Illinois dam costing billions more than expected as delays mount

2013-09-16T07:30:00Z 2014-07-19T20:12:44Z Illinois dam costing billions more than expected as delays mountBy Bill Lambrecht blambrecht@post-dispatch.com > 202-298-6880 stltoday.com

© 2013 St. Louis Post-Dispatch

OLMSTED, Ill. • Last December, a 5,000-ton concrete shell named SS5 was in the water ready to be dropped into the Ohio River like a giant Lego piece by the world's largest catamaran barge. 

Then the river rose. The swift waters threatened to sabotage dam building and endanger divers working 50 feet down with 3-inch visibility.

So the Army Corps of Engineers canceled the operation, yet another in a string of setbacks that has plagued construction of Olmsted Locks and Dam for more than 20 years.

“It was heartbreaking to make that call,” recalled Brad Bradley, resident engineer at Olmsted.

Eight months later, SS5 remains perched on the shoreline along with partially built shells, evidence of a failure that haunts taxpayers and ripples across the nation’s inland waterway system.

A Post-Dispatch review of thousands of pages of documents and more than two dozen interviews reveal a project plagued by cost overruns, delays and engineering challenges stemming largely from the corps’ stubborn insistence on an innovative construction method that met its match in the unruly Ohio River.

A project that should have been completed years ago has quadrupled in cost because of management failures for which the Corps of Engineers has yet to be held accountable.

And the price tag keeps rising.

In 1988, Congress authorized spending $775 million to replace two 1920s-era Ohio River dams 17 miles from the Mississippi River, at the busiest inland shipping hub in America.

A quarter-century later, the projected cost has ballooned to $3.1 billion.

Moreover, the Olmsted project is barely half done. The latest completion dates: 2020 for the dam and 2024 for the entire project.

Up until now, the shipping industry has paid half of the Olmsted tab from a tax on fuel. But that would change under provisions in water project bills in Congress that would put taxpayers on the hook for most or all of the $1.6 billion the corps says it needs to finish the project.

If history is a guide, the final cost will be even higher.

The Post-Dispatch investigation reveals several factors behind the mess:

• The Army Corps of Engineers’ decision long ago to deploy a bold and largely untested construction method called “in-the-wet” figures large in the delays and spiraling cost.

• Failure by Congress to fund the project more robustly in its early years played a role in stretching out construction.

• The Inland Waterways Users Board — the advisory panel that monitors a river construction fund — watched the costs balloon without taking action. The board of shipping industry executives has stressed that it can only make recommendations to the corps.

Last year, the panel passed up an opportunity to recommend that the corps change its dam-building method at a potential savings of more than $100 million.

“Like most major man-made catastrophes, there’s plenty of blame to go around,” said Mark Knoy, chairman and chief executive of Indiana-based American Commercial Lines.

‘IN-THE-WET’

Inland barge navigation is, by most accounts, essential for the American economy, providing an alternative to truck and rail shipping and offering environmental benefits. For Olmsted alone, the corps promises a $685 million annual benefit to the nation in reduced shipping costs when completed — a benefit which, like the project, is delayed.

Meanwhile, the corps is spending $7 million this year for temporary repairs to Locks and Dams 52 and 53, 84-year-old relics still in use that present the ongoing threat of catastrophic failure.

That threat has existed for decades. In 1985, a letter to the corps from a dozen U.S. senators — among them John Danforth and Thomas Eagleton of Missouri and Paul Simon and Alan Dixon of Illinois — complained of the “critically deficient and obsolete” old dams.

In 1987, the corps formally recommended to Congress that a new dam be built near Olmsted, Ill. It did not say how.

A year later, an eager Congress authorized $775 million for the project, with expectations that it would get done in seven years.

But with government spending, authorizations and appropriations are separate animals. Money for the project did not start to flow until 1991.

The corps has blamed funding delays and shortages for what went wrong.

