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Published Wednesday, May 5, 2010 | 10:11 a.m.
Updated Wednesday, May 5, 2010 | 3:25 p.m.
Sun Coverage
The dispute over construction defects and nonpayment of contractors at CityCenter escalated this week when general contractor Perini Building Co. launched a public relations campaign targeting CityCenter developer MGM Mirage.
Perini on Tuesday released a letter sent to Gov. Jim Gibbons on Monday, copies of which were sent to scores of other public officials and MGM Mirage board members, attacking MGM Mirage over the issue, suggesting financial problems at MGM Mirage are behind the non-payment and asking Gibbons to "open an investigation to determine the real reason as to why MGM Mirage is not paying their bill."
Perini claims it and its subcontractors are owed about $500 million for their work on the $8.5 billion resort complex on Las Vegas Boulevard, and that minority and small business contractors are enduring much of the pain.
But MGM Mirage has said it's Perini's responsibility to pay subcontractors and the gaming giant has asserted offsets equaling or exceeding what Perini claims is owed. MGM Mirage's offsets relate to construction defects at the Harmon Hotel and other problems.
In its letter to the governor, Perini revealed that MGM Mirage is claiming the Harmon, where work has been suspended, is a "total loss" and that the loss totals $412 million. Perini also revealed that MGM Mirage asserted offsets of $46 million for non-conforming work in late 2009; and then on March 17 alleged additional offsets totaling $215 million.
Perini is disputing these offsets, saying the $215 million number was presented with no back-up documentation.
Besides the public relations campaign, Perini sued MGM Mirage in March in Clark County District Court. Previous similar legal battles involving the Venetian casino resort and its contractors dragged on for years before reaching trial and finally judgments and settlements in 2003.
MGM Mirage responded to Perini’s letter on Wednesday with a statement disputing Perini’s charges.
“While we disagree with all of the claims made in Perini’s letter to the governor, unlike Perini we are not going to litigate this case in the media,” said Alan Feldman, senior vice president of MGM Mirage. “The matter is before a judge, and the courtroom is the appropriate venue in which this dispute should be heard.”
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Enough allready about City Ceneter. This place is not going to succeed. Accept it. Tear it down, sell the recovered materials for scrap, and get on with it.
Why doesn't Harry Reid step in and help out. He was so supportive of City Center and used it as a media tool on how it created jobs and helped the economy. If Perini's allegations are true then anyone involved should be held accountable.
Perini had shotty contruction and an unrealistic budget. When MGM hired Perini as their contractors, they gave the contractors a budget. Perini went over budget AND had horrible craftsmanship. Why should they be rewarded with more money? If you order a hamburger well-done and it comes out medium rare, do you pay for it? People forget that Harman Tower was capped because of bad construction supports. I wouldn't pay the entire bill either.
This folks is the REAL truth behind the disaster which has come to be known as City Center. MGM Mirage got screwed by the contracters with their massive screw up in the Harmon, MGM Mirage is putting the screws back to Perini thus screwing over the little guys subcontractors etc. This is a lose lose situation, as well as the City Of Las Vegas, CC Employees who will be laid off. Never should have happened, The Holiday Inn Boardwalk was just fine..
Perini is out of Massachusetts.
Sheldon Adelson is from Massachusetts.
Jim Murren of MGM is from New York.
See any connection? I just wonder how many of the MGM subcontractors also worked on the Venetian. Nevada lien laws are a joke. Owner doesn't pay the General, so the General doesn't pay the subs. Even if a lien was placed on the 9 Billion dollar mistake, no one is going to buy it. So the lien is useless.
In the end, the subs might get 30 cents on a dollar, Perini maybe 40 cents, and MGM walks away happy. Welcome to the world of the Northeast, where the Sheldon Adelson's and Bernie Madoff's are born and bred.
Funny how Steve Wynn, from Utica, New York, never has these problems...
Get real, Perini or Tutor Perini and it's subs have built the Wynn, Encore, Trump Tower, City Center and on and on I could go. Funny that Perini built all of City Center and did it in a third of the time a project of this size would take. And all was Strawberries and Ice Cream until MGM was on the verge of Bankruptcy. And all of a sudden Perini and it's subs were fly by nights that needed to be kicked to the curb with MGM stealing hard working peoples money.
