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[answered] MGT279. Management of Major Programs MGT 279. Assume the fo


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In this assignment, you are to play the role of an expert on managing major programs. Assume the following lengthy article that appeared in the Boston Globe comprises a report you have received about the Big Dig project in Boston, one of the costliest and most politically charged major programs in history. You should read the report with a measure of skepticism ? the writer is neither an expert in managing major programs, nor a disinterested third party observer of events. Still, the ?report? is filled with interesting facts that certainly indicate that we are dealing here with a trouble-filled program. When you are done reading the report, please address the following questions:

  1. In summary, what does the report?s author blame for the problems encountered on the Big Dig project?
  2. As an expert, to what extent do you think the author has got things right? Based on your knowledge of what it takes to manage major programs, how would you summarize what went wrong with this project?
  3. To what extent do you feel that if the Big Dig had followed the US Department of Defense approach to managing major programs it would have been more successful? What problems might arise in trying to employ the US DoD approach?
  4. What lessons can be derived from the Big Dig experience that can be shared with individuals and organizations that are about to begin work on a major program? Your answer should be no longer than ten pages long, using single space and 12

point font. In reviewing your response, I will be looking for evidence that you can hold original views that reflect a solid grasp of program management issues.



MGT279. Management of Major Programs MGT 279. Management of Major Programs

 

Assignment 4

 

Boston?s Big Dig

 

In this assignment, you are to play the role of an expert on managing major

 

programs. Assume the following lengthy article that appeared in the Boston Globe

 

comprises a report you have received about the Big Dig project in Boston, one of the

 

costliest and most politically charged major programs in history. You should read the

 

report with a measure of skepticism ? the writer is neither an expert in managing major

 

programs, nor a disinterested third party observer of events. Still, the ?report? is filled

 

with interesting facts that certainly indicate that we are dealing here with a trouble-filled

 

program. When you are done reading the report, please address the following questions:

 

1. In summary, what does the report?s author blame for the problems encountered on the

 

Big Dig project?

 

2. As an expert, to what extent do you think the author has got things right? Based on

 

your knowledge of what it takes to manage major programs, how would you

 

summarize what went wrong with this project?

 

3. To what extent do you feel that if the Big Dig had followed the US Department of

 

Defense approach to managing major programs it would have been more successful?

 

What problems might arise in trying to employ the US DoD approach?

 

4. What lessons can be derived from the Big Dig experience that can be shared with

 

individuals and organizations that are about to begin work on a major program?

 

Your answer should be no longer than ten pages long, using single space and 12

 

point font. In reviewing your response, I will be looking for evidence that you can hold

 

original views that reflect a solid grasp of program management issues. 2015 University of Management and Technology 1 MGT279. Management of Major Programs Below is the Boston Globe report: The Central Artery viaduct snakes within feet of the FleetCenter, which was left off early Big Dig

 

design plans (Globe Staff Photo / David L. Ryan)

 

PART ONE Artery errors cost more than $1b

 

By Raphael Lewis and Sean P. Murphy, Globe Staff, 2/9/2003 t was spring 1997, only a few weeks after he took an engineering job with the Big

 

Dig's private-sector managers, Bechtel/Parsons Brinckerhoff, when David Beck realized

 

something was terribly amiss at the then-$10.8 billion project.

 

The FleetCenter was missing.

 

Not the actual FleetCenter, of course. The flashy facility had been grabbing headlines

 

since a groundbreaking ceremony on April 28, 1993.

 

It was the design drawings. Bechtel had failed to depict the 19,600-seat arena in its

 

preliminary designs, which were completed in October 1994, and instead showed an

 

obstacle-free area for contractors to lay utility lines. Bechtel then failed to fix the problem

 

before signing off on the final design drawings three years later.

 

"I sent out some e-mails, and made a couple of calls, saying, `Hey guys, we have a

 

problem here,' " Beck recalled.

 

Months passed, and construction work was under way before the designs reflected the

 

FleetCenter's existence, records show. 2015 University of Management and Technology 2 MGT279. Management of Major Programs "It fell through the cracks, if you will," William R. Mayer, a top Bechtel engineer,

 

recently acknowledged.

 

But even though Bechtel's gaffe cost taxpayers $991,000, the company never paid a

 

penny back for its mistake. And no one from the state or federal government ever asked.

 

A yearlong Globe investigation found hundreds of similar errors committed by the Big

 

Dig's management company, which is led by one of the world's largest engineering firms,

 

Bechtel Corp. of San Francisco, and includes another industry titan, Parsons Brinckerhoff

 

of New York. The Globe determined that at least $1.1 billion in construction cost

 

overruns, or two-thirds of the cost growth to date, are tied to Bechtel mistakes.

