Locked and Dammed: Ohio River project decades late, billions over

This is the second of a four-part series.

OLMSTED, Ill. — The motto of the U.S. Army Corps of Engineers is "Essayons" -- French for "Let us try."

Since 1993, the Corps has been trying to build locks and a 2,500-foot dam across the Ohio River at Olmsted, Ill., about 20 miles upriver from where the waterway joins the Mississippi River. When the project was authorized in 1988, the estimated cost was $775 million and the Corps expected to complete it by 2000.

Nearly two decades later, the Corps has spent double the original estimate and the work is only 40 percent complete. Officials estimate it will take another $1.6 billion to complete by 2024 -- 24 years later than expected.

The latest price tag on the project, $3.1 billion, added $1 billion to an estimate made just a year ago. The news, delivered at congressional budget hearings this month, stunned industry officials even though they had learned last summer that another hefty price hike was in the works.

"It's a huge, catastrophic blunder for the Corps," said Dale Roth, of the Carpenters' District Council of Greater St. Louis, which represents half of the union workers at the 160-acre project.

"If you were the CEO of a major corporation and made a $3 billion blunder, somebody would be out of a job," he said.

In a statement, the Corps said the original $775 million estimate was too low and that "multiple factors" have caused estimates to increase over the last 15 years. They include challenging conditions at the construction site and inflation. The Corps is investigating "potential improvements in construction methods, contracting techniques and management approaches," the statement said.

Unanticipated costs are to be expected at a project the magnitude of Olmsted, which occupies riverfront property that could hold 150 football fields. One transportation official compared it to the Egyptians building the pyramids.

But cost overruns have gone viral with the dam at Olmsted, which contractors started building in 2005. Three years earlier, contractors completed the twin 1,200-foot-long locks adjacent to the dam at a cost of $271.5 million. Those locks sit idle until the dam is completed.

Some of the unexpected costs can be blamed on weather and river conditions, which limit the time crews can spend building and make the work more tedious. Other added costs stem from the congressional system of piecemeal funding, the Corps' fateful decision on how to build the dam and the fact that no contractor would bid unless taxpayers assumed the risks of construction delays pushing up the price.

The fourfold increase in price has created a dam of its own. Because Olmsted devours the lion's share of the $170 million available to the Corps each year to replace or repair aging river infrastructure, work on other critical projects -- including modernizing locks and dams on the Monongahela River -- proceeds at a snail's pace.

Locks and dams -- which move about 550 million tons of coal, grain and other vital commodities annually -- are falling apart faster than Congress is providing money to replace or repair them.

"This is a ticking time bomb. It's not a matter of if but when there will be a catastrophic failure on our inland waterway system," said Michael Hennessey, chairman of the National Waterways Foundation, a research group funded by companies that move goods on rivers.

Olmsted is the Corps' top priority. Its new locks and dam will replace two sets of locks and dams upriver, near where the Tennessee and Cumberland rivers join the Ohio. Those handle about 90 million tons of cargo annually, making them the busiest locks on the 11,000-mile inland waterways system.

"It's the No. 1 priority, and that's where all the money goes. No other place sees any money because of it," said John Fedkoe, the owner of TowLine River Service, a Neville Island barge operator.

Pushing completion of the project back a quarter of a century means that many more years of spending millions of dollars to maintain facilities elsewhere that are slated for destruction.

The Corps faces the same Sisyphean task at its No. 2 priority: modernizing locks and dams on the Monongahela River at Braddock, Elizabeth and Charleroi. A new dam at Braddock was finished in 2004, the year the entire project was supposed to be completed.

Instead, that is the only component of the $1.4 billion project that is operating. Once new locks are built at Charleroi, the dam and locks at Elizabeth will be torn down, eliminating one stop on the 30 miles of river between Charleroi and Braddock.

The Corps expects to complete the Mon project in 2024 at the earliest. Until then, it must keep the 105-year-old locks and dam at Elizabeth and a Depression-era lock at Charleroi patched together so the 10 million tons of coal and other commodities that move along that stretch of river each year can get to the industries and consumers who depend on them.

Among the major structural problems are a corroding dam foundation at Elizabeth and deteriorating, unstable concrete walls at Charleroi.

If stop-gap measures fail, Corps and industry officials said the dam would be out for at least three years, closing the Mon to barges moving coal to power plants. Consumers and industry would face $1 billion in extra electricity costs, according to a study prepared for the Corps last year.

The irony of caring for increasingly obsolete river infrastructure slated for the scrap heap is not lost on one member of Congress. "We've been spending money to keep the Elizabeth dam from collapsing so we can tear it down," said U.S. Rep. Tim Murphy, R-Upper St. Clair.

'... down the Olmsted hole'

Mr. Roth, the union critic of cost overruns at Olmsted, is a director of the Waterways Council, whose members include barge operators and commodities producers. Those companies pay a 20-cent-a-gallon tax on the diesel fuel that powers barges.

The tax revenue, about $85 million a year, provides 50 cents of every $1 the Corps spends at Olmsted and every other major construction project. Matching funds are provided by U.S. taxpayers.

