Thursday, June 05, 2003
Copyright © Las Vegas Mercury

Cover story: Chewing gum and baling wire

Cost overruns, delays and defects plague government construction projects

By Larry Wills

The state of Nevada may know how to run a prison or a university, but it has a lot to learn about constructing a building. Over the past five years, new state buildings have been plagued by huge cost overruns, long delays and shoddy workmanship.

The state public works program has become something of a laughingstock in construction circles. Some love to contrast the state chaos to Steve Wynn, who builds high-quality Strip casinos on time and within budget.

Others aren't laughing. They're in court trying to get their money.

Dan O'Brien isn't laughing either. As the manager for the state Public Works Board, the problems crash-land on his desk. He's trying to turn things around and says previous board policies were to blame.

"They were not minding the ship," he says. "Things fell through the cracks."

And the cracks were immense.

UNLV's $58 million Lied Library opened last year, 12 months late and $7 million over budget. Now it needs another $1 million to fix construction flaws. A Legislative Counsel Bureau audit accused the Public Works Board of failing to use the competitive bidding process and not evaluating the builders before awarding the contract.

During construction of the library, no one was minding the store. Wall construction deviated from the plans and violated the fire code, costing $780,000 to fix. Change orders delayed the project six months and totaled $3.6 million. The builder blamed state officials for many of the delays, since many of the change orders were not overseen by inspectors.

The Lied Library case might be an anomaly, unless you consider other projects that have followed similar patterns--design, build, change, botch and repair, with everybody in contact with their attorneys.

Take the state's bandaged flagship in Southern Nevada, the Sawyer State Office Building. Tiles are falling off the walls of the seven-year-old building. Pedestrians in the breezeways are protected from falling missiles by gauze-like netting wrapped around everything overhead. O'Brien estimates it will cost $316,000 to make repairs.

"We're waiting for the forensic report. It appears to be a construction problem," he says. "We more than likely will make demands on the contractor."

Historically, the Public Works Board hasn't communicated well with the agencies that are to use the buildings, creating apples when oranges are called for. Five years ago, Desert Willow Hospital, a mental health facility for children, opened next to the Community College of Southern Nevada campus on West Charleston Boulevard. Christa Peterson, deputy administrator of the Child and Family Services Division, recalls the facility was completed in the spring of 1998 and opened that fall without many problems.

But employees tell another story. Defects plagued the project, they say. So-called safety windows could be popped out with a pocketknife. Bathrooms were handicapped accessible, but the railings were a hazard to suicidal patients. Magnetic locks were not approved by the state fire marshal. Isolation rooms had cameras that couldn't monitor the patients. And it took nearly a year to license the facility to make it eligible for Medicaid patients.

The Governor's Mansion itself didn't escape rehab problems. This year the state is spending $590,000 in repairs only four years after a $4 million renovation. The mansion was reportedly not brought up to code in the first project and the nearly century-old house had potentially dangerous defects.

For years, state Public Works also has wrestled with dangerous mold in a dozen of its buildings in Southern Nevada, caused by leaking water pipes. Mental Health Division employees have filed suit over the health hazards, claiming the state did not act quickly enough or simply tried to paint over the mold.

And the incredibly shrinking Southern Nevada Veterans Nursing Home could be a case study on how not to build anything. The $18 million project in Boulder City is two-thirds its planned size and reportedly about $1 million over budget. Veterans Administration licensing is still pending and only 50 of the planned 180 patients can actually use the facility. The lucky few who have beds there had to wait two years after the estimated completion date to get in the door. Some didn't live that long.

The home had been the top priority of most veterans groups that lobbied the Legislature for years to get it. Now, some are bitter about the way it turned out.

"The whole thing reeks," says Bill Brzezinski, adjutant for the Disabled American Veterans. He attended planning meetings on the home from the beginning in 1998. "There was nobody overseeing construction."

Brzezinski says once the screening committee and the architect turned the plans over to the state, everything changed. "Public Works decided they were not going to follow the original plans," he says. "They cut costs by shortchanging things."

Harry Campbell, architect for the project, agrees. From the beginning, the project took unusual turns. He recalls Addison Inc., the contractor, submitted a bid that was $800,000 under the estimated $16 million for the structure itself. Campbell thought that bid was unrealistically low. "We offered them the option of withdrawing from the contract," he recalls. "They said no; we'll make it up. Then the Public Works Board entered into an agreement, partnering to make it [the money] up." The contract was accepted on the logic that rebidding would delay the project another nine months, rankling veterans' groups even more.

The home originally was to be 112,000 square feet, with spacious areas outside the patients' rooms, and there was to be one bathroom for every two patients. But Public Works officials slashed the size of the structure to 82,000 square feet, with relatively narrow halls and a bathroom for every four patients.

