This summer, New York City officials turned over control of the former World Trade Center site to the Port Authority of New York and New Jersey. With its original debris removal mission done, the city's Dept. of Design and Construction is now enmeshed in reconstructing the project's complex paper trail and in seeking final reimbursement from the Federal Emergency Management Agency.
|IRON-RICH Equipment-intensive World Trade Center recovery was costly and not all reimbursement rules are settled. (Photo by Tom Sawyer for ENR)|
By year's end, New York City officials hope that the massive reconciliation of the estimated $500-million Ground Zero cleanup job will be complete. The city has already paid 85% of all unreconciled invoices billed and is holding the rest, says William Cote, a consultant who has managed World Trade Center administration for DDC since last September. "Everyone will be made whole," he insists. "But we are caretakers of public monies."
The process has been erratic. "Some firms have been paid 100% and others less than 50%," says one contractor. "We're finished since April and still waiting for 30% of funds." Others worry that originally agreed-upon or anticipated cost recoveries and definitions are being changed. The city has set a deadline of Sept. 15 for receiving audited invoices from the site's construction managersa joint venture of Bovis Lend Lease, AMEC and Tully Construction Co. Inc.for the project's DDC-managed first phase that ended in early January. An Oct. 15 deadline is set for the post-January phase when project management shifted to the joint venture.
DDC and its specially hired auditor, KPMG, will then reconcile paperwork and turn it over to FEMA by year's end. FEMA then will review, reimburse the city for payments and close out the project, officials say. "It's an aggressive goal considering how much labor, equipment and material was expended down there," says Peter Tully, Tully Construction president.
|OVERSIGHT FEMA will reimburse city for payouts once eligible costs are reconciled. (Photo courtesy of FEMA)|
Reconciling costs has unleashed a virtual army of number-crunchers into the offices of Ground Zero cleanup participants over the past several months. They are verifying records and seeking to ensure that any rumored bogus claims and overcharges are caught. In addition to KPMG, the task is also being handled by the city's Dept. of Investigations and its consultants. "FEMA is committed to reimbursing 100% of eligible costs," says Brad Gair, FEMA's WTC federal recovery officer.
The process has been daunting for firms, as auditors spend days or weeks poring over existing records and asking for more. "We had 16 requests for payments, and each submittal was 3 to 4 inches thick," says George Wittich, senior vice president of Weeks Marine Inc., the Cranford, N.J., firm that managed marine-based debris removal. Tully says he's now down to "only six" staff members involved in Ground Zero paperwork, "but one of my vice presidents is ready to jump out the window almost every day" as new invoices and receipts are found.
While many Ground Zero firms are resigned to not recovering some response costs for patriotic reasons, amounts left unpaid have put some on the financial edge. "A lot of cash has not yet been recovered," says Andrew D. Walker, president of Nicholson Construction Co., the Cuddy, Pa., subcontractor that installed many of the site's 1,100 slurry wall tiebacks. "It's simply taking a long time."
One sore point is reimbursement for labor costs. Authorities are withholding 20% of payroll costs until timesheets are audited. Firms say it is impossible to track who was on site during the cleanup's early days and that a sign-in sheet system was not uniformly followed. "There's nothing in a union worker's contract that says he has to sign in and out," says Grace Mazzochi, president of Mazzochi Wrecking Co., East Hanover, N.J. There is still dispute over reimbursement for numerous site supervisors, a much-needed safety precaution on a hazardous site, she says. Mazzochi's records show 73,000 manhours in the first phase alone. For some firms, payroll rose to between $200,000 and $300,000 a week during the cleanup's peak, says James Abadie, Bovis Lend Lease senior vice president.
|ON SITE? Firms worry that haphazard worker check-in complicates cost verification. (Photo courtesy of Tom Sawyer for ENR)|
Some firms are still haggling with DDC over rental equipment reimbursements and over definitions of "severe" conditions. Cote says the city is increasing Blue Book rates for severe conditions for contractor-owned equipment. All eligible costs "should get reimbursed dollar for dollar," he says, adding that FEMA has paid 95% of payments requested by DDC. While allowed profit is about 10%, some firms may earn as much as 40%, says one source. "Some firms did OK but they had to finance things for so long," says Abadie. "That is eating away at profits."
But some worry about future liability and the still-uncertain status of FEMA's promised $1-billion indemnification fund. While contractor officials cannot confirm any firms yet named in lawsuits, they worry that the fund may be siphoned by the city to pay for police and fire disability claims.
Despite financial strains, Ground Zero firms have gained valuable experience. Many speak of lessons learned in quick mobilization, work force management, site control and creative solutions. "We learned a lot about structural failures and rebuilding in areas we weren't even sure were stable," says Tully.
Bovis and Tully have already been named to the city's emergency contractor list. Mazzochi is on call to Philadelphia, Newark, Atlantic City, N.J., and other nearby cities.
Weeks Marine was called on to handle an emergency repair when an undersea cable broke near New Rochelle, N.Y., last May. "This was partly due to our relationship with ConEd but also to our experience at the World Trade Center," says Wittich.
Nicholson's Walker says the firm is getting more calls from New York City contractors "asking us to bid on jobs there." Adds Grace Mazzochi: "This has given us a certain amount of name recognition."ast Sept. 11, construction industry companies rushed equipment, workers and management to the stricken World Trade Center complex with barely a thought to permits, schedules, risk or compensation. Their resources were desperately needed and they responded without hesitation. A year later, the impact of that rapid response is sinking in, as firms and government officials endure the painstakingand to some, painfully slowprocess of cost recovery. But the Ground Zero ordeal has also provided valuable lessons for future "first responders" and is proving a marketing boon as well.