Port Authority Turnover to Blame for World Trade Center Overruns: Report
Jotham Sederstrom Feb. 8, 2012, 12:33 p.m.
The frequent turnover at the Port Authority of New York and New Jersey’s top position has helped contribute to escalating costs at the yet-to-be-completed World Trade Center site, according to a committee report released yesterday.
The Phase I Interim Report, arranged by the Port Authority’s Special Committee of the Board of Commissioners and co-prepared by Navigant Consulting and Rothschild Group, depicted the Port Authority as an agency “at a crossroads, one that is in need of a comprehensive overhaul of its management structure,” said David Samson, Port Authority Chairman, in a conference call with reporters yesterday.
The 51-page report also identified the bi-state agency as one that let costs escalate as it rushed to complete the September 11th Memorial in time for the tenth anniversary of the terrorist attack while suffering from “a lack of consistent leadership.”
There have been seven executive directors since Robert Boyle took the position in 1997.
“With such turnover at the executive director level, it is difficult for any significant strategic initiatives, goals and objectives to be realized,” the report reads. “Organizations typically become inwardly focused and tend to run adrift in the absence of leadership continuity.
Former executive director Chris Ward stepped down from his post last October to eventually become executive vice president at Dragados, an international construction firm. His successor, Patrick Foye, a former deputy secretary for economic development for Governor Andrew Cuomo, became the agency’s fourth executive director since 2004.
Mr. Ward did not return a voicemail message requesting comment.
Other organizational problems within the Port Authority have also affected the agency. Capital planning and project delivery has had five different “owners” in the past ten years, according to the report.
“Capital planning and project delivery, a critical area of focus within the Port Authority, has suffered from a lack of consistency in management and leadership,” the report reads, while “non-appointed senior career services professional of the Port Authority have an unusually long tenure, averaging 24 years of service.” This kind of infrastructure has turned the Port Authority into a “siloed” organization, the report said.
Redevelopment costs for the World Trade Center site grew from $11 billion in 2008 to $14.8 billion today, according to the report, with the memorial playing “a key role in the escalation of these costs,” said Mr. Sampson. The estimated net cost to The Port Authority after third party reimbursement has grown from approximately $6 billion to an estimated $7.7 billion.
Gross compensation at the Port Authority has also grown in the last 5 years by 19 percent, from $629 million to $749 million.
“Much of the reason for this is the result of add-on compensation such as overtime, unused vacation exchange, and so-called longevity programs,” said Mr. Samson.
The Special Committee said it will introduce new financial and management controls that will limit the $1 billion of cost exposure detailed in the report, added Mr. Samson.
“Given that enormous burden, we are committed to taking the steps necessary to properly complete the project and to mitigate exposure to the World Trade Center cite,” he added.