Alltel Arena project hits another roadblock.

Greenbrier Contractor Given Notice of Default

Nabholz building and Management Corp. of Greenbrier, a concrete contractor working on the Alltel Arena project in North Little Rock, recently hired Little Rock lawyer Cyril Hollingsworth to represent the company.

It has proven to be a wise decision for Ray Nabholz, an owner of NBMC.

Last Thursday, the Multipurpose Civic Center Facilities Board for Pulaski County, at the direction of the construction management team of Vratsinas Construction Co. of Little Rock and Turner Construction Co. of Dallas, voted to place NBMC in notice of default or breach of contract.

Should NBMC, which is not affiliated with Conway contractor Nabholz Construction Corp., be held in default, apparently Baker Concrete Construction Inc. of Monroe, Ohio, would take over the concrete work. Baker, which has assisted NBMC as a subcontractor, never has put in a bid on the $72.3 million public project that is funded in part by more than $50 million in taxpayers' money.

The actual motion before the board did not mention it, but Art Hunkele, senior project manager for VCC/Turner, said Thursday if NBMC cured the concrete within 72 hours, it could "be back to business as usual."

Hours after the board meeting, no one representing NBMC would comment on the notice of default. Hollingsworth, a partner with Horne Hollingsworth & Parker in Little Rock, had not seen the notice and declined to comment Thursday.

According to public documents, the project may be as much as four months behind schedule. An early schedule apparently indicated that steel could have been delivered as quickly as April (see a chronology of the project on Page 22.) First steel did not go up on the job until Aug. 18, four months later.

Hunkele said in a June 16 letter that the delays are the "direct result of continual slippage of the concrete schedule." VCC/Turner is demanding that NBMC pay all extra expenses to get the project on schedule.

Nabholz repeatedly has declined to discuss the situation with the media, citing a vague reference in all the contractors' contracts that "no publicity releases will be issued without prior written approval of VCC/Turner's project manager."

Unbelievably, even though VCC/Turner and members of the Alltel Arena Board have known for months that the concrete schedule has been behind, no one ever chose to bring the problems before the board in open, public meetings.

The biggest problem for the Alltel Arena Board and VCC/Turner may be a backlash from the publicity of the troubles with the project. There are still portions of the job that have not been bid.

"[The arena board and] the county doesn't want to have a reputation for going to court," one construction management expert says. "The way they handle Nabholz could hurt them with these other packages that haven't been bid yet. If I was a contractor looking at it, I'd not want to get into that. That means the competition [for the bids] could be going down and the price [on the bids] could go up."

Should the problems lead to a lawsuit by Nabholz, some experts believe Nabholz has a good chance of winning. It could take up to four years to finally win, however, possibly too late to keep NBMC solvent. NBMC or its bonding company, Mid-Continent Group of Tulsa, Okla., could be forced to pay $1 million or more, an estimate Hunkele has used, to get the job back on track.

When Nabholz placed his winning bid of $4.78 million for the cast-in-place concrete work, he noted that he would take 547 days to finish the job. The arena board approved that bid and apparently never questioned NBMC's time frame. It did not correspond with VCC/Turner's schedule of a year for the work, and the construction management team quickly let NBMC know that.

"From the damn first week, they just started kicking his * * * around and he's a very conciliatory young man," says one of Nabholz's friends who is knowledgeable in construction. "Writing real terrible threatening letters, and they started calling the bonding company, trying to put doubt in [the bonding company's] mind. Look at [Hunkele's] letters, which are totally obnoxious; he's going to wish he didn't write those. You can see what kind of attitude he has."

The friend says Gus Vratsinas, owner of Vratsinas Construction, and Bob Russell, chairman of the Alltel Arena Board, have been "gentlemanly" throughout NBMC's troubles.

"I'm sure Vratsinas is embarrassed," the friend says. "They've got to live and work in this state.

