Bechtel Corporation, a leading engineering firm, was the primary contractor on Boston's Big Dig. If you've been following my postings on that subject, you'll agree that they did a really crappy job - over budget, late and work that resulted in one death, several floods and other problems. Now comes word from Iraq of similar management problems.
The Special Inspector General for Iraq Reconstruction, Stuart Bowen, has released his latest audit. This one covers AID and its primary contractor, Bechtel. Put simply, some of the reports filed by AID were deliberately misleading, primarily as to the allocation of costs. For example, the construction budget for a hospital was $50,000,000, however the cost will approach $98,000,000. Yet, AID told Congress that the cost would be $50,000,000. Another example: the direct cost of a building a power station was $6,600,000, the indirect cost was $27,600,000, or four times the direct costs. Conversely, an electricity project came in at $164,300,000 of direct costs and $1,400,000 of indirect costs, or less than 1% of direct costs. What game was AID playing?
It was not only dollars that were misallocated. In March Bechtel reported that the hospital project was nine months late; in April AID told Congress that there were no scheduling problems.
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