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unbold = recommendation fully completed
bold = initial recommendation completed, continuous (on-going) activity in-place
** = initial recommendation not yet completed
#1 Recommendation: The Division Office should make an annual, independent cost-to-complete estimate to be used as a primary source of information for decision making regarding the adequacy and acceptability of all future Finance Plans submitted for the Central Artery/Tunnel (CA/T) Project.
Responsible Office: Massachusetts Division
Responsible Individual: CA/T Oversight Manager
Initiative(s)
#2 Recommendation: The process used by the Division Office staff in developing the independent cost estimate should be fully documented and refined with assistance from other elements of the FHWA. It should be published as a best practice for use in other mega-projects.
Responsible Office: Massachusetts Division
Responsible Individual: CA/T Oversight Manager
Initiative(s)
#3 Recommendation: The FHWA must establish monitoring practices and procedures for mega-projects.
Responsible Office: Infrastructure
Responsible Individual: Director, Office of Program Administration
Initiative(s)
#4 Recommendation: The Division Office should expand the roles of current staff to include a review of the Finance Plan by the Financial Specialist and the Division Planning & Research Program manager. This will provide a technical analysis of the information presented in the Finance Plan, and provide additional assurances on the adequacy of data contained in the document.
Responsible Office: Massachusetts Division
Responsible Individual: Division Administrator
Initiative(s)
#5 Recommendation: The Task Force recommends that the FHWA determine that the Massachusetts Highway Department (MHD) and the Massachusetts Turnpike Authority (MTA) are "high risk" grantees as defined in 49 CFR Section 18.12, with respect to the CA/T Project. As high risk grantees these agencies must provide more detailed financial and project management reports, as recommended in other sections of this report.
Responsible Office: Infrastructure and Administration
Responsible Individual: Director, Office of Program Administration and Federal-aid Financial Management Division Chief
Initiative(s)
#6 Recommendation: The U.S. Secretary of Transportation should request that the Governor of Massachusetts reevaluate the appropriateness of the MTA's continuing role in day-to-day management and control over the CA/T Project.
Responsible Office: Office of the Secretary
Responsible Individual: Secretary of Transportation
Initiative(s)
#7 Recommendation: It is recommended that the CA/T Project management take whatever steps are necessary to ensure that all requests from external monitoring agencies for information, records, or access to records are met in a responsive and timely fashion. A failure to provide this access should be considered a violation of 49 CFR Section 18.42(e), which will impact the reimbursement and further availability of Federal funds.
Responsible Office: Massachusetts Division
Responsible Individual: CA/T Oversight Manager
Initiative(s)
#8 Recommendation: Require B/PB to submit a certified letter to the Federal Highway Administrator describing their role in the management of the CA/T Project, including whether either company raised questions regarding escalating cost exposure and/or the decision to withhold material information from the FHWA.
Responsible Office: Infrastructure
Responsible Individual: Program Manager, Infrastructure
Initiative(s)
#9 Recommendation: It is recommended that the FHWA Office of Chief Counsel review the circumstances surrounding the failure to disclose information concerning the potential $1.4 billion overrun and recommend whether to take action under 49 CFR Part 29 - Government-wide Debarment and Suspension (Nonprocurement) And Government-wide Requirements For Drug-free Workplace (Grants).
Responsible Office: Chief Counsel
Responsible Individual: Program Legal Services Division
Initiative(s)
#10 Recommendation: The Division Office should continue its oversight and coordination efforts to ensure that the containment of costs and the mitigation of delays and conflicts remain a primary CA/T Project focus.
Responsible Office: Massachusetts Division
Responsible Individual: Division Administrator
Initiative(s)
#11 Recommendation: The U.S. Secretary of Transportation should consult with the Governor of Massachusetts to seek changes in the State CA/T Project leadership consistent with the recently announced change in Federal CA/T Project leadership.
Responsible Office: Office of the Secretary
Responsible Individual: Secretary of Transportation
Initiative(s)
#12 Recommendation: Documentation of the Massachusetts Division Office's process for independent validation of CA/T Project costs should include a system for aggregation of cost and schedule related data routinely accumulated in the normal course of project oversight by FHWA CA/T staff.
