jay Inslee stopped all digging on the project until they can determine the cause.
Another looming issue facing the company in 2016 is its $34 million dispute with Broward County, FL, over claims of delays on the Fort Lauderdale-Hollywood International Airport south runway expansion. Citing "deficiencies and unresolved issues," the county sent Tutor Perini a letter on Dec. 31 informing the contractor of its intention to withhold all of the company’s $20 million in retainage, plus money from future payments, in order to recoup what the county said is "full compensation" for additional costs.
However, despite Tutor Perini's challenges in 2015, the company said in a statement that new projects this year will bring stronger results, according to the News-Record.
