The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Baha Mar’s inability to discover it could not meet its March 27 opening target until just a few days prior was “a red flag” to one local construction engineer, who yesterday said this raised major questions about the developer’s project management.

Tony Joudi, head of FTC (Fast Track) Construction, told Tribune Business that a “lack of funding”, combined with an absence of quality supervision and poor communication between developer and contractor, appeared to have been key factors in the $3.5 billion project’s woes.

But, in particular, he queried why Baha Mar only found out it would not make the March 27 opening less than a week out - even though many persons driving past the project site, and visiting it, knew themselves it would not be ready.

“This doesn’t make sense at all. That was a red flag for me, being an engineer. Where the hell are your project managers? Where are your punch lists?” Mr Joudi said of the issues that came to mind.

He explained that ‘punch lists’ are a formal protocol/procedure employed by all developers, project managers and contractors. They detail, following inspections, all the construction faults and incomplete work that must be remedied by the contractor before completion and a final oversight by building inspectors.

Well-placed Tribune Business sources said it was only after the Bahamian ‘engineers of record’ produced these punch lists to Tom Dunlap, Baha Mar’s president, three days before the March 27 opening that the developer realised it would be unable to meet its opening date.

Up until that point, Tribune Business understands that the American construction managers hired by China Construction America, the main contractor, had been assuring Baha Mar all was well, and that ‘every nut and bolt’ was in place.

“There are two things I could say went wrong,” said Mr Joudi, who is also honorary secretary for the Chartered Institute of Arbitrators for the Bahamas branch.

“The lack of understanding of the Chinese contractor of the required quality finishes we expect in this part of the world,” he added.

“In my opinion, for them to come to this point, there was no proper supervision [by Baha Mar]. The contractor could hire someone to oversee his quality, but these guys don’t report to the developer.

“The owner has to have his guys oversee the job, working hand in hand with the supervisors from the construction company to make sure what they are giving him is double-checked, cross-checked, making sure no one gets in, no one gets behind the line.”

Mr Joudi continued: “These are the two big items. The owner did not have his eyes and ears wide open, and there was no liaison between his people and the contractor.

“With the mammoth size of this project, the owner could get lost very easily.”

Recalling how, as partner and vice-president of Amee International, he was involved in renovating Atlantis’s Coral Towers in the 1990s, Mr Joudi said: “Sol Kerzner was a hands on owner. He and I walked those floors every morning, and would be planning every morning.”

Mr Joudi added that the second ‘big item’ was the project financing, as it was a ‘given’ throughout the construction industry that contractors automatically slowed down, stopped work and let workers go if they were not being paid for their work.

Baha Mar and China Construction America are both pointing the ‘finger of blame’ at each other for the construction delays that have bedevilled the $3.5 billion development and caused it to miss three opening deadlines.

Baha Mar has launched a $192 million damages claim in the UK High Court against the developer’s parent, China State Construction and Engineering Corporation, of which $30 million is to cover allegedly faulty work.

Thomas Dunlap, Baha Mar’s president, in an affidavit filed to support the developer’s Chapter 11 bankruptcy filing in Delaware, indicated that it never trusted China Construction America’s abilities from the start, and their relationship steadily deteriorated, culminating in arbitration hearings and, finally, this year’s payment dispute.

Mr Dunlap also accused Baha Mar’s Chinese construction partner of demanding financial compensation that was more than four times’ greater than the sum verified by the China Export-Import Bank’s project monitor.

He alleged that alleged that China Construction America sought a collective $343.8 million for work carried out at Cable Beach between February to May 2015.

Yet he claimed that the independent project monitor employed by Baha Mar’s main debt financier “countersigned” that its fellow Chinese state-owned company should only be paid $76.1 million - a sum almost 78 per cent less.

Mr Dunlap also claimed that China Construction America failed to return the $54 million that Baha Mar paid it in late 2014 to resolve disputed payments, even though it had agreed to do so if completion deadlines were missed.

The Baha Mar chief alleged that construction completion deadlines were routinely missed, and a Disputes Resolution Board found last August that China Construction America “had been proceeding in breach of the main construction contract ‘with respect to the timing and content of the construction schedules’, and by ‘failing to proceed expeditiously with adequate forces sufficient to comply with the [main construction] contract’.”

China Construction America, though, hit back on Tuesday night by blaming Baha Mar for failing to secure the necessary financing “and its mismanagement of the design” for the project.

This, it claimed, included replacing the principal architect after construction had started, plus the late and incomplete delivery of design packages and more than 1,300 construction change directives.

China Construction America said itself, and its sub-contractors, had yet to receive a cent for the $72 million worth of work done at Baha Mar since February 2015.

It added that its total investment in the project, including monies advanced by its parent, China State Construction and Engineering Corporation, totalled $220 million.

“Baha Mar Ltd’s recent public attempt to shift responsibility away from itself and blame China Construction America Bahamas and our sub-contractors for the delays in the project’s completion is misleading and dishonest,” the contractor added.

“It is insulting to the many talented and hard-working employees and sub-contractors that work for CCA Bahamas, and harms the interests of the people and Government of the Bahamas that are represented by this landmark project.

“CCA Bahamas is committed to holding Baha Mar accountable for its improper actions and failed commitments to the Bahamian government, the people of the Bahamas, and all of its creditors.”

Mr Joudi, assessing the way forward for Baha Mar, told Tribune Business: “They have to find the monies to finish it up, and if no one wants to fund it, find a buyer.”

Noting that the estimated $300 million required to finance construction completion was relatively insignificant when set against the $3.1 billion in project assets, Mr Joudi added: “There will be a lot of people willing to invest in this project.

“Three hundred million is easy with equity of $3.1 billion. People are going to fund this thing.

“The Bahamian people won’t wait any longer. It could drag everyone with it.”

Mr Joudi backed the Government’s decision to finance Baha Mar’s $7.5 million payroll, and questioned whether the project should have followed Atlantis’s lead and built-out in phases, giving it cash flow to finance each stage.