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Summary

On September 26, 2008 we issued our report on the results of our review of the Federal Transit Administration’s (FTA) Lower Manhattan Recovery Projects involving a Federal funding commitment of $4.55 billion. Our objectives were to assess (1) the status of each project, including costs, funding, schedules, and grantees’ oversight and (2) any risks that may adversely impact completion of each project. We also evaluated FTA’s oversight and the activities of the project management oversight contractors FTA has assigned to each project. FTA and its project grantees face key challenges, including mitigating risks posed by estimated cost increases and schedule delays, ensuring grantees provide timely status information and address project management issues that FTA has identified, assessing ways to improve the use of FTA’s oversight tools, and identifying reliable funding sources to cover estimated cost overruns above the Federal cap of $4.55 billion. Due to significant estimated cost increases and schedule completion delays, tough choices lie ahead. Project grantees will likely have to provide their own funding to complete the projects as designed, or propose to significantly reduce the scope of one or more of the projects, potentially diminishing the benefits that the projects will provide to travelers in New York City. We recommended that FTA continue the strong oversight efforts already underway and take the following actions to enhance its oversight: (1) work with the Metropolitan Transportation Authority (MTA) and the Port Authority of New York & New Jersey (Port Authority) to expeditiously finalize a single set of realistic, mutually agreed–to cost and schedule estimates that reflect all potential risks; (2) finalize action plans with the Port Authority to address project management issues that FTA has identified and carefully track the Port Authority’s progress in carrying out these plans; (3) assess what additional actions could be taken to ensure that grantees address the agreed–upon risks identified through FTA’s risk management process and that FTA’s recovery plans are used to mitigate those risks; (4) request that MTA and the Port Authority submit financial plans that identify sources of local funding to cover likely estimated cost overruns; and (5) ensure that the Lower Manhattan Recovery Office and its project management oversight contractor assigned to the Route 9A North highway project meet with the Federal Highway Administration on a periodic basis to encourage better coordination between all parties. FTA commented that it generally concurred with our recommendations.