T still has no handle on Green Line extension’s cost, report says
Massachusetts Bay Transportation Authority employees were ill-equipped to oversee the massive Green Line extension into Somerville and Medford, should have foreseen its ballooning costs, and still don't have an accurate cost estimate for the project, consultants told the state transportation board Monday.
Hired by the MBTA to assess why costs for the long-delayed Green Line extension have increased so dramatically, the consultants painted a bleak picture of a process plagued by problems, including an "excessive drive" to expedite the project with seemingly little regard to rising costs.
The problem "didn't happen yesterday, it didn't happen a month ago, it didn't happen just a year ago," said Terence Rodgers, a managing director for the Berkeley Research Group who looked into the project. "Some of these issues were sown as a part of the process."
MBTA officials stunned the public in late August when they revealed the 4.7-mile extension of the Green Line trolley could cost up to $1 billion more than its budgeted $1.99 billion price tag. The MBTA has already awarded about $206 million in construction contracts, which a MassDOT official said Monday represents a cost overrun of about 45 percent.
Consultants said Monday that the MBTA and its contractors should have been able to predict the rising costs as far back as 2012. Terry Yeager, another consultant for the Berkeley Research Group, said budget estimates from contractors hired at the time should have alerted the MBTA that funding would need to increase substantially.
When pushed by Transportation Secretary Stephanie Pollack about an accurate price range for the project, Yeager said it would likely be between $2.5 billion and $3 billion.
The extension is one of the most extensive projects the agency has undertaken in decades and could be its most expensive. Consultants outlined a number of reasons for its problems. The MBTA did not devote enough staff to the project. Officials botched the implementation of a new contracting process — one that had not been used in Massachusetts. And they were not able to produce a reliable budget throughout the process.
"I'm not convinced that a reliable budget has been produced today," Yeager said.
Members of the state transportation board looked somber or incredulous as they listened to the presentations.
Much of the discussion centered on problems created through the contracting process, which allowed the MBTA to choose companies largely based on their qualifications rather than specific project bid costs. That process allowed the selected construction company — White-Skanska-Kiewit — to negotiate the price of each phase as the project continues.
MBTA officials had seemed to prefer the new contracting method because it sped up the construction schedule, according to the consultants.
Yet critics argue the process gives the construction company no incentive to rein in costs. Because of the way the MBTA administered the process, consultants say, it awarded contracts to WSK that were over budget by up to 10 percent.
Brian Lang, a state transportation board member who also serves on the MBTA's control board, asked Yeager whether WSK had essentially taken advantage of the MBTA's system.
"We allowed them to work the system, and they ended up every time getting their maximum price?" said Lang.
A representative from WSK could not immediately be reached for comment.
Ann-Therese E. Schmid, an attorney with Washington's Nossaman LLP, also hired to assess the problems, told the state transportation board that the MBTA was not following best practices with the contracting process. For example, the MBTA did not put a cap on markups, and it was unclear how collaborative the contractors were in their budget estimates.
The consultants' findings have big implications for the project, which is staffed by about 10 MBTA employees and costs about $1 million a week in payments to outside firms. The MBTA has already awarded up to $251.3 million to five firms, including a project manager, HDR/Gilbane, and WSK.
As the MBTA's fiscal control board and the state transportation board weigh the next steps for the project, the authority could fire some contractors or rebid some of the contracts. Joseph Aiello, chairman of the fiscal control board, told reporters after the meeting that he believes the staff and consultants should be replaced.
Pollack said she is not interested in assigning blame.
"It seems like many parties failed to undertake actions that would have helped us much better understand the cost of this project," Pollack said.
The state transportation board is scheduled to meet again Dec. 9 to discuss the project, which was split into seven contracts. While work on the first four contracts continues, the MBTA has largely halted any work on the fifth.
That fifth phase is one of the biggest. It includes relocating Lechmere Station and constructing tracks and new stations at Washington Street and Union Square.
The revelations about the botched process came amid talks of potential MBTA fare hikes and other budget-balancing measures.
MBTA officials in a separate meeting Monday presented a preliminary list of options that could help the agency save at least $128 million to $191 million through the 2017 fiscal year, which includes choices such as pulling the plug on late-night service and making big changes to weekend commuter rail service.
MBTA officials suggested they could renegotiate their union contracts to defer employee raises and encourage longtime workers to leave the agency with generous retirement deals as part of a package of more than two dozen cost-cutting moves.
Brian Shortsleeve, the MBTA's chief administrator, said some changes could be necessary to cut down on costs.
"When you face the magnitude of the deficits we face, and you have our commitment to get ourselves to balance the budget, you've got to try very creatively to use every lever to close that deficit," he said.