Big Dig costs may rise by millions
US memo says total could reach $14.7b
The US Department of Transportation's inspector general has drafted an internal memo that says the Big Dig's cost may rise by tens of millions of dollars, according to state, industry, and federal officials.
One of the officials pegged the estimated increase at $75 million. If the estimate proves accurate, the project would cost $14.7 billion instead of the current $14.625 billion, an increase that Massachusetts taxpayers or tollpayers would have to absorb, because the federal government has capped its contribution to the controversial megaproject.
A spokesman for the inspector general's office emphasized that the document is a draft and may change.
The higher estimate is driven by a number of factors, said those who spoke with federal officials about the memo. They include: a potential shortfall in the amount of money the state will recover from contractors for late or shoddy work, including leaky walls and roof areas in the tunnels; projections that may have not taken into account the full cost of settling disputes with contractors; and other costs associated with maintaining employees to manage the project as it stretches beyond its completion date.
Mariellen Burns -- a spokeswoman for the Turnpike Authority, which oversees the Big Dig -- said the agency remains confident that the $14.625 billion cost of the Big Dig will hold.
''There is no change at this time to the bottom line of the project," Burns said.
US Representative Michael E. Capuano, a Somerville Democrat who spoke to federal officials about the memo's contents Thursday, said no one should be surprised that the cost may rise, given its history.
''We're being told the concern is less than $100 million," he said. ''That's a lot of money, but in the scheme of things, it's not huge in relation to a $14 billion project."
In an e-mailed statement, a spokesman for Transportation Inspector General Kenneth M. Mead's office downplayed the memo's significance. The memo was sent this week to acting Federal Highway Administration administrator Rick Capka.
''This was meant to be a document for internal use only to advise the Acting Administrator of the status of our ongoing review of the CA/T's 2004 Financial Plan," the statement said. ''It is a snapshot, not our final report."
If Mead's estimate is accurate, it would mean the first increase in the Big Dig's overall cost since 2001, when Beacon Hill, Capitol Hill, and Wall Street were reeling from revelations that project overseers had hidden more than $2 billion in cost overruns. It would also be the first change to the bottom line since Matthew J. Amorello took over as chairman of the Turnpike Authority in early 2002.
One of Amorello's top priorities as head of the Turnpike Authority has been to hold the line on the Big Dig, primarily because the federal government capped its investment at roughly $8.5 billion, following the cost-overrun scandal. With no more federal money coming, any increase will be borne by taxpayers or tollpayers here.
In the past year, the project has been combating hundreds of leaks in the Interstate 93 tunnels. The work of addressing those problems, assigning blame, and seeking compensation for them has added to the project's timeline, as well as the complexity of the job.
For now, Burns said, such problems appear to be manageable.
''The $14.625 [billion] is holding, but as the chairman says every time, we'll never pound the table and say we will absolutely guarantee that until everything is done in mid-2007."
Every year since the cost overrun controversy, Big Dig officials have been required to submit the project's budget, called a finance plan, to the inspector general's office for a thorough audit. Since 2001, the $14.6 billion figure cited by project managers as the final cost has withstood that audit.
Of course, the finance plan submitted by Big Dig officials acknowledges that the project ''cannot guarantee with absolute certainty the accuracy of these estimates."
Indeed, some new costs have come up since the submission of the annual finance plan late last year. For example, Big Dig officials disclosed last month that they will need to retain approximately 100 employees from the project's private management consortium, Bechtel/Parsons Brinckerhoff, at a cost of between $18 million and $25 million. It's not clear whether the cost of employing them will be offset by savings elsewhere at the project, though Burns's statement suggests that they will be.
Late Thursday, the Federal Highway Administration, also in an e-mailed statement, acknowledged receiving the memo and promised to take its recommendation seriously.
''The Federal Highway Administration is currently reviewing a memorandum from the Office of the Inspector General and will closely review its recommendations to ensure that taxpayer money is used appropriately," the statement said.
Andrew Paven, a spokesman for Bechtel/Parsons Brinckerhoff, said the company could not comment because company officials had not seen the document.
Raphael Lewis can be reached at rlewis@globe.com. 