17% Over Budget, One Year Late

The shabby condition of the Brooklyn-Queens Expressway and the ballooning costs to fix it are no secret among drivers in New York City – nor, now, along I-95 in Connecticut, where a billboard sprang up last July that mocked the road as a way to hawk Japanese sport-utility vehicles. Depicting the shiny new Toyota Highlander, the billboard declared: “$8 Billion less than fixing the BQE.”The price tag of the current BQE rehabilitation project isn’t quite that high. Since groundbreaking almost five years ago, however, the project, which the state Department of Transportation is touting as its most expensive ever, has continued to rise in cost beyond original contract amounts and to accumulate months of delay.As the project enters its final stretch, it is now about $252 million, or 17%, over budget – compared to an industry standard of 5% to 10% – and about one year behind schedule, documents show.The story of the BQE delays and rising costs testifies not only to the inefficiency of publicly financed projects in New York, but also to the failure of the domestic steel industry to keep up with overseas competitors in Asia, Europe, and South America.State engineers apparently were unaware of just how bad things had gotten.They had large ambitions when they sat down in the late 1990s to design the 16 bridges and overpasses and three miles of roadway they aimed to replace between 25th Street and Broadway, not far from La Guardia Airport at the eastern end of the expressway in Queens. To support the numerous retaining walls and overpasses their plan called for, the engineers designed foundations that made use of 14-inch-thick steel pieces weighing 700 pounds a foot. The largest 14-inch beam available from American “minimills” in 2000, however, weighed only a bit less than 400 pounds a foot.Since the 1980s, federal regulations have required that any project subsidized by federal money buy 99.9% of its steel from American manufacturers. It wasn’t until the BQE project got under way in March 2000, however, that project planners acknowledged that the last American steel mill capable of forging steel so heavy had abandoned the business in 1995.That caused months of delays, as the state sought waivers to buy overseas and as engineers scrambled to redesign portions of the project using lighter steel. Meanwhile, the cost to pay for the workers, heavy equipment, safety officers, and infrastructure rose every day the project continued – while the number of accidents in dangerous expressway construction zones steadily increased.Over the course of construction, drivers have bumped into protective barriers at lane closings and bridge construction sites at least 150 times, records show. Accidents and delays on stretches of single-lane roadway are so frequent that the contractor has spent millions to hire a tow truck to stand by, The New York Sun reported last month.In a conference call, two officials at the state DOT, who declined to be identified, insisted that at the time of the design it was still possible to purchase the huge steel piles, or beams, in America.“At the time this was designed, the consultant had every reason to believe the steel was produced in the United States,” one of the officials said, declining to elaborate.They could offer no further details, however, they said they were unable to ascertain when the design was completed, and the project’s managers made it clear in change orders that the steel issue took them by surprise and caused months of delay.The last two American steel producers with the capacity to forge beams so large were Bethlehem Steel and U.S. Steel, which had both quit the structural business more than three years before the BQE work went out to bid. In 1994 and 1995, Bethlehem Steel laid off half its workforce and ceased production of structural steel. U.S. Steel fled the industry the following year, according to the director of sales for Skyline Steel, Frank Maag. Skyline, of Parsippany, N.J., won the contract to obtain the steel for the BQE project.The Buy America program, which requires highway projects financed with federal money to purchase 99.9% of their steel from American producers, is even older. Congress passed it in the 1980s and ’90s to prevent foreign steel companies from flooding the American market with cheap steel. Those regulations, though, were not enough to avert a fundamental shakeout – which also peaked in the news around the time that the BQE construction design was under way. In the two years before construction began on the BQE, no fewer than 24 American steel companies filed for bankruptcy protection as a result of the cheap steel flooding the market from Asia, where a massive financial crisis was driving down the value of local currencies, according to Mr. Maag.Some new American steel producers have emerged. Unlike Bethlehem and U.S. Steel, which made their money mining the ore and then forging it in the huge smelters of what were known as “integrated mills,” these new minimills use a cheaper method, melting scrap in huge furnaces. They do not have the huge capacity of the old mills, or of some overseas competitors.It wasn’t until April 14, 2000, that the state DOT requested a waiver to the Buy America provisions. Department officials said about half of the foundation piles were eventually purchased overseas from Luxembourg, after the federal government allowed the state to exceed the 0.1% by about 0.6%.The rest of the foundations were redesigned to use lighter, smaller, domestically produced steel piles.“Initial changes of the schedule reflected a delay of 180 calendar days,” the contractor reported in a change order. “This later changed to a final number of 201 days.” That included 67 days for material delays and 134 days to construct the new design, according to change-order documents.The contractor agreed to lop 11 days off the schedule, but the resulting delay of 190 days cost taxpayers a lot of money. The project’s general contractor, Slattery Skanska, charged $552,521 to devise and implement the new plan.Skanska billed the state an additional $126,000 last August for the costs of engineering work hours and of keeping its project office open during the delay. In addition, each extra day of construction required additional pay for safety workers to remain on site. It cost approximately $880 a day for the two workers required to stand by the railway tracks and warn of approaching trains – or $167,200 for the 190 days.Under the contract, Skanska is entitled to a 20% markup for overhead and profit for each change order – a bonus not available during bidding, when contractors are under pressure to lower profit margins to beat out competitors for the job.

17% Over Budget, One Year Late

17% Over Budget, One Year Late

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