The Big Dig, Boston - a project brief
by Sean O' Neill
Director of Communications
Massachusetts Turnpike Authority

Financial Planning and Funding Strategies

• Annual Finance Plan - CA/T was the first Federal Transportation Project in the nation to submit annual finance plans that identified the sources and uses of Federal and third party funds. Subsequently the Federal Highway Administration instituted a national policy that all projects greater than $1B submit annual Finance Plans using the Project's finance plan as their roadmap.
  
  
• Grant Anticipation Notes (GANs) - In order to expedite the Project schedule and leverage Federal funds, the Commonwealth was able to issue bonds that funded the Project using out year Federal funds as the source for retiring the bonds. This concept had not been previously utilized on any large scale nationally but the Commonwealth of Massachusetts was able acquire $1.5B of GANS, or Grant Anticipation Notes, with this innovative program. Programs of this type were subsequently used by several other states.
  
  
• Advance Construction with Partial Obligation Authority Conversions - The traditional federal obligation process required a State to begin a Project once the State had accrued sufficient obligation authority to fully fund a particular contact or project. Massachusetts was able to spearhead this AC technique where Federal Highway would commit to authorizing a contract to proceed (through Advance Construction or AC) and as obligation authority was distributed each year the State would dedicate that authority to ongoing contracts that had been previously authorized. The Commonwealth shaved at least ten years off of the Project schedule by introducing this scheme in the early 90's. Today it is a commonplace practice for all State's transportation programs.
  
  
• Recognition of the Importance of the Statewide Program - The Commonwealth of Massachusetts realized that funding the CA/T Project cannot impact the transportation priorities for the balance of the State. Therefore in the early years of the Project, the Commonwealth established policies for the use of Federal funds that would collectively keep the Project moving expeditiously but provide a level of satisfactory funding for other capital transportation projects within the State.
  
  
• Transportation Infrastructure Fund - In the late 1990's the Commonwealth established a dedicated revenue stream for transportation funding that minimized public concerns over the ability of the Commonwealth to provide their share of the Project funding needs. The Transportation Infrastructure Fund or TIF was created whereby revenue from drivers' licenses and other auto related fees would be earmarked solely for transportation purposes.
  
  
• Third Party Construction - Within the City of Boston there are several agencies advancing their particular construction programs. The CA/T Project envelope at times encroached on the footprint of these other projects. In order to minimize disruption to the public, minimize constructability interfaces, and thus reduce overall cost, it was an early Project policy that the work of the two agencies be combined in common areas alleviating the need to disrupt the public multiple times.

Cost Control and Reporting

• Safety Program - The Project has continually adopted the concept of 'zero accidents' on the Project. Safety awareness has been paramount in daily meetings, regular site walk downs, and the overall Project culture. Although there have been accidents on the Project, the Project is extremely proud that its performance has been continually significantly below the national averages that has resulted in high morale within the labor force and significant insurance savings to the Commonwealth
  
  
• Share Program - As further encouragement for the contracting community to accent the importance of safety and the 'zero accident' Project philosophy, the SHARE Program was conceived whereby specific contractors with outstanding quarterly safety statistics would receive a cash reward based on their achievements. In many cases this cash reward would be shared directly with their workers.
  
  
• Owner Controlled Insurance Program - CA/T implemented an owner controlled insurance program as opposed to contractor/consultant procured insurance which eliminates overlapping coverages, allows the MTA to realize economies of scale and promotes the expeditious processing and settlement of claims. It has been estimated that this program saved hundreds of millions of dollars.
  
  
• Integrated Financial / Cost Database - Oracle database software is utilized to capture projectwide cost trends from all responsible departments which are reported to senior management via the Monthly Cost Trending Program. Computer terminals are deployed throughout the construction field offices and the control project office for project staff to enter real-time cost information.
  
  
• Cost Containment Committee - This is a formal committee consisting of MTA, FHWA and B/PB staff, which meets regularly to review various cost and schedule suggestions. Examples include various aspects of the design like the specific tunnel finishes, building treatments, roadway materials and construction methods.
  
  
• Employee Suggestion Program - This is a program to reward employees for suggesting ways to reduce project costs by providing cash bonuses. The cash bonuses are paid on a non-reimbursable basis by the Management Consultant, which demonstrates the Management Consultant's commitment to Cost Containment. It furthers a Cost Containment mind-set for all employees.
  
  
• Design to Cost Program - This program establishes a contractual Baseline Construction Budget with the Final Design firm. This baseline budget is adjusted throughout the final design phase only for changes to scope. If progress estimates are higher than the baseline budget, the Final Design firm is required to redesign without reimbursement.
  
  
• Monthly Cost Trend Program - Cost trends across the entire project are captured during each month and reported to senior management for information and decision-making. Uses of project contingency budgets are evaluated and follow-up actions to contain costs are identified.
  
