For the last few months there have been growing disputes among those on the Minnesota Sports Facilities Association that there are significant discrepancies on who should be paying for costs associated with construction of the Minnesota Vikings’ new stadium.
The MSFA claim the costs were part of the M.A. Mortenson Company bid proposal and Mortenson claims were not part of the scope of the original bid package.
The discrepancy has been growing over the last few months. Former MSFA treasurer Duane Benson, who resigned from the board Aug. 1, said last month that there was a problem growing within the project that hadn’t been aired publicly, estimating that, in a worst-case scenario, could cost an additional $35 million to $50 million.
The MSFA released a statement saying that Mortenson has filed to have a mediator decide who is on the hook for up to $15 million in costs.
“This morning, the Minnesota Sports Facilities Authority (MSFA) was notified that M.A. Mortenson Company has made formal application to engage in a mediation with the MSFA for reconciliation of disputed costs related to the construction of the new stadium,” the statement said. “Mortenson also filed for a right to proceed with arbitration if the mediation was unsuccessful. These are the dispute resolution procedures specified in the contract and their use is common if disputes cannot be negotiated to resolution directly between the parties.
“As we have previously described, there are disputed responsibilities for costs of approximately $15 million, and while there has been continuous willingness to discuss these disputed costs, we have not yet been able to reach agreement. In 2013, the MSFA entered into its Construction Services Agreement with M.A. Mortenson, and in accordance with the Minnesota legislative statute that enabled this project, that agreement included a Guaranteed Maximum Price, ensuring that the risk of cost disputes on the project was the responsibility of M. A. Mortenson. As has also been previously described, the stadium construction project has a current contingency of $29.7 million.”
Clearly, the statement released comes from the viewpoint of the MSFA. Mortenson claims that the disputed costs are from change orders. Anyone who knows how construction projects work, especially one as technical and massive as a stadium, change orders are inevitable and, just as importantly, need to be signed off on by the construction overseer – the MSFA. The dispute is on outstanding change orders that are changes that have been discovered during the construction process.
Mortenson would prefer to have arbitration, but mediation is always the first step in the process – a third party sitting at a table with Mortenson and the MSFA and trying to hash out a compromise agreement. The fact Mortenson seems convinced that mediation won’t work, it would appear that the two sides are far apart on what they believe to be fair and equitable in terms of the cost overruns that are in dispute.
There isn’t likely to be a winner in this case regardless of whether the mediator gets them to meet halfway or an arbitrator renders a verdict that could be an all-or-nothing decision. The fact that the owner’s group and the construction manager are in-fighting is never good. Both sides believe they are right and that the opposing view isn’t living up to the contract they signed before construction began in late 2013.
But the Wilfs don’t have a dog in this fight. Every time change orders have come at the request of the Vikings, they have paid for it. As far as the Vikings are concerned, it’s a third-party battle for these change orders. Will it impact the future of the stadium construction? No. But could it make it uncomfortable over the next 11 months? Stay tuned.
Additional stadium costs going to mediation
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