Case Study: Central Artery/Tunnel “The Big Dig”

Introduction and History

Megaprojects in transportation are recognized as a major factor in economic development in the U.S. The United States Department of Transportation identified that constructing roads, bridges, transit systems, and airports can spur the creation and growth of small businesses (USDOT 2011). Also studies conducted by the U.S Treasury in 2011, indicate that public infrastructure investments have higher returns and productivity gains on private sector than private capital investments, this research showed that a well designed infrastructure investment can raise economic growth, productivity and land value while also providing significant positive spillovers to areas such as energy efficiency, public health and manufacturing. But there is a legitimate concern observer may raise about the inherent risks of multi-billion-dollar construction and transportation megaprojects? Is there a track record of such projects with overrunning cost far more than initially budgeted accompanied with large time delays? There are indeed such risks, and no major construction/transportation megaproject exemplifies this better than Boston Massachusetts’s Central Artery/Tunnel project, which is commonly referred to as “The Big Dig”. From this study important lessons on construction megaprojects can be learned.

A megaproject can be said to be a Complex Products and Systems (CoPS) with high value, it integrates many interacting components and subsystems and it is mainly purchased by large businesses or government agency and not mass-produced. (Carlos Sato, 2015). The Boston Massachusetts’s Central Artery/Tunnel (CA/T) project is a one-off CoPS project, which conforms to important dimensions of a CoPS project such as financial scale of project, quantity of sub-systems and components (refer to appendix 1 for critical product dimension for Cops). The Big Dig is considered as one of America’s foremost megaprojects; the largest and most complex urban transportation project in the history of the America (Bechtel, 2008).

The Big Dig has created both a positive and negative legacy for itself. From an engineering perspective it is a big breakthrough as it devised new techniques and methods for construction, replacing the congested six-lane elevated highway with a technically challenging eight to ten lane underground expressway(a set of tunnels) and new bridges (Bechtel, 2008). The completed and fully operational project exceeded all set expectations of reducing traffic congestion, therefore saving time. The study by EDR Group estimated the timesaving per year to worth $177 million, $120 million per year in new property tax revenue, thanks to $7 billion in new development made possible by removal of the former elevated highway. But from management perspective, the big dig was in a state of disorder. The initial budget was set at $2.6 billion (in 1982 dollars) and ended up costing $14.8 billion (2007 dollars) a cost overrun of approx. 190%, also its development dragging for almost two decades (Bechtel, 2008). The state (Tax payer) currently pays over $100m annually in debt service for the project, which is likely to continue till 2038. It still owes about $9.3bn in both principal and interest (Boston.com). It is a financial disaster. Quality control was also a disaster, as evidenced by defective concrete work, thousands of leaks, 2004 slurry wall breach within the I-93 Tunnel, and the fatal ceiling panel collapse of 2006 in the I-90 Connector Tunnel( Bechtel , 2008)

Project Goal

The big dig was developed as a response to the chronic traffic congestion on the central artery (I-93), which carried 75,000 vehicles a day approximately and had an accident rate four times the national average for urban interstates (Bechtel, 2008). Planning for the big dig official began in 1982 (McNichol and Ryan, 2001) with a goal to replace the elevated six-lane I-93 with an eight-lane, mainly underground directly under the existing road, a new bridge crossing the Charles River and construction of a new four-lane expressway to extend I-90 from its then-terminus downtown eastward to the airport through a tunnel. The project involved a big, new I-90/I-93 interchange. Though only 7.5 miles in overall length, it encompassed 161 lane-miles of roadwork.

Type of Project and Project Successes

Project success has traditionally been measured by (H.Kerzner, 2006) against the “triple constraint” of performance; scope, schedule, and budget. However, this definition has proven to be partial and sometimes misleading. As sometime projects, which failed to meet the triple constant, were later consider a success when it became operational such as the Sydney opera house whilst those which meet the constraint failed in operation such as the Iridium satellite phone. A more suitable approach to defining project success is to Shenhar, Dvir, and Levy’s five dimensions of project success, this is used to define the project success dimensions for the Big Dig as shown in the figure below.