"Originally we planned for more space for the men in the hallways," says Irving Finver, a member of the steering committee and Jewish War Veterans. "It was like a living room coming out of your room. Then, without us knowing about it, they just made the changes. After the bids were opened, the changes were made. Every week we'd go over items that were wrong."

"Every single space suffered a loss," says a former state official who refused to be identified. And, he recalls, changes were made to the structure itself. "They tied the roof to the inside bearing wall, rather than the outside walls." Since the building was steel framed, the hot summer temperatures expanded the beams, cracking the Sheetrock.

"They should know it's hot as hell in the summer," Finver says.

Steve Van Meetren, president of Addison, says he warned state officials about the situation. "Thermal expansion was causing some movement in the building. We advised them of that, but they chose to stick their heads in the sand."

The situation was spinning rapidly out of control, infuriating veterans, the architect and the contractor. Change orders exploded to triple the budgeted amount.

But change orders were necessary, since the design was continuously being altered and Van Meetren recalls he was trying to make sense out of it. Some of the plans were never signed off by the state. "The contractor has no control over the budget. The state issued the change orders."

Finally, Van Meetren called for a timeout. "It was so screwed up that we suggested they stop construction and fix everything. They said we'll fix everything as we go."

Campbell blames a lack of oversight for the slow pace of construction. "They had 10 people on a job that should have had over 100. They didn't pay all their subcontractors and the subs didn't show up. We said this project was headed for a train wreck, but the state did nothing. Public Works isn't in control of anything."

Van Meetren agrees. "It seems they're more interested in placing blame than in doing a quality job."

Now Van Meetren and Campbell are involved in cross-complaints with the state over unpaid bills. Van Meetren says he's owed $1.6 million, while Campbell is seeking $260,000. Tom Sargent of the state attorney general's office says those cases and similar ones filed over the Lied Library are pending.

But Gary Bermeosolo, the new director of the veterans home, insists most of the problems have been taken care off. "Nothing is really serious," he says.

The state's not alone in construction woes. The federal government's VA clinic on Martin Luther King Boulevard, built five years ago, has been deemed unsafe. The front of the building is buttressed with steel beams to keep it from collapsing. Employees are being dispersed to 11 separate sites across the valley.

Randy Walker, Clark County's director of aviation, recently was saddled with the Clark County Regional Justice Center, a $185 million construction project that's $15 million over budget and could take another two years to finish.

Walker blames the problems on failing to check out the bidders to ensure they're qualified. He also faults the onerous bidding process. "In the bidding rules, you've got a process that would choke a horse," he says.

Governments are limited to low bids, and often have to hire contractors despite poor performance records. Walker blames the original contractor for delays and overruns at the justice center. "Our management structure was not as strong as it could have been," he says. "It would be helpful to have other criteria than just the low bid, such as experience in high-rises and runways. We keep our fingers crossed that we don't get certain contractors."

Unlike the state, which can have one project manager handle up to 10 jobs, Walker says the county maintains tighter control over projects. Bechtel Corp. provides outside expertise to check construction in progress. And a small county staff keeps track of Bechtel. The state, by contrast, has no outside review in place.

Walker concedes the process creates tensions between the government and the contractors from the onset in a seesaw battle over additional claims. "All these rules create an adversarial relationship from the very beginning," he says.

No matter what process is used, Walker doesn't see governments reaching the efficiency of the private sector, such as in casino construction. For example, he says casino mogul Steve Wynn, who built the Mirage, Treasure Island and Bellagio, plays by different rules. Walker says the private sector can stick with the same contractor and doesn't have to take the lowest bid. "We don't get to establish a long-term relationship with a contractor," Walker says.

O'Brien believes the state is now doing a better job, thanks to a law allowing prequalification of contractors. "We've already disqualified about four," he says.

This legislative session he hopes to expand that process to subcontractors. "A lot of subs can make or break a project," he says.

And he says a more active Public Works Board is making a difference. "The board only recently got authority to issue citations" for sloppy work, he says.

"A lot's been happening over the last two and a half years," O'Brien says. "It's going to take awhile to get it all in place."

He says the key is to spot problems early. Other improvements he's looking at are adopting the design/build process, which awards single contracts to architects and builders as a team. That system defines responsibility and the entire team is liable for defects. "If spending a few dollars brings a project in on time, eliminates change orders and litigation, all that saves money."

There'll be ample opportunity to see if the improvements make a difference as the state embarks on a new round of construction. In the next biennium, $120 million in new projects are planned in Southern Nevada. A psychiatric hospital, a DMV building, a science and technology building at UNLV and a health science building at the Community College of Southern Nevada on West Charleston are on the drawing boards.

Not to mention all the existing structures that have to be fixed and fixed and fixed.