 

Yet, even as Bechtel's errors helped drive up the Big Dig's cost, the company never paid

 

for any of its mistakes. Instead, it profited. To date, Bechtel has received more than $264

 

million beyond what its original contracts called for, in part because Bechtel received

 

additional money to fix its errors, records show.

 

After years of inaction on cost overruns, the Big Dig late last month hired a retired judge

 

to determine whether Bechtel -- or any contractors -- owe refunds for mistakes in design,

 

construction, or management. But the state is unlikely to get repaid for as many as twothirds of the errors because the statute of limitations has passed.

 

The Globe investigation included scrutiny of 12,000 changes to more than 150

 

construction and design contracts, review of 20,000 pages of project documents, and

 

more than 100 interviews with current and former Big Dig officials, construction

 

specialists, and contractors. The chief findings:

 

? During the 17 years it has managed the Big Dig, Bechtel has neglected to perform basic

 

work called for in its contracts, such as conducting crucial field surveys of the elevated

 

Artery, and verifying the locations of utility lines and buildings such as the FleetCenter.

 

The failures contributed to more than $350 million in construction overruns, project

 

records show.

 

? Construction on virtually all of the Big Dig's major contracts began with incomplete and

 

error-filled designs, which led to nearly $750 million in other construction cost overruns,

 

records reveal. Bechtel created the basic design for the entire Big Dig, set the design

 

schedule, and signed off on all the final design drawings.

 

? Bechtel failed to heed warnings of problems in the design drawings, even from its own

 

engineers, records and interviews reveal. Those deficiencies were usually fixed only after

 

contractors discovered them, when it was far more expensive to make changes. In almost

 

all cases, Bechtel solved the design problems by recommending that the state approve

 

hundreds of millions of dollars in payments to contractors for additional work.

 

? Bechtel failed to detect or call attention to serious flaws in construction work, leading to

 

tens of millions of dollars in repair and delay costs. 2015 University of Management and Technology 3 MGT279. Management of Major Programs Bechtel's top Big Dig official, project manager C. Matthew Wiley, said the firm has done

 

its job as well, if not better, than any other engineering firm could.

 

"I believe the Bechtel/Parsons Brinckerhoff team has performed admirably, and to a

 

higher professional standard of care than required in our contract," he said.

 

Bechtel officials disputed that any part of the $1.6 billion in construction cost overruns to

 

date resulted from mismanagement or deficiencies in its designs. They attributed about

 

$1 billion in overruns to justifiable expenses that cropped up as they confronted

 

engineering challenges and community concerns.

 

The remaining $550 million in overruns, they said, was the cost of shortening the

 

project's schedule from late 2007 to mid-2005. By cutting time off the project, Bechtel's

 

so-called fast-track initiative created a net savings of about $1 billion, they said.

 

But if Bechtel -- and the state officials who relied upon the company -- expected overruns

 

due to a "fast-track" plan, they never told the public until after overruns busted the Big

 

Dig's budget.

 

In fact, no documentation of such a plan exists in the Big Dig's voluminous files, the

 

Globe found, calling into question the assertion that "fast-tracking" was an actual

 

initiative and not an after-the-fact justification for overruns.

 

What the Globe did find was that Bechtel had no financial incentive to minimize errors,

 

and that its officials routinely advised the state to pay overruns to smooth over problems

 

that were often of Bechtel's own making.

 

Bechtel was "like the fox guarding the chicken coop," said C. William Ibbs, a

 

construction management professor at the University of California at Berkeley and a

 

frequent consultant to both the Big Dig and Bechtel.

 

"We would like to think they are honest people and act with the highest integrity," Ibbs

 

said. "But they are profit driven."

 

Error by design: A case study

 

On July 15, 1997, state officials gathered to award a contract to build tunnels from

 

Haymarket Square to the North Station, where the elevated Artery loomed four stories

 

above street level.

 

The terrain demanded the most precise designs and complete research Bechtel could

 

offer; otherwise, a minefield of obstructions would send delays rippling throughout the

 

Artery work zone. 2015 University of Management and Technology 4 MGT279. Management of Major Programs First, the contractor had to build new steel legs to hold up the rusty old highway. Then,

 

the contractor had to tunnel through crumbling bedrock, old sewer mains, and wooden

 

piers from long-forgotten wharves.

 

And they had to do it all without interrupting traffic.

 

Bechtel estimated the job would cost about $260 million to complete, and Big Dig

 

officials hoped they were right. After all, they had pledged repeatedly to the public that

 

the project's cost would not rise above $10.8 billion.

