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Romney tackled overruns while leading Olympics
By Sean P. Murphy and Raphael Lewis, Globe Staff, 2/28/2003
 hen he meets this morning with Adrian Zaccaria, the president of Bechtel Group Inc., Governor Mitt Romney will be renewing a business relationship that began in 1999 when Romney took over leadership of the Winter Olympics and promptly slashed the budget Bechtel had helped create.
Romney arrived in Salt Lake City with a mandate to straighten out problems left by previous executives -- and to do it fast. At the time, the budget for the privately financed 2002 Games was steadily rising, and state leaders turned to Romney to rescue a faltering event. One of the consulting companies Romney confronted in his new assignment was Bechtel, which had a $750,000 contract to develop the cost side of the budget, then pegged at $1.5 billion. Romney spokesman Eric Fehrnstrom declined yesterday to comment on the governor's direct dealings with Bechtel in Salt Lake City, but said, ''The governor has a great deal of respect for Bechtel. It is one of the world's finest consulting firms.'' But Fraser Bullock, Romney's top assistant on the Olympic committee, said he and Romney, upon taking over the committee leadership, found Bechtel's budget to be ''too fat,'' and that it included a $50 million ''error'' involving inflation calculations. ''What Bechtel had done was capture the recommendations of the staff and put those in the budget,'' Bullock said. ''My task was to go through it and reduce it.'' Bullock, who now leads Sorenson Capital, a private equity investment firm in Salt Lake City, said Bechtel had budgeted $50 million to cover the cost of inflation during the years of preparation for the games. ''That was their math,'' Bullock said of Bechtel's estimate. ''And we felt there was already enough padding that the entire amount could be eliminated.'' He and Romney wound up trimming the budget, item by item, by $150 million, including the inflation reduction. Bechtel spokesman Jeff Berger said Bechtel worked only on the cost side of the budget, not on the revenue side, in which sizable errors were made in estimating the value of in-kind contributions pledged by corporate sponsors. Berger said Bechtel did its job well. And Bullock noted that a separate Bechtel task overseeing some of the construction for the Olympics went off without a hitch. Today's meeting in Romney's office was called by the governor two weeks ago after the Globe published a series of stories on more than $1 billion in Big Dig construction cost overruns tied to Bechtel's management of the project. Zaccaria, Bechtel's chief operating officer, was expected to present the company's views on Big Dig cost overruns to Romney, who has called for an independent engineering review of overruns on the $14.6 billion project. ''The purpose behind the meeting is to talk with Adrian Zaccaria about putting in place a credible independent review on cost recovery,'' said Fehrnstrom. ''[Bechtel] should look forward with enthusiasm to a professional independent review.'' Bullock said Bechtel had about 10 employees assigned to the Olympics, out of a staff of about 250. Bechtel, along with Big Dig partner Parsons Brinckerhoff, currently has about 500 employees in Boston.
This story ran on page B1 of the Boston Globe on 2/28/2003.
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