Property Types Office
June 30, 2008
By: Michael Fickes, Contributing Correspondent
A report released this afternoon by the Port Authority of New York and New Jersey said that the World Trade Center rebuilding project in Lower Manhattan would take substantially longer and cost substantially more to build than estimates have indicated.
In a letter to Governor David Paterson of New York, who requested the report, Chris Ward, executive director of the Port Authority, wrote that the schedule and cost estimates of the rebuilding effort that have been communicated to the public are not realistic. While the report itself did not revise the schedule or the budget, a story in this morning’s Wall Street Journal cited sources familiar with the report as saying that the $15 billion World Trade Center, including a September 11 Memorial, three office towers and a transportation hub, will probably take one to three years longer to build and cost $1 billion to $3 billion more than previously estimated.
What happened? The report identified and explored four main factors that contributed to the problem:
* The project’s unprecedented size and complexity
* The unique interdependencies of each of the projects on the site
* The change in market conditions that has resulted in significant construction cost escalations
* Given the lack of an effective decision-making process and governance structure, the inability to work through issues that fundamentally drive schedule and cost
“No one should be surprised that the project has fallen into its own miasma,” Barry LePatner, an attorney and principal with LePatner & Associates L.L.P., a firm that provides business and construction counsel to clients, told CPN today.
“A combination of political, economic and financing problems has put this project into a slow grind. And if it continues, Ground Zero will become New York’s Big Dig,” he said, alluding to the Boston highway expansion project that took nearly three decades to design and complete, falling victim to constant cost overruns and missed deadlines. By the time the 7.8-mile project was completed, it had cost $14.8 billion, up from the original estimate of $2.6 billion.
“Projects like these, even though complicated, are not impossible to complete within a reasonable schedule and budget,” said LePatner, who is the author of Broken Buildings, Busted Budgets: How to Fix America’s Trillion-Dollar Construction Industry, a book published recently by the University of Chicago. “Look at 7 WTC, a building that went down with the Twin Towers. It contained a Con Ed generating plant that had to come back on line quickly, and it was done quickly--within four years.”
Governor Paterson ordered the Port Authority report in early June after expressing shock over the state of the project’s planning and construction progress.
In a statement today, Larry Silverstein, president of WTC developer Silverstein Properties Inc., said, "New Yorkers are entitled to an aggressive, reliable schedule for rebuilding the World Trade Center, backed by absolute accountability from the people responsible for getting the job done.... As of today, my company's projects--Towers 2, 3 and 4--are fully designed and on schedule." Silverstein went on to note that, "Construction of Towers 3 and 4 is underway, and all three buildings are slated for completion, as projected, by the end of 2012."
“As demonstrated by the success of 7 World Trade Center, as well as other recent developments in the area, Downtown is energized like never before. It is vital that we maintain that momentum and finish the rebuilding,” SIlverstein said.
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By: Michael Fickes, Contributing Correspondent
A report released this afternoon by the Port Authority of New York and New Jersey said that the World Trade Center rebuilding project in Lower Manhattan would take substantially longer and cost substantially more to build than estimates have indicated.
In a letter to Governor David Paterson of New York, who requested the report, Chris Ward, executive director of the Port Authority, wrote that the schedule and cost estimates of the rebuilding effort that have been communicated to the public are not realistic. While the report itself did not revise the schedule or the budget, a story in this morning’s Wall Street Journal cited sources familiar with the report as saying that the $15 billion World Trade Center, including a September 11 Memorial, three office towers and a transportation hub, will probably take one to three years longer to build and cost $1 billion to $3 billion more than previously estimated.
What happened? The report identified and explored four main factors that contributed to the problem:
* The project’s unprecedented size and complexity
* The unique interdependencies of each of the projects on the site
* The change in market conditions that has resulted in significant construction cost escalations
* Given the lack of an effective decision-making process and governance structure, the inability to work through issues that fundamentally drive schedule and cost
“No one should be surprised that the project has fallen into its own miasma,” Barry LePatner, an attorney and principal with LePatner & Associates L.L.P., a firm that provides business and construction counsel to clients, told CPN today.
“A combination of political, economic and financing problems has put this project into a slow grind. And if it continues, Ground Zero will become New York’s Big Dig,” he said, alluding to the Boston highway expansion project that took nearly three decades to design and complete, falling victim to constant cost overruns and missed deadlines. By the time the 7.8-mile project was completed, it had cost $14.8 billion, up from the original estimate of $2.6 billion.
“Projects like these, even though complicated, are not impossible to complete within a reasonable schedule and budget,” said LePatner, who is the author of Broken Buildings, Busted Budgets: How to Fix America’s Trillion-Dollar Construction Industry, a book published recently by the University of Chicago. “Look at 7 WTC, a building that went down with the Twin Towers. It contained a Con Ed generating plant that had to come back on line quickly, and it was done quickly--within four years.”
Governor Paterson ordered the Port Authority report in early June after expressing shock over the state of the project’s planning and construction progress.
In a statement today, Larry Silverstein, president of WTC developer Silverstein Properties Inc., said, "New Yorkers are entitled to an aggressive, reliable schedule for rebuilding the World Trade Center, backed by absolute accountability from the people responsible for getting the job done.... As of today, my company's projects--Towers 2, 3 and 4--are fully designed and on schedule." Silverstein went on to note that, "Construction of Towers 3 and 4 is underway, and all three buildings are slated for completion, as projected, by the end of 2012."
“As demonstrated by the success of 7 World Trade Center, as well as other recent developments in the area, Downtown is energized like never before. It is vital that we maintain that momentum and finish the rebuilding,” SIlverstein said.
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