Skip to main content

In dispute over stalled modular tower, Skanska warns: "No one knows if the building is going to leak"

Update: also see coverage of Skanska terminating contract to build B2 and purchase order for modules, as well as the Opportunity Brief Forest City presented to further the partnership.

The planned tallest tower in the world built via modular construction—stalled at ten (of 32) stories next to the Barclays Center—may be not just delayed but also defective.

The tower, known as B2 and slated to include 363 units, half of them affordable, could leak “at the thousands of joints between module façade elements,” according to the construction company mired in a bitter legal dispute over the project.

B2's facade seems insecure; it's not clear if this signals
 the potential misalignment identified by Skanska
"It is impossible to predict that the building when completed will perform as designed; and in particular, it is impossible to predict that the curtain wall joints will be and, over time, will remain effective barriers to the passage of air and water,” warned Skanska USA Building in a 146-page letter August 8 to estranged partner Forest City Ratner.

“[I]n simple terms, no one knows if the building is going to leak,” Co-Chief Operating Officer Richard Kennedy wrote (p. 117), terminating Skanska's agreement with a Forest City affiliate, Atlantic Yards B2 Owner, to build the tower and fabricate the 930 modules to be trucked to the site and assembled in Lego-like fashion.

Both sides blame each other for delays and attendant excess costs, and have filed dueling lawsuits, with Skanska seeking at least $50 million in damages.

Skanksa’s letter, which surfaced in a recent legal filing, offers new details regarding the tower’s purported failures and suggests that—as experts have long warned—the creation of a new construction system poses big challenges.

Beyond that, according to Skanska, the system Forest City developed to build modules at the Brooklyn Navy Yard was flawed from the start.

"There is risk in this Project substantially in excess of a conventional high-rise commercial building, and that risk arises directly from a defective design," wrote Kennedy, who also blamed Forest City for unwisely cutting corners in preparing the project.

(Note: Unlike with much of the coverage of the B2 legal dispute, this article was not driven by a press release from Forest City or Skanska. I found the document on my own.)

Forest City blames Skanska

Forest City, which in available legal filings has not yet directly responded to Skanska's warnings about leaks, has blamed the Skanska for numerous implementation errors and said the builder “belatedly—and falsely—claimed the modular design is defective.”

Having claimed to have “cracked the code” with a “revolutionary methodology” for modular construction, Forest City backs the system it developed to lower costs, speed construction, and potentially transform the building industry.

“We believe the system is compelling, and works," Forest City CEO MaryAnne Gilmartin said at a conference September 16, adding that the stall was not a "referendum" on modular, which would be validated by a finished building.

In an affidavit, Gilmartin blamed Skanska Modular for delays “in fitting out the Factory and its ineptitude in procuring essential building materials,” and for falsely blaming B2 Owner for the delays.

Clearly contradicting Skanska’s stance, Forest City in legal papers said that Skanska "confirmed in writing that there were no flaws in the design or constructability of the modular units” that would have caused a material increase in the cost of unit fabrication.

If Skanska's warning about leaks is valid, that suggests that the tower may require new testing before it can be deemed habitable and potentially repairs or even unbuilding.

Tangled ownership, effort to reopen factory

Atlantic Yards B2 owner is a partnership between Forest City and the majority owner, the Arizona State Retirement System. B2 was being built under a contract with Skanska USA. In turn, Skanska has subcontracted module production to a new company, FCS Modular, co-owned by Forest City and Skanska, but managed by the latter.

Skanska USA agreed to construct the Project for a fixed price of $116,875,078, and hired FCS Modular for a fixed-price of $31,450,087, with Skanska taking responsibility for all cost overruns.

Skanska says the the intellectual property (IP) contributed by Forest City was fundamentally flawed, thus obviating that responsibility.

Meanwhile, Greenland Forest City Partners, the new joint venture building the 15 additional towers in the project launched as Atlantic Yards, has renamed it Pacific Park Brooklyn. The 70% owner of the joint venture, which excludes B2 and the Barclays Center, is the Chinese government-owned Greenland Group.

On August 27, FCS Modular furloughed some 157 workers at the modular factory in an action Forest City said violated a contract requiring board assent. Forest City then asked to reopen the factory, under its control, with Gilmartin assailing “Skanska's indifference to the well-being of these workers and the project.”

