TAXPAYERS ROUTINELY PAY FOR COST OVERRUNS WITH NO “TRANSPARENCY”
by OPOVV, ©2015
(Apr. 12, 2015) — People make governments and people have names. When we hear of a “cost overrun,” we don’t hear the real story. We don’t learn about change orders, or changed specifications, or mistakes, or changes in the scope of the work from original intent, which is a change order, by definition, but a change for, most likely, monetary gain. An example of a change in the original plans would be as little as adding a utility sink in a janitor’s closet to adding another 100 beds in a VA hospital.
A residential contractor building custom homes welcomes change orders: it’s almost pure gravy. Maybe the client has a large gilt mirror they wish to hang in the foyer. Great; extra backing must be installed to hold the weight of the mirror. Ding-ding! opens the contractor’s cash drawer. “Lady, the plans you yourself approved show the dryer on the left of the washing machine and now you want it on the right?”
Unbeknownst to the person signing the change order, the total price of the project increases, sometimes at an exorbitant rate. Take the washer/dryer example. First, the outlet for the 220-volt service must be repositioned. Second, the plumbing, the hot and cold water faucets and drain, must be moved over from the back of the dryer to the rear of the washing machine. And then the dryer exhaust opening must be moved to accommodate the new location of the dryer. Ding-ding.
When a person pays for a new house to be built, the fee collection process is usually divided into two points: initial start-up and the remainder when the CO (Certificate of Occupancy) is issued. Change orders complicate the payment process so much so that experienced contractors require that change orders be paid for at the time of the client’s signing as a buffer from the ill feelings and name-callings that inevitably occur during the final payment process.
The downside of government contracts is that mistakes and change orders are not immediately dealt with in the public forum, at least in the form of a public notice with the names of all the people involved. An example would be of a new VA hospital costing a billion more than the original bid.
There’s always a reason why there are cost overruns. Mistakes on approved blueprints are common and should be worked through by competent construction superintendents. There have been cases of incompetent soil experts missing a natural spring in the center of the proposed slab, which would quadruple the cost or cause the project to be abandoned. But the most egregious reason that there are cost overruns on government projects is the criminal markup of specified items ($20 hammer sold to the government for $300), or those contractors who have a TM (Time & Material) contract to milk the contract (charging a week for a job that would normally take an hour).
Names. Publish names, contracts and change orders.
Publish how much it’s costing the government to hang a sheet of drywall vs. your paying for the same drywall hung in your new custom home. The taxpayers have been taken for a ride, and it’s about time we put an end to it. Publish the names of everyone (not just the names of companies), and do it in a timely manner, as it is happening, and not after the fact.
Chas. H. Sells Engineers & Surveyors, Pleasantville, NY
This is the company I went to work for after graduating college. After only a year there one of my managers came to me and said I needed to vote for specific politicians, because they give the company the contracts.
Being a naive college grad I was totally shocked. Needless to say I wasn’t there much longer, and spent the rest of my career as an entrepreneur, where I didn’t have to deal with such nonsense/corruption.
Was there waste at Chas. H. Sells? You bet there was, and many of the examples in this article describe them. This is a small company, so you can expect the waste and political payoffs to be exponential in larger companies.