Executive Summary

The Central Artery/Tunnel (CA/T) project is one of the most complex, and certainly the most costly, public-infrastructure projects ever undertaken in the United States. Often called the “Big Dig,” the project was conceived to improve the traffic flow in downtown Boston and link several major roadways and transportation hubs. It was intended to replace a badly deteriorated and congested elevated roadway (I-93, the “Central Artery” through Boston), extend the Massachusetts Turnpike (I-90) to Logan Airport through a harbor tunnel, provide an interchange of I-90 and I-93, and replace the I-93 bridge over the Charles River. The project was originally estimated to cost $2.6 billion (1982 dollars) and be completed in 1998. The current estimate is $14.6 billion (2002 dollars) with completion anticipated in 2005. All design work has essentially been done, construction is about 85 percent complete, and portions of the project are now being put into operation.

The overall responsibility for the CA/T project was initially assigned to the Massachusetts Department of Public Works, which became the Massachusetts Highway Department (MHD) in 1991. The MHD hired a joint venture of the firms Bechtel and Parsons Brinckerhoff Quade and Douglas, hereinafter referred to as B/PB, to serve as project manager. In 1997, the state legislature designated the Massachusetts Turnpike Authority (MTA) to be owner/operator of the overall Metropolitan Highway System, with consequent responsibility for management of the CA/T project. That management function is now performed by an integrated project organization (IPO) of MTA staff and B/PB staff who essentially work as one single organization under the direction of the MTA.

The Central Artery/Tunnel project has had many noteworthy technological accomplishments that will serve to guide future urban construction. Among them are the deep slurry walls constructed in soft clay, the soil-freezing and tunnel-jacking operation at the Fort Point Channel crossing, and the Leonard P.Zakim Bunker Hill Bridge, which is the widest cable-stayed bridge in the world. It must also be noted that extensive construction has taken place in a dense urban area with minimal damage to existing structures and utilities, traffic has been kept flowing through a busy city for over a decade, and a major railroad yard continued operations while a tunnel was built beneath it.

Accomplishments have not been limited to the technological. The CA/T project team has been sensitive to the needs and desires of the communities that were inevitably affected by the construction activities. The Owner-Controlled Insurance Program (OCIP) was an effective and cost-reducing response to the challenge of obtaining adequate insurance coverage for the large numbers of engineering and contracting firms involved in the project. And the project’s safety record for 2002–5.5 recordable worker injuries per 100 full-time employees—is significantly below the national average of 8.2.

This report was requested by the MTA, which sought an independent assessment of the CA/T project’s current project-management and contract-administration practices. The MTA wished to determine if such practices will be adequate for completing the project in a timely and cost-effective manner. The report therefore focuses on project-management and contract-administration practices and procedures in place as of October 2002 and looks toward the future—that is, to the end of the project and its transition to a fully operational system. The report does not attempt to address the many past controversies that have surrounded the project’s justification, funding, cost, schedule, or management; it considers prior project performance, cost



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Executive Summary The Central Artery/Tunnel (CA/T) project is one of the most complex, and certainly the most costly, public-infrastructure projects ever undertaken in the United States. Often called the “Big Dig,” the project was conceived to improve the traffic flow in downtown Boston and link several major roadways and transportation hubs. It was intended to replace a badly deteriorated and congested elevated roadway (I-93, the “Central Artery” through Boston), extend the Massachusetts Turnpike (I-90) to Logan Airport through a harbor tunnel, provide an interchange of I-90 and I-93, and replace the I-93 bridge over the Charles River. The project was originally estimated to cost $2.6 billion (1982 dollars) and be completed in 1998. The current estimate is $14.6 billion (2002 dollars) with completion anticipated in 2005. All design work has essentially been done, construction is about 85 percent complete, and portions of the project are now being put into operation. The overall responsibility for the CA/T project was initially assigned to the Massachusetts Department of Public Works, which became the Massachusetts Highway Department (MHD) in 1991. The MHD hired a joint venture of the firms Bechtel and Parsons Brinckerhoff Quade and Douglas, hereinafter referred to as B/PB, to serve as project manager. In 1997, the state legislature designated the Massachusetts Turnpike Authority (MTA) to be owner/operator of the overall Metropolitan Highway System, with consequent responsibility for management of the CA/T project. That management function is now performed by an integrated project organization (IPO) of MTA staff and B/PB staff who essentially work as one single organization under the direction of the MTA. The Central Artery/Tunnel project has had many noteworthy technological accomplishments that will serve to guide future urban construction. Among them are the deep slurry walls constructed in soft clay, the soil-freezing and tunnel-jacking operation at the Fort Point Channel crossing, and the Leonard P.Zakim Bunker Hill Bridge, which is the widest cable-stayed bridge in the world. It must also be noted that extensive construction has taken place in a dense urban area with minimal damage to existing structures and utilities, traffic has been kept flowing through a busy city for over a decade, and a major railroad yard continued operations while a tunnel was built beneath it. Accomplishments have not been limited to the technological. The CA/T project team has been sensitive to the needs and desires of the communities that were inevitably affected by the construction activities. The Owner-Controlled Insurance Program (OCIP) was an effective and cost-reducing response to the challenge of obtaining adequate insurance coverage for the large numbers of engineering and contracting firms involved in the project. And the project’s safety record for 2002–5.5 recordable worker injuries per 100 full-time employees—is significantly below the national average of 8.2. This report was requested by the MTA, which sought an independent assessment of the CA/T project’s current project-management and contract-administration practices. The MTA wished to determine if such practices will be adequate for completing the project in a timely and cost-effective manner. The report therefore focuses on project-management and contract-administration practices and procedures in place as of October 2002 and looks toward the future—that is, to the end of the project and its transition to a fully operational system. The report does not attempt to address the many past controversies that have surrounded the project’s justification, funding, cost, schedule, or management; it considers prior project performance, cost