Figure 3: Project Success for Big Dig

According to Shenhar and Dvir projects are the only way organizations can change, implement a strategy, innovate or gain competitive advantage is through projects’ (Shenhar and Dvir ,2007). Yet most projects carried out by organisation are regarded as a failure. In a study conducted by Shenhar and Dvir (2007), collecting data of more than 600 projects in business, government and non-profit sectors: 85% of the projects failed to meet time and budget goals, with and average overrun of 70% in time and 60% in budget. From the project success above figure 3 one can conclude the big dig project failed to meet some of its requirements such as efficiency dimension, with the project completion behind schedule and a cost over run of 190%. Can these failures be attributed to the project being managed in the wrong way? Firstly all projects should not be managed in the same way, different types of projects must be planned and managed differently in order to succeed, so attempting to apply the “one size fits all” approach may lead to a project failure. For example a construction project is very different from a high-tech research program in several ways, including how each is managed. Shenhar and Dvir’s Novelty, Technology, Complexity, and Pace (NTCP) diamond framework is one way of classifying project according to four dimensions such that the values attributed to each of these dimensions indicate a recommended style of management for increasing the likelihood of the project’s success.

Project success

Efficiency

-1982 till 1998 -$2.8billion -5 miles of tunnel - 6 interchanges- birdges -replace the rusting elevated six-lane Central Artery

Impact on customer

- Improved Traffic circulation

Impact on team

- Skill developement-Team member growth -team morale

Business and direct success

-Attract new investors for

the city -Link both side

of the city together

-Reducing traffic

-Creation of open space

Preparation for future

-worker and safety innovations- Development of freed 25 acres of land -New capability for Massachusetts Turnpike Authority (MTA), the US Federal Highway Administration

Before developing a NTCP diagram to indicate the style of management used on the big dig, it is best to review and analyse the literature to gain a better understanding on some of the best practices and pitfalls of the project.

The Project life cycle

The project life cycle of CoPS is difficult to define in traditional project life cycle as several phases, which inter-relate making it difficult to define where one phase ends and the next phase begins. The functional activities in CoPS projects work in reverse unlike mass production where the product has to be ready before sale to a customer. CoPS sells first then produce, it follows the process where the customers requirements are stated, suppliers are then invited to propose (via Invitation to tend) and bid on how then intend to match the requirements, then suppliers are chosen to develop the project with the user.

Invitation to tender (ITT)

Research into the bid management style or basis for assigning the joint venture of Bechtel and Parsons Brinkerhoff (B/PB) as management consultant for the Big Dig is not explicit detailed, following numerous reports of corruption experienced during this project, which some have labelled as “American’s greatest Highway robbery”(BigDigHighwayRobbery). My assumption is that some form bribery might have been involved.

However it is important to discuss the bid management style used by B/PB to award design contracts and construction contracts. For design contracts, design consultants were ranked according to qualification criteria, and the highest ranked were invited to submit a fee proposal, which was then compared to estimates made by B/BP to conclude on a contract value. For construction contracts, a low bid methodology was used in awarding contracts. This action resulted in contractors applying for frequent claims and changes throughout the project life cycle therefore overrunning cost .

The Best value methodology, similar to the methodology used by British Telecom for its 21TCN megaproject is more efficient methodology for reducing cost and selecting more qualified contractors. This style can be divided in three stages:

First stage: Pre-ITT socialisation, this event was launched where the requirements are clearly defined to a general market prior to the formal ITT. The idea is to identify the potential suppliers.

Second stage: Formal invitation to tender is issued to potential suppliers, full technical and commercial responses required.

Third Stage: Shortlisting and selection of final suppliers based on commercial & technical bases

It is also important to specify a hospitality policy, so has to control and mitigate bribery and corruption in the bidding process.

The Project Organization

The Project Based Organization (PBO) was the organization structure adopted for the Big Dig, its ideal for managing increasing product complexity (Andrew.D, 1960). Although responsibility for the Big Dig was quite unclear, the project owner which was the Commonwealth of Massachusetts, was represented by Department of Public Works (DPW) initially, although the Massachusetts Highway Department (MHD) was the recipient of federal funds. Ultimately nominal control was later passed to the Massachusetts Turnpike Authority (MTA). There is no clear documentation on how the management consultant was selected but from its inception in 1985, a joint venture of Bechtel and Parsons Brinkerhoff (B/PB) managed the project, as megaproject was deemed too large for one consultant along. (Bechtel, 2006). The B/PB was responsible for design, providing technical support during construction, handling environmental issues and oversight of other sub-contractors. The Figure 5.3 below graphically displays the flow of obligations amongst the various participants.

The Decision to use the PBO structures is justified. According to (Gaan, 1998) PBO is a natural organisational form for CoPS especially when several partner suppliers are engaged with the user through various stages of innovation and production. PBO is also best suited to very large, risk intensive projects where resources have to be combined and shared with other firms as illustrated by (Andrew.D, 1960).

The Project WebThe table below briefly illustrates some main actors involve in the big dig.