Documents and interviews suggest a bigger culprit: the decision to build Olmsted “in-the-wet,” setting in motion costly changes and engineering challenges that continue to this day.

   How Olmsted dam is being built
     

The corps has constructed few big navigation dams in recent decades. The most recent was the Mel Price Locks and Dam on the Mississippi, 17 miles north of St. Louis, which opened in 1990 after 11 years of construction at a cost of $1 billion.

The Mel Price dam was built with traditional cofferdams — temporary diversion barriers in the river that create a watertight enclosure and a dry working environment during construction.

But in 1997, the corps instead decided to build Olmsted using the in-the-wet method, in which immense, fabricated dam segments are floated into the flowing river.

In-the-wet was used with some success along European coasts and in American bridge construction. The corps deployed the construction method in 2004 on Braddock Dam on the lake-like Monongahela River in Pennsylvania to rebuild a structure one-fourth the size of Olmsted.

In the 1990s, as the corps listened raptly to consultants, “innovation” became a watchword where corps brass gathered.

Corps documents from 1997 cited recommendations to use the method from the Sverdrup-Gerwick Joint Venture. Sverdrup Corp. was a St. Louis engineering company later purchased by Jacobs Engineering. Ben Gerwick, who died in 2007, was an engineer and bridge designer in California and an apostle of in-the-wet.

That study, obtained by the Post-Dispatch, concluded that the dam could be built in as little as three years using the in-the-wet method, depending on funding, significantly faster than the projected eight-and-a-half years using cofferdams.

Citing the study, a July 1997 internal corps document comparing construction methods declared that in-the-wet would cost $40 million less and get done anywhere between 18 months and two years quicker than the traditional technique.

That prediction would be vastly off the mark. But potential drawbacks of the wet method noted in the document proved prescient:

“Difficult construction underwater with no visibility, greater use of divers and (threats to) their safety, greater uncertainty in design and construction.”

TROUBLE ON THE GROUND

In April 2002, Paul Hanley, a corps official from the Great Lakes and Ohio River Division, announced at a meeting of the Inland Waterways Users Board in Chattanooga that the Olmsted project was “moving along very nicely,” according to minutes of the gathering.

Daniel Steiner, chief of planning in the corps’ Great Lakes-Ohio River Division, displayed the fervor in the corps’ underlying innovation, remarking that “navigation modernization is God’s work.”

“We are totally committed to building everything that makes any sense at all in-the-wet,” he said.

But the project quickly ran into trouble. The corps received no bids from contractors because, as Army engineers confessed later to the navigation industry, of “the perceived risk associated with a new in-the-wet river construction technique.”

“In retrospect, that should have been bells and whistles and red flags to tell the world that this would be a problem,” said John Doyle, a lawyer in Washington for river shippers.

   An aerial photo of the Olmsted Locks and Dams on the Ohio River that are under construction in Olmsted, Ill. Photo courtesy of the U.S. Army Corps of Engineers
   Olmsted construction site
     

Twin 1,200-foot locks were finished — built with cofferdams. Without a completed dam, they were useless. So corps officials offered the lure of a different type of a contract: a “cost-plus” arrangement in which the contractor is paid for expenses up to a limit along with additional payments to allow for a profit.

In January 2004, the corps awarded a $564 million contract for the dam alone to a joint venture of Alberici Constructors Inc. of St. Louis and Washington Group International, which later became part of URS Corp.

Alberici and URS have worked together in construction projects around the world. In the Olmsted joint venture, URS is the lead contractor, but Alberici’s chief operating officer, Leroy Stromberg Jr., said the partnership is “close to 50-50.”

Olmsted has meant steady profit for the contractors with basically no investment or risk. Under the cost-plus contract, payments include a share of fee distributions based partly on performance and reimbursement for employee salaries and home office expenses supporting employees on the job. Alberici has enjoyed the added benefit of fabricating steel for the project in St. Louis.

