Business Updates

Dispute Over Pay and Defects at Unopened Vegas Hotel to Stretch into 2014

In a Dec. 3 ruling, a county court judge in Nevada has pushed the start of litigation over the half-built, never-opened Harmon Hotel in Las Vegas into 2014 and reversed prior demolition approval for the $275-million, oval-shaped tower. Trials involving both a construction pay dispute and a defects case had been set for June 2013. Judge Elizabeth Gonzalez set a June 24 start date for the pay case, with the defect claims trial to begin on Jan. 6, 2014.

MGM Resorts International, co-owner and manager of the $8.5-billion CityCenter complex that includes the hotel, wants to conduct more testing for the defects case against contractor Tutor Perini Building Corp. The contractor is countersuing for $191 million in unpaid bills. Tutor Perini, who blames the problems on a faulty design, claims the owner wants to destroy evidence prior to trial and prejudice the jury. MGM says the building is structurally unsound due to shoddy construction and believes demolition will avoid a potential collapse.

Tutor Perini rebuffs those claims and calls them a stall tactic to avoid payment, noting that diminished demand has left CityCenter with little need for Harmon's 400 rooms. The contractor repeatedly has offered to perform a proposed $20-million building fix. Demolition will cost $30 million.

Gonzalez previously ruled in July that the 397 structural building test sites done by MGM engineer Weidlinger Associates were not selected randomly, negating extrapolation of the results to demonstrate building-wide defects.

CityCenter appealed the ruling to the state Supreme Court on Oct. 25; it’s unknown how long a decision could take. CityCenter is expected to re-seek an order for building demolition.

Louis Berger Group Finishes Two-Year Federal Billing Compliance Overhaul

Louis Berger Group, Morristown, N.J., completed a costly, condensed two-year program during which it upgraded its compliance and audit systems and functioned under a monitor's supervision as part of a 2010 settlement with federal prosecutors regarding fraud and overbilling charges on cost-plus federal work over a six-year period. Known as a deferred prosecution agreement, the program's completion marked the end of a painful period for the company that included an initial $69-million settlement with the U.S. attorney in Newark, N.J. "The process made us more efficient," says Larry D. Walker, president.

The compliance overhaul cost an additional $20 million for new accounting and audit systems and staff training under an upgraded code of conduct. At the time of the settlement, two former employees pleaded guilty to charges related to the overbilling.

Separately, a trial date has been set for May for Derish Wolff, the company's former chairman, Assistant U.S. Attorney Scott McBride and Wolff's attorney both confirm.

Cement Consumption Forecast Calls for Little Growth in 2013

Total cement consumption is estimated to increase 7.4% this year to 77 million metric tonnes, according to the Portland Cement Association, Skokie, Ill. That may just be a temporary bump, with the PCA forecasting total cement consumption to increase just 2.0% next year (see p. 37). That lower number assumes a disruption over the so-called fiscal cliff, which, if not resolved, could raise taxes and cut federal spending early in 2013. Beyond the fiscal cliff, market fundamentals look strong, says Ed Sullivan, chief economist for the PCA. For cement consumption, he predicts a strong rebound of 8.9% in 2014 and 13.8% in 2015.