Responsible Office: Massachusetts Division
Responsible Individual: CA/T Oversight Manager
Initiative(s)
#13 Recommendation: The delegation of authority to accept annual Finance Plans for the CA/T Project should be withdrawn to FHWA Headquarters.
Responsible Office: Infrastructure
Responsible Individual: Director, Office of Program Administration
Initiative(s)
#14 Recommendation: The FHWA Division Office should obtain written assurance from the State that all data with respect to the independent audits of the CA/T Project (e.g., O'Brien Kreitzberg and Deloitte Touche) will be provided to the FHWA. The FHWA should independently and objectively review this and other external reviews of the Project (such as by the OIG, state auditors, etc.), and must not accept assurances provided by Project officials.
Responsible Office: Massachusetts Division
Responsible Individual: Division Administrator
Initiative(s)
#15 Recommendation: CA/T Project should perform an annual bottom-up review for the remaining years of the CA/T Project, beginning with the last quarter of 2000. The results of these efforts should be incorporated into the PMM.
Responsible Office: Massachusetts Division
Responsible Individual: Division Administrator
Initiative(s)
#16 Recommendation: The data contained in the PMM should be modified to show potential project cost exposures identified in the separate document referred to as the Up/Down chart. The PMM or similar vehicle should include such items as: (1) anticipated cost exposures in design and/or construction activities; (2) projected labor rate increases; (3) anticipated petroleum price increases or decreases; (4) expected increases in operational costs such as insurance premiums, consultant support services, and materials: and (5) potential and settled claims.
Responsible Office: Massachusetts Division
Responsible Individual: CA/T Oversight Manager
Initiative(s)
#17 Recommendation: The Significant Schedule Trends Report shows possible delays to all six remaining key milestones. The PMM should indicate why the projected delays have occurred and what measures are being considered by MTA management to remedy this deficiency.
Responsible Office: Massachusetts Division
Responsible Individual: CA/T Oversight Manager
Initiative(s)
#18 Recommendation: The Finance Plan should be based on more realistic cost and revenue scenarios, and include contingency plans to cover potential revenue shortfalls or cost overruns. Inclusion of contingency plans will minimize the surprises inherent in an overly optimistic forecast scenario and provide for an earlier discussion of how potential circumstances would be addressed.
Responsible Office: Program Administration
Responsible Individual: Director, Office of Program Administration
Initiative(s)
#19 Recommendation: The Finance Plan, since it is a picture of the funding revenues and outlays for a project, should include all costs associated with the project, regardless of the source of funding. Since this project does not recognize costs borne by the State, such as personnel expenses for MTA employees, the total CA/T Project cost figures are inherently low. A more realistic picture would include such costs. Since they are directly attributable to the CA/T Project, although they would not be included in a budget for the B/PB joint venture.
Responsible Office: Program Administration
Responsible Individual: Director, Office of Program Administration
Initiative(s)
#20 Recommendation: By showing post-construction funding as lump-sum amounts, the annual budget and cash flow needs through the conclusion of the project financing are not clear. For example, funds needed for the GANs repayments and the conversion of advance construction should be shown annually.
Responsible Office: Program Administration
Responsible Individual: Director, Office of Program Administration
Initiative(s)
#21 Recommendation: Although the financing requirements are intended to accurately depict the future needs of the CA/T Project, it is recommended that future Finance Plans include a short discussion of past costs and the impact these have had on the initial assumptions. This permits the reader to gain a full understanding of the finances for the Project, past, present, and future.
Responsible Office: Program Administration
Responsible Individual: Director, Office of Program Administration
Initiative(s)
#22 Recommendation: The Federal Highway Administrator should require the MHD to reach agreement with local officials on the term of a balanced statewide program. By making the agreement a formal condition of STIP approval, the FHWA and the FTA would have a means of ensuring the commitment is satisfied.
