Massachusetts Turnpike’s Natsios

Having fired James Kerasiotes as head of the Mass Pike over the ‘surprise’ $1.4b cost over-run on the Central Artery project, the state governor appointed Andrew Natsios in his place. Natsios comes from the state’s budgetary oversight office, and apparently was one of the leading guys who blew the whistle on what was going wrong under Kerasiotes.

Natsios says only about 4 or 5 Turnpike people and a similarly small number of Bechtel/PB people were in on the coverup. He says that in early 1998 they began an accounting trick in which they deployed credits to offset, and hence disguise cost increases. This misled most people who looked at the numbers coming out.

A Turnpike guy told us that Kerasiotes was well-intentioned but foolish: “He was trying to buy a bit of time to get a handle on the true extent of the cost over-run and to put together a financing package that would provide the money to pay for the over-run. But he was foolish in trying to keep it secret. He set himself up as the lightning rod, and got zapped bigtime. He took more responsibility than any one guy can take.”

The state’s inspector-general Bob Cerasoli says the project management contract with the Bechtel/PB venture is overbroad and gives it no incentive to exercise cost-control and oversight, since Bechtel/PB also has a lock on all the design work. He says Bechtel/PB have never acknowledged a single mistake, though in their time costs have increased about six-fold to $13b. But a hefty percentage of these costs are Bechtel/PB’s revenue!

What kind of self-denying mother-theresa types did they think they were dealing with when they gave oversight and cost-control to the project managers and designers?

You give the fox charge of the chicken run, then express shock, horror and surprise when chickens turn up dead. As for Bechtel/PB, well it was good while it lasted. But it was an arrangement that more far-sighted managers would have shied away from. They would have pointed out to everyone the temptations and moral hazard involved?