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and schedule escalation, and financing plans only to the extent that they may affect future performance. The assessment was performed by an expert committee appointed by the National Research Council (NRC). The NRC’s Board on Infrastructure and the Constructed Environment (BICE), in collaboration with the National Academy of Engineering (NAE) and the NRC’s Transportation Research Board (TRB), helped to oversee the study process. The committee members who undertook this study had expertise in the key areas of project management, contract administration and management, and transportation-agency administration, but they had no significant relationship with the project, the MTA, or the management consultant B/PB. The committee was constrained to accept the information presented by the MTA and IPO and information included in prior audit reports. The committee was charged with the following five tasks: Determine the adequacy of current procedures for addressing the CA/T project’s cost and schedule issues. Recommend refinements to the organization and management of its contract-administration function. Recommend improvements to the reporting and controls procedures. Determine the adequacy of oversight of the project’s management consultant. Determine the appropriateness and effectiveness of the structure for transition from construction to operations. In undertaking these tasks, the committee was well aware of the many controversies that have surrounded the CA/T project. During its long history, the project has been scrutinized by myriad investigative and oversight bodies, and it will no doubt be subject to additional probing yet to come. However, the committee went forward with the rationale that there is $2 billion still to be spent, major construction to complete, and a key element of the Massachusetts transportation system to be made fully operational. The committee maintains that management and organizational changes can still be implemented both for saving money and easing, even expediting, the transition to operations. The findings and recommendations presented below are thus offered in the belief that the future of the CA/T project is still to be determined and that every opportunity for efficiency and improvement should be evaluated and acted on. The committee’s findings and recommendations are summarized below under headings that correspond to its five tasks. The committee considers all of its conclusions to be relevant to the issues confronting the MTA, but it also believes that two matters of overarching importance merit special emphasis and priority attention: The uncertain financial burden and potential for delay posed by the excessive number and monetary value of outstanding contract claims and related issues. The need for the transition process from construction to operation and maintenance to be properly organized and managed.

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FINDINGS AND RECOMMENDATIONS Cost and Schedule Procedures Schedule Management Finding 1: Meeting the CA/T’s project’s scheduled targets continues to be a problem. Despite an emphasis on reaching the milestones on time, slippage continues, thereby reducing public confidence in CA/T management. Recommendation 1: CA/T project managers should strategically evaluate future schedules by determining what critical tasks need to be done without fail and how long these activities will likely take. Published completion dates should be developed around realistic workflows and schedule risks, with modest allowances for unknown issues. Cost Management Finding 2: The project has had large cost increases resulting from changes in scope, design, and project limits, as well as from deficiencies coordinating contracts. Recommendation 2: All contract modifications should be comprehensively reviewed—prior to execution—for impacts on scope, design details, interfaces, and contract duration. Cost/Schedule Tradeoff Finding 3: The committee could not identify sufficient analysis to justify all construction-acceleration efforts that have occurred. Recommendation 3: The MTA should rigorously analyze all costs associated with project acceleration, especially for completing the key “critical path” tasks (those in which a delay could cause critical project milestones to be missed). Value Engineering Finding 4: The savings from contractor-proposed “value engineering change proposals” (VECPs) to date has been $25 million, which is a negligible amount compared with the constructed value of the project. Recommendation 4: The MTA should aggressively promote the VECP for the remaining work. This effort should increase contractor level of awareness, encourage innovation, and yield cost reductions. Contract Administration Claims Management