“It’s been a good project. We haven’t lost any money,” Stromberg said.

In the early going, the corps’ Louisville District realized the difficulty of overseeing such a massive project in which the government had, in effect, become the prime contractor.

Design flaws became apparent. The plan called for moving the enormous dam segments on what amounted to 120-square-foot sleds. But the sleds wouldn’t uniformly support the shells and could damage them. So the corps devised a lifting method that would require a $9.5 million super-gantry crane.

Meanwhile, the assembly site, situated adjacent to an old kitty litter plant, needed vast excavation after an earth slide on the slope leading down to the river.

Two years into the contract, the estimated cost had grown by $200 million and nothing had been built.

   Olmsted funding chart
     

In-the-wet poses many challenges, none greater than a short construction season on the river — from June 30 through November. Unanticipated high water can further shorten the water construction season, as it did again this summer. At least half the time in recent years, a turbulent river has shortened the season.

The corps’ chosen method required elaborate equipment that the government now owns: a $19 million, football field-wide catamaran to float the segments; a $17.5 million “aquadigger” for dredging; and a $4 million cradle system to move dam segments to water.

Engineers had to devise a 40-foot-wide curtain made up of heavy chain to protect divers from the current.

Asked what will become of all the specialized equipment after the dam is completed, a corps official replied: “That’s a good question.”

The Olmsted problem isn’t just water over the dam, as the saying goes. Keeping the project afloat has drained the Inland Waterways Trust Fund, the account fed equally by shippers and taxpayers to pay for construction on the nation’s marine transportation system.

With Olmsted siphoning away three-fourths or more of the fund’s proceeds, work on other priority river projects has slowed or been put off to nearly unfathomable future dates.

In 2007, Congress authorized building second locks at three Missouri dams on the Mississippi River. But with Olmsted bleeding the account, the completion date at Lock & Dam 24, at Clarksville, is projected for the year 2090, according to the corps.

Similarly, the scheduled finish date for Lock & Dam 25, at Winfield, is 2064. And on the Illinois River at LaGrange, a second lock won’t be done until 2070.

Meanwhile, money for Olmsted continues to flow from the treasury as inexorably as a river — a flow of tax dollars that will increase if the barge industry gets its way.

In short order, Congress must reauthorize Olmsted at a higher spending level or further construction will stop.

Corps officials are taking a potential shutdown seriously, preparing to put the project in “caretaker status” as early as November and lay off some 500 workers. That would be a stunning development even for star-crossed Olmsted, which has bred frustration among those bearing the burden of delays.

“I call Olmsted the 800-pound gorilla, the project that sucks the life out of the room and allows nothing else to get done,” said Richard Calhoun, president of Cargo Carriers, a division of Cargill Inc.

‘A COMPLETE FAILURE’

In 2009, five years into the dam contract, the corps estimated that the dam would cost an additional $300 million. Only then were the first shells being built.

And costs continued to soar. In January 2011, the corps told Congress that the overall project cost had grown to $2.1 billion. Thirteen months later, that number would rise to $2.9 billion, which became $3.1 billion.

The leaps in cost sparked outrage in Congress, which had devoted little oversight to Olmsted.

“A complete failure,” is how Rep. Ed Whitfield, R-Ky., who helped to shepherd dam-funding through Congress, referred to the project.

About a year ago, the Inland Waterways Users Board had an opportunity to direct the corps to finish the project with the tried-and-true cofferdam method.

   Construction workers wait for a load of concrete to be lifted into position at the Olmsted Locks and Dams that are under construction in Olmsted, Ill., on Aug. 28, 2013. Photo By David Carson, dcarson@post-dispatch.com
   Work in Olmsted
     

“Should we be using in-the-wet,” corps Maj. Gen. Michael Walsh asked industry leaders in Pittsburgh in July 2012, “or should we also look at in-the-dry and make a decision to switch that construction and development?”

