University of Iowa to pay Modern Piping $21.4 million for children's hospital construction

Published: Apr. 4, 2019 at 6:14 PM CDT
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The University of Iowa said it will not appeal a court's decision involving Cedar Rapids-based company Modern Piping, according to a statement released Thursday.

On Wednesday, the Iowa Court of Appeals ruled in favor of Modern Piping over a lawsuit regarding payment for construction work at University of Iowa Stead Family Children's Hospital and Hancher Auditorium.

Modern Piping said the university owed $21 million plus interest after design changes drove up costs, but UI and the Board of Regents never paid them that extra.

The lawsuit cites design changes, miscommunication, missed deadlines and budget overruns as reasons the two sides disagreed.

The children's hospital project was originally estimated to cost $270.8 million but ended up costing over $360 million and was delayed by months.

On Thursday, the university released a statement saying it plans to ask the Board of Regent to increase the project budget in order to pay Modern Piping $17.9 million. That amount covers the arbitration panel's award minus the payments that have been already given to Modern Piping.

"With this additional $21.4 million, the university will have paid Modern Piping $73.9million for work on the UI Stead Family Children’s Hospital and Hancher Auditorium," officials said in a statement. "Modern Piping was awarded attorney fees and expenses in the amount of $724,912.38."

The university said it also settled a dispute involving Merit Construction.

Officials said the university and Merit settled for $9.4 million.

"The University of Iowa Hospitals and Clinics, a self-supporting enterprise, will pay for the requested increase of its project budget for the UI Stead Family Children’s Hospital," officials said.

The university and Board of Regents have reviewed and changed how it handles contracts, procedures and delivery methods related to construction projects.