"If they really did care about the workers, they would have engaged in dialogue with us and resolved the significant commercial and design issues facing the B2 Project," Skanska's Kennedy countered.

Hearing Tuesday; affidavits support Forest City

A hearing on a preliminary injunction in the lawsuit aimed to reopen the factory is scheduled for 9:30 am, Tuesday, Sept. 23 in state Supreme Court in Manhattan, before Justice Saliann Scarpulla. The location is IAS Part 39, Room 208, 60 Centre Street.

Numerous supporters of the Atlantic Yards project filed affidavits backing Forest City’s effort to reopen the factory, saying Skanska’s action threatened both affordable housing and jobs.

They include Gary LaBarbera, president of the Building and Construction Trades Council of Greater New York; Steven Spinola, president of the Real Estate Board of New York; the Rev. Herbert Daughtry of the Downtown Brooklyn Neighborhood Alliance; and Bertha Lewis, president of the Black Institute.

Skanska's opposition papers are due Monday afternoon.

Resolving blame, clouding re-opening of factory

If Skanska’s warning is valid, it clouds the potential reopening of modular factory, at which 60 percent of the building is supposed to be completed.

Forest City touted the plan as enabling greater more quality control, requiring fewer trucks and less waste, and saving money, thanks to increased construction speed and the use of cross-trained workers completing multiple tasks, at lower wages.

B2, which broke ground in December 2012, was originally said to take 20 months. The delivery date was extended to December 2014 and then the fourth quarter of 2015, well more than a 24-month schedule via conventional construction.

For now, there's no projected opening date, and Greenland has directed that the next few towers be built via conventional means, thus depriving Skanska of a previously presumed pipeline of additional work.

And though Empire State Development, the state agency overseeing/shepherding Atlantic Yards, presumably has an owner's rep keeping track of the project, no observation of problems and delays has publicly surfaced. The New York City Department of Buildings hasn't publicly weighed in. Nor has the Arizona State Retirement System commented.

Resolving the chicken-and-egg dispute—Skanska says Forest City’s design is flawed, while Forest City blames Skanska’s implementation—likely will rely on the Spearin Doctrine, which distinguishes between “performance” and “design” specifications.

While performance specifications give the contractor latitude to achieve the requested results, design specifications admit no such flexibility. Skanska says it was required to follow such design specs.

Forest City, however, says "nothing in the IP Transfer Agreement absolved FCS Modular’s responsibility to adapt, refine and supplement the IP to the extent necessary to timely fulfill its obligations.” Forest City also points out that B2 Owner, a limited liability company, is not a party to the IP Transfer Agreement, while Skanska is trying to assign blame to the larger but separate developer.

Questions over methods, “weather seal,” and flooring

Skanska says the system it was required to use was flawed from the outset. For example, Kennedy wrote that the steel frames used in the project “call for tighter-than-industry-standard tolerances in the fabrication shop and in the field erection,” so the exterior curtain wall panels will fit.

Such tolerance is crucial to achieve “an effective weather seal.” In a typical steel frame building, according to Skanska, adjustability would come from four sources, including the position of the steel framing, the adjustment of the facade, and the position of other structural facade supports.

Only the first source of adjustability is possible in this project at this time, with Skanska recommending that “FC's design team should develop additional sources of adjustability,” including the ability to adjust facade panels in the field.

Without such adjustability, “the building is expected to continue experiencing problems that will make it difficult or impossible to maintain the tolerance between façade panel gaskets that is required to support the warranty of these panels and their performance as a building envelope.”

It is “particularly troubling,” Kennedy wrote, that “the out of plumbness of assembled module columns”—the departure from perpendicularity—can “be cumulative.”

Large parts of the cost overruns, according to the letter, derive from the difficulty erection crews at the B2 site have had in “bringing the module columns as close to specified alignments as possible.”

The new production plan apparently provoked unintended consequences. The wood flooring supplier, Armstrong Flooring, told Roger Krulak—a Forest City employee placed at the factory—that factory installation would void the warranty, according to Skanska.

