In an effort to clear the record after a contentious board meeting on Tuesday, Deputy Secretary for the Office of Policy and Management Kosta Diamantis told CT Examiner that rising cost estimates for redeveloping State Pier in New London were the direct result of efforts to be transparent with the public after early missteps by the previous administration.
Diamantis told CT Examiner on Wednesday that the rising cost estimates are typical for construction projects, but that it’s not common to release early estimates based on incomplete designs.
Despite cost estimates that have risen from $93 million to $157 million to $235.5 million, Diamantis told members of the Port Authority board on Tuesday that there had not been any “cost overruns” on the project so far.
Diamantis said that the early estimates were released in an effort to be transparent, but it has created the appearance of cost overruns. If they were not released, the public and press would have been demanding more information, he said.
“It’s a situation that is damned if you do, damned if you don’t,” Diamantis said.
State Sen. Paul Formica, R-East Lyme, told CT Examiner on Wednesday that a truly transparent estimate would have made clear that those numbers were based on incomplete plans. Formica said that he could have understood that. Instead, Formica said he was led to believe that the final cost would be $157 million.
“Now it’s going up to $235 million, and if it goes any higher than that, I don’t think that’s what people bought in for,” he said.
Formica criticizes “complete and total mismanagement”
At the Port Authority meeting on Tuesday, Formica suggested that members of the board resign if they can’t get the project back on track.
Although Formica has previously questioned the capability of the authority and criticized the misuse of funds reported in a 2019 state audit report that found the quasi-public had spent thousands of dollars on food, drinks and entertainment, he has been a supporter of the project since it was first announced in 2019.
This year, Formica in particular has taken a hard stance on the Port Authority, joining Senate Minority Leader Kevin Kelly in February to call on Attorney General William Tong to investigate the authority for paying a $523,000 ‘success fee’ to a contractor it hired partly to find an operator for the state pier.
That tension was evident at the Tuesday meeting, where Formica chastised the Port Authority for new Connecticut Port Authority Executive Director John Henshaw’s explanation to CT Examiner for how the cost estimate for the project jumped up again – now at $204 million in hard costs, and $235.5 million in total costs.
“I am offended as a legislator, and I’m offended for all the taxpayers,” Formica told the board. “Quite frankly, I think you should all resign your positions if you can’t get this right. We need to get somebody in here who can salvage this project, and come up with a number that is finite, that we can work on, that we can build this thing – because in ten years, we’re going to need the energy of offshore wind. If we keep fiddling around with this mess here at the Port Authority and the State Pier, we’re never going to realize that.”
Speaking to CT Examiner on Wednesday, Formica said that if there continue to be escalations to the cost like there have been so far, lawmakers may need to take a closer look at the board and see if they need more help.
Formica said that, as a long-time supporter of the redevelopment, he was offended by what he called “complete and total mismanagement” of the project. He said the explanation – that earlier estimates were made when the project was not yet fully designed, and without having a construction manager to consult – was “alarming, arrogant, and completely unacceptable.”
He said the cost of the project should have been known going in. There are usually contingencies of between 5 and 10 percent of the project cost to cover unexpected costs, but nothing like the escalating estimates of the State Pier project, he said.
Formica also said that he was disappointed that the escalating costs of the project have taken away from its purpose, which is to help spur offshore wind development. He said he thinks the renovated pier will be a big asset for New London and the state.
“I just want us to get to the point where we can focus on this new emerging industry of offshore wind, so that it can begin to help generate the power we need to move Connecticut,” he said. “As the economy heats up, we’re gonna need something.”
Diamantis explains the changing estimates
Diamantis told CT Examiner that he understood Formica’s comments came from frustration with the cost estimate rising from $157 million to $235.5 million. He said he understands why people who are not closely involved in the construction process would be frustrated by the rising cost estimate and see it as an overrun.
“It evolves, but it certainly isn’t because the teams at [state agencies], CPA, [Northeast Offshore], or our consultants were not vigilant in crossing every ‘t’ and dotting every ‘i’ to get to this 100 percent document, and to build this pier properly for long-term use for the state of Connecticut,” Diamantis said.
He said at the Tuesday meeting that there are no cost overruns, there are now concrete numbers to move forward. He also said nothing has happened that should be cause for anyone to resign.
The first estimate of $93 million was produced by Moffatt & Nichol, who were hired under the administration of former Gov. Dan Malloy to design the project. The estimate was based on project plans which were 30 percent complete – commonly the first time there is a cost estimate for a project, said Diamantis. He said he must have misspoke when he said it was a 3 percent estimate at a Bond Commission meeting last week.
“We relied on their numbers early on, thinking that they had done all the necessary homework – geo-testing, and all the other things that were associated with the project,” Diamantis said. “We had later learned that they had not.”
The second estimate of $157 million was also based on 30 percent complete plans, but came after the project was moved to the opposite side of the pier to avoid boxing in the Cross Sound Ferry. Officials looked for a construction manager with $157 million as the estimated price, and hired infrastructure engineering firm AECOM. They realized there were things missing from the design of the project, as well as elements that were unnecessary, Diamantis said.
That, as well as taking a closer look at specific pieces of work that had to be done and the costs associated with them, drove the construction cost estimate up again, to $204 million, he said. Changes to different materials, aspects like the width of docks, the material being dredged, and how many times that material needs to be moved, can all affect the cost estimate, said Diamantis.
He explained that the state would usually engage a construction manager much earlier in the process, and that if the state had been the only party involved in this project, it probably would have hired one within a month of hiring the architect.
Diamantis said that the hiring of a construction manager was delayed while all sides reached a decision. It was delayed further amid discussions about the base cost of the project, to see if Gov. Ned Lamont was willing to invest more than the early cost estimate of $157 million.
“After his own personal review, as the businessman that he is, he felt that we are going to make an investment in State Pier, and we are going to make it part of our economic recovery plan and our economic boom for the future, and be ahead of the curve,” Diamantis said.