Voestalpine Hot Briquetted Iron Plant
EXPERTISE IN ANALYZING SCHEDULE DISRUPTIONS IS CRUCIAL IN ARBITRATION
The Voestalpine Texas LLC (Voestalpine) Hot Briquetted Iron (HBI) Plant is located in Corpus Christi, Texas and stands as the largest building in south Texas. Exceeding all current American and European environmental standards, the Voestalpine plant employs the use of seawater for cooling via ultra-modern water processing with aims to conserve the area’s scarce freshwater resource. This project began when Voestalpine hired a heavy machinery supplier to complete construction on the project. The supplier then hired subcontractor Vezer Industrial Professionals (Vezer), represented by our client Cokinos, to perform mechanical, structural, electrical, and concrete work on the byproduct plant for a lump sum of $13 million. The contract was formed in March 2020 with a target completion date of December 31, 2020. The supplier provided Vezer with a schedule for engineering, fabrication, and shipment dates for materials which the supplier would provide and make available onsite by July 2020. Due to COVID-19 impacts on staff and COVID policy-related prohibitions from Voestalpine, both the supplier and Vezer entered into a new contract that was a time & materials (T&M) proposal based on man-hours rather than a lump sum.
The supplier delivery was critical for Vezer to meet milestones outlined within the construction phase of the project. However, Vezer encountered delays that caused the expenditure of significant manhours performing unanticipated and out-of-sequence work. The supplier initially acknowledged the delays and inefficiencies due to the unanticipated work that was outside of Vezer’s control. However, as of June 2021, the relationship became strained as the supplier withheld payment for invoices past due and terminated Vezer. Vezer claimed more than $10 million for work performed and damages. The supplier attempted to back charge Vezer $21 million in costs incurred to complete the work – a gap of $31 million between the parties.
Peritia analyzed the contracts, critiqued the supplier’s damage model, performed a MCAA factor inefficiency analysis of Vezer efforts, conducted schedule reviews related to the civil, mechanical, structural, and electrical scopes and delivered their expert opinion and report to Cokinos who then filed payment claims for the unpaid base contract and changed work. Peritia’s team provided testimony regarding the outstanding contract balance and the reasonable and necessary costs incurred.
Peritia’s involvement and investigation allowed Cokinos to return to arbitration with findings and reports of incurred damages and delays. Cokinos received a decision from the arbitrator who ruled wholly in Vezer’s favor. Vezer was awarded nearly all the monies claimed including legal and consulting fees. Leadership groups from Vezer and Cokinos delivered personal distinctions to Peritia for their work.
Vezer Industrial Professionals
Cokinos | Young
Corpus Christi, TX
2 million tons HBI yearly
Termination Claims, Payment Claims, Damage Quantification