Forest City said it was a Skanska/FCS responsibility. Skanska called it a design error, referencing a Krulak email citing "a specification problem.” Forest City then said the email was taken out of context.

"There is no indication that FC has any intention of acting in good faith to resolve any of these Change Orders, Bulletins and issues," Kennedy, wrote, pointing to changes that led to increased costs but no payment. "They are simply acting in furtherance of the FC business ethic of denial, regardless of its contractual obligations and the legitimacy of the other party's rights."

Alleged additional flaws in match plates

Skanska also charges that match plates—3/8" thick plates which tie the modules together—were flawed. Though the drawings by Forest City consultant Arup called for a 1/4" tolerance between columns in the modules, the bolt holes in the original match plates allowed for only units to slide horizontally only 1/16”.

While Arup agreed on an enlarged match plate hole diameter, the holes were then reamed to 1 3/4", which, while adding flexibility to set individual units, also “created the potential” for misalignment, according to Skanska.

Skanska also blames Forest City for erroneously selecting Building 293 at the Brooklyn Navy Yard, saying it was not only not ready on time but also not effective for construction. (Forest City says Skanska was responsible for the factory.)

The lack of laydown space around the modules requires the operations team to move material multiple times, Skanska’s Kennedy wrote, suggesting that a truly "ideal factory" would be larger and allow for more concurrent work on modules.

Moreover, the space does not allow Group Technology Workcells (GTW) to work in a sequence that matches the position of modules at the construction site, which would make it easier to align facades.

Problems with workers, assembly process

While Forest City’s assembly methodology was used to produce modules for B2’s second and third floors, the time required—46 and 50 days, respectively, rather than the planned seven days each—spurred a change.

Skanska’s letter says “it was, and still is, completely unrealistic to expect the factory workers”—which it says were underpaid at a blended average of $36/hour—to “possess the skills necessary to perform all of the various tasks.”


Skanska said "there was a complete lack of reality to the ill- conceived seven (7) workday per floor duration. The fact that the workers were unskilled simply exacerbated the delay and damage."

After the slow production of modules for the second and third floor, FCS Moudlar abandoned the GTW methodology and had more skilled workers do “a narrow set of the more difficult tasks,” Kennedy wrote. That halved the delays for the next floor completed and further reduced delays for subsequent floors.

This learning curve trend will continue through the life of the B2 Project and would continue to B3 absent the improper repudiation of the LLC Agreement by FC," Kennedy wrote.

Skanska also says that more than 600 requests for information (RFIs) “were generated in the factory and field,” and unless such RFIs referred to existing drawings, the design was not complete, and therefore Forest City’s responsibility. Also, Forest City and its architect SHoP instituted design changes via several Bulletins.

Inadequate prototype alleged

Skanska even says that the prototype structure produced in the fall of 2012 was inadequate. Though “Arup and SHoP somehow declared the prototype and its erection sequence to be successful,” Kennedy wrote, the two 13th-floor units were bare steel, with no finishes, so they couldn’t be aligned appropriately.

Nor were two stories of stacked modules sufficient to simulate the cumulative effects of a potentially misaligned system.

In a report, SHoP observed that "Joints between the modules did not hold the 1" tolerance” but in some cases “approached nearly 2-1/4,” which Skanska says “should have raised a large red flag.”

“If FC [Forest City] had not been so profit- and schedule-driven at this stage of the Project, if it had been willing to step back and consider seriously the implications of its own prototyping information, the possibility existed for catching at the outset an important problem in its design,” Kennedy wrote.

Bitter disputes

According to Kennedy, the relationship quickly became adversarial: “As work began and problems were being encountered in the factory and on site, Skanska sought out the assistance of FC and its design team, with the expectation they would recognize that success in this Project depended upon joint efforts at every step. Consistently, however, Skanska's overtures were rebuffed.”

His letter even alleges that Krulak was a "spy" for Forest City “while pretending to work” for the modular joint venture.

By contrast, Forest City, in its lawsuit, charged Skanska with “gross incompetence,” thus causing the delays and cost overruns. “Skanska has stumbled through every step of the Project, and has repeatedly and routinely failed to meet any self-imposed or contractual deadlines, goals, or targets,” Forest City said.

