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Extra-Large Price Tag Lands ’Big Dig’ in Big, Big Trouble

Wed April 26, 2000 - Northeast Edition
Walt Heithaus

On April 11, Massachusetts Governor Paul Cellucci fired the shot heard ’round the country’s construction industry by forcing the resignation of “Big Dig” project boss James J. Kerasiotes.

A buzz word for the Central Artery/Tunnel Project (CA/T), the “Big Dig” has been under construction since 1991. At its completion, scheduled for 2004, it will have sunk Boston’s raised Central Artery underground, erected two bridges across the Charles River, and linked the Massachusetts Turnpike with Logan Airport.

The project is owned and managed by the Massachusetts Turnpike Authority (MTA). Design and construction management is provided by Bechtel/Parsons Brinckerhoff, a joint venture of Bechtel Corporation of San Francisco and Parsons Brinckerhoff Quade & Douglas Inc. of New York.

Championed by local officials as “the largest, most complex and technologically challenging highway project ever attempted in American history,” the “Big Dig” also is the most expensive public works project under way in America.

Which is why it’s in trouble. Big time.

Gov. Cellucci canned Kerasiotes only minutes after a Federal Highway Administration task force released a blistering report denouncing him for staying deceptively mum for months about $1.4 billion in looming cost overruns.

The 48-page federal report said the cost overruns, in part due to rising labor and material costs, may now reach $1.88 billion — $480 million more than Massachusetts had estimated. That would bring the total price tag to $13.6 billion.

When the project started in 1991, it was estimated it would cost $5 billion to complete.

About two-thirds of the Big Dig project has been completed, including a tunnel under the Boston Harbor. The federal government is paying about 70 percent of the project costs.

U.S. Transportation Secretary Rodney Slater said Kerasiotes and project officials “demonstrated disrespect for the federal oversight process by intentionally withholding knowledge” of the Big Dig’s potential cost overrun, which officials contended is “one of the most flagrant breaches of the integrity” of the 85-year-old federal program that finances local construction projects.

Slater also criticized the Federal Highway Administration for its failure to “adequately fulfill its oversight role.”

Slater said the price tag for the Big Dig could now be as high as $13.6 billion, and warned that project officials’ estimates for future construction costs are “optimistically low.” The audit team also warned inflation could drive the total even higher.

The pivotal source of Kerasiotes’ trouble was his long and aggressive insistence that the project would come in on its $10.8-billion budget and would be on time. In February, when Kerasiotes suddenly announced that the project was going to be $1.4 billion over budget, federal officials responsible for the Big Dig’s oversight were understandably unpleasantly surprised and began to dig for facts.

For weeks before taking action, Governor Cellucci defended Kerasiotes. After pulling the trigger, Cellucci said of Kerasiotes, “I think in his zeal to finish the project he forgot something that is fundamental, that this is a democracy and the citizens have a right to know what [the project] is going to cost.”

Governor Cellucci appointed Administration and Finance Secretary Andrew Natsios to replace Kerasiotes as Massachusetts Turnpike Authority chairman and overseer of the project, and gave him free rein to fire and hire.

Consequently, Natsios fired Project Director Patrick J. Moynihan and other aides close to Kerasiotes. The “house cleaning” is expected to continue. He also pledged to flood the news media and public with information about the highway project.

Natsios said he will await a report by consultants O’Brien/Kreitzberg before deciding whether or not to amend the Commonwealth’s long relationship with Bechtel/Parsons

Brinckerhoff, the $150-million-a-year management consultants on the project.

Natsios said he is planning to hire a construction lawyer to prepare for possible lawsuits against Big Dig contractors for initiating the cost overruns.

Gov. Cellucci and Massachusetts lawmakers said they hoped Kerasiotes’ firing would send a signal to federal officials that the Commonwealth is serious about getting the troubled Big Dig project back on track.

U.S. Transportation Secretary Slater also blamed federal highway officials for being too trusting and failing to catch rising costs. “No one is blameless as it relates to this project,” he said.

Massachusetts’ grip on the project clearly has been loosened as federal officials take over. The audit designates the Massachusetts Highway Department and the Massachusetts Turnpike Authority as “high-risk” grantees, requiring them to submit detailed financial reports.

One-of the Big Dig’s harshest critics has been U.S. Rep. Frank Wolf (R-VA) who called on Slater to “suspend” federal participation in the project.

Slater said he hopes to convince Wolf he was taking clear steps to rein in the project. Wolf seemed unfazed, branding the auditor’s report “deeply disturbing” while noting that the state lacked an approved finance plan to continue the project.

“The Transportation Subcommittee calls on the Secretary of Transportation to suspend federal participation in the Central Artery project at this time,” Wolf said in a statement.

While Massachusetts has had a long-standing relationship with Bechtel/Parsons Brinckerhoff, Federal Highway Administrator Kenneth R. Wykle took a shot at Bechtel, suggesting that the firm deserves greater scrutiny for failing to reveal the $1.4-billion cost hike in the project.

Local officials believe Natsios will impose new oversight on Bechtel, perhaps a project management organization to be hired by the Commonwealth to oversee the contractor.

During 2000, more than 4,000 construction workers will work on the Big Dig which has some 109 separate construction contracts in force.

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