Customers/Environment/Owner

Massachusetts Turnpike Authority

Prime Contractor/ Systems Intergrator

Bechtel/Parsons Brinckerhoff

Sub system suppliers Jay Cashman, Modern Continental, Obayashi Corporation, Perini Corporation, Peter Kiewit Sons' Incorporated, J.F. White, and the Slattery division of Skanska USA e.t.c

The Big Dig is a complex project; as such it involves the careful integration of many sub components. As Simon Ramo of Ramo Wooldridge and systems integration expressed it, System Integrators act as a cure for chaos. The assigning of a joint venture Bechtel/Parsons Brinckerhoff as prime contractor/ system integrator in the Big Dig project will provide a number of advantages, which includes integrating

components, skills, knowledge, services from other firms to produce ever more complex products and services, creating better communication channels with several suppliers/subcontractors and acting as a project manager for the customer. It is important to note that there are limits to a SI, not a substitute for good leadership and management as it often ignores soft human side.

Financing the Big dig

The Big Dig just like many other construction CoPS depend upon multiple sources for financing; including both public sector and private sector. The Big Dig was entirely funded by the public sector while a private sector management consultant carried out construction, thus the Big Dig Public-Private Partnership (PPP) structure combines public finance and private sector management. The initial budget was set at $2.6 billion and ended up costing $14.8 billion with its development dragging for almost two decades. This is a clear indication that things did not go according to plan financially. The question needed to be asked here is: Was this structure of PPP appropriate for the project and did this contribute to the project cost overrun? A study on megaproject by Greiman (Gremian,2013) identified two other megaprojects, the Eurotunnel with a financed and managed privately PPP structure and the Mozal project which was a combination of both private public sector funding, It highlighted that neither the publicly funded projects nor the privately funded Eurotunnel successfully kept to schedule or cost control, yet the Mozart project with a combination of both was 6 months ahead of schedule. It is useful to point as there is no universal answer to project financing. However Gremian suggest that it is good practice to always form PPP highlighting the points of risk shifting to parties who can manage the risk better and delivering better quality of service. (Gremian, 2013b)

Risk Management

The main cause of cost overrun mentioned by Flyvberg is the lack of realism in initial cost (B.Flyvberg, 2004. P3). In reducing the cost overrun a clear definition of PPP that emphasizes on allocating risks to parties who have an incentive to reduce the negative impact is best. Flyvbjerg suggests that the choice to continue with a project ought to be in view of the eagerness of private financiers to take part in the megaproject without a sovereign guaratee. By putting their own capital at risk, such private financiers will be more involved in checking how the task is done, to relieve the danger to themselves. What's more, if such private financiers timid far from putting resources into megaproject, that ought to be a indication to government that the task may not be monetarily supportable or even reasonable.

The Build-operate-transfer (BOT) model, under which a private consortium acquires a long-term proprietorship interest in the megaproject, is recommended. For this to work effectively in reducing cost overrun it is important the length of the ownership should be long enough for the private consortium to have a high probability of making a return on the investment. In light of this long stretch of responsibility, the private consortium will have an incentive to construct it right to minimize lifecycle costs. This model will provide responsibility, accountability and risk management to the project, which the traditional government-commanded model essentially does not give.

Sustainability in the Big Dig

Sustainability requires maintaining operability, services and the benefit of a project during its life time. This is particularly important as the community is forced to live with the project outcomes,to maintain the Big Dig integrated programs which followed centralized processes and procedures where established with the goal of maintaining the operability and benefits. These model of intergration are highlighted in the figure below.

These integration models are a good practice to follow as they help ensure sustainability and economic growth, avoid repression of investment returns by government and possible changes to life expectancy.

Actual and Required Management style

As stated earlier in the project successes, the NTCP diamond can be used to show the gaps between how the Big Dig project should be managed and how it was actually managed. From analysing some aspects of the project life cycle and studying literature on the Big Dig, alteration can be done to the classification of the project on the NTCP, as this will result in a management style more suited to achieving the project success.

ComplexityActual: System / ArrayRequired: Array

The project complexity was classified in-between a system and an array as the project was identified early on to be a very large-scale project, this resulted in the forming of a joint venture to build up capabilities to manage and delivery the project successfully. Sadly this wasn’t the case as the joint venture was short of the required capabilities to meet all dimensions of a project success. In my opinion the required classification for the complexity of this project is an array(widely dispersed collection of systems with a common mission), this classification will result in a higher complexity in organisational structure.