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Finding 5a: The project’s exposure to unsettled claims and changes is significant. Both the number of claims and their average age have been growing steadily for the past 4 years. Finding 5b: Responsibility for resolving claims and changes for amounts over $250,000 is currently assigned to the legal staff of the MTA, and the imminent departure of a key staff member may adversely affect staff productivity. Recommendation 5a: Resolution of unresolved changes and claims should be deemed a high-priority issue, meriting immediate attention by the MTA. It constitutes a project within the project, to which project management principles should be applied. Recommendation 5b: A closeout schedule should be developed, along with identification of resources necessary to support it. A target date of July 2004 should be established for resolution of the unsettled claims and changes. Recommendation 5c: Consideration should be given to paying contractors for the estimated direct costs of directed changes and recognized claims in advance of settling other entitlement issues. In that way, the burdens on contractors and subcontractors carrying these costs can be relieved. Contingency Management Finding 6: While individual contracts have been analyzed for exposure to changes, comprehensive risk- and contingency-management tools and processes do not appear to be in place. Recommendation 6: The MTA should initiate contingency-management procedures that include continual comprehensive risk analysis to quantify and refine contract contingencies, individual-contract contingency tracking, and a contingency drawdown plan that includes contingency-use forecasts. Cost Recovery Finding 7: The current cost-recovery program emphasizes legal issues prior to resolution of engineering issues. This process is reported to have replaced a partnering-style relationship with an adversarial process. Recommendation 7: The MTA should take steps to reinstate the engineering-driven process in order to resolve cost-recovery issues. Reporting and Controls Senior Management’s Information Overload Finding 8: Too much uncoordinated information is provided to the project’s senior management, and project reports do not lend themselves to ready analysis—particularly with

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regard to such concerns as the uncertainty of forecasts and the trade-off possibilities between time reductions and cost increases. Recommendation 8: As the project foci shift—to managing claims, cost-recovery processes, and the transition to operation—project reports should also change to emphasize summary information and strategic issues. Schedule Analysis Finding 9: The MTA has developed an aggressive and optimistic schedule for project completion. However, the project milestones are prone to slippage as events occur. Recommendations 9: Project reports should reflect the probability of meeting milestones or the probabilistic distribution of completion times, based on the results of past efforts. Oversight for Management Consultant Integrated Project-Management Oversight Finding 10: The integrated project organization (IPO) structure currently utilized by the MTA to direct the design and construction of the CA/T project appears to be functioning reasonably well. Although most of the contracts are now under way or completed, the committee observed that a detailed plan for downsizing and ultimately eliminating the management-consultant staff was not in place. Recommendation 10: MTA should implement an aggressive plan to downsize the B/PB staff members who are not essential to completing contracts and resolving claims. At the same time, the MTA should ensure that key staff members remain in place to finalize and close out all contracts and claims. Finding 11: The existing management tools and metrics currently in use are sufficient for overseeing the management consultant. Recommendation 11: If the MTA wishes to improve its oversight of the management consultant, the committee encourages it to make better use of the tools presently available rather than develop new tools. Independent Peer Review Finding 12: The CA/T project has had numerous reviews over time for different purposes. However, there has not been a continuing independent peer-review of technical issues, management, and strategic directions. Recommendation 12: The MTA should establish an external, independent peer-review program to address technical and management issues until transition to operations and maintenance is

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completed. The frequency of reviews and peer-review participants should vary in accordance with the issues to be addressed. Transition from Construction to Operations Public Education Finding 13: Information transfer to the motoring public has been minimal thus far and not well timed for the scheduled opening of the first completed sections of the project. Recommendation 13: MTA should have a media team, with technical assistance provided by the project staff, to develop and immediately implement an innovative plan for educating the public to use the CA/T. Strategic Thinking Finding 14: The committee has not seen an adequate plan for guiding the transition from a construction organization dominated by project-management consultants to an operations organization that is largely composed of full-time MTA staff. Recommendation 14: The MTA should establish processes to assist its chairman in identifying and prioritizing strategic issues and in carrying out the transition from design and construction to operations and maintenance. Security Finding 15: During its October site visit, the committee observed what it perceived as a lack of security. Recommendation 15: A comprehensive security program should be developed, immediately implemented, and maintained not only until completion of the project but also throughout its transition to operation.