“For example, Skanska employed three different project managers over the course of a fit-out process that was supposed to take approximately five months,” Forest City said.




Comments

  1. Anonymous9:43 AM

    A Toronto-based company called Vector Praxis has been studying modular construction techniques for several years and has developed a tall-capable modular construction system that addresses many of the issues raised in these documents. You can download a summary here: http://www.vectorpraxis.com/images/projects/collateral/en_2014-07-01-13-45-04-65M8-101175-Vectorbloc%20PPT%20July%201%202014.pdf

    ReplyDelete
  2. To claim that the building may leak is the weakest excuse I have heard ever. Is there ANY building built ever that have not run the chance that it may leak? They better support these allegations with imperial proofs or FCR has serious reason to call BS on this lawsuit. I know of quite a few projects by Skanska that is leaking... Just look at their "renovation" work of the NYC subway. You don't have to go far before you see a leak or feel one.
    Again, Skanska is grasping at straws and it is as far as I can see all about trying to recuperate the money that had to invest in the plant in Navy Yards. Wouldn't be surprised it is all coming from their shady backers the Koch as a successful implementation would set a bad precedent about environmentally sound buildings.

    ReplyDelete
  3. Anonymous9:29 PM

    To be out of plumb and off by as much as two and a quarter inches on a factory built pre-fab module is pure incompetence. The whole point of factory pre-fab is to build in a controlled environment, out of the weather, nearer to tools and supplies as compared to site work. If you can't build a square, dimensionally accurate box under those conditions you should be fired.

    Sadly it sound like all parties are idiots in this "joint" venture and it was doomed to fail from the get go. Somehow though I think that they will be rewarded with the exception of The State of Arizona Pension System and who will be left holding the bag.

    ReplyDelete

Post a Comment

Popular posts from this blog

Barclays Center/Levy Restaurants hit with suit charging discrimination on disability, race; supervisors said to use vicious slurs, pursue retaliation

The Daily News has an article today, Barclays Center hit with $5M suit claiming discrimination against disabled, while the New York Post headlined its article Barclays Center sued over taunting disabled employees.

While that's part of the lawsuit, more prominent are claims of racial discrimination and retaliation, with black employees claiming repeated abuse by white supervisors, preferential treatment toward Hispanic colleagues, and retaliation in response to complaints.

Two individual supervisors, for example, are charged with  referring to black employees as “black motherfucker,” “dumb black bitch,” “black monkey,” “piece of shit” and “nigger.”

Two have referred to an employee blind in one eye as “cyclops,” and “the one-eyed guy,” and an employee with a nose disorder as “the nose guy.”

There's been no official response yet though arena spokesman Barry Baum told the Daily News they, but take “allegations of this kind very seriously” and have "a zero tolerance policy for…

Behind the "empty railyards": 40 years of ATURA, Baruch's plan, and the city's diffidence

To supporters of Forest City Ratner's Atlantic Yards project, it's a long-awaited plan for long-overlooked land. "The Atlantic Yards area has been available for any developer in America for over 100 years,” declared Borough President Marty Markowitz at a 5/26/05 City Council hearing.

Charles Gargano, chairman of the Empire State Development Corporation, mused on 11/15/05 to WNYC's Brian Lehrer, “Isn’t it interesting that these railyards have sat for decades and decades and decades, and no one has done a thing about them.” Forest City Ratner spokesman Joe DePlasco, in a 12/19/04 New York Times article ("In a War of Words, One Has the Power to Wound") described the railyards as "an empty scar dividing the community."

But why exactly has the Metropolitan Transportation Authority’s Vanderbilt Yard never been developed? Do public officials have some responsibility?

At a hearing yesterday of the Brooklyn Borough Board Atlantic Yards Committee, Kate Suisma…

Barclays Center event June 11 to protest plans to expand Israeli draft; questions about logistics

At right is a photo of a poster spotted in Hasidic Williamsburg right. Clearly there's an event scheduled at the Barclays Center aimed at the Haredi Jewish community (strict Orthodox Jews who reject secular culture), but the lack of English text makes it cryptic.

