Cost overruns run amok

Wednesday March 20, 2013

Cost estimates are never written in stone. They are merely calculated approximations of what one can expect to pay for a construction project. When the final bill comes in lower than the original estimate we are gratified at the prospect of saving money. When the actual cost is higher, we grit our teeth and accept that these things happen.

However, when the final cost is more than four times the estimate we react with "eye-popping" surprise, as Vermont lawmakers are doing after learning about the still-mounting bill for new office space for some state agencies.

Members of the House Corrections and Institutions Committee, which oversees state building projects, say they were given a rough estimate last year of about $2 million to renovate new space at the National Life building in Montpelier. This space was for the Vermont Agency of Natural Resources and other state agencies after their offices were flooded by Tropical Storm Irene.

The most recent figure is now $8.65 million -- and that’s not a final number, according to the Associated Press. National Life chipped in $3.5 million for the project, but will charge the state an average $3.7 million a year in lease costs over the next 10 years.

Last year, the Legislature included $1 million for the project and separate allocations for replacing other office space in Waterbury and for replacing the Vermont State Hospital. Administration Secretary Jeb Spaulding, whose agency includes the Department of Buildings and General Services, which managed the project, called the early amounts "placeholders."

But some committee members still find the latest price tag troubling.

Rep. Cynthia Browning, D-Arlington, told the AP she saw a pattern in which BGS officials "get us to commit to a project and then come back later and say we need more ... We end up being kind of played, kind of manipulated, kind of trapped," she said.

A list of costs from the BGS shows the state spending nearly twice last year’s early estimate just on modular furniture: $3.675 million. And that didn’t include $1.4 million on new walls, $600,000 on carpeting, or $100,000 for a "transition manager," whose job was to help state employees get familiar with their new surroundings, the AP reports.

A transition manager, really? Perhaps that money would have been better spent on an auditor or controller to keep all the other inflated costs in check.

During storm recovery, Gov. Peter Shumlin touted the collaboration between ANR and the Agency of Transportation as they worked on permitting and rebuilding roads and restoring gouged river beds. Shumlin said he wanted that collaboration to be the new norm. ANR would move into the National Life building, which already housed the Agency of Transportation and the Agency of Commerce and Community Development.

We don’t question the great work these agencies and state employees did under very trying circumstances after the flood, and we want them to be comfortable in their new offices so they can continue doing a good job for the state and all of its residents. But we do question some of the more extravagant spending involved in this project, and we wonder why there wasn’t better oversight on the part of either the House Corrections and Institutions Committee or the Department of Buildings and General Services.

In these difficult times when state budgets are operating in the red, businesses are struggling to stay afloat and many residents are living paycheck to paycheck, it’s outrageous that cost overruns were allowed to run amok on this project.


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