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Large infrastructure projects in New York City often present a super-sized menu of opportunities and challenges. But if these giant projects develop problems, the potential for major delays, change orders, and even litigation can grind progress to a halt and extend a final resolution for many years.
While few owners or the contractors they hire seek confrontation, it's easy to see how multi-million dollar disputes can become project-threatening hurdles. There is no sure roadmap to avoid conflict, but a major renovation of the Williamsburg Bridge by the Perini/O&G II Joint Venture for New York City's Department of Transportation offers a striking case study in how collaboration and coordination averted a project meltdown and settled an extraordinarily complex construction dispute.
The end result - the project finishing only eight months behind schedule, and a $20 million claim settlement for the joint venture - is proof that the collaborative approach works.
The original $155 million contract called for reconstruction of the eight-lane bridge's south roadway, including total replacement of both approaches, the main span roadway, the south foot walk, and partial completion of the south inner roadway. The project duration was originally 42 months, scheduled in two stages.
Early on, the department required an acceleration in the project schedule at the same time that a court-ordered injunction barred the use of sandblasting to remove lead-based paint during demolition. The injunction required the joint venture and its primary subcontractor, American Bridge, to reengineer removal efforts to instead use a hand-stripping technique and a "cocooning" envelope to capture paint particles.
The new paint removal requirement affected every single aspect of the project, and because the methodology was relatively new, the city and contractor agreed that work would take place on a time-and-material cost basis, not a fixed price. The task, however, proved to be larger than anticipated, as did the $88 million tab for the paint removal work, part of $117 million in contract changes overall.
The scale of changes also included scrapping an original plan to divert traffic to the northern lanes while the southern lanes were being reconstructed, because the department determined that the northern lanes themselves were unstable. The solution was an emergency replacement of parts of the northern lanes to prepare for the later work on the southern side, causing a five-month delay in the overall project. Another major change, recommended by the joint venture and approved by the department, was the replacement of misaligned main span floor beams.
Despite such changes, the contractors continued to coordinate construction strategies with the department and accelerated their efforts, completing the project only eight months after the original contract completion date. But the final impact of the changes left the contractors with costs well above those envisioned in the base contract, and they filed for a $30 million payment to settle their claims.
Perini, one of the joint venture members, initially opted for litigation to settle the time-and- materials claim on the advice of its attorneys at the time. But after several years, eight lawsuits, and only minor progress by the department on auditing the change orders, Perini approached Goldberg & Connolly's managing partner, Henry Goldberg, in search of a faster solution.
The firm developed a strategy that bypassed the litigation and claims process and went straight to negotiations with the city's Office of the Comptroller and Office of the Corporation Counsel. The plan involved suspending all prior litigation and establishing a working group of the contractors and the city agencies, which first met on Sept. 10, 2001. The terrorist attacks on the city that occurred the next day, and the resulting demands of the rebuilding effort on many of the negotiators, could have derailed efforts to find a solution. But the group, which would involve more than 20 people over the years, stayed on track.
The complicated negotiations, which continued through changes in the city's political leadership and members of the working group, ultimately resulted in the $20 million final payment. The 27 meetings, none in a court setting, were an exercise in resolve, and helped to avoid years of litigation. In the place of a big legal battle, the joint venture team's willingness to work hard for a negotiated solution proved to be an effective business strategy.
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