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Paul F. Levy

Managing another construction feat

By Paul F. Levy
August 17, 2008
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ON THE EVE of a massive program to rebuild many of the Commonwealth's bridges, I often hear from people who express doubts about the ability of the state government to manage large construction programs effectively. They mainly cite the Big Dig, which suffered from delays, cost increases, and quality problems.

But there was one notable multibillion-dollar state construction program that was on time and under budget and worked - the Boston Harbor Cleanup. The project consisted of the huge Deer Island wastewater treatment plant and related facilities, including a 9-mile outflow tunnel drilled through the harbor's bedrock, another 5-mile cross-harbor tunnel from Quincy to Winthrop, and a sludge-to-fertilizer plant in Quincy.

Sure the project took place under a federal court order, under the supervision of the late Judge A. David Mazzone. But Mazzone did not decide how the project would meet its budget and timetable. It was a clearly conceived implementation plan by the managers and board of the Massachusetts Water Resources Authority. I was there as executive director when we developed that plan in 1987-88, and its components present a lesson for the successful execution of future projects.

First, hire an experienced program management staff. Pay them salaries comparable to those earned by the engineering and construction companies that will design and build the project. Why? You can't be outclassed by those you supervise.

We took political heat for paying private-sector-level salaries, but we built an in-house project management team that ably and forcefully supervised the private contractors.

In contrast, the state Department of Public Works was not permitted to recruit this level of talent for the Big Dig, leading to overreliance on private firms. I fear that the same problem will exist for the bridge renovation project.

Second, assemble the engineering and construction jobs into biddable packages that encourage the greatest degree of competition while also taking advantage of economies of scale. To do this, you need to understand the capability of the local, national, and international firms that might be encouraged to bid. This can be a key factor in the costs of the dozens of bridge renovation projects about to be undertaken. The state needs to do that analysis and make tough choices about the size and scope of bid packages it is about to issue.

Third, hire specialty firms that focus on specialized aspects of project management - such as environmental remediation and unexpected subsurface conditions. Make these firms responsible to the owners, not to other contractors, to assess the need for changes to designs or construction processes.

Fourth, put in place a clear risk-sharing and claims process so that unexpected conditions are dealt with in an objective and expeditious fashion. Without this, all bidders will insert an unspecified level of contingency in their bids, driving up the project's costs.

We have seen the multiple levels of disputes that arose after the completion of the Central Artery and Ted Williams Tunnel. Some of those may have been related to an unclear definition of risk-sharing in the original project documents.

Fifth, consider the labor environment and, as appropriate, enter into a project labor agreement that quickly resolves jurisdictional disputes between unions and provides for a no-strike clause. Labor delays cost money.

For the harbor project, we signed an agreement with 14 local and nation trade unions to cover all of the crafts and trades that would be needed. There was not one strike in over a decade, and disputes between unions were resolved expeditiously. The Big Dig likewise used a project labor agreement, and this was very effective.

Sixth, manage your management costs. Set a target, and control the amount of money you are spending on managing the project. If these costs are getting out of line, it is indicative of other problems that need attention on the job. In retrospect, it was clear that this was not done effectively at the Big Dig.

These are simple lessons that have been used throughout the world to manage large construction projects effectively. They worked for Boston Harbor, and they can work for the vital jobs the Commonwealth is about to undertake.

Paul F. Levy, CEO of Beth Israel Deaconess Medical Center, was executive director of the MWRA from 1987 to 1992.

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