Office of the Inspector General Commonwealth of Massachusetts UMASS/AMHERST ° WW 0 3 Z00 Statutorily Mandated Reviews of Central Artery/Tunnel Project Building Construction Contracts 997-1 999 1 Robert A. Cerasoli Inspector General December 999 1 p p p p I I I I I I I 1 g g i 0 D D JOHN W. McCORMACK STATE OFFICE BUILDING ROOM 3 I I1 TEL: 727-9140 FAX: 723-333^ ROBERT A. CERASOLI MAILING ADDRESS: INSPECTOR GENERAL STATE HOUSE STATION P. O. BOX 270 December 1999 BOSTON, MA02I33 His Excellency the Governor The Honorable President of the Senate The Honorable Speaker of the House of Representatives The Honorable Chairman of the Senate Ways and Means Committee The Honorable Chairman of the House Ways and Means Committee The Honorable Chairman of the Senate Post Audit and Oversight Committee The Honorable Chairman of the House Post Audit and Oversight Committee The Directors of the Legislative Post Audit and Oversight Bureaus The Secretary of Administration and Finance Members of the General Court Omnibus ad quos praesentes literae pervenerint, salutem. In December 1996, issued a report on the seven statutorily mandated I reviews of Central Artery/Tunnel (CA/T) building projects completed by my Office between 1994 and 1996. Those seven reviews commented on a number of issues including large, unexplained increases in contract cost estimates, inadequate cost containment measures, and possible violations of state law. This report contains the four statutorily mandated CA/T building project reviews this Office has conducted since 1996.1 These four reviews identified a number of issues including costly over-design, safety issues, compliance problems with state regulations, unclear contract specifications, and a continuing failure to apply rigorous cost containment measures on CA/T contracts. ' This report also includes a Central Artery/ Tunnel (CA/T) Project response to a review letter included in the December 1996 report and a series of correspondence between this Office and the CA/T Project concerning the mandated review process itself. IP I I i j j i j j I I i j The Commonwealth faces great challenges as moves through the peak it of CA/T construction where the potential for delays and cost overruns increases. Project management is aware of this potential and is committed to controlling Project costs. believe that these statutorily mandated reviews have assisted the Project I in identifying problems and controlling costs, such as the case in which my Office took issue with the design of the East Boston toll plaza canopy. The Project redesigned the canopy for an estimated savings of over $1 million. In 1994, the Legislature first stipulated that no CA/T Project building construction contract could begin until my Office had completed a review. Specifically, Section 11 of Chapter 102 of the Acts of 1994 (the transportation bond bill) included the following language: [The Massachusetts Highway Department] shall have jurisdiction over the selection of designers performing design services in connection with the ventilation of buildings, utility facilities and toll booths to be constructed as part of the Central Artery/Tunnel Project, and shall construct, control, supervise, or contract for said structures; provided, however, that no construction or contractual agreement for construction shall begin prior to the review of the inspector general of the commonwealth. [Emphasis added.] The 1996 transportation bond bill contained similar language pertaining to CA/T- related buildings, but expanded this Office's responsibility significantly by directing that "no construction shall begin prior to the review and approval of the . . . inspector general of the commonwealth." (Section 67 of Chapter 205 of the Acts of 1996; emphasis added.) 