"Where Ray made his big mistake was he kept trying to take care of them as a client. They kept kicking him around. Finally he got full of it and started playing a little hard ball with them. He should have done it a long time ago.

"There are two sides to every coin. I think Ray got hold of a bad job, too, underestimating what it was going to take to get it done."

A construction management expert who has reviewed some of the Alltel Arena documents says, "If the contract says it's 547 days, that's what the contract says."

"Any arbitrator or judge or jury will say that's what the contract says," he says. "That's the way he bid it, so [the Alltel Arena Board] had to sign him up that way. Now they're probably trying to shrink the schedule."

NBMC's problems working with VCC/Turner apparently aren't unique. Other contractors agree that working with the construction management team is difficult. Some say their payments are well past due.

In May, Leon Ross of IHP Industrial Inc. of North Little Rock wrote to Paul Simonetta, senior project engineer with VCC/Turner, about delays in the project.

"IHP is reaching a very critical juncture," Ross wrote. "Your failure to perform is bringing unplanned cost to us."

Nabholz's construction friend, who asked not to be identified, says, "Ray is just Mr. Nice Guy, but he was in there with a black widow. And they just ate his lunch."

* Convention Center expansion hasn't been without its problems.

* Motels, restaurants and possibly a movie theater are springing up around the $90 million Baptist Memorial Medical Center development in North Little Rock.

* Work on highways throughout the state is moving along, but probably not as quickly as the state's drivers want.

Alltel Arena Construction Chronology

Here is an abbreviated chronology on construction at the Alltel Arena with particular emphasis on the cast-in-place concrete work done by Nabholz Building and Management Co. of Greenbrier.

Oct. 14, 1997: NBMC bids $4.78 million to do cast-in-place concrete work for Alltel Arena. Mobley Contractors Inc., the only other bidder on the job, bids $9.88 million. VCC/Turner's prior estimated amount for the job is $4.806 million. In his bid, Ray Nabholz, owner of NBMC, stipulates that his work will be done 547 days from his notice to proceed.

Oct. 17, 1997: NBMC is given notice to proceed. 547 days later would be April 19, 1999.

Dec. 3, 1997: NBMC signs a standard change order with VCC/Turner. The change indicates that NBMC "will make every good faith effort to achieve the anticipated construction schedule" but doesn't seem to indicate anything about what the schedule is. There is also no mention or disagreement with NBMC's 547-day schedule.

Jan. 8, 1998: At weekly contractors meeting, NBMC is warned that "area 6 columns & tie beams must start!" (emphasis in original document).

Jan. 15, 1998: At contractors meeting, Rankin Construction Co. of North Little Rock is asked to "clean reinforcing material and spoils off island. This staging area belongs to Nabholz, second request!" Notes of the meeting also indicate that Rankin's "manpower was 18 on [Jan. 12 and 13] and 21 on [Jan. 14]. This must improve to complete your work ahead of Nabholz." NBMC is told "rebar manpower must increase. Should have wall steel ready to set following forms being set."

Feb. 5, 1998: At regular Alltel Arena Board meeting, Art Hunkele, senior project manager for the construction management team VCC/Turner, says that "the concrete pour of today [Feb. 5] is the first vertical pour, which means concrete columns will be appearing. AFCO is fabricating material that will be ready in March and April."

March 5, 1998: Notes of contractors meeting indicate that "[construction manager] is still holding steel delivery date [by AFCO Steel] due to Nabholz."

March 12, 1998: In response to a question at contractors meeting, Tommy Doolin of VCC/Turner says that "concrete is a full two months behind schedule." Hunkele says that a recovery plan is formulated and that is to not allow the concourse schedule from sliding anymore.

March 19, 1998: Weekly contractors meeting indicates "AFCO will mobilize May 1, 1998. Steel will arrive May 11, 1998."