All material suppliers, construction companies, insurance companies that handle construction as well as family members should do all they can to see to it that they do not spend a dime at any MGM property. Tell your family from out of State that plan to visit to stay at another property. These people are nothing but crooks and I am glad to see them suffer and going broke.
It is not good enough the law lets MGM steal your money on the Casino floor. The Stae of Nevada is now letting them steal the money from the construction workers and their families and in the process burry many a small business where they work.
MGM hired Perini. MGM did not hire the sub contractors, Perini hired them. Perini is responsible for paying the sub contractors. Why haven't the sub contractors filed lawsuits against Perini for moneies owed?
One last thing, when you walk into a MGM Casino and decide to gamble and you lose you pay. MGM gambled and lost and now they want others to pay the debt. They should have listened to Mr Casino Mr. Wynn when he was telling all that would listen it was a mistake. Pay your debts MGM or you are nothing but a dead beat. Word a mouth from locals to outsiders means a bunch and I for one will be telling all that will listen to stay out of your properties because you are a bunch of crooks and have NO CLASS.
the NRS is svery specific about this....if the Contractor has been paid for the work, then they have 30 days to pay the sub-contractors, or the ownner can pay the subs directly.
with progress payments being made to the contractor, the subs should have been paid....usually the last amounts paid in a construction contract are to cover overhead and profit (release of retention)....generally.
any monies lost on the value of the Harmon will eventually be reimbursed by the Construction Bonds due to gross negligence on the part of the GC who is responsible for their subs. So MGM/Mirage will get reimbursed for any loss of value and the Bond companies will go after the GC and his insurance.
And the spirit of the mob says to one another, "And they talked about us".
Having worked for Perini as a Sub-Contractor at City Center and several other projects on the Las Vegas strip I can say with experience that Perini is not being paid because of the way they completely screwed that whole site. Out of all the major General Contractors that work in this city, Perini is by far the worst. They don't deserve any more money from MGM and now they are applying a public smear campaign against MGM, because as a company that's what they do. What they probably don't say in their pathetic letter to the governer is how much money MGM will lose in having several floors of Harmon tower missing due to Perini's ignorance. Their ignorance and horrible management is the reason why they were fired from the Cosmopolitan and Vear Towers projects, which are both way past schedule and over budget because of Perini. It's good to see Perini get treated the same way they treat all of their sub-contractors. I told my boss that I would quit before I ever worked on another Perini project.
the best use right now for citi center is to pour 100 trillion tons of
concrete over it and bury it.
then paint in blue and call it fountainblue2
Anyone who has ever worked with Perini will recognize this letter for what it really is, a bunch of bull crap. As someone who has worked in the Gaming industry as upper management Estimator and Project Manager for 30 years, I've seen the inside workings of Perini. Perini has a long history of slow paying Subcontractors, and "negotiating" change orders at the end of a project. The subs have a choice of just excepting the amounts allowed by Perini or fighting for what is actually owed to them and not doing any more work in the future. Perini is also know for cutting corners in construction methods and practices, and then "hiding" the results. Not to mention the hardcore safety violations, and DEATHS. These are the direct result of total lack of concern for the safety of their workers, and constant pushing of their employees and subcontractors to work extremely long hours. The "missing" structural steel in Harmon tower is NOT a design issue, it is nothing more than Perini getting caught with their collective hand in the cookie jar. Although me being a retired tier two subcontractor I would hate to see any Sub not get payed, this is not a MGM problem, this is a Perini problem, and I hope that MGM makes Perini own up to their gross misconduct, and makes them accountable for absolutely unforgivable construction practices. So all of you people who read the news and side with Perini, take it from someone who really knows what is going on and has been on the inside, MGM is not the crook and is not stealing anything, Perini is the party that is responsible, and Perini is the crook. They always have been and always will be. They would still be slow paying the subs, even if they already received payment. Get real people, and check the facts, don't let Perini's BS sway the truth!
Khragh
@lvbuilder: Having first hand knowledged of Perini as you say please answer some questions. Since you have worked for Perini as a sub-contractor and the MGM says that the work is inferior does a sub have any responsibility in regards to the "shotty work" Also if you as a sub are aware that the general is doing things incorrectly are you also held accountable beings that you preformed the work?
