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Consultant says $1.4b overrun known in '99

By Thomas C. Palmer Jr., Globe Staff, 04/12/2001


Bechtel's mistakes drive up cost overruns, and company profits.

Bechtel's fee overruns
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State officials overlook and excuse Bechtel's mistakes for a decade.

Cost recoveries initiated

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This series has generated strong response from the state, the public, and Globe columnists.
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On Feb. 20, 2003, Bechtel/Parsons Brinckerhoff issued a document disputing the findings of the "Easy Pass" series. Globe editor Martin Baron responded with a defense of the Globe's reporting.
Read Bechtel's statement
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Bechtel has never shied away from big construction projects, but worldwide achievements are accompanied by controversy.
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Review cites flaws at Big Dig
Cerasoli charges Big Dig coverup
$1.4b overrun known in '99
Firm rejects call to offset costs
'99 memos warned of tunnel leaks

Officials disclose more defects
Lawsuit raises Big Dig questions
State to reopen deal with Bechtel
Big Dig hires quality manager
US knew of hidden expenses
Big Dig overrun just plain big
SEC probers to target Big Dig
Big Dig review to target overruns
Turnpike, firm set deal on leak cost

Contracts to be reviewed


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On February 11, 2003, Globe reporter Raphael Lewis chatted with Boston.com readers about the Bechtel series.
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Beyond the Big Dig   What happens to the ribbon of land being created by the depression of the Central Artery? A joint effort between The Boston Globe, MIT, and WCVB-TV explores.
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he top Boston official at Bechtel/Parsons Brinckerhoff, the Big Dig's private management consultant, testified yesterday that he suggested more than two years ago to a state official that other people should be told about the project's escalating cost.

But the fact that the project was $1.4 billion over its budget was not disclosed until early 2000, when state Treasurer Shannon O'Brien forced the admission by officials of the Massachusetts Turnpike Authority.

Matt Wiley, program manager for the Central Artery/Ted Williams Tunnel project, was asked at a legislative hearing on the cost increase whether he was bothered by the internal cost estimates that differed from what officials were telling the public.

"I've raised the issue on one occasion that information should flow higher than the individual I was interacting with," Wiley said at a hearing before the Legislature's Joint Transportation Committee.

But Wiley said he did not press the matter, because "I had no knowledge of what was and wasn't being shared" with other state officials, including legislators.

Wiley did not identify the state official to whom he made the suggestion, but a source who asked not to be identified said it was Peter M. Zuk, who was project director until late 1998.

Yesterday was the first time a Bechtel/Parsons official has said there was concern that Big Dig cost information was not being given to the public.

Zuk, now working for a company in Colorado, declined to comment on Wiley's testimony.

Zuk and his boss at the time, James J. Kerasiotes, insisted during most of the late 1990s that the project would not cost more than $10.8 billion. However, Wiley confirmed yesterday that Governor William F. Weld was told late in 1994 that the project could cost almost $14 billion.

But Wiley denied that the lower cost estimate was an attempt to mislead the public, saying there were programs in place to reduce cost.

"I don't think we ever put forward any fictitious numbers," he said.

Attorney General Thomas F. Reilly said yesterday that the time has now come to investigate whether there were any crimes committed "as cost projections spiraled totally out of control."

"Those allegations cannot and will not be left alone," Reilly told the Transportation Committee.

He was referring to a recent report issued by state Inspector General Robert A Cerasoli alleging that federal and state officials deliberately misled the public about cost overrruns.

Reilly has issued subpoenas to a dozen state and federal agencies as part of an investigation into the allegations.

Yesterday's hearing came exactly one year after former governor Paul Cellucci fired the previous Big Dig management team, including Kerasiotes, who was the Mass. Pike chairman, and project director Patrick J. Moynihan.

In other testimony at yesterday's four-hour hearing:

Greg Sullivan, first assistant to the inspector general, said a yearlong 1994 internal review of costs at the Big Dig by Bechtel/ Parsons concluded that discrepancies of $4 billion or more between actual cost estimates and the number that was being disclosed "could undermine public confidence."

That led to a meeting in December 1994 between high-level Bechtel/Parsons officials and Weld, in which the governor was told the cost could reach $13.8 billion.

Members of the Turnpike Authority board are seeking documents prepared for that meeting, but said they have been told by Big Dig officials that none exist.

Cerasoli's staff, elaborating on its stinging recent report on the performance of Big Dig managers, emphasized that local Federal Highway Administration officials were kept advised of steps that kept the project's official cost estimate artificially low.

"Once Federal Highway had accepted that methodology," said Sullivan, "that became the `Good Housekeeping seal of approval' for the Big Dig reporting system."

On the other hand, the inspector general credited Bechtel/ Parsons officials with vigorously resisting some of the specific techniques state officials were using, such as employing unreasonably low estimates of change orders on future contracts.

Wiley and state project manager Michael Lewis defended the project's record of advertising the huge construction contracts, even though some portions were not fully designed.

Lewis said this "fast track" process resulted in changes to contracts and additional expense but was considered the most efficient way to complete the project.

Senator Robert L. Hedlund, a Weymouth Republican and cochairman of the Transportation Committee, called the Big Dig "a fiasco."

Representative Joseph C. Sullivan, a Braintree Democrat and the committee's other cochairman, replied that Hedlund's comment was "the senator's opinion," not the committee's.

This story ran on page B3 of the Metro/Region section of the Boston Globe on 04/12/2001 .
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