The website Matzav.com explains, Protest Against Israeli Draft of Bnei Yeshiva Rescheduled for Barclays Center:
A large asifa to protest the drafting of bnei yeshiva in Eretz Yisroel into the Israeli army that had been set to take place this month will instead be held on Sunday, 17 Sivan/June 11, at the Barclays Center in Downtown Brooklyn, NY. So attendees at a big gathering will protest an apparent change of policy that will make it much more difficult for traditional Orthodox Jewish students--both Hasidic (who follow a rebbe) and non-Hasidic (who don't)--to get deferments from the draft. Comments on the Yeshiva World website explain some of the debate.

The logistical questions

What's unclear is how large the ev…

Atlanta's Atlantic Yards moves ahead

First mentioned in April, the Atlantic Yards project in Atlanta is moving ahead--and has the potential to nudge Atlantic Yards in Brooklyn further down in Google searches.

According to a 5/30/17 press release, Hines and Invesco Real Estate Announce T3 West Midtown and Atlantic Yards:
Hines, the international real estate firm, and Invesco Real Estate, a global real estate investment manager, today announced a joint venture on behalf of one of Invesco Real Estate’s institutional clients to develop two progressive office projects in Atlanta totalling 700,000 square feet. T3 West Midtown will be a 200,000-square-foot heavy timber office development and Atlantic Yards will consist of 500,000 square feet of progressive office space in two buildings. Both projects are located on sites within Atlantic Station in the flourishing Midtown submarket.
Hines will work with Hartshorne Plunkard Architecture (HPA) as the design architect for both T3 West Midtown and Atlantic Yards. DLR Group will be t…

Not quite the pattern: Greenland selling development sites, not completed condos

Real Estate Weekly, reporting on trends in Chinese investment in New York City, on 11/18/15 quoted Jim Costello, a senior vice president at research firm Real Capital Analytics:
“They’re typically building high-end condos, build it and sell it. Capital return is in a few years. That’s something that is ingrained in the companies that have been coming here because that’s how they’ve grown in the last 35 years. It’s always been a development game for them. So they’re just repeating their business model here,” he said. When I read that last November, I didn't think it necessarily applied to Atlantic Yards/Pacific Park, now 70% owned (outside of the Barclays Center and B2 modular apartment tower), by the Greenland Group, owned significantly by the Shanghai government.
A majority of the buildings will be rentals, some 100% market, some 100% affordable, and several--the last several built--are supposed to be 50% market/50% subsidized. (See tentative timetable below.)

Selling development …

Forest City acknowledges unspecified delays in Pacific Park, cites $300 million "impairment" in project value; what about affordable housing pledge?

Updated Monday Nov. 7 am: Note follow-up coverage of stock price drop and investor conference call and pending questions.

Pacific Park Brooklyn is seriously delayed, Forest City Realty Trust said yesterday in a news release, which further acknowledged that the project has caused a $300 million impairment, or write-down of the asset, as the expected revenues no longer exceed the carrying cost.

The Cleveland-based developer, parent of Brooklyn-based Forest City Ratner, which is a 30% investor in Pacific Park along with 70% partner/overseer Greenland USA, blamed the "significant impairment" on an oversupply of market-rate apartments, the uncertain fate of the 421-a tax break, and a continued increase in construction costs.

While the delay essentially confirms the obvious, given that two major buildings have not launched despite plans to do so, it raises significant questions about the future of the project, including:
if market-rate construction is delayed, will the affordable h…

"There is no alternative": DM Glen on de Blasio's affordable housing strategy

As I've written, Mayor Bill de Blasio sure knows how to steer and spin coverage of his affordable housing initiatives.

Indeed, his latest announcement, claiming significant progress, came with a pre-press release op-ed in the New York Daily News and then a friendly photo-op press conference with an understandably grateful--and very lucky--winner of an affordable housing lottery.

To me, though, the most significant quote came from Deputy Mayor Alicia Glen, who, as the Wall Street Journal reported:
said public housing had been “starved” of federal support for years now, leaving the city with fewer ways of creating affordable housing. “Are we relying too heavily on the private sector?” she said. “There is no alternative.” Though Glen was using what she surely sees as a common-sense phrase, it recalls the slogan of a politician with whom I doubt de Blasio identifies: former British Prime Minister Margaret Thatcher, a Conservative who believed in free markets.

It suggests the limits to …