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Nazareth, Pa., United States

Monday, July 27, 2015

Butz: We Finished Arena On Time, On Budget

Earlier this month, I told you that three mechanics' liens have been filed in connection with the $160 million PPL arena project. Alvin H Butz got dragged into it, I was surprised to learn this company, large as it is, was not required to post a performance bond, something that any municipal attorney should require. That omission, along with the lack of bidding or any transparency throughout the entire Neighborhood Improvement Zone, are major concerns. But Butz did not get to be where it is today by doing slipshod work. I was contacted by someone from that firm, who asked to present their said of the case. I am only too happy to do so.

Here are the facts:

We served as Construction Manager, not General Contractor. Our contract was with ANIZDA, but we worked under the direction of Hammes Corp., a Madison, Wisconsin firm that served as Development Manager.

Because a Construction Manager is hired before the drawings are complete, there is no way to “bid” the project, but we were selected, by Hammes, after the most rigorous process we’ve ever encountered. We competed with five of the largest CM’s in the world, and the process took months. We were eventually selected on the basis of the quality of the individuals on our proposed management team, our demonstration of understanding of the project, the methods we proposed to employ, and the competiveness of our fee. We were the only local firm capable of undertaking a project of that magnitude.

A performance bond was considered, but Hammes recommended waiving it because of our financial strength, our reliability and the cost savings its waiver would generate. A bond would have cost the project about $1.5 million.

The absence of a performance bond has no bearing on the payment of our subcontracts or on any exposure to the taxpayer. Our contract requires that we hold ANIZDA harmless from claims of subcontractors.

Every subcontract was competitively bid and open to all qualified firms.

The liens have been filed by subcontractors of subcontractors. They involve disputes between themselves, and we’ve withheld money to make sure that any offended party gets the money it’s due.

We have no opportunity to pocket money that should have gone to subcontractors. All the checks we’ve received are made jointly to us and each individual subcontractor and supplier. Furthermore, we would never hold back money that’s due. Our reputation has been built partly on our exceptional treatment of our vendors.

The project schedule proved to be exceptionally difficult. The underground piles turned out to be much more extensive and time-consuming than anticipated. We suffered with hundreds of scope changes, many of them requiring extra time. Just as we were about to put the roof on, we were hit with one of the worst winters in history. It snowed almost every other day. Meeting the completion date became increasingly challenging, and many thought meeting it was impossible. We decided to work overtime to meet the schedule, and the cost of doing so resulted in enormous costs that we could never have anticipated.

Despite the incredible challenges, we finished the project on time; and in this day of huge cost overruns on sports arenas, the final cost to ANIZDA was within 3% of the original estimate.


Rich Fegley said...

What about the fact that the taxpayers paid Mr. Butz back?


"A brutal winter and fear the arena would not open on time last September forced construction double shifts that pushed the arena, originally expected to cost $177 million, to run $3.4 million over budget."

"The Allentown Neighborhood Improvement Zone Development Authority agreed to split that shortfall with its construction manager, Alvin H. Butz Inc., even though the Allentown firm had a "guaranteed maximum" contract to build the arena for no more than $177 million."


"A contract signed by Butz and ANIZDA this week will pay Butz $1.7 million, with the remaining overrun money coming out of the fee Butz collected for the two-year building project. In addition, Butz will not be forced to complete a $100,000 job to repair cosmetic cracks in the western end of the arena concourse floor, and the company will be permitted to keep 100 percent of the NIZ tax money for the $15 million office complex it is building just off Hamilton Street."

Anonymous said...

Mr. Butz.
You forgot about the public procurement act. You were required to public bid the project, advertisements and all. What about that? What about the rip and read process of public bidding? It was not exempt. What about that?

Anonymous said...

The Sacrificial Lambs are being culled out from the herd.
It's about to get nasty as the big boys circle the wagons.

Anonymous said...

Didn't this outfit milk the Norco taxpayers a few years back?

Anonymous said...

Butz has been very successful getting local contracts on high-focus projects. They are VERY good. On the other hand, this quote, "We were the only local firm capable of undertaking a project of that magnitude." sounds very ANIZDA-speak. For the amount of money involved, I'm not sure non-local firms would have been scared off. Wonder what other bidders feel about not getting the job?

Anonymous said...

"This is only an unfortunate distraction in the press."