Just asking
@chuck - you are correct....the subs should have said something...but then again, they may have, as the QAA firm (Converse) was found to have incompetent staff, and was actively falsifying records related to structural issues that were in the end the death of the tower (at least 20 floors of it).
The real loser is MGM/Mirage and their stockholders ......or at least the construction bond companies.
Isn't this how the big dogs do it? Don't pay your bill and then settle in court for a considerably less amount?
@chuck321: With the exception of the Harmon structure, which is the responsibility of Perini, the Engineers, and third party inspectors, the subcontractors performed great work. The construction defects at City Center have nothing to do with the Subs. If it wasn't for the Subs, that building would still be sitting unopend. That's one of the inherent problems in commercial construction. The subs are required to step up to bail out the Generals regardless of time, money, and safety, and the only thing they get in return is all of their change orders slashed in half just because they can. The overall problem lies with the complete mis-management by Perini. If they had just once listened and respected any of their Subcontractors they probably wouldn't be in as big of mess. Just finding a Perini person to coordinate with on site was almost impossible. There was an astronomical amount of money spent on that site because of their lack of communication and coordination. The biggest mistake that MGM committed was building this project all at once and not in phases and that decision could ruin MGM. That project was WAY too big for any one General Contractor, let alone a crooked one like Perini. Ask anyone who has ever worked for Perini.
@lvbuilder: Believe me I sympathize with you and the subs that preformed work and are now not getting paid for ther efforts. Small businesses are at the hands of larger corporations and the government all the time. What I still don't understand and perhaps you can shed light is that if lets say materials being used were low grade or concrete mixtures were not up to spec, or electronic lighting was faulty, why didn;t someone step up and say something to either the MGM, Perini, the Inspectors, I don't know someone that could do something. Saying that Perini's management or lack there of is the problem doesn't explain why if construction was faulty and people knew why wasn't it corrected.
Perini has been screwing it's sub contractors for years. It's called Karma Perini. I along with many others in the construction industry are hoping MGM puts the screws to you. Your turn......
What's the point of sending a letter to Gibbons when the idiot can't read?
As a Union Carpenter working for subcontractors under Perini as the general contractor, I would have to say that they are incompetent in performing such tasks as site coordination, organization, quality product, management and completing jobs on schedule. The most important qualities of a successful Union Contractor they lack. It is amazing that they are awarded the bids to such exorbitant work which they can't handle.
I"ve seen answers from people that actually worked on City Center but still no one answers the simple questions. If you as a journeyman carpenter, plumber, electrician know that the work is not up to standards why isn't it corrected. Please don't respond with Perini is at fault. How can you work on a job you know isn't quality and point the finger somewhere else. Not that Perini isn't wrong but when do you as an artisan take responsibilty for your work. Like if Perini said jump off a cliff you would even though you'd get hurt.
First understand this there is no such thing as a union carpenter. Carpenters are not members of the building trades and perini supervision is eat up with them that is why this was the most dangerous project ever in the U.S.A. more injuries and deaths than any job ever built in the U.S.A. thats a fact. Put that in your pipe so called union carpenters. Every job perini has ever done in the us. is crap just like their owners!!!!!
This response is at Actmaker....
Perini was only supposed to do Aria and Crystals. Because no other company wanted to take the risk due to couldn't build it, or wanted to even try, they gave perini the whole project. I saw the letter and it makes complete sense. When signing contracts you have to pay when work is done on time.... WITH POSSIBLE BONUSES!!!! MGM has pulled this crap the whole project and I saw it first hand....
Like my dad said if you don't have anything smart to say, that keep your mouth shut....
So take my dad's advice..
Its amazing how many "experts" there are claiming to know what happened.
The problem at Harmon was NOT a Structural Steel problem but a REBAR problem......You know, the deformed reinforcing bar that is set into mattes and cages for the concrete to be poured into and over.....