 

As it turned out, the low bid came in at $218 million. Artery officials rejoiced.

 

But their joy was short-lived.

 

Today, the contract held by Jay M. Cashman Inc. has grown $128 million beyond the bid

 

submitted that July day, an increase of nearly 60 percent. In many ways, it stands as an

 

object lesson in Bechtel's problematic management.

 

Cashman and the other contractors had virtually no hope of cobbling together accurate

 

cost estimates, records show. The reason: Bechtel had poorly managed the contract's

 

design, and it was nowhere near complete.

 

As a result, the cost of the job was artificially low because Cashman never had a chance

 

to submit bid prices for significant aspects of the work required.

 

The plans the contractor bid on were confusing, hastily assembled, and sometimes

 

contradictory, records show. In the eight weeks before the bid opening, the engineering

 

firm hired to finish Bechtel's preliminary designs for the Cashman job redrew them nine

 

times, the Globe found. Bidders received the last packet of drawings just five days before

 

the contract was awarded.

 

But that was hardly the end of the design process. On 16 occasions between July 1997

 

and October 2002, Bechtel sent Cashman new design packets that included as many as

 

400 new drawings. The packets addressed 1,800 written requests for clarification from

 

Cashman on discrepancies between the designs and the actual conditions workers

 

confronted.

 

One major problem appeared almost immediately after Cashman got the go-ahead to

 

begin work. Crews found that Bechtel's complicated scheme to support the Artery while

 

excavation work proceeded below was not viable, records show. The discovery set off an

 

eight-month odyssey of reengineering, overtime, and extra shifts to correct the designs.

 

Project records and interviews with officials involved with the contract indicate that

 

Bechtel violated standard industry practice by neglecting to survey and measure the

 

elevated roadway before construction began. Instead, Bechtel relied on aerial photos

 

taken in 1987 and 1988 and 1950s-era architectural drawings. Measurements would have 2015 University of Management and Technology 5 MGT279. Management of Major Programs determined exactly where structural elements such as support footings rested and not

 

where planners a half-century earlier had said they would be.

 

Anthony Lancellotti, Bechtel's engineering manager, acknowledged that the Artery was

 

not properly surveyed, saying the company took a calculated risk that the combination of

 

aerial photos and old "as-built" drawings would be sufficient.

 

"Each contract is exposed to certain risks," Lancellotti said.

 

That risk turned out to be quite costly. The failure to survey the Artery cost at least $16

 

million to correct and about $10 million more in overtime and extra shifts to avoid

 

schedule delays, according to contract records and interviews with contractors.

 

Other costly problems wrought havoc, too. Cashman found a 9-foot-wide sewer main and

 

other obstructions not mentioned on the designs in places where the firm was to supposed

 

to build tunnel walls, records show.

 

When Cashman drilled down to bedrock, which determined the height of the tunnel

 

walls, it sat about five feet higher than designs showed, requiring new plans for more

 

than a mile of tunnel walls.

 

And Cashman encountered a subterranean pocket of tidal muck that caused repeated

 

tunnel wall cave-ins, in part because Bechtel did not allow the company to try a different

 

construction method for several months, records show. The cost: $1.2 million.

 

A little more than a year after Cashman took on the Artery contract, the company's

 

managers were fed up. In April 1999, Jamie Doyle, Cashman's project director, fired off a

 

letter to Bechtel engineers calling the contract "unconstructible." He blamed the problem

 

on unfinished designs.

 

"With even a summary understanding of the history of the issues dealt with, it becomes

 

clearly evident that the plans, at bid time, were at best, no more than 65 percent plans,"

 

Doyle wrote. "The prudent bidder has a legal as well as moral right to expect that he is

 

bidding on 100 percent plans."

 

Bechtel officials insist the designs in the Cashman contract were adequate, and that

 

contractors routinely complain to make extra money.

 

Still, Cashman was expected to finish in February 2001, but the job dragged on an extra

 

22 months. The delay cost Bechtel nothing. In fact, as with all the other overruns, it only

 

added to the company's profit. While taxpayers covered the $128 million in overruns,

 

Bechtel took home an additional $3.7 million for its extra time. 2015 University of Management and Technology 6 MGT279. Management of Major Programs Forget and forgive

 

Even when an outside agency pointed out problems in

 

Bechtel's preliminary designs, Bechtel failed to heed the

 

warnings.

 

On Dec. 22, 1994, MBTA officials met with Bechtel to

 

discuss the firm's plans to raze a ramp near the FleetCenter.

 

The T's representatives told Bechtel that it would cause the

 

Green Line and the ramp to collapse, according to project

 

records.

