The problems have contributed to a drastic scaling-back of the work that NYCHA will complete under a crucial initiative to rebuild its aging housing stock. The number of construction projects NYCHA can afford could shrink by as much as 75 percent – leaving thousands of public housing residents in need of new roofs, better kitchens, improved wiring and more.
The memos, penned this autumn by inspector general Robert McSweeney, who is charged with NYCHA oversight by the city Department of Investigation, and former NYCHA chairman Tino Hernandez, indicate that NYCHA management was alerted to the problems years ago but has moved slowly to take corrective action.
NYCHA said Tuesday it is working to correct the problems.
In 2003 NYCHA launched a program called "CM/Build" that hired outside construction management firms to oversee half of NYCHA's capital program—replacing the authority's in-house construction management team that normally oversees jobs. NYCHA was attempting to improve a capital program that rarely completed work on schedule. Under CM/Build, the authority would pay construction management firms to oversee and subcontract all the work on particular projects. For example, the firm Hill International contracted to receive $6 million in fees for overseeing $44 million in capital work.
NYCHA said in its 2006 annual report that the goal of CM/Build "is to improve the quality of construction work, and ensure that capital projects are completed on time and within budget." The approach was modeled after similar programs at the Port Authority and the city’s Department of Design and Construction, according to NYCHA.
In an October interview with City Limits, NYCHA general manager Doug Apple said of the CM/Build program: "We think we're actually squeezing efficiency out of our capital program. We're getting quality work. We actually think we're achieving all of that."
But the memos indicate otherwise.
On Sept. 17, inspector general Robert McSweeney sent a memo to the NYCHA board. It reported that "in many instances, there have been multimillion-dollar differences" between NYCHA's cost estimates and what projects administered by outside construction managers actually cost, with few documented attempts to reconcile the differences.
The construction management firms also approved a number of sole-bid contracts—with no competition—"five of them totaling over $55 million," the memo said. Change orders, in which a contractor asks for an increase in payment because of changes in a job's scope, received only a "cursory review" and had little documentation.
The current phase of NYCHA's capital plan, paid for by a $300 million bond sale, was supposed to complete at least 100 projects. But because of cost increases and inaccurate estimates, the inspector general reported: "Rather than fund 154 planned projects, or the guaranteed minimum of 100, the bond process will finance only 39 projects."
The Capital Projects Division's oversight "has been inadequate over the past four years," the report concluded, with employees reporting that they had been told to take a "hands-off" approach to supervising the outside firms. That lack of supervision, the employees testified, "resulted in [construction management] firms using inexperienced staff to supervise subcontractors and poor construction quality on many contracts."
