August 14, 2011

By Beverly Ford, New England Center for Investigative Reporting
If it seems as if those costly road and bridge construction projects in Massachusetts are never ending, you might be right.

Nearly half of all road and bridge projects in the state are over budget and more than one-third are not completed on time, an investigation by the New England Center for Investigative Reporting (NECIR) has found. The completion delays result in contract extensions that put thousands of extra work days on the state’s construction calendar and millions of dollars in contractors’ pockets.

In the last four fiscal years alone, contractors had 155,008 extra work days added to their construction schedules – equivalent to nearly 425 years – and billed the state more than $352 million in cost overruns on hundreds of road and bridge projects that have been completed throughout Massachusetts, the NECIR investigation found by examining data obtained from the Massachusetts Department of Transportation. Projects still underway will add $127 million and nearly 43,000 days to those figures.

“You can’t open a vault filled with money. That just doesn’t work,” said Scott Amey, general counsel for the Project on Government Oversight, a Washington, DC based government watchdog group. “The government needs to do everything it can to protect itself and the taxpayers so that contracts don’t end up over budget and behind schedule.”

Lessons of extensive time delays and construction shortfalls learned from the Central Artery Tunnel Project, better known as “The Big Dig,” seem lost in the four years since 2007 when that $14 billion project faced $12 billion in cost overruns and ran years behind schedule. Today, Massachusetts continues to struggle to bring construction projects in on-deadline and on-budget.

In 2010 alone, recession-weary taxpayers shelled out more than $8 million to cover construction costs that added some 4,000 calendar days – over 10 years – to road and bridge projects in the Bay State.

From drain cleaning and sign installation to a “weave elimination project” on the Massachusetts Turnpike, cost overruns and missed deadlines have taken a collective bite from at least half of the 1,212 road and bridge contracts signed by MassDOT since 2008, the data shows.

Topping the list of cost overruns is the rehabilitation of the Fore River Bridge on Route 3A linking Quincy and Weymouth. The Middlesex Corp. of Littleton, which signed on at the original contract price of $58 million, saw costs rise by $30 million in the ten years since the project’s 1999 start, data supplied by MassDOT shows. By 2009, costs had reached $87.9 million. The total tab for that project is projected to top $240 million by the time it is completed, MassDOT estimates.

A close second place contender is a project to relocate Route 44 in Plymouth. Started in 2001, the project overseen by PA Landers Inc. of Plymouth, overran its original construction budget of $34 million when costs soared to $57.6 million by 2009, according to the MassDOT data. That was $23 million and nearly 2,200 days more than originally estimated.

Both projects remain on the MassDOT active construction list even though the Route 44 relocation project has been completed for years. Despite that completed status, the project remains open due to a payment dispute with a contractor, a MassDOT official said.

Among completed projects, two nondescript road projects stand out. Although few, if any, drivers even noticed them, they were among the costliest and most time consuming ventures since the Big Dig epoch.

One of the state’s longest running completed projects is a 10-year-old venture to install an intelligent transportation management system, which controls and monitors traffic along a 25-mile stretch of Route 128 from Braintree to Wakefield. Started in July 1998 and scheduled for completion in April 2004, the project overseen by Liddell Brothers lasted an additional five years and topped out at $9.6 million, $3.1 million more than its original contract price and nine years beyond its scheduled completion date, MassDOT records note. The Halifax-based contractor on that project signed a total of 23 contracts with the state since 1998, topping its budgets on ten occasions while adding $2 million in overruns and more then 4,500 extra work days to the final cost.

Yet that $3.1 million project overrun could hardly compare to one of the state’s most costly. That distinction goes to a series of structural repair projects by N E L Corporation that started in 2004. Originally expected to cost $1.5 million, cost overruns of $7.5 million put the final dollar figure at $8.9 million after just four years, MassDOT data indicates. Including that project, N E L Corporation has signed 56 other contracts with MassDOT, 19 of them with cost overruns totaling about $40 million and eight in which completion deadlines were extended by more than 7,000 days, MassDOT records show.

Representatives from all four construction companies either declined comment or did not return phone calls but John Pourbaix, executive director of Construction Industries of Massachusetts, a trade organization that represents many of the contractors who do business with the state, said several factors affect the bottom line in almost all construction projects. Weather and environmental concerns, design snafus and utility relocation issues all mean delays, he notes. And as delays mount, so do costs.

