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Building a reputation

Bechtel has never shied away from big construction projects, but worldwide achievements are accompanied by controversy

By Raphael Lewis and Sean P. Murphy, Globe Staff, 2/28/2003

   
 THE SERIES

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

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


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

Graphic
Cost recoveries initiated


PART THREE
Powerfull allies help protect Bechtel and its bottom line.

 FOLLOW-UPS

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

 GLOBE DEFENSE OF SERIES

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

 PHOTO GALLERY

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

 FROM THE ARCHIVES

2001
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

2002
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

2003
Contracts to be reviewed

 RELATED LINKS

Central Artery/Tunnel Project
www.bigdig.com

Bechtel
www.bechtel.com

Parsons Brinckerhoff
www.pbworld.com

State Inspector General reports
On the history of the Central Artery/Tunnel project's finances:
www.state.ma.us/ig/publ/cat01ex.htm
On the Central Artery/Tunnel project's attempts to recover money for mistakes:
www.state.ma.us/ig/publ/catcrex.htm

About "Scheme Z" bridge design
libraries.mit.edu/rotch/artery/

State oversight of the Big Dig
www.state.ma.us/catocc/

Mass. Turnpike Authority
www.massturnpike.com

The Artery Business Committee
www.arterybusiness.com

 ONLINE CHAT

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

 CONTACT THE GLOBE

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

 MORE BOSTON.COM COVERAGE


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
 


They cleaned up the mess at the Three Mile Island nuclear reactor, put out oil fires in Kuwait, helped build the Hoover Dam, and connected England and France via the Channel Tunnel.

They are workers for Bechtel Group Inc., best known to Bostonians for their management, along with Parsons Brinckerhoff, of the $14.6 billion Big Dig project, an endeavor marked by Herculean engineering challenges and notorious cost overruns. Recently, Bechtel has become a lightning rod for criticism in Boston, where policy makers, the media, and the public have questioned the company's role in the Big Dig's cost growth.

But for Bechtel, one of the world's largest engineering and construction firms, controversy is par for the course. Perhaps it's inevitable when a company of 50,000 employees takes on 20,000 projects in more than 140 countries, over the span of 105 years.

Bechtel-led projects are said to have changed the face of the planet, building 20 towns and cities, 50,000 miles of pipelines, and 17,000 miles of highway. But as the firm adds to its portfolio, becoming ever more entrenched and connected to the power elite around the world, Bechtel's projects have increasingly drawn criticism. The company has long asserted that it gets by on its ability to work on difficult projects safely, and by assembling a high-powered brain trust for any task it takes on. Critics, the company says, have a variety of ulterior motives, not the least of which is a desire to compete.

Governor Mitt Romney apparently wants to make up his own mind. This morning, he is scheduled to meet with Adrian Zaccaria, Bechtel's president and chief operating officer, and the agenda is simple: Why do construction cost overruns top $1.6 billion on the Big Dig, and what is the firm's role in that embarrassing cost growth?

As vexing as the Big Dig's issues have been, the stakes for Bechtel have been even higher elsewhere. In the Bolivian city of Cochabamba in 2000, for example, impoverished residents rioted after a company partially owned by Bechtel pushed for water rates that doubled many residents' bills. A 17-year-old boy was shot and killed in the melee. After company officials fled the nation, leaving investments worth at least $25 million, Bechtel is now pursuing the Bolivian government for its losses. The proceeding is taking place in a World Bank-controlled private arbitration.

''In Bolivia, Bechtel demonstrated that it has no moral compass whatsoever other than seeking profit off the poorest people in the world,'' said Jim Shultz, the Bolvian-based director of the Democracy Center, a citizens advocacy group.

Jeff Berger, a Bechtel spokesman, said critics should focus their ire on the Bolivian government, which, he said, controls water rates, structured the deal with Bechtel, and fired the shots into the crowd.

