SOUR NOTE Arts center was 600 days late and millions over budget.

The owner, architect and builder of the $419-million Miami Performing Arts Center have reached a $44-million settlement that is expected to put the high- profile project on positive footing after years of delays and big cost overruns. The two-building complex is 600 days over its original schedule and more than $67 million over budget, but the pact resolves all claims and carves a finish date in stone.

Under the settlement reached last month, contracts among the parties are restructured so they can work collaboratively to move the project forward, says Tim Ackert, program manager for URS Corp., San Francisco, who was brought in last year by owner Miami-Dade County to help put the project back on track.

Cesar Pelli and Associates, New Haven, Conn., designed the 600,000-sq-ft center, which includes a 2,400-seat opera-ballet building, a 2,200-seat symphony hall and a smaller 200-seat theatre. A joint venture of Odebrecht Construction, Coral Gables, Fla.; Ellis Don Construction, Northville, Mich.; and The Haskell Co., Jacksonville, Fla., was awarded a construction management-at-risk contract to build the center in September 2001. Odebrecht is managing partner of the construction team, which also includes 12 major subcontractors and 60 smaller subs.

Settlement: Who Gets What
(in $ mil.)

Cesar Pelli & Associates 4.20
PACB (contractor joint venture) 4.20
Six biggest subcontractors 25.15
Remaining subcontractors 6.09
Other 3.80
Source: Ron Austin, Construction Director, Miami-Dade County

Two years into construction, the project already was spiraling down. "There was a state of complete distrust between the architect, county and the contractor,’’ says Bill Johnson, assistant county manager who took control of the project in 2003. "The architect was worried about construction quality and the contractor thought the plans had significant issues." He says mounting claims could have reached $100 million if nothing were done.

A year of effort to fix the project culminated July 27 when the county Board of Commissioners approved a settlement reached through "torturous" negotiations, says Johnson. "We needed an approach that would protect the overall objective, which was to build a quality set of buildings,’’ he says.


Architect Pelli, which had about $9 million outstanding in claims for additional services, agreed to settle for $4.2 million. The contractor joint venture, which sought $9.8 million in additional costs, also agreed to $4.2 million. The estimated value of subcontractor claims was $75 million. The 12 largest subs settled for $25 million, with remaining smaller firms agreeing to take $6 million.

Parties also settled on a fixed completion date of Aug. 4, 2006, and agreed to work until the project is finished for no additional profit. If the center is not completed by the agreed date, the architect and contractors must pay completion costs. "That could be as much as $200,000 a month, which is an incentive to get it completed on time,’’ says Ron Austin, the county’s director of construction, who joined the project nearly a year ago at the contractor’s request to help straighten it out. He had worked on two successful Pelli projects in the past.

Under the settlement, the architect, contractor and the county have agreed not to sue each other and to set up a dispute resolution system. In addition, the project’s guaranteed maximum price was removed and its CM-at-risk contract replaced...