Big Cost Overruns Turning Up at St. George Ferry Terminal

The city’s project to rebuild the St. George ferry terminal on Staten Island is $31 million over its original budget and a year behind its original schedule for completion.In a monthly report obtained by The New York Sun, the general contractor acknowledged that work by electricians on the project had been “embarrassingly slow.” The president of one company involved in the construction project, Nicholas Laganella of PT &L Contracting, pleaded guilty to bribery in connection with work on a Brooklyn post office. Another subcontractor filed for bankruptcy protection earlier this year.Since work on the terminal began in September 2001, the price tag for the project has ballooned more than 30%, to about $120 million from $89 million. New York City’s Economic Development Corporation is overseeing the project. The inflated costs come at a time when transportation funds are needed in the city. The Metropolitan Transportation Authority is in the midst of a budget crisis and is considering layoffs, fare hikes, and service cuts. Almost half of all New York City roads are in poor condition. And ferry service to Staten Island has failed to keep up with the needs of its growing population, according to the City Council.Most private developers include clauses in their contracts that reward contractors for finishing early and fine them for finishing late. With millions of dollars in interest payments hanging in the balance, they cannot afford to do otherwise.No such incentives or penalties are built into the Staten Island ferry terminal contracts, and the results are apparent. Records reviewed by the Sun tell a story of costly work slowdowns on the St. George project, questionable charges that inflated costs, and a lack of urgency on the part of some of those involved. The upshot is that the project, which was originally to be completed last year, has not been finished. Officials said it should be finished late this year.A spokeswoman for the Economic Development Corporation, Janel Pat terson, attributed the delays at the St. George terminal to “two very severe winters,” which slowed down work; changes to the plan and scope made for security reasons after September 11, and delays caused by the terrorist attacks and the Staten Island ferry crash last year that killed 11 people.Joseph Ciccione, senior project manager for the firm Barney Skanska, the general contractor on the job, praised his workers and said problems with contractors and unforeseen delays are typical in big projects. He said many factors have caused the delayed finish, including the addition of a new fueling pier.“People have been working really, really hard, it’s a really tough job and they have all done a really good job,” he said. “We have basically demolished a three-story brick-and-glass project and replaced it with 70,000 people walking through it every day.”Records reviewed by the Sun disclose that a number of other factors not previously mentioned by city officials have slowed the project and inflated costs.Last year, the president of PT&L, Laganella, pleaded guilty to paying $80,000 in bribes to secure a $2.9 million subcontract at the General Post Office Building in downtown Brooklyn. His indictment and the resulting chaos at his company, the largest subcontractor on the job, “posed very serious delays to work” and forced the general contractor, Skanska, to make arrangements with another company in case “PT&L should fall apart completely,” according to progress reports reviewed by the Sun.When the project’s prime contractor for concrete and masonry, Shroid, filed for bankruptcy protection earlier this year, it forced a new hiring and delayed the project further.Disputes over costs have also slowed the project. In August 2002,Skanska informed the city it would need at least an additional $7 million to complete the project because of higher-than-expected bids from subcontractors and additional work requested by the Department of Transportation.Once notified of the change, the city held up payments for so long that workers from PT &L walked off the site twice in February and March of 2003, setting back the project at least a-month-and-a-half, according to the reports. Delays in signing contracts with another contractor pushed back another portion of the project at least six months, according to reports. A third contractor, Tradewinds, completed its work but has now sued the city and Skanska over payment.In a September 2003 project report, Skanska blamed Local 3 of the International Brotherhood of Electrical Workers. “At this writing the pace of this installation by EJ’s electricians is embarrassingly slow, unfortunately local #3 has no shame and all attempts to increase productivity have failed,” Skanska reported. The electricians, who worked for E-J Electric Installation, were paid between $97 and $167 an hour.The business manager for Local 3 in Staten Island, Joe McSpedon, said he had not heard of any complaints about union electricians working on the ferry terminal job. Told of the comment in the project report, he said: “It’s hard to imagine what Skanska’s motivation is for saying that. But they’re responsible for that project and they’re going to push off blame everywhere they can imagine.”Representatives from E-J Electric did not return calls seeking comment.“We are frustrated and out of ideas to expedite work,” Skanska noted in November 2003.A “premium acceleration scenario” proposed by Skanska and the city “to get EJ off the hook with Local #3 has been rejected,” by E-J Electric, Skanska wrote in January.To win work from the city, contractors must submit bids and compete against one another by offering the best deal. After the projects have started, however, many contractors on the Staten Island job are entitled to a 20% profit on material and engineering costs and 5% profit on labor and equipment costs included on any change order approved by the city, according to contracts reviewed by the Sun.Contractors have submitted more than 100 change orders totaling more than $4.4 million to the city, including $16,000 to relocate equipment from an old office dock and $17,000 to furnish and install 13 new exit signs. Meanwhile, the fee charged by the general contractor has risen 65%, to $11.6 million from about $7 million.The city has challenged some of the change orders. In a March 2003 audit, the city’s Economic Development Corporation questioned a $270,000 charge by E-J Electric that would have paid an electrician overtime rates of $130 an hour to be on standby between December 15 and April 15 in case the heater in the ferry terminal broke.The audit also noted “irregularities” in bills submitted by six of the contractors working on the project, including lack of insurance, labor overcharges, and claims for laborers without documentation.Such documentation is necessary to prevent no-show jobs and other forms of fraud. Last year, federal and state law enforcement agencies charged 42 members of two New York City unions with such crimes as part of a mob-directed scheme that netted $2 million. PT&L was among the contractors that allegedly paid wages fraudulently recorded under the scheme, though PT&L was not charged with any wrong doing. The ferry terminal was not included in the investigation, but PT&L was working on the project at the time the alleged crimes were committed. And in the audit, the EDC questioned $105,423 in labor charges at the terminal from them.Officials at PDG Environmental Inc., which purchased PT&L in April, declined to comment. But Mr. Ciccione said PT&L has now provided most of the missing documentation.The project for the St. George ferry terminal was announced by Mayor Giuliani in 1999. It will create an additional 12,000 square feet of retail and restaurant space and a pedestrian walkway connecting Richmond Terrace and the terminal entry. The Whitehall Ferry Terminal in Manhattan is undergoing a similar renovation.

Big Cost Overruns Turning Up at St. George Ferry Terminal

Big Cost Overruns Turning Up at St. George Ferry Terminal

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