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Big Dig firm rejects call to offset costs

Turnpike Board may consider termination

By Thomas C. Palmer Jr., Globe Staff, 10/03/2001


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

Bechtel's fee overruns
Map of major conflicts
History of the contract
Contract modifications
Cross section of roadway
Construction cost overruns

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

Cost recoveries initiated

Powerfull allies help protect Bechtel and its bottom line.


This series has generated strong response from the state, the public, and Globe columnists.
More Globe coverage


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
Read the Globe's statement


Building a reputation
Bechtel has never shied away from big construction projects, but worldwide achievements are accompanied by controversy.
See past Bechtel projects


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


Central Artery/Tunnel Project


Parsons Brinckerhoff

State Inspector General reports
On the history of the Central Artery/Tunnel project's finances:
On the Central Artery/Tunnel project's attempts to recover money for mistakes:

About "Scheme Z" bridge design

State oversight of the Big Dig

Mass. Turnpike Authority

The Artery Business Committee


On February 11, 2003, Globe reporter Raphael Lewis chatted with Boston.com readers about the Bechtel series.
Transcript of chat


Any tips? Let us know.
Phone: 617-929-3379
E-mail: bigdigtips@globe.com


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.
A special report

Progress updates on the Big Dig. Info

fficials from Bechtel/Parsons Brinckerhoff yesterday rejected the Massachusetts Turnpike Authority's call for "reparations" to offset costs that have skyrocketed during the consultant's management of the Central Artery/Third Harbor Tunnel project.

Admitting the company is in "deep trouble" because of authority officials' unhappiness about its performance, a top Bechtel/Parsons representative nevertheless said it drew the line at writing a check.

"We do not think reparations is a reasonable basis for discussion," said John A. MacDonald, president of Bechtel Infrastructure Corp.

Authority officials have asked for $250 million from the consultant.

Two board members, Jordan Levy and Christy Mihos, said they will decide whether to vote next week to terminate Bechtel/Parsons's contract and undertake the difficult task of finding another consultant to manage the last 30 percent of Big Dig construction.

Few construction companies have the capacity to oversee such a large project, and many workers and contractors believe the disruption caused by a change in consultants would be severe.

"It's one of the most ominous decisions I might be faced with in 30 years of public service," said Levy. "I understand who we're dealing with."

Questioned about the ever-changing project price tag by legislators at a hearing of the joint Transportation Committee, Bechtel/Parsons officials sought to shift some blame back to the turnpike authority, saying officials had prevented them from accurately assessing costs on the megaproject for five years, ending in 2000.

That was the period during which the state's transportation secretary and later turnpike authority chairman, James J. Kerasiotes, who tightly controlled the private consultant's work, insisted publicly that the cost of the project would not exceed $10.8 billion.

"We asked a number of times whether we could have permission to go do another cost analysis," said C. Matt Wiley, program manager of the consulting team that has managed the project for the state since 1986.

The answer, Wiley said, was no. He said language in the consultant's contract with the state and the turnpike authority was specifically changed around 1995 so that the consultant was no longer required to assess costs.

"It was the choice of the MTA to not go through the cost of doing a semiannual cost estimate," said Wiley. "We were told $10.8 billion was the target, and we were `tracking' to the number."

He estimated the expense of reevaluating project costs at under $1 million a year. Wiley's comments, coming from a company whose officials rarely comment publicly, were the most critical yet concerning the direction the consultant had from the state and the turnpike authority, and from Kerasiotes in particular.

Kerasiotes, who was not mentioned by name yesterday, could not be reached for comment.

Early last year, Kerasiotes was forced to acknowledge that the project had overrun its projected cost by $1.4 billion. He resigned in April 2000 at then-governor Paul Cellucci's request, and further analysis by a new authority management team put the Big Dig's cost at $14.1 billion, later increased to $14.5 billion.

Both MacDonald, of Bechtel in San Francisco, and Thomas J. O'Neill, president of Parsons Brinckerhoff Inc. of New York, said the team had done good work on the complex project.

State Senator Robert A. Havern III, an Arlington Democrat who cochairs the Transportation Committee, asked three Bechtel/Parsons officials testifying together whether their team deserved to be fired. Following several seconds of silence, MacDonald said no.

"I think we're fundamentally doing good work," he said, but acknowledged, "We are not here to pretend anyone could go 15 years on a project of this complexity and scale and not wish some things could be done differently."

Bechtel/Parsons has offered to give up some of its fee if project costs go up yet again, but MacDonald said he could not guarantee that the $14.5 billion figure would not grow. "That is not something we can do, sir, because it's too risky," he said.

Although authority officials have spoken of a $500 million contingency fund, part of the $14.5 billion figure, as something that would cover unforeseen costs, MacDonald had a different view. "The contingency is something we expect will be consumed on the project," he said.

Questioned by legislators from across the state whose constituents are unhappy about the Big Dig sucking up a disproportionate share of transportation funds, MacDonald told committee cochairman Representative Joseph C. Sullivan, (D-Braintree), "I think I'm doing a bad job of conveying our position on this."

But, asked by reporters after the four-hour hearing why costs had grown so dramatically, he declined to say. "I don't really want to answer that off the cuff," he said. "I'm kind of talked out."

Administration and Finance Secretary Stephen Crosby and Treasurer Shannon O'Brien testified about Acting Governor Jane Swift's plan to pay for this summer's Big Dig cost increase of $400 million.

"This is genuinely an anger-producing, frustration-generating project," said Crosby, admitting he had been wrong about last year's cost estimate.

"I believe, with even more informed good faith than when I came before you months ago, that we will not be back for more" funding, Crosby said.

Authority officials said the current plan to pay off the agency's Big Dig bonds over 40 years includes toll hikes of about 20 percent every six years. Turnpike tolls are scheduled to increase in January. The three-member authority board will vote on the increase at a meeting Tuesday.

Asked whether discount programs would be available for some communities, authority officials demurred. Crosby said, "Modifying the toll increase is not likely."

Pressed on why they didn't speak out publicly about the project's cost, Bechtel/Parsons officials said they stuck to their contract, which meant supplying information only to the agency they worked for.

Senator Therese Murray, a Plymouth Democrat, asked MacDonald whether Bechtel/Parsons had been "complacent."

"We were responsive to our customer, not complacent," said McDonald.

"That's management talk," said Murray.

This story ran on page A1 of the Metro/Region section of the Boston Globe on 10/03/2001 .
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