The problem lies on the shoulders of ALL the parties involved. The Rebar Subcontractor that set/used insufficent/incorrect amounts of rebar, the GC that knew (or found out about it), the Inspectors who did not catch the mistakes (or ignored them, or wasnt experienced enough to know the difference, and the Owner and Owners parties (Architects & Engineer) that apparently approved drawings that were not correct. NO ONE is clean in this....what concerns me is that Halcrow and MGM acknowledged the problem, said it could and would be fixed and Perini accepted responsibility to financially absorb the fix once it was designed and approved .....YET Suddenly decided NOT TO DO IT ?
Thats an MGM decision.....
And as a former subcontractor (among the many) I can tell you with NO UNCERTAINTY that the majority of all the issues and problems was due to MGM's lack of DESIGN CONTROL of the Architects and Engineers.....and read the letter again friends, that is clearly stated.......
They let them run all over them with change after change after change.....MILLIONS of $$$ were spent on UNUSED materials and designs and subcontractor drawings because MGM, their Construction Manager, Their Design Team REFUSED to STOP re-designing things...sometimes up to a year after original design and drawings were approved and products installed......YET now they dont want to pay for it.
Perini has some liability no doubt, but the bulk of the responsibilty falls clearly on MGM here.....
I tell you this.....HARMON was NOT the only project that had MAJOR issues......
Funny how NO ONE HAS EVER MENTIONED VEER ?
I wont set foot in any of those buildings....NOT knowing what i know about under designed, uncorrected buildings.....and that my friends is NOT Perini's fault.....MGM and their Architects and Engineers designed it.......OOPS !
This is for Chuck,
You obviously are not or have not ever been in the trades or worked with Perini Building, your talking as if a single tradesman or subcontractor could effect the decisions that Perini makes on site. This was a massive project, and all trades, and even within the same trade, processes are very compartmentalized. Subcontractors and or tradesman are responsible for their area of expertise. When problems arise, or substandard work is noticed, I guarantee you the the proper people were informed, and that Perini knew exactly what was going on. Trying to blame a third party inspection company is ridiculous. Perini has in house, and on site Engineers and structural Engineers and a whole corp of qualified personal to check and cross check inspection findings. To feign ignorance of structural integrity, come on!! The contractor chose to ignore or sweep under the carpet these problems, typically what happens is the inspectors and or the owners are informed of the problem. The subcontractors involved write letters to everyone informing them of the problems to absolve themselves of responsibility and limit themselves to the liabilities. Everyone on a construction site has a job, the General Contractors job is to protect the owner from exactly these types of problems, and to make sure that all of the work is performed per specs and contract documents. It is the General Contractors JOB to make sure contract documents are up to snuff. The General Contractor is also there to protect the subcontractors from the owner, and to make sure that they are compensated for services rendered. This being said Perini has failed on both fronts.
mjm6787 this is for you
The conditions of Perini taking this job at all was that it would be the only job that they would take during this time period, due to the massive size. So what did they do? Start a joint venture with Tudor so they would have a different name ie. Tudor Perini...jobs under Perini, and jobs under Tudor Perini, just another example of Perini bending the rules to suite whatever they want to do. So yes they gave the whole contract to Perini, not because they were the only company that could do it, but because they were under the impression that this project would have their full and undivided attention.
Wrench this one is for you, because your obviously misinformed,
This town has the most talented Carpenter corp than any town in the U.S. they have completed the largest and most complex projects in the last twenty years in the history of the United States, this is not opinion it's a fact. The reason that project was the most dangerous was because of the gross neglect of Perini, not because of the Carpenters. You should follow your Pops advice. The largest asset that a company has is first, it's employees, second it's customers. Again Perini failed both. Go MGM
As a Journeyman Carpenter we are given orders from our foremen. The foremen deals with the workers hand and hand. The foremen gets his information from the general foremen. The general foremen and the superintendent are the ones who are responsible for knowing the specifications of the job. They then relay that information down the line.
Carpenters on a massive job site only work on small pieces of the job at a time. We build everything how we are told.
The problem is lack of competence in the higher positions. The general contractor (Perini) is responsible for every sub contractor on the job site. The general controls the job.