Its troubles in Bolivia notwithstanding, Bechtel is good at making money. Company revenues in 2001, the most recent for which Bechtel has made data available, topped $13 billion, making it one of the world's 400 richest companies. By comparison, Bechtel reaps between $100 million and $200 million a year managing the Big Dig. The only reason Bechtel is not listed by Forbes Magazine in its annual listing of the world's most successful firms is that the Bechtel Group is still a family-run, privately held company, now in its fourth generation. What began as a one-man, horse-drawn concern in America's heartland now includes subsidiaries in telecommunications, water delivery, nuclear plant construction and cleaning, pipeline building, and even megaproject financing. Many of those businesses have attracted bitter opponents and regulatory trouble. Even as critics are awed by the company's reach, they find its work rarely lives up to its promise of peerless efficiency.

Robert R. Loux is the director of Nevada's Agency for Nuclear Projects, which oversees the controversial Yucca Mountain nuclear repository project, which entails creating a subterranean, national waste center. He said Bechtel's work on the project has been spotty at best. But, he added, determining where Bechtel's performance ends and the US Department of Energy's begins is nearly impossible, especially because the company has hired many government officials to advocate and lobby on its behalf. ''It's hard to separate out the two parties, but the overall performance on the project has been very poor, in terms of cost, schedule, and quality of science,'' Loux said.

Berger defended the company's work on the Yucca Mountain project as meeting or exceeding the government's expectations, and noted that Bechtel is one partner in a joint venture on the project. As on the Big Dig, Berger did not acknowledge any errors, but said the firm is ''on a continuous quest to improve our overall quality performance.''

In many ways, Bechtel's performance on several high-profile projects follows the same pattern as the Big Dig. On the one hand, even its harshest critics concede that Bechtel is perhaps the best, most well-equipped firm to take on the task at hand. On the other hand, they see problems in work quality and oversight.

Joe R. Egan, a suburban Washington, D.C., lawyer who has been involved in some of the nation's most contentious and high-profile nuclear disputes, praised Bechtel as ''a superior builder of nuclear power plants.'' In the next breath, however, he assailed the firm's work regarding nuclear cleanup and remediation. ''They've had growing pains to say the least,'' he said. ''They bought old companies with massive problems and assimilated all their employees, some of which were very unqualified.''

Last year, a Bechtel subsidiary in Idaho was hit with $41,000 in proposed fines for violations of nuclear safety laws, and in 2000, another company subsidiary was told to pay twice that amount for three serious violations.

Again, Berger defended the company's record in nuclear management and cleanup as ''second to none.'' All violations, he said, were often dealt with before the fines were even handed out, and many were due to the work of subcontractors.

Jack Lemley, a world-renowned construction management consultant based in Boise who helped manage the English Channel tunnel project, said, ''I generally have a high opinion of the company. They're very ethical.''

Yet Lemley, who was brought in by Massachusetts officials to scrutinize Bechtel's work at the Big Dig, says he saw a fundamental difference in the way Bechtel approached the Boston project with, for example, the way it dealt with the Channel Tunnel. Whereas Stephen D. Bechtel Jr., the company's patriarch, frequently visited the channel project and placed the firm's best talent on that job, Lemley saw no such commitment in Boston.

''[The Big Dig] didn't have the highest level of attention with the Bechtel company,'' Lemley said. ''They certainly took an interest in it, but I don't believe it had the highest level of attention.''

But some things may have changed since Lemley reviewed the project in the mid-1990s. Last September, Stephen Bechtel came to the region to watch a relative row in the Head of the Charles regatta, and his son, Riley, now the company's chief executive officer, visited the project and met with state officials.

Zaccaria, a 59-year-old Cambridge native who joined Bechtel in 1971, came to town for the dedication of the Leonard P. Zakim Bunker Hill Bridge in October, and appeared to enjoy himself as Bruce Springsteen played ''Thunder Road'' and the company was praised for its accomplishments.

Raphael Lewis can be reached at RLewis@globe.com.

This story ran on page B1 of the Boston Globe on 2/28/2003.
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