April 2, 1998: NBMC is told at contractors meeting "concrete schedule is critical. Structural steel will be on site in 46 calendar days (May 18, 1998)." Rankin Construction Co. indicates "tunnel excavation continues to be on hold, waiting on Nabholz."

April 6, 1998: Ray Nabholz writes to Hunkele, "We have never agreed to change our 547 days that is on our bid form. ... Your anticipated construction schedule was inaccurate from the very first item. The bid date was scheduled to be Sept. 25, 1997, but the actual bid date was Oct. 14, 1997. The pile caps were scheduled to be complete Nov. 26, 1997, but were not complete three months later in February. ... We moved on site in December 1997 to start the walls. The site was not ready, compaction of the areas disturbed by the pile cap contractor were nonexistent, our equipment and personnel could not move properly on site and the pile cap contractor was not ahead of us far enough. ... We have been on site 100 days and [25 1/2 days] were lost to weather."

April 16, 1998: Hunkele writes to Ray Nabholz: "We are getting the impression that you are distancing yourself from the project team. We base this on: being 'stood up' at an April 3 meeting with no phone call or response to our phone calls; limited participation at the formal partnering session on March 20 and 21; several unreturned phone calls; 'Lone Ranger' attitude displayed in your April 6 letter."

April 23, 1998: At regular Alltel Arena Board meeting, Paul. Simonetta of VCC/Turner tells the board that "the project is on schedule. All contractors are proceeding in a timely fashion."

May 14, 1998: Leon Ross, project manager for heating and air conditioning contractor IHP Industrial Inc. of North Little Rock, writes to VCC/Turner's Paul Simonetta: IHP is reaching a very critical juncture. ... IHP was to have HVAC equipment on site as of June 8, 1998. We will have the majority of this on site by this date. ... [But] we cannot install HVAC equipment and piping without a building and you have not provided a building. Your failure to perform is bringing unplanned cost to us."

June 16, 1998: Hunkele writes to Ray Nabholz (with a copy to Bob Russell, among others): "During the last three months we have met with you and/or your staff to attempt to salvage acceptable milestone dates in order to coordinate with the other trade contractors and preserve the board's schedule to complete the project by Aug. 11, 1999. The attached summary of schedules presented by your team indicates how futile this effort has been. ... Lacking confidence in your projected schedule, we extrapolated the completion date based on your average weekly concrete placement. based on a placement of 86 yards per week, NBMC will not allow the east precast/high roof to start until January 1999. ... Overall project completion would be Nov. 15, 1999, three months beyond the acceptable date, the direct result of continual slippage of the concrete schedule."

June 19, 1998: Hunkele writes to Ed Moffitt of NBMC: "You have not given us your latest projection as to when you feel NBMC will be out of AFCO/Steel City's way wherein they can effectively start their work. We have met several times during the past two weeks with you and AFCO/Steel City to help you determine this date and you continue to be evasive. Previously you have committed to May 15, June 1, July 1 and now nothing! ... Please be advised that all AFCO/Steel City overhead costs incurred since June 1, 1998, will be forwarded to your account per Article 3.3.5 of the supplementary general conditions."

June 22, 1998: At a concrete-in-place concrete schedule meeting attended by 11 people, including Russell, the board chairman, Hunkele says that, based on the current pace in placing concrete, NBMC's projected finish date is Sept. 20, 1999, 40 days after the planned completion of the entire arena. Nabholz says he has until April 15 to complete his work. Hunkele says delay costs incurred by other contractors will be the responsibility of NBMC.

June 23, 1998: A memo from Tommy Doolin of VCC/Turner to Tim Rowlett of NBMC indicates that steel City, the contractor scheduled to install steel, has found "anchor bolts installed by [NBMC] that have so much concrete on them they cannot get a thread chaser to start."

June 24, 1998: Hunkele writes to Ray Nabholz: "We are suspending all future premium time reimbursements for your Saturday work. We do expect you to work, at your own expense, whatever days and hours it takes to comply with the June 5, 1998, project schedule."

