Thursday, January 11, 2001

The $18 million question: Who will pay?

That's most county can try to recover, auditor says

By Dan Klepal
The Cincinnati Enquirer

        Auditors hired to examine $51 million in overruns at Paul Brown Stadium say the most taxpayers can hope to recover is $18.5 million.

        They arrived at the figure after an 18-month review of stadium contracts and, more importantly, changes to stadium contracts that increased the magnitude and cost of the work.

        The report, produced by the New York firm PricewaterhouseCoopers, is the first indication of how much taxpayer money the county hopes to recover from the troubled project. The report was obtained by the Enquirer through a public records request.

        Auditors concluded there is insufficient documentation for $18.5 million in changes. But construction managers say they have more information and promise to share it with the auditor when they meet in the next two weeks.

        That information could reduce the amount of money the county can recoup.

        The county either will have to sue or negotiate with its construction managers to recover any of the cash. Either way, information from the audit will be the county's primary weapon when trying to get back taxpayer money.

        County officials recently hired two out-of-town law firms to help in the recovery.

        Commissioner Tom Neyer, who along with former Commissioner Bob Bedinghaus was a stadium supporter, said the numbers are sure to change over the coming months.

        “There are still some open questions,” Mr. Neyer said. “But the report will be essential to understanding where mistakes were made and, therefore, where our recovery can reasonably be sought.”

        The auditor reviewed more than 430 changes to the “guaranteed maximum price,” (GMP) which was supposed to limit public money used in building the stadium to $287 million.

        But the GMP was based on incomplete design drawings. So the stadium's price went up as designs were completed or revised. This practice, auditors say, accounted for more than 72 percent of the $32.6 million in overruns that are definitely not recoverable.

        In a written response to the report, project director W. Shelby Reaves said the rush to open Paul Brown Stadium on time caused many of the problems.

        The stadium simply would not have opened by Aug. 19 if construction managers waited for set prices for each change before the work started. And, he said, there was an insufficient contingency fund for the stadium from the beginning.

        “One needs to realize that (the auditor's) vision sees how it "ought' to be,” Mr. Reaves wrote. “They have not been able to acknowledge and address the PBS constraints of unchanging completion date, an extended duration for completion of bid and construction documents, and the uncommon amount of changes.”

        Architect NBBJ, based in Los Angeles, said in a written response that the large number of changes on the project weren't all its fault.

        The architects say construction manager Turner Barton Malow D.A.G. underestimated the original guaranteed maximum price by $117 million, throwing off the whole project.

        “This estimating bust was extremely disruptive to the design process,” NBBJ senior associate Paul Becker wrote. “Instead of focusing more intently on design documents, NBBJ was occupied with the task of removing over $100 million from the project.”

        On Monday, Bob Grace, project manager for Turner Barton Malow D.A.G., said the project team was given clear direction from county commissioners to open the stadium on time. The rush to do so created many of the problems now being realized.

        Newly elected Commissioner Todd Portune said backup material supporting the need for changes won't erase mistakes that were made.

        “All of those issues need to be sorted through,” Mr. Portune said. “But (Mr. Grace) raises a larger issue of whether or not the prior commission took steps that today will make it more difficult to recoup the money.”

        The auditor issued a preliminary report in February that said all but about $3 million of the overruns might be recoverable. But that report was issued after only a very small number of contract changes were investigated.

        Since then, the overruns have mounted an additional $6 million — from $45 million to $51 million. The county has decided to front the money for the overruns, so subcontractors will continue getting paid, while it works to recover money from their project team.


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