Management Effectiveness
In May 1988, the Boston Harbor Project was projected to cost $2.6 billion in constant dollars with no allowance for contingencies. Escalating this baseline cost at 7% per year, the program was forecast to be completed at a total cost of $4.0 billion. With over 99% of construction completed, the current projected cost to complete for the project is $3.55 billion or $450 billion below the original current dollar budget estimate. Viewed another way, over the past 12 years, the cost of the Boston Harbor Project has increased at an average annual rate of 2.62% per year from the original $2.6 billion constant dollar estimate prepared in 1988. A key element in controlling the cost of the Boston Harbor Project has been effective management of the project’s construction schedule. Effective schedule management is also important because it has enabled the MWRA to comply, to the greatest extent feasible, with the court-ordered schedule, a fundamental program objective. The BHP management team was successful in maintaining construction progress close to this aggressive schedule established almost fifteen years ago:
- Eleven of the 17 court-ordered milestones were achieved on or before the milestone date.
- The milestone for start-up of the first phase of the primary treatment plant, which involved bringing on-line all or part of 17 separate construction packages with a combined value of $880 million and involving the checkout of over 32,000 individual components was met within six months of the milestone date, despite the adverse impact of severe winter weather.
- The complex start-up of the first battery secondary treatment facilities was achieved within seven months of the milestone and the second battery was brought on-line ahead of schedule.
- With the completion of the third battery of secondary treatment facilities, the final project milestone $3.6 billion construction program with an original duration of almost 15 years was completed within one year of its original target date.
The project did, however, experience its share of setbacks. Completion of the Inter-Island Tunnel was delayed by three years resulting in missing the milestones related to transfer of south system flows to the new treatment plant by over three years. The Effluent Outfall Tunnel proved an even more challenging project. Originally scheduled to be completed in July 1995, the tunnel was not placed into service until September 2000, over five years behind schedule. These delays are attributable to several factors. Despite, the extensive geotechnical investigations under taken prior to bidding the tunnel contracts, differing site conditions relating to rock conditions and the extent of water inflows were encountered in both tunnels which adversely affected productivity in mining and lining the two tunnels. Additionally, these were the first deep rock tunnels to be constructed within the Boston area in over a generation and neither construction planners nor bidders fully understood the productivity that could be achieved with this comparatively inexperienced workforce. It also took considerable time and effort to establish effective-labor management relations. Delays in completion of the final milestone, the third battery of secondary treatment facilities, are related to another concern identified early (and largely avoided) on the project – competition with the Central Artery/Third Harbor Tunnel for available resources. During the major concrete placement phase of the contract, the contractor limited the size of the workforce, apparently out of concern over the availability of experienced, highly productive workers and the ability of his own management staff, spread thin overseeing several billion dollars of ongoing work on the Central Artery, to effectively manage a larger workforce and/or work extended hours. As a result, completion of the concrete work was delayed by almost a year, which directly affected follow-up mechanical and electrical work and absorbed any float in the schedule that would have allowed for schedule slippage which often occurs during the final stages of construction, check-out and testing.
Management Efficiency
In early 1992, prior to the commencement of major construction, PMD adopted a goal of keeping program management costs to less than 10% of total project costs. On the Boston Harbor Project, program management costs consist of PMD’s expense budget, the CM contract and the management and coordination components of the LDE contract. This goal was viewed as ambitious, given the extensive number of owner-supplied services requiring CM management and the extensive number of contractors and subcontractors working on the project. Currently, with construction over 99% complete, these management costs are at the targeted 10.0% of total project costs. Management costs are now projected to be 10.3% of total project costs upon completion and closeout of the project.