As costs for the KeyArena renovation soar beyond $800 million, the Oak View Group developer has looked into replacing general contractor Skanska Hunt. An announcement is expected within days on whether OVG will stay the course or switch to a new firm.
An announcement is expected within days on whether the general contractor for the rapidly escalating, $800 million KeyArena renovation project is to continue on or be replaced.
But officials from the Los Angeles-based Oak View Group and NHL Seattle said Saturday that any change in contractors would not delay the arena’s completion by early 2021. The NHL last week awarded a Seattle expansion team to begin play in October 2021 while the WNBA Seattle Storm also hope to open at a remodeled KeyArena that spring.
“The big timeline for us is to make sure that we’re on time for the Storm,’’ NHL Seattle CEO Tod Leiweke said Saturday.
OVG construction executive Ken Johnsen, brought on in early November to review progress on the renovation plans, has spoken with general contractor Skanska Hunt to see whether it is indeed confident it can meet what’s still an aggressive completion timeline. If not, OVG would opt to go with Kirkland-based M.A. Mortenson Co. once hard construction begins as scheduled next month.
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“One of the really good things is both of these firms are ready to go,’’ Johnsen said Saturday, adding that a final decision has yet to be made.
Mortenson did pre-construction work around the KeyArena site in the first part of the year before Skanska Hunt – a joint venture between the Swedish-based Skanska construction giant and the AECOM Hunt architectural and engineering firm – was named general contractor in July. For now, preliminary work at the site – launched by a groundbreaking ceremony last Wednesday — is being handled by project developer OVG but will shift to harder construction come January.
Rumors have swirled that Skanska Hunt was leaving the project ever since the NHL last week delayed the expected October 2020 launch of the new hockey team by 12 months. In citing the need for a delay, NHL commissioner Gary Bettman expressed doubts the project would finish on time so the team could open the first part of the 2020-21 season at home.
Originally forecast to come in at $600 million a year ago, the KeyArena project had ballooned to $700 million by mid-summer and then $800 million by the time the NHL franchise was awarded. Now, that cost could climb closer to $825 million or even $850 million as OVG prepares some added initiatives within the building.
OVG in its KeyArena partnership agreement with the City of Seattle has pledged to cover the entire renovation as well as any additional overruns.
A political source said Saturday that OVG wanted Skanska to sign a Guaranteed Maximum Price document promising the total project cost wouldn’t exceed a certain amount. The company is said to have refused.
Skanska’s Seattle-based executive vice president and general manager Kevin McCain could not immediately be reached Saturday, nor could officials in the company’s New York office.
Johnsen and Leiweke reiterated that no final decision had been made. Both said it’s been clear for some time the KeyArena renovation likely wouldn’t be completed until at least November 2020.
“I think we all knew that it was a really aggressive schedule and that it meant spilling it in to a month or so on the road,’’ Johnsen said of any October 2020 launch by the new NHL team. “So, it was going to be tight. I think the idea of shifting it was a good one.’’
Johnsen added that putting the launch off by a year bought OVG an extra three months of cushion to have the arena ready for the Storm’s early 2021 opener. As a result, he said: “We’re feeling emboldened to ask some good questions (of Skanska Hunt) and get this thing right.’’
One of those questions has been whether to stick with a joint venture of two companies or change to one that is based locally, has vast experience within the market and all services under its one roof.
Some of the Seattle NHL team owners have cited the inflated cost of steel due to increased tariffs as one of the reasons behind the higher project costs. There have also been numerous upgrades to the building Leiweke said were approved by majority owner David Bonderman to make it “the best facility possible.”
But both Leiweke and Johnsen said the local construction market has also played a huge role in driving up costs.
“The construction market in Seattle is a busy one,’’ Johnsen said. “There aren’t many projects that aren’t having any problems from a budget standpoint.’’
That said, he added, OVG has yet to scale back on anything and keeps adding to the bottom line even as costs grow.