The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Public Hospitals Authority (PHA) was yesterday accused of “failing to recognise” it owed Cavalier Construction $5.5 million for building the Critical Care Block, yet its managing director challenged the contractor: “Prove it.”

Richard Wilson, Cavalier’s managing director, told Tribune Business that the contractor had not been paid since November 2013, and was now owed its ‘extension of time claim’ and final 5 per cent of the contract sum by the Government-owned PHA.

He revealed that Cavalier had effectively been funding the Critical Care Block’s completion out of its own pocket since January this year, alleging that the PHA had refused to provide funds for deposits on essential construction materials to it.

And, despite acknowledging his letters requesting payment, Mr Wilson said the taxpayer-funded PHA’s response had effectively been “non-existent”, meaning the matter was likely to head to third party dispute resolution.

“I’ve never come across a contract like this,” the Cavalier managing director told Tribune Business. “I’m more than frustrated.

“They don’t recognise that we have an extension of time claim. They don’t recognise it. If they do recognise it, the value they’ve put on it is negligible.”

But Herbert Brown, the PHA’s managing director, yesterday branded Cavalier’s charges as “absolutely untrue”, saying the contractor had provided no evidence to back up its allegations.

Arguing that Cavalier had failed to provide the necessary documentary evidence, Mr Brown acknowledged that the two sides had exchanged letters on the issue, but called on the contractor to prove its claim.

Should it do so, he said the PHA would pay it “forthwith” what it was owed.

Mr Wilson, though, told Tribune Business that the Princess Margaret Hospital’s Critical Care Block construction was still not complete, despite the PHA having occupancy of the laboratory and administrative areas since November 2013.

Shedding new light on why the Bahamian people continue to wait for access to quality, affordable healthcare on life-saving matters, Mr Wilson said constant design changes - especially in the mechanical and electrical areas - had delayed completion.

The Critical Care Block, he added, was supposed to have been a 20-month project that was completed in June 2013. But work was still required some 15 months later, which Mr Wilson said was equivalent to a 75 per cent time “overrun”.

Hence Cavalier’s claim for an extension of time payment, with the final 5 per cent balance of the contract sum - something that is normally retained until confirmed completion - also outstanding.

That final 5 per cent sum is equivalent to $2.4 million, and represents Cavalier’s profit margin on the project. Together with the extension of time payment, the contractor is alleging that the PHA owes it some $5.5 million.

Mr Wilson said Cavalier felt the Critical Care Block had been “complete for months”, at least from January 2014.

Yet the practical completion certificate that was issued for the project on May 8, 2014, was then “rescinded”. Although Cavalier’s top executives did not say so, this was seemingly a device to justify the non-payment.

“We’ve not been paid anything as far as the extension of time claim is concerned,” Mr Wilson told Tribune Business. “We’ve had acknowledgement, but they’ve refused to pay us any money.”

“The job’s done, but they [the PHA] can’t open it. They’re still designing it. The building was supposed to be finished at the end of June last year.

“We’ve been in business nearly 60 years, and have a reputation of completing on time and on budget. I have never known Cavalier to be more than a month late on an agreed completion date after agreement with the client,” he added.

“We are now 15 months later than the completion of the job. That’s a 75 per cent overrun in time. We’re out basically $5.5 million. They’ve paid up until probably November. Then they paid us, but took it back.”

Mr Wilson said the outstanding sum was having a “huge impact” on Cavalier’s finances, adding that the $5.5 million was the total the contractor was claiming until end-May 2014.

Steven D’Alewyn, Cavalier’s chief financial officer, added: “We don’t have that money in our back pocket sitting around. It does affect your business.”

Given the relatively flat construction market, Mr D’Alewyn said Cavalier was effectively being denied a vital capital source that could fund its own self-build projects.

With three months having elapsed since the $5.5 million claim was calculated in May, Mr Wilson said the meter was effectively continuing to run, with Cavalier staff and sub-contractors still on-site at the Critical Care Block.

The Cavalier managing director said the “extension of time costs” and design changes had effectively increased the cost of a $52.8 million contract to closer to $60 million, imposing an extra burden on the Bahamian taxpayer and Treasury at a time they can least afford it.

Given relatively thin construction industry margins, the final 5 per cent sum represents Cavalier’s profit on the contract, but the non-payment to-date has put it negative cash flow on this particular project.

The time overruns had also forced Cavalier to absorb increased project insurance costs, and a rise in Business Licence fees from 0.75 per cent to 1.25 per cent of the contract amount.

“They’re now asking us to do more work all connected to the redesigns,” Mr Wilson told Tribune Business. “I would say another $0.5 million.

“We’ve been financing this job since January ourselves, and received no remuneration for it. We’ve said we need deposits for materials, and they’ve refused to pay it.”

And it was not only Cavalier suffering due to the alleged non-payment, Messrs Wilson and D’Alewyn pointing out that much of the $5.5 million was ultimately destined for the 50 sub-contractors that had worked on the project.

Mr Wilson said he had yet to receive a response from the PHA to his August 12, 2014, letter, and added: “I’ve never known a contract like this. I, and the company, pride ourselves on having integrity, having honesty. We deal with the client and look after the client.”

Mr Brown, though, said had written back to Cavalier making it “very clear” that the contractor needed to supply documentary proof to back up its allegations.

“I told them very clearly in a letter that if there was any documents they have to show the PHA owed them any money whatsoever, to provide me with the same and they’d be paid forthwith,” Mr Brown told Tribune Business.

“They wrote to me. They made a claim they owed money. This whole question that they’ve not been paid since last year, they just got a cheque for $240,000.

“Ask them to provide you with the evidence that they’re owed money. That’s what you should do.”

Suggesting that Cavalier should “know better”, Mr Brown said it had yet to provide the proof the PHA deemed necessary.

“Cavalier knows the PHA has paid every claim submitted, and which we were able to validate,” he told Tribune Business. “Every claim they have submitted and that has been validated, we have paid.”