WILLIAM J. POORVU RICHARD E. CRUM
Regency Plaza
Kris Hodgkins, the project manager for condominium development at the Regency Plaza hotel complex, worked her way through the half finished units on the twelfth floor of the building. It was early on a Thursday morning in late June of 2007, and the sounds of construction workers and equipment mobilized for work filtered up through the floor. All around her, Hodgkins could see the skeletal forms of luxury condominium units taking shape.
She carried with her several hand drawn sketches that detailed a series of changes to the layout of condominium unit 1203. She could see that the sketches were a radical departure from the standard floor plan and that some of the already installed work would have to be ripped out. She had scheduled an afternoon meeting with the owners, the Millers, their interior designer, the project architect, and the general contractor's project manager to discuss the changes.
Hodgkins was worried about the project. Condominium sales were slow and the local economy appeared to be weakening. The project was behind schedule and over budget. The general contractor was angry about both the number and frequency of changes that were taking place on the project and the cost of estimating changes that did not go through. Several of the buyers had begun to complain about slower service, bad workmanship, and delayed closings.
Senior management at the Regency Hotel Group, however, remained committed to a high level of customer service and to their strategy of allowing buyers to customize their condominium units so long as he or she was willing to pay for any additional costs. Should she allow these changes to go through? Who would pay for the delays and wasted materials? And what should she tell the Millers?
The Project
The Regency Plaza was a mixed use project consisting of the 300-room Regency Plaza hotel and 96 luxury condominiums. The building was a 22-story steel and concrete structure with a...