A nearly $500,000 cost overrun on a project to restore a Tarentum creek channel contributed to $6 million in additional costs across a dozen projects in Allegheny County, county Controller Chelsa Wagner said.
The extra costs more than consumed the revenue raised from a new $5 vehicle registration fee Allegheny County residents pay to fund road and bridge work, a 27-page report released by Wagner says.
Wagner said the county must tighten standards for firms designing and carrying out public works projects to prevent construction cost overruns.
Overruns on the dozen projects examined averaged almost double the 10 percent that would typically cover change orders and is considered the industry standard, Wagner said.
“Cost overruns resulting from omitting necessary tasks from design plans and bids not only sap county resources that could go to other projects, they open the door to unscrupulous practices such as ‘bid rigging,’ which drive costs up even further,” Wagner said.
“When cost overruns become commonplace, contractors may see the opportunity to secure contracts by bidding below their actual anticipated cost,” she said. “This is why close oversight of design work to prevent the necessity of excessive change orders is essential.”
According to Wagner’s report, the Bull Creek channel restoration project near the Tarentum Bridge originally included installing a gabion wall on the creek’s eastern bank between a railroad bridge and the Fourth Avenue bridge.
While the contractor was excavating for the wall’s installation, “it was determined that the pier depth of the Tarentum Bridge was too shallow to continue. The excavation was shut down by PennDOT to prevent any further instability to the Tarentum Bridge.”
The project designer had to develop an adjacent caisson wall to replace the original wall and avoid more excavation surrounding the Tarentum Bridge pier.
The change added about $488,000 to the project’s roughly $1 million original cost.
Wagner’s audit recommended building limits on added costs due to design omissions into engineering contracts, and conducting thorough internal reviews of design specifications to ensure they are complete before issuing requests for construction bids.
Firms that repeatedly submit incomplete designs should be restricted from county engineering work, she said.
In responding to the audit, public works Director Stephen Shanley said 33 projects were completed from 2015 through 2017. The bids for those projects was $81.1 million and the final contract amount was $81.3 million. That’s a $202,525 difference and a change in costs of 0.25 percent — well below the 10 percent industry standard.
“Our project managers that oversee the design and construction strive to limit project issues and when they arise handle them as effectively as possible,” Shanley said in a written response. “This can be seen through the bid costs and final construction costs of the projects bid through 2015-2017 that have been completed. It is our opinion that this is a more accurate representation of the projects designed and constructed by this department than those selected for this audit.”
The $5 surcharge on vehicle registrations in Allegheny County took effect in 2016. It raised $4.8 million in 2017, which is $1.2 million less than the cost overruns on the projects that auditors examined.
“When every Allegheny County driver saw their vehicle registration fee rise by $5 two years ago, they expected that to result in safer roads and bridges,” Wagner said. “But we have seen cost overruns that could well have been prevented through due diligence by the county to burn through this amount and more.
“Greater safeguards simply must be put in place to ensure that every dollar available for investment in this vital priority is spent wisely.”
Brian Rittmeyer is a Tribune-Review staff writer. You can contact Brian at 724-226-4701, [email protected] or via Twitter @BCRittmeyer.