 

But Bechtel did not change the plans. Three years later, after

 

the project discovered that T officials were right all along,

 

Bechtel ordered the contractors to install an elaborate support

 

system. Cashman received an additional $250,000 for the

 

new work, records show. Bechtel has neglected

 

to perform basic work

 

called for in its

 

contract, such as

 

conducting field

 

surveys and verifying

 

the location of large

 

utilities and buildings

 

like the FleetCenter. Bechtel officials insist they were forced to make frequent changes to designs in that area

 

because the MBTA's plans and schedule changed frequently. They said they did their best

 

to minimize costs and conflicts.

 

"They were a moving target," Bechtel's Lancellotti said of the MBTA.

 

But Beck, the former resident engineer, recalls meeting resistance from his Bechtel

 

bosses upon finding errors or problems. When he told a senior Bechtel manager about the

 

Green Line problem, the manager told Beck, "No, we do not have errors on our

 

drawings," according to Beck.

 

Beck did not last much longer on the project. In 1998, a North End resident complained

 

about construction noise, and Beck dismissed the complaint as exaggerated. Bechtel fired

 

him, at the insistence of state officials.

 

Beck acknowledged his role in the incident but says he was fired primarily for his

 

criticisms of the Big Dig and its management.

 

"It's too bad because we were doing great, important work," Beck said. "It's just that it

 

could have been done so much better."

 

State officials, the ultimate overseers of the project, took little notice of what Beck or any

 

other critic said and simply paid for Bechtel's mistakes.

 

"I've always taken the position that, if you make a mistake . . . the last thing in the world

 

you want to do is hit somebody over the head," said James J. Kerasiotes, the state's top

 

official overseeing the Big Dig for the first decade of its construction. 2015 University of Management and Technology 7 MGT279. Management of Major Programs Fast track to overruns

 

The problems that dogged the Cashman contract, and the tens of millions of dollars

 

needed to fix them, were pervasive throughout the Big Dig, records show.

 

On more than 3,200 occasions since 1991, the state paid extra money to contractors to

 

compensate for design flaws, some big, some small.

 

For example, the drawings for the Ted Williams Tunnel left a 4-foot gap between tunnel

 

sections, which was discovered by perplexed workers only after the massive tunnel tubes

 

were eased into position, records show. The problem caused at least $307,000 in new

 

work.

 

Another set of designs, which detailed specifications for a trucking route through South

 

Boston, instructed contractors to connect an electrical line to a certain manhole. "The

 

manhole does not exist," project officials later acknowledged, as they authorized a

 

$63,000 overrun payment.

 

Drawings for the Big Dig's Operations Control Center called for 12-foot-wide openings

 

in the walls for ventilation. But "a 20-foot opening was required," a project memorandum

 

states. The state paid $11,000 to make the vent system fit.

 

And another design called for laying 12 inches of gravel beneath a road section in East

 

Boston. As it turned out, the required amount was actually 15 feet. The cost: about

 

$560,000.

 

All these small errors helped add up to something very large: $1.6 billion in unplanned

 

construction costs. About $1.1 billion of that can be traced back to deficiencies in the

 

designs, records show: $357 million because contractors found different conditions than

 

appeared on the designs, and $737 million for labor and materials costs associated with

 

incomplete designs.

 

The rest, about $500 million, Bechtel filed under the category "Other." The innocuoussounding category covered all manner of extra expenses, from extra street sweeping to

 

additional police details to new shipments of concrete -- most of it necessary because of

 

design-related delays.

 

When the Globe first questioned the completeness of Big Dig designs, Michael P. Lewis,

 

the state's Big Dig project director, said the designs were "100 percent" finished when put

 

out to competitive bidding. State law requires as much, to ensure that taxpayers get the

 

lowest price possible for every aspect of work involved.

 

A few weeks later, however, Bechtel's Lancellotti, as well as Lewis, pulled back slightly,

 

saying "virtually all" designs were "98 percent complete" when construction activity

 

commenced. The designs left only minor items out at bid time, they said. 2015 University of Management and Technology 8 MGT279. Management of Major Programs Shortly thereafter, they acknowledged three major construction contracts went out to bid

 

while designs were still "substantially incomplete." The designs were not ready in time to

 

meet federal funding deadlines, they said. Those three contracts -- two on the Ted

 

Williams Tunnel and one near South Station -- have increased by more than $250

 

million, records show.

 

Finally, Bechtel officials said they had intended to begin most contracts with some design

 

elements unfinished, to save time. About $550 million in overruns were necessary to fill

 

in some of the gaps caused by such "fast tracking," they said.

