I was just reading Tony Illia’s blog about contractors not getting paid for the CityCenter project in Las Vegas. I’ve blogged a few times about the $8.5B casino/residential project and the mighty lawsuit that would follow.

Well, the occupancy permits are obtained and the facility works, though with many fewer visitors than projected. Now MGM Resorts, the owner, is holding $500M in payments for work completed by Perini Corp, the GC. Those of us in construction can hum the tune. The scum sucking pencil pushers working for the Owner decide that the contractors really don’t need to be paid the contract amount.

Since cash rules, many of these subs are accepting 90 cents or 80 cents or even less on the dollar just to get out. It’s unfortunate that the scum sucking pencil pushers are correct in their dastardly scheming.

It’s great to see that Perini’s CEO Ron Tutor has wielded an effective publicity campaign to keep MGM Resorts on the hot seat for their payment defaults. He sent a letter to the State Gaming board with copies to every politician and media outlet that clearly stated the unfairness of the situation.

Interestingly, MGM Resorts won an award this Spring for all their efforts to promote women and minority owned businesses. Now many of those same women and minority owned firms they hired are near bankruptcy due to lack of payment. MGM Resorts, of course, wants to settle the issues with a years long lawsuit.

I do understand the issue isn’t totally one sided (and blogged about this issue previously). The Harmon Hotel was designed with too much rebar in the foundations to physically fit. Rather than stopping and making the design engineer resolve the problem, the concrete contractor simply made adjustments and continued work. After the foundations were completed, the inspectors pointed it out (don’t you just love that timing?).

So the Harmon Hotel was reduced from 48 stories to 26 stories, partly due to the foundation issue and partly due to the change in demand. MGM Resorts uses this change to justify all the held payments.

I’ve been in the developer role and understand the difficulties of changed economic conditions. The difficulty of the decision, however, doesn’t change the right course of action. Developers need to pay contractors on time. Even if a bunch of scum sucking pencil pushers advise that some easy money may be available by putting the screws to the contractors. I wonder, how those scum sucking pencil pushers justify their behavior? How do they sleep at night?