That means about $170 million is available each year to fund an $8 billion backlog of work needed to replace or make major repairs to locks and dams on the rest of the nation's rivers.

"There are a number of projects on our rivers that are going to be frozen in their tracks if we keep pouring money down the Olmsted hole," said Dan Mecklenborg, senior vice president of Ingram Barge, a Nashville, Tenn., company that operates a fleet of nearly 4,000 barges.

He and other industry officials see red any way they look at Olmsted. The latest $1 billion cost increase amounts to $225 million more than the project's original estimated cost. The Corps already has spent $1.5 billion -- double the original cost -- with half of the money coming from the tax on diesel fuel.

"We have already paid for all of the original estimate," said Stephen D. Little, president of Crounse Corp., a Paducah, Ky. company that operates 1,000 barges and moves 30 millions tons of cargo a year.

Industry officials are disturbed that they have no say in how Congress funds the projects or how the Corps manages them.

"We're expected to write a blank check. We have to pay for half of this, and we have no control over it," said Peter Stephaich, chairman of Campbell Transportation, a Houston, Pa., company that operates a fleet of 500 barges.

The Olmsted project is on the site of a former cat litter plant, 964 miles down the Ohio from Pittsburgh. The depth of the river at the construction site fluctuates 40 to 45 feet a year depending on snow and rain upriver. That limits the time crews can spend working in the river.

That's only one factor that affects what it will cost to build the dam.

There's also the New Madrid fault, located about 30 miles away in Cairo, Ill. Seismologists say if a major earthquake occurred east of the Rockies, its source would most likely be the New Madrid fault.

"It played into every bit of the design," said Bill Gilmour, the Corps' resident engineer at Olmsted.

But two other challenges loom even larger than Mother Nature.

When the Corps builds an Army base or some other military project, Congress provides all the money upfront. With funding in hand, the Corps can purchase construction materials and schedule work efficiently.

But lock and dam projects are subject to the whims of politicians and the federal budget process. Funding varies from year to year, forcing the Corps to break up massive projects into bite-size chunks and multiple contracts.

At Olmsted, that means purchasing steel, concrete and other materials in installments and at higher prices. It means mobilizing and demobilizing construction equipment and a work force that ranges from 250 to 500 depending on funding and weather.

The results are cost overruns and construction delays.

"It's not an unfortunate outcome. It's a guaranteed consequence of the way we do things," said Michael Steenhoek of the Soy Transportation Coalition, an industry group lobbying for changes in how waterway improvements are funded.

"How you allocate money is just as important as how much you allocate," he said.

A bit like giant Legos

Another sore point is the way Olmsted's dam is being built.

Traditionally, construction crews embed massive walls of sheet steel in the river to create a so-called cofferdam that diverts water around a rectangular section of the river bed. Water inside the cofferdam is pumped out, creating a dry hole where the dam can be built.

In 1997, Corps officials decided to build the Olmsted dam "in the wet." They believed that would save $64 million and shorten the construction schedule.

Building "in the wet" involves assembling 42 massive shells made of concrete and steel on dry land, moving them into the river and guiding them 60 feet down to the bottom where a network of more than 3,000 24-inch diameter tubes anchors the dam's foundation. The largest shells weigh 3,700 tons and are 125 feet long, 102 feet wide and 30 feet high. Each shell takes six to nine months to build.

When river conditions are tame enough, a 10-story, 5,300-ton crane that travels on rail lifts a shell from where it is assembled to a cradle that rests on 104 23-inch wheels.

From there, the shell and the cradle roll down an incline at a pace of 1 foot per minute, taking two days to reach the river bank. It is transferred to a catamaran barge, which moves it into position over the network of tubing, then gradually lowers it to the river bottom. The margin of error for placing the shell on the foundation is three inches or less.

From dry land to river bottom, the shell's journey takes three weeks.

Last summer, workers at Olmsted expected to set seven shells. A hole was dug in the river bottom big enough to accommodate them. But because of spring flooding and high river speeds caused by a drought last fall, workers only had time to set three shells.

When construction crews return this summer, they will have to clear out a 25- or 30-foot mound of sand, mud and other debris that settled in the hole. Clearing the debris will take several weeks or more, Corps spokesman Jon Fleshman said.

The way the contract was bid is also an issue. The Corps originally sought a fixed-price bid that would have made the winning contractor assume the risk of completing the project on time and on budget.

"Nobody bid on the job," said Col. Luke T. Leonard, who in July took command of the Corps' Louisville, Ky., district, which oversees Olmsted.

The Corps switched to a contract that required the government to reimburse contractors for costs and pay them a fee for doing the work. When it was awarded in March 2004 to a joint venture between Washington Group and Alberici Constructors, the contract was valued at $564 million.

"We pay for everything. If their guys work overtime, we pay," Col. Leonard said. "We absorb the risk here."

Col. Leonard said the Corps will re-examine its decision to build in the wet and whether it makes sense to switch to more conventional methods for a 1,700-foot section of the dam.

Len Boselovic: lboselovic@post-gazette.com or 412-263-1941. First Published March 19, 2012 4:00 AM


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