 

But there is no documentary evidence that such a plan existed, the Globe found, and if

 

Bechtel truly intended to forge ahead while expecting to fill in the gaps with overruns, the

 

firm did not publicly state that. Asked under the state's public record law to provide any

 

reports, memos, or correspondence that detailed, or even mentioned, such a plan, Bechtel

 

and state officials said there were none.

 

They did provide a copy of the management plan Bechtel submitted to the state in

 

February 1985. In it, the company proposed going ahead with relocation of utility lines

 

even as engineers were still developing the conceptual design of the project. They called

 

it "fast tracking." The plan was limited only to the earliest stages of the project, before

 

anything was awarded to contractors.

 

By the mid-'90s, however, Bechtel was moving ahead with far more than just utility lines

 

before the final drawings were complete. One of Bechtel's top engineers protested the

 

company's practice of putting out incomplete designs and then filling them in later,

 

according to a legal complaint filed in federal court in Boston.

 

Bruce Newman, who designed the Big Dig's massive electronic security system, says he

 

was fired after complaining that Bechtel was engaging in "major violations of accepted

 

practice" and breaking state laws. He sued Bechtel in federal court, and the two parties

 

reached a confidential settlement in 2000.

 

Bechtel, in court papers, said Newman was let go as part of wider layoffs. But the

 

company did not dispute that Newman was told to sign off on drawings that he called

 

"extremely simplistic."

 

Project records confirm much of what Newman alleged -- that the design process had

 

fallen further and further behind schedule as construction pressed forward. State officials

 

refused to delay construction to give engineers time to work out serious omissions in the

 

designs, records show.

 

As a result, almost all Big Dig construction contracts were awarded amid a last-minute

 

flurry of design revisions, just as the Cashman contract was. Thousands of new drawings

 

poured in just days before bids were due, records show, making inaccuracies in the bids a

 

virtual certainty. 2015 University of Management and Technology 9 MGT279. Management of Major Programs Once construction began, Bechtel and the design firms it managed fired out hundreds of

 

"design update" packages to contractors already in the field, often with new information

 

that conflicted with other designs. Some of those updates arrived years into construction,

 

records show.

 

To Ibbs, the construction specialist, Bechtel's willingness to provide contractors with

 

incomplete designs was irresponsible. And the more difficult the project, he said, the

 

more crucial it is to make designs precise.

 

"You have to take care up front," in the design process, Ibbs said. "If I am doing a one-ofa-kind project in Boston, that demands even more care."

 

Construction criticism

 

In December 1998, more than a year after Cashman won its contract, federal inspectors

 

paid a routine visit to the job site, interviewing laborers, scribbling notes, observing

 

workers pour concrete and install steel beams.

 

They found some troubling lapses, according to a Federal Highway Administration

 

inspection report.

 

Topping the list of concerns: Workers had installed at least one massive steel beam that

 

was made of a weaker grade of steel than project regulations allowed, the inspectors said.

 

The inspectors rated the quality of work "unsatisfactory." State officials promised better

 

oversight. Cashman disputed most of the charges.

 

But the inspectors raised a crucial question: Why didn't Bechtel spot the problems first?

 

After all, Bechtel not only managed the entire design process, it was responsible for

 

enforcing the project's construction guidelines.

 

In fact, on several occasions, Bechtel failed to watch contractors closely or test their work

 

until after it was too late, the Globe found.

 

For example, when the federal inspectors returned to the Cashman work site two years

 

after documenting lapses in Bechtel's oversight, they reported that Bechtel's "inspection

 

of the structural steel fabrication continues to be an issue."

 

The problem, the federal inspectors said in their June 2000 report, was a projectwide

 

"weakness" in Bechtel's oversight.

 

Bechtel officials, in interviews with the inspectors, blamed state-mandated caps on their

 

staffing levels, which they said hampered their ability to observe all steel being installed

 

on the project.

 

But steel quality was not the only problem to elude their gaze. 2015 University of Management and Technology 10 MGT279. Management of Major Programs Bechtel failed to test the Ted Williams Tunnel ventilation system until a year after the

 

roadway opened to the public in December 1995. As it turned out, mistakes by a

 

contractor had left gaps in the ventilation system, leaving it unable to draw smoke out of

 

the parts of the tunnel in the event of a fire.

 

Bechtel and project officials insisted that the system was adequate all along, and that at

 

no time were drivers put in harm's way.

 

It took Bechtel until September 2000, nearly four years after the problems were detected,

 

to get the system fixed. It cost taxpayers $5 million.

 

A flood of trouble

 

Bechtel's failure to order timely repairs at the

 

contractor's expense was not limited to the Ted

 

Wi...

 


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