2 This Office's letters target issues at the heart of cost and performance, including the following recommendations to Project management: Cost Containment: Conduct cost containment reviews such as value engineering, claims avoidance reviews, constructability and peer reviews before the completion of the final design. Life-cycle Costs: Conduct life-cycle cost analyses to identify all costs, including operations and maintenance costs for a facility's expected useful life. 2 Section 16 of Chapter 11 of the Acts of 1997 approved by the Governor on May 16, 1997. exempted structures or building[s] integral to the operation of the Central Artery/Ted Williams Tunnel Project from the M.G.L. c.7, §39A definition of "capital facility project." As a result, CA/T buildings were exempted from the requirement, among other requirements, that the state's Division of Capital Asset Management and Maintenance (DCAM) certify a study prior to the commencement of design on the buildings. p I I 1 # I I I 1 ] ] j i I I I I I I Knowing these costs might help to identify inefficient design components and help in the planning for future operations expenses. Cost Estimate Growth During Design: Identify and explain all cost estimate increases that occur between the beginning of final design and the construction bid process. Professional Practice: Sign, stamp, and date design drawings in compliance with professional practice and the Massachusetts Code of Regulations. As my Office completes each mandated review, ensure that appropriate I legislative and Project leaders are fully apprised, in writing, of this Office's concerns. My staff accords Project management ample opportunity to review and comment on the findings documented in every review; each of the Project's formal written responses appears in this report. Although the Project has been generally responsive to this Office's concerns, we are not in accord on all matters. Project management disagrees with this Office's contention that the Project should apply cost-containment measures such as value engineering reviews and claims avoidance reviews to all significant Project contracts. Project management also disagrees with this Office's interpretation of the Massachusetts Code of Regulations and professional practice as it applies to the use of professional stamps on design drawings. However, no topic of disagreement has caused this Office to withhold approval to proceed with construction. In some cases, such as the East Boston Toll Plaza Facility - Contract C07C1, Project management took appropriate corrective action after this Office provided review comments. Management made design changes that both reduced Project cost and in the opinion of this Office improved the safety and life span of the facility. In other cases, the problem was not sufficient to justify delaying the contract by withholding approval. Nevertheless, the Project is responsible for carefully considering all review findings and taking corrective action whenever possible. CA/T Project management has cooperated with this Office to ensure that my staff can complete the mandated reviews in a thorough and timely manner. I will continue to keep you apprised of the results of these reviews and look forward to the continued cooperation and assistance of the Massachusetts Turnpike Authority. I i 'I TABLE OF CONTENTS ... Section One: Review of East Boston Toil Plaza Facility (C07C1). 1 Preliminary Letter: September 22, 1998. 3 .... Project Letter: November 12, 1998 . . . 11 Approval Letter: November 4, 1999. 17 .... Section Two: Review of Ventilation Building No. 8 (C19E4). 21 . .... Approval Letter: September 27, 1999. 23 Project Letter: November 17, 1999. 29 .... Section Three: Review of Ventilation Building No. 1 (C09A3). 35 Approval Letter: August 4, 1999. 37 ... Section Four: Review of Ventilation Building No. 5 (C01 B1). 41 . ..... Preliminary Letter: April 7, 1999 . 43 .... Project Letter: July 27, 1999. 47 Approval Letter: August 11, 1999. 51 Section Five: Preliminary Joint Review of Ventilation Building No. 1 (C09A3) and Ventilation Building No. 5 (C01B1). . . 53 .... Preliminary Letter: March 23, 1999. 55 . . . Project Letter: April 5, 1999. 63 ..... Section Six: Review of Ventilation Building No. 3 (C17A3) 71 . . .... Review Letter: May 3, 1996. 73 Project Letter: January 30, 1997 77 .... Appendix A: Review Process Summary. ... 83 Appendix B: Chapter 205 of the Acts of 1996. 99 Wta^^p^hn^Attc: Offiop of thp ln*snprfor Gpnpral ;.\.MUUtCO^« .... -MIVpItCIi1Ii1iInlnu MArUtUrfIrCpOQOc** Room 1311 P.O. Box 270 John McCormackStateOffice Buifding State House Station OneAshburton Piace Boston, MA02133 Boston, MA02108 Phone: Internet and Fax: {617)727-9140 Viww.state.ma.ys/ig/ighome/htm {617} 523-1205 (MCPPO Program) (617) 723-2334 (lax) (800)322-1323 (confidential 24-hourhotline) Publication No. 18261-170-5C-12/99-IGO, approved by Philmore Anderson III, State Purchasing Agent Printed on Recycled Paper