“Believe me, a contractor would love to get in and get out as quickly as possible,” Pourbaix said. “It’s extremely expensive in terms of overhead in equipment and bidding opportunities,” to deal with delays.

MassDOT officials said changes to work orders along with scheduling, site and other issues likely contributed to increased cost and later completion dates on those projects and others, as well. In fact, extra work orders and design changes or omissions cause 86 percent of all internal delays, a MassDOT study shows. Schedule extensions also were due to external factors, including changed surface conditions, inclement weather and delays by utility companies in relocating equipment. Those factors contribute to 69 percent of all delays caused by external conditions in 2010, that same study notes.

Michael McGrath, deputy chief engineer for construction with MassDOT, said while those factors contribute to 69 percent of all delays caused by external conditions, utility company relocation delays are often a key reason for schedule extensions. They accounted for 28 percent of the delays in 2010

“Utility companies have, for us, been problematic over the years,” he admits. “Because we’re not a revenue source for them, our projects aren’t given priority.”

Amy Zorich, spokeswoman for National Grid, said it’s not about giving state projects priority, it’s about the number of utilities and other construction demands associated with the often complex relocation work that can cause extended deadlines.

“We do our best to work cooperatively with the state to make sure projects go smoothly but there are a lot of things that go into projects that affect the timing,” said Zorich. “Everything from engineering, staffing, traffic control and the weather to coordinating with other utilities all takes time.”

MassDOT is hoping to change all that, however.

McGrath says state transportation officials are currently working on a plan to pay utilities half of their relocation costs in a bid to shorten more expensive scheduling delays.

That plan is one of several transit officials hope to use to increase on-budget and on-time performance for road and bridge construction. Tighter oversight, peer review of projects and other cost cutting measures put the state over the 50 percent mark for on-time and on-budget performance in 2010 for the first time in five years.

Next year, MassDOT plans to set the standard even higher.
“Our goal is to have 80 percent of our highway projects completed on time in fiscal 2011,” says Thomas Broderick, acting chief engineer for the state’s Highway Division. “We want to make sure we’re showing constant improvement.”

While that may seem a lofty task, some critics worry that it does not go far enough to fix the state’s ballooning transportation budget, which is predicted to face a $15 billion to $19 billion funding gap over the next 20 years. The Massachusetts Legislature could soon begin studying a plan to impose mileage-based fees on drivers to generate that needed revenue.

Yet some find that approach deals with only part of the problem.

“When the taxpayers’ money is at stake, there’s no dis-incentive – no financial or business consequences,” said Thomas Schatz, president of Citizens Against Government Waste, a taxpayer advocacy group, explaining the need to make contractors more accountable for cost overruns and delays that add millions to the state’s highway budget annually.

Schatz said MassDOT can induce cost savings by offering incentives for a job well done and penalties for contractors who breech deadlines or overspend budgets. That approach can be quite effective in curbing cost and time overages, he says.

MassDOT spokesman Adam Hurtubise said the state recently began selectively using incentive clauses in some contracts to insure on-time delivery of pending projects, including one dubbed “Fast 14,” a program designed to replace 14 bridge decks on Route 93 in Medford over the course of the summer.

Under that program, part of the state’s Accelerated Bridge Replacement effort, contractors can earn up to $7 million in incentives if they adhere to a contract provision requiring bridges closed for weekend repairs be reopened to traffic by 5 a.m each Monday. Contractors who miss that Monday deadline can face penalties of $450,000 and up.

So far, the roadway has opened ahead of schedule each weekend, Hurtubise said.

While incentive and penalty programs may appease some critics, others say its time the state restructured contracts to make them more cost effective, such as implementing “cost plus” contracts that lock in prices but provides additional payment if material costs rise substantially or unforeseen conditions arise.

“It’s always a challenge to foresee all the potential circumstances and get it in the bid document,” says Steven Poftak, research director at the Pioneer Institute, a Massachusetts-based public policy research center. “But I think we can be more innovative in the way we contract to encourage contractors to be more innovative in the way they work. We also just need to be more demanding.”

Lizzi Weyant, an attorney with the Massachusetts Public Interest Research Group, a Bay State advocacy group, said it’s not just about making contractors more responsible and government more innovative. It’s about making the state’s roads and bridges as safe as possible for the public.

“Ultimately, that’s what it’s about,” she said. “That is the bottom line.”
The New England Center for Investigative Reporting (www.necir-bu.org) is a nonprofit investigative reporting newsroom based at Boston University.