During the meeting, Richard Hancock, then regional business director in the corps’ Great Lakes & Ohio River Division, sounded one of the corps’ rare mea culpas. Recalling early decisions, he said planners believed that in-the-wet would save money

“As it turns out, that maybe wasn’t the right assumption,” he said. “Because the effort to put these things in this section of river was a little more than what we were originally estimating.”

At the next users board meeting in August, in St. Louis, corps officials tried to persuade members to stick with wet construction.

They estimated that switching to conventional cofferdams would save at least $109 million — money that could be spent on pressing river projects elsewhere. But, they added, it could mean even more delays at Olmsted, a year or even two.

“So to me, that $100 million is almost a wash,” Hancock said at the Sheraton City Center Hotel, according to minutes.

The shipping CEOs passed up the opportunity to scrap the in-the-wet process. In recent interviews, several of them used words similar to those of Stephen Little, president and CEO of Kentucky-based Crounse Corp.

“They’re the engineers,” he said. “They’re the folks who are supposed to know how to build things.”

CORPS’ REPUTATION

The corps spent a year on a 2008 study that analyzed management at Olmsted. The study broke the problem into a pie chart, with one-third of the blame assigned to “lack of optimum funding.”

The study made no mention of in-the-wet.

The corps’ performance at Olmsted has received little scrutiny. That could change. A provision in the Senate’s version of a water bill orders a review by the nonpartisan Government Accountability Office, the investigative arm of Congress.

How does the corps explain things now? Besides funding shortfalls, officials blame inflation and higher costs related to China’s construction boom and the aftermath of Hurricane Katrina in 2005.

The corps’ Richard Hancock had a supervisory role before moving on recently to a position with authority over military construction worldwide.

“I still support the in-the-wet construction method, but it is not as compelling a decision as it was when we first looked at it,” he said.

Dale Berner, president of Oakland, Calif.-based Ben C. Gerwick Inc. — the company that recommended in-the-wet — said that building structures in flowing water was done as early as the Roman Empire. His company is still being paid for “engineering support,” the corps acknowledged.

“All I can say all is that it is a large job, and all large jobs have some challenges. As far as people in Washington getting nervous, what they should do is commit the funds and do the job,” Berner said.

Alberici’s Stromberg said the dam-building method is so “neat” that it was featured on the Discovery Channel in 2011 — billed on television as one of the most massive engineering projects in North America.

   The lower pier shells 1 through 4 to the right of the locks being prepared to be filled with concrete at the Olmsted Locks and Dam construction project on the Ohio River. Photo courtesy of the U.S. Army Corps of Engineers
   Work in the river at Olmsted
     

“Technologically, it’s really something how we’ve figured out how to do all this work under water,” he said.

He, too, blames funding woes for the problems: “When jobs are not fully funded, it just tends to extend them. That’s not the way we normally work. Normally, we work toward getting done as quick as we can get done.”

But Dale Roth, business representative of the Carpenters’ District Council of Greater St. Louis & Vicinity and a member of the industry’s Waterways Council Inc., says in-the-wet is the main culprit in the delays and overruns, which he counts in lost jobs along the Mississippi River.

“The decision to do this project in-the-wet was a disaster, and an even bigger disaster was not shifting course last year to save $100 million, and probably a lot more,” he said.

Michael Toohey, president and CEO of the Waterways Council, Inc., which represents the marine transportation industry in Washington, said he has no confidence that the project will be done even by 2024.

“The dynamic that’s at play here is reputation,” he argued. “If the corps had pivoted and finished the project with cofferdams, it would be a tacit admission of failure.”

Toohey added: “But many years from now, the corps will finish Olmsted, and they will hold it out as this marvelous engineering feat, something that had never been done before.”

Bill Lambrecht is Washington bureau chief for the Post-Dispatch and STLtoday.com. He covers politics, Congress and Missourians and Illinoisans in Washington.

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