June 25, 1998: Hunkele writes to Nabholz: "Your performance to date has prevented 200 other tradesmen from going to work. ... Ray, you need to 'jump start' the raker beams installation as well as the rest of your operation because the project can't accept continuation of the-current level of performance."

June 25, 1998: Hunkele writes to Paul LaForge of Mid-Continent Group, the bonding company for NBMC: "We are very disappointed in your demeanor and lack of positive response to our presentation [on June 22] of your client's failure to prosecute the work according to his contractual requirements. ... Failure to complete the upper raker beams by Sept. 14, 1998, as detailed in NBMC's May 20, 1998, schedule, could lead to a notice of default and financial damages assessed accordingly."

July 1, 1998: James Edwards, president of Central Industrial Electrical Co., the electrical contractor, writes to Hunkele: "We are laying people off because we are so far behind and cannot keep people on the payroll waiting on the job to start."

July 8, 1998: At a cast-in-place concrete meeting, Hunkele says that Alltel Arena would not be completed until Oct 22, 1999, if the current pace of concrete work continues. Hunkele indicates that Baker Concrete of Houston has been contacted about assisting NBMC. The cost would be about $500,000. Nabholz says he's facing a no-win situation. His June payment has been held up. Without progress payments, he's cash starved and out of business. If he pays $500,000 [to Baker Concrete] and another $1 million in damages and claims from other contractors and the Arena Board, he's out of business. Given these options, he'd be better off to shut down the operation and take the matter to court. He felt he'd have an excellent chance of a favorable settlement. Nabholz says the foundation contractor, Rankin Construction Co., was four months late and soil conditions were not in accordance with contract documents. Hunkele responds that Rankin held up Nabholz in one instance, but it was rectified in two weeks.

July 10, 1998: Hunkele writes Nabholz that the June progress payment, which had been withheld from Nabholz, will be paid.

July 15, 1998: At the regular Alltel Arena Board meeting, Paul Simonetta of VCC/Turner recommends that the board increase the overall project budget to $72.3 million, an increase of $1.3 million over the original budget of $71 million. The board unanimously accepts the recommendation.

Aug. 18, 1998: First steel beams go up, 4 1/2 months after Hunkele initially indicated at Feb. 5 arena board meeting that AFCO's steel would be ready and 99 days after the May 11 arrival date for steel is mentioned in March 19 weekly contractors meeting.

Aug. 20, 1998: First mention made at Alltel Arena Board meeting of any concrete delays. Project is 356 days from scheduled completion on Aug. 11, 1999.

Source: Documents on file with the Alltel Arena Board.

RELATED ARTICLE: If Needed, Arena Work Could Continue Until First Event

If Alltel Arena isn't finished by its scheduled completion date of Aug. 11, 1999, the impact on events at the North Little Rock facility may not be significant.

One executive with a national construction company says it's not unusual for a general contractor to turn a project over the night of the first event.

"I've been to the point of getting food service accepted at 4 p.m. for a 7 p.m. game," says Ted Wellmeyer, an executive with Huber Hunt Nichols of Indianapolis. "If it has to go down to the wire, it goes down to the wire."

The first scheduled event at Alltel Arena won't be until October 1999, when a minor league hockey team probably will play its first home game. The original plans called for Leisure Management International Inc., which will manage the arena when it opens, to have six-to-eight weeks to become familiar with the facility.

"LMI says the arena does not have to be 100 percent complete for them to start moving some stuff in," says Bob Russell, chairman of the Alltel Arena Board. "They say it's not going to take them two months to do their walk-through and check out all their equipment. You might even have some events in there when things that the people won't see are not completely finished."

Huber Hunt Nichols built Bud Walton Arena in Fayetteville. Wellmeyer says that job went "down to the last thing."

"You kind of dragged the broom out the door as people walked in," Wellmeyer says. - David Smith