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State audit blames LIRR management for cost overruns on capital projects

In an audit of the LIRR, State Comptroller

In an audit of the LIRR, State Comptroller Thomas DiNapoli said: "This audit identifies ways that LIRR can save millions of dollars on capital projects, if it does a better job of adhering to oversight policies it already has in place." Credit: Jeff Bachner

Long Island Rail Road managers’ failure to comply with their own procedures have led to several major infrastructure projects falling years behind schedule and millions of dollars over budget, according to a new state audit released Monday.

The audit from the office of State Comptroller Thomas DiNapoli sampled 11 projects from the railroad’s two previous Capital Programs, covering 2010 through 2019. Ten of those projects ran late, by between three months and four years. And eight of the projects went over budget, for a total cost overrun of $69.9 million.

Since the audit was conducted, the LIRR has handed off management of its capital projects to a different agency.

In a statement, DiNapoli noted that the audit comes as the LIRR’s parent organization, the Metropolitan Transportation Authority, faces "the greatest crisis in its history." The transit agency’s revenue has been decimated by the COVID-19 pandemic, and it has warned of the potential for mass layoffs and deep cuts — including reductions in LIRR service of up to 50%.

" … The LIRR, like all other MTA agencies, needs every dollar it can get. This audit identifies ways that LIRR can save millions of dollars on capital projects, if it does a better job of adhering to oversight policies it already has in place," DiNapoli said.

In a statement, MTA spokesman Aaron Donovan noted that the MTA’s Capital Construction & Development agency has taken over the management of capital projects "in order speed capital project delivery and reduce cost." He said the new management system has already resulted in the LIRR’s Double Track project being finished a year ahead of schedule, and its Third Track project being "an industry-leading example" of innovative engineering techniques, cost control and community outreach.

"MTA Construction & Development will review the practices and procedures that the Comptroller has commented upon and will determine which can be improved as part of the transformation being accomplished," Donovan said.

The audit found that LIRR project managers sometimes violated their own written procedures, including by skipping critical "project plans" and planned "kickoff meetings" or not properly developing budgets. Those measures could have helped hold down costs and avoid delays, according to the audit.

The audit also found that projects routinely were underfunded by millions of dollars, both because the LIRR’s "Estimating Unit" was not always involved in the budget process, and because the MTA did not allow the railroad to account for inflation when preparing project budgets.

As an example of the railroad’s shortcomings in managing capital projects, the audit explained how LIRR executive management "significantly changed the scope of work" of one project — involving centralizing the control of its trains — when the effort was already 85% done. The late change set the project behind by nearly two years, over budget by nearly $5 million, and required diverting money from another project — a move that contributed to delays in that project as well.

DiNapoli’s audit made several recommendations to the LIRR, such as developing a procedure for when a project can be redesigned, and strengthening project management procedures, including by adopting some standards already in place at other MTA agencies.

Eng, in a written response to the audit, accepted most of the comptroller’s recommendations, including that the railroad should account for inflation. Many of the recommended changes are already underway, Eng said.

But the LIRR rejected other recommendations, including that it require outside contractors to abide by the same procedures railroad project managers do. He said those procedures are "issued internally for the benefit of LIRR employees."

DiNapoli is the latest of several public officials to recently scrutinize LIRR spending practices as the MTA pleads for a $12 billion federal bailout. Earlier this month, federal prosecutors arrested five current or former MTA employees — including four from the LIRR — on charges that they allegedly collected more than $1 million in overtime pay they did not earn.

On Friday, MTA Inspector General Carolyn Pokorny issued four reports detailing alleged wage improprieties among LIRR workers, including a manager who worked from his house in North Carolina for 18 months before receiving authorization to do so; five employees being paid for hundreds of hours of travel time to which they were not entitled; and a utility worker who doubled his annual pay through overtime, even though vehicle records show he was often home when he claimed to be at work.

"Washington has to step up with funding if we are to save our regional public transit system, but MTA must also find ways to save and eliminate waste without impacting riders," DiNapoli said.

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