Bosley,
you hit a lot of important issues, and from what I know the whole rebar thing was know about almost immediately after it happened, and could have been fixed in short order had Perini decided to be proactive. I don't agree with you on Contract Document responsibilities. Many times I've had to beat the owner over the head with their own documents to get them to get their proverbial heads out of their asses. I think it lands squarely in Perini's lap. But I'm not sure, you sound like your in the know, so to speak. But...I'm definitely in your corner on this, I will never go into any of those buildings, it's kinda funny how no one mentions anything about "PT" cables, or the lack of. You know what I mean.
Khragh
It just gets better and better!! I thought City Center was supposed to "save" Las Vegas?
I am laughing my arse off reading most of your posts.
First, Perini prior to being put under control of Tutor, Perini provided good workmanship and paid bills timely. Perini issued what we called PCO, Perini Change Orders; they paid timely regardless of payment from owner. When Tutor took over the PCO now became known at Potential Change Orders, we're not paid until they're paid.
Before throwing stones, look at the history and what has occurred, Google Ron Tutor or Tutor-Saliba, it's not rocket science. Perini was a good company; Tutor-Perini will follow the fate Tutor-Saliba. Tutor-Perini or any company with Tutor personal, grab your wallets, it's going to hurt.
Let's go back in time, The Arizona operation was originally founded in 1914 as Mardian Construction Company, which was acquired by the Perini Corporation in 1974. The company formally changed its name to Perini Building Company in the early 1990s and operates as a wholly-owned subsidiary of the parent company with Craig Shaw as president and Dick Rizzo as chairman. The division reported revenues exceeding $632 million in 2005. When Ron Tutor became involved, look at the trend.
Be real, Las Vegas has two builders, Mardian and Marnell Corrao who built the City of Las Vegas, many others have come and gone, two existed, now 1 exists, Marnell Corrao. Casino building was built on the old school mindset, it did and does work, shake a hand, direct the work, and you're paid. Marnell Corrao provided budget for City Center, MGM took lowball number.
MGM should prevail; subs will be paid, not by MGM. I would place bets or odds that Perini will pay as a result of management they took off the streets to manage the project. They took project managers and project engineers from all over the USA and promised them the world regardless of qualifications, they needed bodies to work the system and get paid for working the system. The contract between MGM and Perini is written very well, MGM has not only defective work claims; they have excessive profits made on change orders by subcontractors that exceeded allowable profits MGM and Perini contract tied subcontractors to their main contract.
Remember, KARMA does prevail and when contract claims are in the millions, nobody wins except the attorneys and their fees paid.
The next drama with this project is the bonuses not paid to Perini employees.
Many have said they're joining in a class action lawsuit to collect payments on bonus payments not made to them; this saga is going to drag on for years.
The sad part is, the common investor who read the SEC filings and don't follow the history of who is running the company now, one has see how the rich stay rich and the common person goes broke.
chuck321 It would be nice if you actaully knew what you were talking about. Now go listen to Fox News,Rush and right wing nut job radio. People who have professional knowledge of Perini have stated excellent positions on the matter while on the other hand you rant like some juveniile,ignorant trouble maker without any facts other than the ability to insult people.Move on your taking up space.
I own a contracting company that has worked on almost every major hospitality project in this city, including city center. I am by no means a perini lover, but the fact is that the GC is almost always a reflection of the owner. Perini has built for the Wynn group, and Station Casinos, and other notable companies in this city, and on all of those projects, I was paid in full and on time. I can tell you that MGM was the most difficult owner I have ever had to work for. The fact is that the problems on this project stem from both Perini and MGM, and the proper thing to do is set aside the Harmon issue, and get the subcontractors not involved with the disputed work closed out and paid.
Thanks Kragh....
As far as the Contract Docs go, there may be some culpability in certain cases by Perini , but I (as well as others I am sure) was directly involved and affected by the constant changing and re-changing and MGM was the one pushing this, much to Perini's (and my) disgust.....In one such instance it went back to the original design (6 months later) and they (MGM) refused to pay for all the re-draws and re-engineering (even though their ARCHITECT DEMANDED it) because it was back to the "original" design........Even though 10's of thousands of $$ were spent in EACH case re-doing the work to satisfy the Architect and owner....
In another case, close to a million $$ was spent on material procurement that the Architect then decided (8 months later) NOT to use because they did not like the way it looked....and they (MGM)refused to pay for it even though they (the owner) had authorized (IN WRITING) to the GC to procure it..... We finally had to settle (14 months after the fact) in order to get any $$$ at all..... Was that Perini's fault?
