Report: Green Line extension budget issues brewed long before crisis

A budget discrepancy set the stage for big problems, a report shows.

Tracks along the path of the planned Green Line extension in Somerville.
Tracks along the path of the planned Green Line extension in Somerville. – Aram Boghosian for The Boston Globe

In early 2014, the cost of the Green Line extension to Medford—a project currently under review, after the Massachusetts Bay Transportation Authority revealed it was as much as $1 billion over budget last year—depended on which MBTA consultant you asked.

The estimate of the extension’s construction management firm differed by hundreds of millions of dollars from a projection by the T’s project management consultant. The project moved forward without addressing the difference between the two estimates, a newly released report shows.

In December 2013, White Skanska Kiewit, a consortium of companies tasked as the project’s construction manager, put building costs at $1.17 billion. Extrapolating the construction estimate to include non-construction costs, the overall project would have probably cost $2.35 billion, according to the report.

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But in January 2014, HDR/Gilbane, another contractor that served as the project manager, estimated construction costs to be far lower, at $853 million, and overall project costs at $1.83 billion, according to the report, produced by the consultancy Berkeley Research Group.

The failure by the MBTA and its consultants to address the difference reflected poor project management that ultimately allowed costs to spiral, the report says.

“It is clear now that the WSK construction budget should have served as a clear indication that the two parties should have reconciled the differences in the estimates or that a reliable independent check estimate should have been produced,’’’ the report says.

In June 2014, the T set the estimate at $1.99 billion based on feedback to HDR/Gilbane’s lower estimate. The estimate, at which the federal government awarded the project $1 billion in funding, ignored White Skanska Kiewit’s projected construction costs, according to the report.

Last year, the T said the estimate had ballooned to as high as $3 billion.

The report adds that there was “concern at the time’’ about WSK’s budget, but the numbers were not reconciled prior to applying for the federal funds with the lower budget.

Rafael Mares, a project advocate and vice president with the Conservation Law Foundation, said the discrepancy “should have sent a flag’’ to project managers that the budget was unstable.

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The report faults another consultant: Stanton Constructability Services, which served as the T’s independent cost estimator for the project, for allowing the project to advance without bridging the differences in costs.

The report also says Stanton told the MBTA and HDR/Gilbane that construction firms often overestimate costs early, and that they would come down as the project advanced. Instead, White Skanska Kiewit’s bids for different portions of the project only continued to go up.

“HDR/Gilbane and the MBTA relied on [Stanton]’s advice and did not reconcile WSK’s December 2013 construction estimate,’’ the report says.

The report says Stanton “spent only two weeks’’ reviewing HDR/Gilbane’s early 2014 budget estimate, despite saying it was valid. Stanton did not produce a detailed cost estimate of its own.

Stanton did not immediately respond to a request for comment. In a statement to Boston.com last month, the firm said: “There were too many issues to overcome on this project, especially the budget.’’

Berkeley Research Group’s findings had previously been presented to the MBTA and the Massachusetts Department of Transportation.

But its report, which offers the new insight into the fiscal problems, was not released to the public. Boston.com obtained the report after appealing the decision to withold it under public records laws. Certain sections of the report remain redacted.

Berkeley had previously said, and the report reinforces, that bungled project oversight allowed White Skanska Kiewit to maximize what it received for different portions of the project.

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As the project advanced, White Skanska Kiewit’s bids for early portions of the project exceeded estimates from the $1.99 billion budget.

When its estimate for the next stage of the project came in at more than $400 million over budget, the T began a review of the project in an effort to get it back on track.

That review is ongoing, and is now led by an interim project management team. It’s expected to include design changes and a new budget analysis. Berkeley’s report says that the company does not believe any of the budget figures that were posed last year to be “reliable.’’

The T has not ruled out canceling the project.

Meanwhile, White Skanska Kiewit, HDR/Gilbane, and Stanton were all dismissed from future portions of the project in December.

 

 

 

 

 

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