TechnologyActual: Low-techRequired: Medium-Tech

The project technology was classified as a low tech which is not usually for a construction project, the required classification for the technology dimension is a medium tech as the challenges faced by the big dig which includes the unfavourable conditions; such as sea beds, bad textured soil etc., are the first of its kind. If classified with a higher level of uncertainty i.e. medium tech, the project could have been managed to accommodate increased design and development activities, frequent technical reviews in addition to usual managerial reviews. As such design flaws such as the 1000s of leaks, 2004 slurry wall

breach within the I-93 Tunnel, and the fatal ceiling panel collapse of 2006 in the I-90 Connector Tunnel might have been avoided.

NoveltyActual: DerivativeRequired: Platform /Break through

The Big dig was classified as a derivative, an improvement to the existing central artery (I-93) highway. The required view for novelty for this project is between a platform and breakthrough, the novelty level affects the ability to determine requirements, from the construction phase one can identify a number of instances where bad choice of materials or substandard material used led to disasters, one of the high profiled disaster is the collapse of a pillar which took the life of a motorist, research on the cause of this collapse indicated that the wrong number of bolts were used to hold the pillar in place. Although the Big Dig is a construction project, the size and constraints against the Big Dig where enormous, it need to devise new techniques and methods for construction. This is made evident by the fact that every other construction mega project takes on the lesson learnt from the Big Dig to develop their procedure and organization structures, construction techniques, risk management strategy e.t.c

PaceActual: RegularRequired: Regular

Unlike a Time critical or fast and competitive project delays in the CA/T project was not critical to its direct success and as such it was viewed as Regular which is appropriate for this project.

Conclusion

Mega projects will always struggle with unforeseen events, massive regulatory requirements, technical complexities, community concerns, and a challenging political environment. The Big Dig after completion was successful in its overall project goal of reducing traffic congestion, the biggest negative to the Big Dig is the huge financial debt it has place on the tax payer/state. The biggest lesson learnt from this megaproject is to shift the risk to the investor, as this will produce a high degree of focus on the project. Other lessons we have learnt from this project is that carrying out functional activities the way they have been donein other constructed projects does not work for CoPS project “one size does fit all”, appropriate bid management system should be used in screening and selecting contractors, also project integration is critical to success and while a system integrator will greatly help in combining capabilities to develop the system, reduce chaos, it is not a substitute for good management and leadership.

Appendix 1

Reference:

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2. Andrew.D. (1960). The business of projects managing innovation in complex products and systems . Cambridge: Cambridge University Press.

3. Bechtel, (2006). The Big Dig: Key Facts About Cost, Scope, Schedule, and Management . Accessed from the world wide web on May 2, 2015 at http://www.bechtel.com/getmedia/0202bc86-abaa-42ab-8d90-db5224d31f4f/BigDig_KeyFacts_Dec2006/

4. Bechtel, (2015). The most complex urban transportation project in U.S. history. Accessed from the world wide web on May 2, 2015 at http://www.bechtel.com/projects/boston-central-artery/

5. B.Flyvberg. (2003). Megaprojects and risk: an anatomy of ambition. Cambridge: Cambridge University Press.

6. Bigdighighwayrobbery.com,. '"The Big Dig -- America's Greatest Highway Robbery"'. N.p., 2015. Web. 11 May 2015.

7. Boston.com,. 'Big Dig's Red Ink Engulfs State'. N.p., 2015. Web. 11 May 2015. http://www.boston.com/news/local/articles/2008/07/17/big_digs_red_ink_engulfs_state/

8. Carlos Sato. (2015) 'Week 1: Introduction: Complex Projects, Products and Systems'.. Available at: https://studydirect.sussex.ac.uk/course/view.php?id=21327&topic=0 (Accessed: 2 May 2015).

9. Dan McNichol and Andy Ryan, 2001 The Big Dig

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14. FLYVBJERG, BENT, METTE K. SKAMRIS HOLM, and SØREN L. BUHL. 'What Causes Cost Overrun In Transport Infrastructure Projects?'. Transport Reviews 24.1 (2004): 3-18. Web. http://flyvbjerg.plan.aau.dk/COSTCAUSESASPUBLISHED.pdf

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16. Shenhar, Aaron, and Dov Dvir. Reinventing Project Management. Boston, Mass.: Harvard Business School Press, 2007. Print.

17. U.S Department of the Treasury. 2010. An Economic Analysis of Infrastructure investment: A Report Prepared by the Department of th Treasury with th Council of Economic Advisers. Washington, DC: U.S Department of the Treasury

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19. Virginia A Greiman, 2013 Megaproject Management: Lessons on Risk and Project Management from the Big Dig, Wiley

20. Virginia A Greiman, 2013b Megaproject Management: Lessons on Risk and Project Management from the Big Dig, Wiley