Year in review A bad year for construction

Despite many work stoppages and non-starts, the GOAP forges ahead

The year 2010 is one Cayman’s contractors will not soon forget, try as they might. Nearly every construction company in Cayman had to lay off employees because of the lack of work and many struggled to stay in business.

Construction activity was at the lowest level in years in terms of both public and private sector projects. The private sector saw several big projects put on hold, although some of the projects – like the luxury WaterColours condominiums on Seven Mile Beach – eventually got under way during the year.

On the public sector side, the virtual stoppage of three large government projects and the delay of others significantly impacted the construction industry. Through it all, the largest government project in Cayman, the Government Office Accommodation Project, continued on full steam ahead.

High schools

Construction on the John Gray and Clifton Hunter high schools came to a halt in November 2009 when the general contractor, Tom Jones International, walked off the job, citing nonpayment of amounts due. The following month, the Cayman Islands Government formally terminated its contract to build the schools with Tom Jones. Although some mechanical/electrical/plumbing work by subcontractors resumed in January 2010 and some other subcontracting work took place later, the projects progressed only minimally during the rest of 2011.

In March, a team of Cayman’s top construction companies – Arch & Godfrey, McAlpine, Hadsphaltic and DECCO – announced they had formed a joint venture and bid on the construction management contract to finish the schools. However, the bid process led to no immediate contract and in July Hadsphaltic was put into liquidation. In September, Education Minister Rolston Anglin announced that the remaining three companies of the construction “dream team” had been awarded the construction management contract and said the project would be fully mobilised within 30 days. That, however, didn’t happen.

In December, Mr. Anglin announced that the government would issue a series of 70 separate tenders for the remaining construction work on the two schools.

The high school construction projects, which began in 2008, were originally supposed to be completed by September 2009. That was pushed back to September 2010 by the previous government administration. When the current government took office, it said it found cost overruns of $17 million and announced another year delay – to September 2011 – on both schools.

Mr. Anglin also said the plan was still to complete the Clifton Hunter High School in Frank Sound in time for the next school year starting in September 2011, but that the John Gray High School would be delayed yet another year, to September 2012.

Mosquito Research facility

Another government project that hit a snag in 2010 was the new Mosquito Control and Research Unit hangar facility near Owen Roberts International Airport. Work on the project seemed to be moving along smoothy until the general contractor, Hadsphaltic International, failed to show up on the job site on 25 June. When the company’s Turks & Caicos-based CEO was questioned, he said the company was going through restructuring.

However, despite promises that the contractor would return to the job the following week, it did not and on 19 July, the company was put into liquidation and work on the hangar facility project came to a halt, leaving several subcontractors owed money and out of work.

The rapid demise of Hadsphaltic ended a 44-year run in the Cayman Islands, where the construction company built such major projects as the Hyatt Regency Hotel, the Westin Hotel and a multitude of government buildings.

In August, it was decided to re-tender the remaining work on the MRCU hangar project. However, up until mid-December, no new contractor for the project had been announced. The MRCU’s previous hangar was damaged beyond repair during Hurricane Ivan in September 2004. Since then it has operated out of a make-shift facility.

Non-starts

Several planned private sector projects failed to get under way for economic reasons during the course of the year, including the Mandarin Oriental Hotel and the Island Resort and Residences in the East End District. Most of the extensive renovation project at Spanish Bay Reef Resort in West Bay was put on hold, although the project plans were still set to go ahead. Another large private sector project – the Dr. Devi Shetty medical centre – also failed to get started because of the lack of legislative changes necessary for the development to proceed.

Two large government projects that were to help stimulate the local economy also never got off the ground during 2010: the proposed national sewerage system and cruise ship berthing port facility.

The sewerage system never progressed past the talking stage because it too needed legislative changes to make it possible. However, the problem with cruise berthing facility turned out to be something different.

The government announced it had selected DECCO – a Dart Group subsidiary – to develop the port facility in November 2009. In April 2010, the Cayman Islands Port Authority signed a memorandum of understanding with DECCO to build the $150 million facility.

Over the next five months, the Port Authority and DECCO tried to reach an agreement on the terms of payment for the project. The scope of the project expanded, at one time reaching $300 million, as plans to put in a mega yacht marina and other features were added.

In September, the government stated that DECCO could get a lease of anywhere between 21 and 99 years, depending on the scope of investment. The government tried to negotiate that term down, but were ultimately unsuccessful. In December, it announced that it would move forward with the construction entity that placed second in the original bidding, a team led by GLF Construction Company and including the Cayman-based Royal Construction. Less than two weeks later, the Port Authority and government signed a framework agreement with GLF/Royal with the goal of finally commencing construction in the first part of 2011 and completing the project by the end of 2012.

GOAP

The one government project that proceeded relatively smoothly was the Government Office Accommodation Project on Elgin Avenue. This, however, did not mean the project was without controversy.

When the government announced it would seek to divest itself of the building and rent it back from the new owner – as recommended in a report produced by a commission headed by James C. Miller – in effort to reduce its debt, the opposition People’s Progressive Movement and in particular former Cabinet Minister Charles Clifford, strenuously objected. Mr. Clifford planned a protest march in March that the PPM had agreed to support, but when the government reversed course and said it would not seek to divest the GOAP, the PPM pulled out of the protest march. Left without the support of the party to which he belonged, Mr. Clifford cancelled the march and a few months later resigned from the PPM, but not before harshly criticising his former party.

In April, two government-appointed committees made up of from the private sector also recommended the Government Office Accommodation Project be sold quickly and then leased back. Despite the recommendations of both the Miller Commission report and the Private Finance Initiative Oversight/Big Four Committees, nothing came of a sale of the GOAP.

As the year ended, however, the project neared completion, with the government scheduled to move into the building in first part of 2011.

LOCALstory

The gates to the Mosquito Research and Control Unit hanger facility project remained locked midyear as work on the project stopped because of issues with the general contractor, Hadsphaltic International Ltd. – Photo: Alan Markoff
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