Bruce Ratner's riskiest endeavor to date—developing the world's tallest modular building—is not going well. The most recent trouble involves a dispute with the construction manager for the 322-ft-tall high-rise, called B2 Bklyn. The 32-story building, currently up about 11 stories, is the first tower to come out of the ground at the $4.9-billion Pacific Park (formerly Atlantic Yards) development in Brooklyn, N.Y.
On Aug. 26, Skanska USA Building issued a stop work notice on B2. The CM maintains it issued the notice because, among other reasons, the project was requiring a more significant investment than it ever anticipated or agreed to. "There are challenges with the modular design," says Richard A. Kennedy, Skanska USA Building's co-chief operating officer. "There are also site issues associated with the modular design" that have schedule and cost impacts, he adds, declining to elaborate.
Forest City Ratner Cos. and Skanska have a complicated relationship. In 2012, Skanska signed a CM contract with a guaranteed price of $117 million with FCRC's Atlantic Yards B2 Owner LLC. The same year, FCRC and Skanska formed a modular building company called FCS Modular to execute the B2 project and perhaps other commercial modular projects. Skanska also issued the stop work notice to B2's subcontractors and suppliers, including FCS Modular.
The notice comes after an announcement, last April, that B2, which will tower over the Barclays Center arena, would be completed a year late, at the end of next year. At the time, FCRC issued the following statement: "FCS Modular's setbacks are due to slower factory ramp up and fit out, purchasing and supply chain challenges and slower-than-expected workforce hires."
In a statement issued in response to the stop work order, FCRC says: This is a dispute over the costs of delays resulting from Skanska's own failures and missteps as the construction manager for B2 modular. Skanska entered into a construction management agreement based on a fixed price which they guaranteed. Now faced with overruns, they are employing a typical strategy to try to weasel out of that obligation….We intend to pursue all of our rights and remedies under the law to enforce our agreement and resume work at the factory."
Skanska also hopes to come to an agreement. "I remain hopeful we will be able to resolve our issues and continue with this groundbreaking project," says Kennedy.