Ritz-Carlton Cayman developer gives contractor ultimatum

Friday, February 27, 2004

GEORGE TOWN, Cayman Islands: The developer of The Ritz-Carlton Grand Cayman gave Fluor Daniel (Caribbean) Ltd, the general contractor for the $350 million project, a Notice of Default last week, according to a Ritz spokesperson.

Ritz spokesperson Melissa Perkins, said the notice was dated 17 February. "It gives them 15 days to remedy the default or choose to leave site," she said, "but they will have a chance to demonstrate a cure."

Some of the violations leading to the default according to the Ritz developers included failing to complete work on time, failing to submit acceptable work schedules and failure to submit complete and accurate pay applications.

Last Tuesday, Ms Perkins said that the Ritz was unsure how Fluor would respond, however, she said that a contingency plan is already in place in the eventuality that the general contractor pulls out. "The development team was always going to take over when the finishing work began, and this would only accelerate the process." 

Ms Perkins said that another general contractor would not be called into the project if Fluor leaves, and that their own development team would hire the necessary sub-contractors.

For its part, Fluor says it has no intentions of leaving the site, according to Jerry Holloway, a spokesperson for US-based Fluor Daniel. "We don't agree there are any material breaches on the part of Fluor Daniel, so we don't agree that we are in default, so there is no action for us to take," he said.

Mr Holloway said that change orders have delayed the completion of their part of the project. " A number of change requests by the owner have caused the schedule to slip repeatedly," he said.

Asked if the possibility of pulling out would affect the scheduled opening date for the project, Ms Perkins said: The opening date is still the opening date. We are still planning a October turnover (to The Ritz-Carlton Corporation) and a 18 December Gala Opening."

Fluor, however, went on record to dispute that claim. "The current schedule does not support a 18 December opening date," said Mr Holloway.

Several local industry experts have also refuted that claim, saying that completion is more likely in the middle to end of 2005.

The rift between the Ritz developers and Fluor Daniel has been in the making for some time, and first came to the surface following the November pullout of a major subcontractor on the job.

Rumours circulated at the time that Fluor was behind in receiving payment from the Ritz developers for work done on the project. Although they did not comment about that report last November, Mr Holloway confirmed that there are now arrears. "Payment is not current at this point to us," he said.

On 29 January, Fluor filed a civil lawsuit against the Ritz developer in the United States District Court in New York court alleging breach of contract and seeking unspecified damages. 

In a written statement, Fluor delved into the dispute further: "The owner of the project, Humphreys Cayman Ltd, failed to provide contractual modification for substantial changed work under the contract and demanded work where complete design was lacking, which resulted in extra costs. In accordance with the terms of the Construction Agreement, Fluor has requested mediation and arbitration to resolve the differences concerning change orders between the parties."

One source close to the scene told Cayman Net News this week that the relationship between Fluor and the Ritz developers had broken down to the point that "they can't sit in a room together without shouting."

Even though the conflict is escalating, the Ritz general contractor says it will continue to work. "Fluor continues to fully perform its commitments, despite the owner's alleged material breaches of the Construction Agreement," they said in their written statement.

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