Venetian reveals dispute with construction manager

Gary Thompson

Wednesday, March 31, 1999 | 11:22 a.m.

The owner of The Venetian hotel-casino revealed today that it has rejected a request by the construction manager to delay the opening of the $1.5 billion project for two months.

The disclosure was made in an annual report to the Securities & Exchange Commission filed by Venetian owner Las Vegas Sands Inc. (LVSI), which is wholly owned by billionaire Sheldon Adelson.

The filing is the first public acknowledgement of a rift between LVSI and Lehrer McGovern Bovis Inc. (LMB), which is overseeing construction of the 3,036-room hotel-casino.

For months, Venetian executives have denied reports of cost overruns or possible delays in the scheduled April 21 opening of the resort. The allegations were first raised in a lawsuit filed by a former LMB employee.

In today's filing, however, LVSI said construction costs incurred so far are $90 million higher than those called for in the "guaranteed maximum price" agreement between the two entities and reported LMB had asked to delay the opening.

"The construction management agreement provides that the date of substantial completion for the casino-resort will be April 21, 1999," the SEC filing said.

"The construction manager has requested that this date be extended to June 20, 1999. The company does not believe that the requested extension is warranted, has rejected the construction manager's request and has advised it to proceed on the current construction schedule."

The SEC filing then said LVSI "believes this request by the construction manager was intended to preserve the construction manager's claims for overtime and delay relating to the project, which claims the company believes are unfounded and has contested."

The report said, "Based on the construction progress to date, the company believes the casino-resort will be substantially completed by April 1999."

"There are scheduling issues on this project and LMB and The Venetian are working together to overcome those issues to achieve an April opening," LMB spokesman Sam Singer said today. A Venetian spokesman couldn't be reached for comment.

The report also disclosed that the guaranteed maximum price for construction of the core facilities has climbed to $633.4 million from the $624 million last reported. That excludes $82.2 million of "owner-managed construction costs," the report said. The latter costs weren't defined in the filing.

"Given the risks inherent in the construction project, it is possible that the construction costs could be significantly higher," the report said.

The report said that as of last Dec. 31, LVSI had committed to $948 million of capital spending on the resort and had expended $808 million of that amount.

Those figures exclude Adelson's contribution of 44 acres valued at more than $200 million.

Company officials have said they expect outside restaurant, retail and entertainment providers to spend about $300 million on improvements, raising the resort's total cost to about $1.5 billion.