The Tribune

Lessons must be learned from Baha Mar’s construction woes to ensure other Chinese-led investment projects avoid similar delays, a leading contractor yesterday noting the same company is poised to begin the British Colonial Hilton’s $200 million redevelopment.

Stephen Wrinkle, the Bahamian Contractors Association’s (BCA) immediate past president, told Tribune Business it was vital that this nation “get a better handle” on the construction quality and deadline issues that have plagued the $3.5 billion Cable Beach development “for the benefit of future projects”.

Mr Wrinkle said this was especially important given that the Chinese intended to be long-term players when it came to foreign direct investment (FDI) in the Bahamas, with Beijing’s state-owned companies already leading several vital construction projects besides Baha Mar.

The contractor at the centre of the Baha Mar controversy, China State Construction, last year acquired downtown Nassau’s flagship property, the British Colonial Hilton, and is now poised to embark on a multi-million dollar mixed-use resort development on the adjacent property to the west.

Mr Wrinkle, though, said it was important to get to the root of Baha Mar’s construction problems to eliminate further “negative repercussions for the economy”.

“I think it would be very prudent to sit down with the owners [of Baha Mar] and get a better handle on what the problems were for the benefit of future projects,” the ex-BCA president told Tribune Business.

“It will be good to identify what the problems were and find equitable solutions, so it doesn’t happen again.....

“I think there’s lessons that can be learned here and taken to the next project. They [the Chinese] obviously have another project coming up at the British Colonial Hilton. Right off the bat, we’ve got to deal with them again,” Mr Wrinkle added.

“It would be most beneficial to sit down after this one is completed, and learn what we can from it.”

Baha Mar on Tuesday night placed 100 per cent of the blame for missing its planned Friday opening on China State Construction, alleging that the Chinese contractor’s workmanship was not up to the necessary standard.

“Subsequently, it has become clear that the contractor has not completed the work with an attention to detail consistent with Baha Mar standards of excellence,” the developer said.

“Anything less than a world-class facility and best-in-class guest experience is not acceptable to Baha Mar. As a result, Baha Mar will not begin its paced opening on March 27.”

Mr Wrinkle said that while he possessed no inside knowledge on the situation, the problems at Baha Mar had likely stemmed from communications difficulties between the developer and contractor, plus related logistical issues.

“I think there’s probably been some difficulties in communicating finishes and schedules, and things of that nature, between owner and contractor,” Mr Wrinkle added.

“And when all materials are coming out of China, there is a significant lag time between manufacturing and delivery. I’ve never worked with the Chinese before, but I am sure it’s a cultural problem.”

China has repeatedly served notice of its intention to be involved in the Bahamas for the long-term as a major investor. Apart from Baha Mar and the British Colonial Hilton, its state-owned China Harbour Engineering Company (CHEC) is also the main contractor on the $39 million north Abaco port.

All of which makes it critical to ensure the apparent errors on the Baha Mar project are not repeated. Yet the North Abaco port project has already run into unexpected delays, due to the discovery of a ‘blue hole’ that has required a supplementary Environmental Impact Assessment (EIA) to be performed.

And Baha Mar’s construction quality complaints will likely reawaken concerns, previously expressed, about the quality of Chinese workmanship and construction materials.

These worries have already been expressed in relation to already-completed Chinese construction projects in the Bahamas, such as the National Stadium, although the relevant government regulatory agencies passed them all as fit for use.

Mr Wrinkle, meanwhile, pointed out that Baha Mar’s president, Tom Dunlap, has a strong background in constructing mega resorts, having previously worked on Disney World.

While not attributing blame to either side at Baha Mar, Mr Wrinkle told Tribune Business: “At some point, someone has got to take responsibility for being late.

“Any time a project is delayed from opening, it has negative repercussions for the economy. All the private sector, and the Government, have based their projections on doing business with Baha Mar, and we’ve lost half a year.

“Six months’ late opening of a project of this size and scope has a significant impact. We’ve lost half a year of revenue. It affects everyone.”

Mr Wrinkle said Baha Mar’s owners, the Izmirlian family, had made the right decision in not opening tomorrow, as this would have compromised guest experience and satisfaction - potentially harming the development’s reputation for good.

“They cannot accept sub-standard work, and if these people [the Chinese] can’t do quality work, we need to know that we can make other arrangements,” the ex-BCA president said.

He added that Bahamian contractors performed 90 per cent of the finishes at Atlantis, albeit in joint venture partnerships with foreign contractors.

Baha Mar was effectively ‘locked into’ accepting Chinese financing and contractors by the urgent need to find a new strategic equity partner, following Harrah’s withdrawal from the project in 2009.

In return for Beijing’s support, China State Construction became an equity partner and main contractor/project manager for Baha Mar, while there were stipulations on using Chinese labour and materials.

Former Prime Minister Hubert Ingraham was successful in getting the Chinese to modify their agreement with Baha Mar, ensuring that the construction project would employ 4,000 Bahamians during its duration and provide them with a collective $400 million in contracts.

“It’s proven not to be that successful,” Mr Wrinkle said of that agreement yesterday. “We shouldn’t continue doing projects in the same manner as this one, and expect different results. It’s not going to happen.”