Stadium woes - redux...

 

 

"Given the skill level of the two political hacks that are in charge of this thing, it is amazing we are this far along..."

In my years of contracting, I learned one basic fact of life. Costs never come in as projected. Oh, as much guessing as possible is taken out of the projections. But even with that, the final cost is either going to be higher or lower than the estimate. Is it possible for a huge, multi-year project like the Viking stadium to come in on budget right to the penny? Sure it is. Statistically, it is also possible to win the power ball ten years in a row.

We seem to have somewhat of a dust up between the Treasurer on the Stadium Commission (who is very experienced and very sharp) and the Governor's two political hacks (who have less experience doing this type of contracting than I have). The Treasurer said (based on some closed door stadium meetings) there is a cost overrun coming. And that overrun could be as high as $50M. The hacks on the other hand, say no. Maybe $29M at the highest. Regardless of the amount, a much bigger question remains.

Back to contracting for a minute. Most construction contracts that I am familiar with have some kind of incentive clause in it. In other words, should the costs come in under the projection, there will be some kind of sharing of that benefit between the parties. On the other hand, should there be cost overrun, who is responsible for it gets a bit trickier. Was it because of unforeseen increases in material costs? Was is due to fuzzy or ambiguous drawings which led to higher labor costs? Was it a force majeure event, which was also not in the cost estimation?

Extra costs in most projects end up being like the proverbial "red headed stepchild". Especially when you have costs being shared by two parties (the state and the Vikings). If the prime contractor is able to prove the extra costs are not his nor his subcontractor's fault, it then becomes who on the buyer side is going to eat them. And if it is the state, where will the money come from? This becomes almost a game of three dimensional chess. It is heady stuff. Probably much too heady for "Michele Two Names" who seems to be much more concerned about whining about her salary than tackling major league problems such as these.

I would love to tell you I am in shock and awe that this monster project has cost overruns. I would be more apt to tell you I would be in shock if it was not. I am just going to sit back and enjoy the show. There are enough pros involved from the prime contractor that this thing will get built. Even though we have armatures running the Stadium commission, it will get built. The final cost however, is anybody's guess...