In August, 2001, Coty US LLC, an international fragrances firm, had moved into their 100,000rsf facility at One Park Avenue. Unfortunately, the project was designed by a small architectural firm and was constructed by an inexperienced construction manager. The project did not utilize the services of a project management consultant. This combination proved detrimental to the successful completion of the work.

The result of this combination of events was $6.5 million costing Coty $8.8 million. In addition, three weeks after move-in, the CM presented Coty with $700,000 in change orders for work never presented for approval during the course of the project. With $2 million in outstanding payments to the CM, the President of Coty halted all punch list work and payments. Project Control Group, Inc. was called in to perform a complete construction audit that ultimately positioned Coty in a mediation and arbitration proceeding to recover damages.

Project Control Group, Inc. immediately began a seven-week process that included preparing an independent budget based on all construction documents, extensive field studies to determine whether substandard materials were used in the construction, a review of all contracts and submitted change orders and a complete study of all project documentation.

As a result of these activities, we determined that substandard materials caused office doorways to collapse and concrete floor tiles to crumble and crack. We discovered that poor coordination of sprinkler and ductwork routing created an inability to install ninety-three corridor light fixtures and seventeen exit signs. This was a significant liability issue to the facility, as no emergency lighting was installed and only three exit signs for 100,000rsf on two floors. Instead of fire proof prime grade Douglas fir, green hemlock fir was used for all framing, causing wood to twist, door openings to collapse and walls to bend.

Accordingly, in November, 2001, we recommended termination of the CM under the AIA contract. This process was initiated with the assistance of outside counsel that PCG recommended to Coty. As a part of that process, we provided a budget estimate to repair all poor workmanship and substandard materials ($5.4 million). The reason for the high amount of repair was the inclusion of overtime and lost time for construction trades.

In May, 2002, after several months of arbitration hearings, the arbitrators ruled that Coty should be awarded $3.6 million in damages.