  
• Early ID Program - This program highlights issues, which potentially could increase project cost. Issues are gathered from all project departments and reviewed weekly by senior project management to mitigate impacts where possible.
  
  
• Value Engineering Program - During the Preliminary Design Phase, a group of experts from the other B/PB offices were brought in for a one to two week period to review and comment on the in progress preliminary designs.
  
  
• VECP Program - The Value Engineering Contractor Proposal program awards 50% of total savings realized from a contractor proposed idea to the construction contractor.
  
  
• Material Disposal Program - Through a Project initiative, an agreement with the city of Quincy was negotiated which saved the Project some $60 million compared to the original disposal concept and further benefited Quincy and Milton by closing landfills at no cost plus converting these city areas to revenue producing properties.
  
  
• Industry Peer Reviews - The MTA engaged the National Academy of Engineers to perform an independent assessment of the project management and contract administration practices employed on the CA/T project.
  
  
• Lessons Learned Program - Engineering and Design have always been an evolutionary process. Due to the length of the CA/T Project, capturing lessons learned through a formal program from early construction contracts and corporate experience on other projects could greatly benefit later contracts.
  
  
• PCA Initiative Program - A significant portion of cost changes during construction result from differing site conditions, with the majority of the cost being the residual schedule impact costs to the contract as well as interfacing contracts. Prior to this program, all such actual site conditions had to be negotiated. To reduce cost, the Project created bid items to obtain competitive pricing for removal of unspecified obstructions and other actual underground conditions.
  
  
• Constructability Reviews - Throughout all phases of design, the Project utilizes on-project and off-project construction experts to review final design submittals to ensure that the designs are constructible and thereby avoid claims and delays.
  
  
• Pre Advertisement Open Issue Reviews - Prior to advertising a construction package, unresolved design issues are reviewed by senior design and construction managers (including MTA, FHWA, and B/PB). This group evaluates project exposures and decides whether to proceed from a cost/schedule efficiency viewpoint or wait until the issues are resolved.
  
  
• Partnering - It has always been the practice of the Project to work harmoniously with the Project's many contractors. To facilitate this concept the Project has utilized a partnering program whereby the owner/management consultant can understand firsthand the concerns and challenges of the contractor and vice versa. This process has greatly improved the traditional adverse owner-contractor relationships and improved communications across the Project.
  
  
• Issue resolution - As one may expect there are many instances where the view of the contractor is not consistent with the understanding of the owner especially in the area of claims. A formal program to assist resolution of these differences was established by the Project team. This process requires a series of progressive reviews by various levels of management and if that does not resolve the impasse the process involves the use of Dispute Review Boards consisting of off-project experts experienced in claims administration.
  
  
• Claims Avoidance Reviews - In this program, claims analysts from active construction contracts are assigned to review similar contracts still in design, with the intent of minimizing the recurrence of similar claim issues.
  
  
• Schedule Initiative Program - Time always translates into money. Therefore, CA/T management instituted an aggressive program to identify schedule saving initiatives. Throughout the life of the project, schedule savings ideas have been evaluated based on cost/benefit analyses and technical merit.
  
  
• Integrated Project Schedule - Throughout construction, the project has utilized the Primavera CPM product to maintain a project master schedule. This schedule is the product of all individual contractor schedules, identifies all contractor interfaces, and identifies schedule trends against major road opening target dates.
  
  
• C17AA Incentive Clause - The CA/T construction schedule requires efficient management of multiple/complex contract interfaces. An incentive fee clause was included in the I-93 Tunnel Finishes contract to acknowledge that the Contractor's participation is essential to interface management and to compensate the Contractor for schedule flexibility, ingenuity, and cooperation.

• Fast Track Approach - At he outset of the Project it was understood that while various parts of the Project were in construction other parts of the Project would still be in the design phase. This industry wide management practice reduced the Project duration by several years, minimizing impacts to the Boston area and reducing the costs attendant with extended schedules.
  
  
• Project Specific Estimating Database - The Project established an estimating database that was the primary source for pricing the several contract estimates. This database was customized for the CA/T Project scopes of work and work methodologies. It employed crew based estimating methodology whereby very experienced construction superintendents would assign a crew, equipment and other material requirements to a particular scope of work based on the Project's unique working circumstances. The database was continually refined and updated based on the bidding environment on the Project. It did not rely on unit price values from other Projects within the State or other States because those Projects were not of the complexity as the CA/T Project.
  
  
• Electronic Processing - There are several processes for a mega-project that were traditionally performed in a hard copy environment. The CA/T Project embraced the concept of using electronic means for various processes if appropriate. Various levels of management approved contractor and design consultant invoices electronically. Material requisitions for smaller purchases were processed in electronic fashion. If security could be maintained and the process lent itself to electronic means then the position of the Project was to pursue the electronic availability of such a process.