Audits

We found that the October 2002 finance plan for the Central Artery/Tunnel Project fairly represents the project’s costs and identifies adequate funding to cover them. The plan estimates project costs to be $14.625 billion and identifies $8.549 billion in Federal funds and $6.076 billion in state funds to pay all costs. The plan also reflects our prior recommendations for full disclosure, including a $150 million increase to the cost estimate for added insurance costs.

We also identified four material matters the plan needs to disclose: (1) an unresolved legal issue about how to characterize expected proceeds from the sale of the project’s headquarters building; (2) risks of possible 6- to 9-month schedule delays and what is being done to mitigate them; (3) potential cost growth related to construction claims and the opportunity to recover some costs due to design errors and omissions; and (4) a risk that a major contractor’s insolvency could lead to cost increases and schedule delays. The Project amended the plan as recommended. Since the amended plan meets FHWA finance plan guidance and is otherwise satisfactory, we concur with FHWA’s decision to approve it.