NO WAY.....
MGM (because of who they think they are) believes they can TREAT anyone however they want to.....Dont get me wrong...There were (and still are) some very good people in their system.
But the arrogance of those at the top of the food chain is unbeleivable....
that is another reason I wont set foot in an MGM property.....(unless a client requests me to meet them there)
I agree with alot of what you said Kragh but the other info about the Tutor Perini stuff is incorrect.
The reason Tutor came to town was that Ron Tutor (who was CEO of Perini) also has his own private construction company (Tutor Saliba) based in SoCal. He chose to bring them to town (to work on Encore) because of the contractual obligation of Perini to MGM. At that time they were two completely separate companies with separate sets of employees and projects but both controlled under the guise of Mr Tutor......It wasnt til recently that they became Tutor-Perini and thats a WHOLE other story.....LOL
So did you here about the "shattered" rebar cages?
As I have said in many of my previous comments/complaints regarding Perini, and the local unions in Las Vegas, I can tell you first hand why the work was not done properly on the City Center Project.
Most of first line workers, ie: Plumbers, electricians, carpenters, etc. were NOT licensed. Yes, they are required to have licenses, unless they are an apprentice, but the majority of journeyman were not. Even though the unions specifically tell them, "get your license within 6 months, or your off the job" it was not enforced.
Those that were licensed, complained constantly of work that was left undone, or half done, and were either ignored, or " laid off." An example of this is roof drains. I know for a fact that the roof drains were not done properly, although Perini was warned time and time again. Maybe they went back and fixed them later, and if they did, I'm sure they charged MGM more money to do it, when they should have been done right in the first place.
Also, regarding the many injuries and deaths: There were too many NON-ENGLISH speaking workers there. I'm not saying latinos, there were other nationalities as well. An all Chinese crew did the windows and glass, even though I'm sure there are many glass companies in Vegas that would have loved to do the work, and may understand English better. Its not always about saving money, sometimes its about safety!
It appears that OSHA has opened an office in Vegas finally, but its alittle too late.
Perini needs to get out of Vegas, and go back to the East Coast!
What's really sad about City Center is that it is a trouble magnet; I knew that when I moved here in 2007 and this eyesore was still under construction. When those workers died, those were bad omens in their own right.
I often wonder why Harry Reid fought for this place, I guess MGM must have been quite generous to Reid's campaign fund. Maybe that's why MGM can't pay Perini; that five hundred million is probably in Harry Reid's campaign coffers.
I prefer to think of this as the,"Curse of The Dunes!" The Emerald Green Country Club was always my favorite golf course. Then Steve Wynn got a hold of it and the area has gone downhill ever since. It could have been left alone as a golf course, but no, we casino gods need to greedily develop this piece of priceless property and make tons of cash. Well, I say a curse upon thee and to all who have built property on the Westside Strip between Flamingo and Tropicana.
I cannot remember all of Bellagio's construction woes, or that of New York New York, but I'm sure there were tons. Now poor City Center must bear its wrath, with its construction delays, poor workmanship and materials, failures to make profits, and failures to pay off debt. Oh yeah, do you remember the Monte Carlo fire? Uh huh"the Dunes.
I want my golf course back, but then again, from the sounds of that Perini letter, I could be smacking a driver off a deserted Harmon Ave very soon.
I finally saw CC last week. It looks like a high tech prison. The new Walgreens next door is more interesting than Aria. Well maybe they can earn back their costs with those penny slots where the minimum bet is 40 credits.
The recriminations now begin, followed by the truth coming out. CityCenter was/is a flawed development, rife with life,health and safety issues. Anyone buying one of these Condos or staying in the hotels risk their life on a scale greater than that posted by the MGM Hotel fire years ago. This will all end very badly and with screams and lawsuits by all whose hand is stuck with this mess.
The good news for Boyd over at the Stardust site is when they are ready to resume construction they may have the opportunity to build something more low key that will be different from this CityCenter monstrosity.
CityCenter is the perfect example of why Bigger is not necessarily better. It is like when the Venetian tried to emulate Bellagio... No comparison.