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Big dig, bigger problems

The USA's largest civil engineering scheme should be a showpiece of programme management skills But the project has run into trouble. Damian Arnold went to Boston to investigate

Running over budget is inevitable, we are told, on a 13 year project involving tunnelling through frozen ground, slurry wall construction and soil mixing on an unprecedented scale, as well as heavy construction at the heart of a community that knows its rights and is determined to exercise them.

Despite these enormous challenges, the programme management joint venture for Boston Artery - better known as the Big Dig - between Bechtel and Parsons Brinckerhoff is working towards a zero schedule contingency and 7% cost contingency, but many will be surprised if they meet those target.

Bechtel deputy project director Matt Wiley explains: 'In 1995 we set a number of aggressive targets and by maintaining this posture for four years we have cut about $635M by finding offsets and being tough on negotiating the change orders.'

But the projected 13% overrun on the $10.8bn project cost figure set in 1997 simply doesn't look good for two companies which have built their reputation on delivering to tough targets. UK observers will be particularly keen to know what is going on given Bechtel's and PB's success (along with fellow US firm Fluor Daniel) in stealing the ú10bn Railtrack programme management prize from under the noses of Britain's finest.

Supporters of Bechtel and PB say the programme managers are responsible for both the 'wonderful achievement' of keeping the city's traffic moving during construction and an 'outstanding' safety record.

In no way can they be held to blame for the project's ills. These supporters claim the joint venture has been the victim of Massachusetts politicians 'lowballing' the costs.

Executive director of the project client Massachusetts Turnpike Authority, Jim Kerasiotes, is said to have driven the cost target. A source close to the project says: 'Jim has put his own stamp on this project with his combative style. He doesn't appear to be a fellow comfortable with the idea of failure and he didn't want to hear about overruns.

Tremendous pressure has been put on the programme managers.'

When presented last year with a breakdown of figures showing how the project was running over budget, Kerasiotes is said to have ripped it up.

An analyst of the project, head of Harvard's Kennedy School of Public Policy Planning Professor Alan Altshuler, defends the programme managers: 'I share the general view that overall the Big Dig has been managed very well for a one of a kind project that is extremely complex. The Government of Massachusetts lowballed the figures to make the project marketable and the costs have just risen and risen.'

The latest overrun estimate has caused extreme concern within the Federal Highway Administration, the national body responsible for US roads and a major funder of the Big Dig. It has already insisted that it would honour a 70% contribution to the project's 1997 cost, but no more.

The FHA's chief overseer Pete Markle, who the US press have claimed thought the overrun was only ú400M, has left his job amid recriminations that the FHA's relationship with the MTA was 'cosy'.

A team of Federal auditors have since combed the accounts of the Big Dig, and any exposure of unnecessary waste could lead to the freezing of the Federal contribution to the project.

Opponents of the Big Dig, such as Republican congressman Frank Wolf, who is chairman of Congress' transportation committee, have seized on the announcement to insist on tighter Federal controls.

The Bechtel/PB supporters say they are simply paying the price for their loyalty to a secretive client that has played political games with the figures. But critics of the programme managers claim they could have done more to cut costs. They suggest that with more technical insight from Bechtel and PB, the client could have identified opportunities for 'value engineering solutions'. These were apparently not pursued under the programme managers' 'conservative engineering approach'.

Bechtel and PB were appointed in 1985 because the Commonwealth of Massachusetts did not have the technical expertise to manage complex engineering such as jack box tunnelling, and could not by law afford the sort of salaries needed to develop the skills in house.

Critics say the client has failed to monitor the managers adequately, or alternatively employ a third party consultant to oversee their work.

They also point out that most of the contracts signed by the programme managers have not included incentives to keep costs down.

A source claims: 'The problem here is that the client has delegated things it doesn't; understand. In a number of places I believe the project is significantly over engineered and the client had not the confidence or expertise to propose value engineering solutions.'

A 1997 attempt to align the client's technical staff with those of the programme manager by integrating decision making on the project is said to have improved matters.

MTA engineering manager Michael Lewis says: 'Fiefdoms, jealousies and turf battles, which had characterised the management structure, have been replaced by an integrated approach geared towards quicker decision making and appointing the best person for particular jobs regardless of who they were working for.'

The move has helped address what some sources claim is a Bechtel characteristic: 'not listening to someone who is not from Bechtel'.

A source claimed: 'Bechtel is regarded by many as the senior partner in the joint venture. But its engineering approach has been quite conservative, which caused conflicts with section engineers pretty far down the line when it came to defining the construction methods.'

Wiley's view is that problems were created because the original designs were too conceptual. A document of all the changes made to Big Dig contracts, one line for each change, is said to run to 600 pages.

Wiley says: 'There are those who say there have been too many change orders, and I agree that the original designs were too conceptual. It may have been better to have made more design decisions up front. It would have made the project go a little quicker.' Parson's Brinckerhoff project director Anthony Lancellotti agrees: 'The lesson of this project is design it once and as early as possible.'

But MTA construction director Michael Lewis claims that this was not possible because of the demands of Boston's residents and businesses. He says: 'The challenge has been to develop designs that meet the objectives and are acceptable to the residents and businesses. The real lesson of this project is that the community is much more educated when it comes to their rights than they were 20 years ago.'

Wiley singles out disputes that developed with businesses and third party agencies affected by the construction activity as an area of overspend that could have been avoided.

He says: 'We should have done more up front. We underestimated the power of businesses and others affected by construction. We got into some real disagreements with the Boston Fire Department, for example. We ended up walking the town with them making sure we were in agreement over specifications.'

PB's Lancellotti adds that the programme management joint venture should have taken a tougher approach. He says: 'We should have said 'no' more often to the outside agencies and businesses affected by construction who were very, very demanding. We have, for example, ended up providing services free of charge for utilities in the city, which they ought to have contributed to.'

Yet another US programme manager, O'Brien Kreitzberg, was recently brought into the project by the MTA to review the cost of the Big Dig. OBK senior vice president Lou Tucciarone is clear as to what PB and Bechtel need to do: 'They could simplify the staging of the works so that contractors could work more in parallel and cut the duration. The earlier contracts have been too sequential.'

With change orders on contracts running at an average of 24%, he adds ominously that further overruns could be in store unless more cost cutting is identified. He warns: 'There are contracts not currently on the critical path that affect the schedule. But if they fall further behind they would also need speeding up. There is also no guarantee that the overspend to speed up the schedule will produce 100% of the benefit. There is $800M worth of contracts not yet awarded and we think there is some financial risk there.'

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