Responsible Office: Massachusetts Division
Responsible Individual: Division Administrator
Initiative(s)
#23 Recommendation: The Finance Plan contains potential project offsets that have been determined to be outside the scope of the CA/T Project. These include the OCIP credits, air space leases, and the sale of the CA/T Project management building. While post-construction credits and revenues may be included in cash flow models, the Task Force recommends that they not be allowed as offsets to reduce the cost of the CA/T Project.
Responsible Office: Program Administration
Responsible Individual: Director, Office of Program Administration
Initiative(s)
#24 Recommendation: The FHWA should require the CA/T Project management to obtain an independent certification as to the accuracy of the information contained in the Finance Plan. This certification would accompany the Plan upon submission to FHWA for review and acceptance.
Responsible Office: Program Administration
Responsible Individual: Director, Office of Program Administration
Initiative(s)
#25 Recommendation: The FHWA should retain the services of an independent contractor to conduct a review of the OCIP and the risks associated with the CA/T Project, and to assist the FHWA in the development of National policy on OCIPs.
Responsible Office: Program Administration
Responsible Individual: Director, Office of Program Administration
Initiative(s)
#26 Recommendation: The CA/T Project figures for extra construction costs are optimistically low. The bid discount rate of 13 percent and PCA rates of 7 percent to 10 percent should be changed to properly reflect recent trends. If this is done, the likely cost of the remaining construction work will be estimated at $300 million to $480 million higher than reflected in the bottom-up CA/T Project estimate. A more realistic estimate would be $1.7 to $1.88 billion in potential project cost overruns. This increases the potential total project cost to the range of $13.4 to $13.6 billion. (The $13.4 billion figure is the total of the $10.8 billion pursuant to the C/SU Rev. 6 estimate, plus $900 million in allowable credits, plus the $1.7 billion project overrun). In addition, if inflation rates rise, as is the present trend, the estimate should be further adjusted to reflect this trend. Finally, further adjustments should be anticipated for litigation, vulnerability, environmental contingencies, and other unforeseen events likely in a project of this magnitude.
Responsible Office: Program Administration
Responsible Individual: Director, Office of Program Administration
Initiative(s)
#27 Recommendation: The Finance Plan should include revenue sources that are likely to be available to the CA/T Project. If a revenue source requires legislation, legislative support needs to be demonstrated. If the revenue is to be provided by another State agency, agreement or concurrence from that agency needs to be obtained.
Responsible Office: Program Administration
Responsible Individual: Director, Office of Program Administration
Initiative(s)
#28 Recommendation: Another option, pending legislative action on the above proposals, is for the State to commit its general fund to the CA/T Project. The general funds would serve as surety until other funding sources are established. State officials advised the Task Force that funds may be available for budget surpluses or other reserve funds.
Responsible Office: Program Administration
Responsible Individual: Director, Office of Program Administration
Initiative(s)
#29 Recommendation: The PF (Potential Forecast) for all project elements should be a best estimate of the completion cost.
Responsible Office: Massachusetts Division
Responsible Individual: CA/T Oversight Manager
Initiative(s)
#30 Recommendation: The PF should be maintained on a current basis for all project elements.
Responsible Office: Massachusetts Division
Responsible Individual: CA/T Oversight Manager
Initiative(s)
#31 Recommendation: The PF total for all project elements should not be constrained by MTA policy directives.
Responsible Office: Massachusetts Division
Responsible Individual: Division Administrator
Initiative(s)
#32 Recommendation: On a quarterly basis, an overall CA/T Project Budget vs Potential Forecast Variance Report should be furnished to the FHWA. This report would contain an explanation of all significant variances, by project element, segregated into the following categories:
Responsible Office: Massachusetts Division
Responsible Individual: CA/T Oversight Manager
Initiative(s)
#33 Recommendation: CA/T Project management and the Division Office should continue with the cost containment initiatives to achieve the greatest savings by:
Responsible Office: Massachusetts Division
Responsible Individual: CA/T Oversight Manager
Initiative(s)
#34 Recommendation: The Task Force recommends the FHWA and MHD enter into an agreement to formalize recommendations contained in this report which are relevant to the working relationship between the parties.
Responsible Office: Massachusetts Division
Responsible Individual: Division Administrator
Initiative(s)
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