Cost overruns plague pilot station

Construction of a barge-based station where pilots can meet vessels going up the Mississippi River has been plagued with delays and is costing about 50 percent more than was projected.

A newly formed state regulatory commission, created on the heels of criticism that the river pilots were too laxly regulated, is hiring a forensic engineer to determine what went wrong.

The state-of-the-art station, which was supposed to cost $12 million, is being paid for with a surcharge added to bills the pilots charge. The cost for the project is now expected to come in around $18 million, according to a cost reconciliation submitted to state regulators.

“Obviously, someone was extremely off with the numbers,” said Gregory M. Bowser, who as executive vice president of the Baton Rouge-based Louisiana Chemical Association represents about 60 chemical manufacturing companies that rely on the ships to move supplies and products to and from their plants.

Bowser said the state Pilotage Fee Commission, on which he serves, will determine whether Crescent City River Pilots Association, of Belle Chasse, will be held responsible for the unexpected cost overruns, rather than the customers.

The Crescent City Pilots, one of four pilot associations operating as monopolies within their territory, shepherd large foreign vessels from the point where the Mississippi River splits into several passes to roughly Canal Street in New Orleans. Another pilot association takes over the vessel in New Orleans and takes it farther up the river.

The charges for the service depend on how large the ship is, how much cargo is being carried and where the ship ultimately goes. Pilot fees for a ship going to Baton Rouge average about $5,000, according to the fee commission. Under the original estimates, an additional $132.68 would have been added to the bill to cover the costs of building the station, according to reports filed with the commission.

Media reports in 2001 found that the pilots, who are paid an average of nearly $400,000 a year, were too loosely regulated by individual boards that often downplayed accidents. Industrial customers complained that little was done to rein in the costs charged by the pilots. The 11-member fee commission, made up of pilots, shippers and gubernatorial appointees, was formed by the Legislature in 2004.

Mark L. Nelson, the chief operating officer of the Crescent City Pilots, said nobody with the association would discuss the situation.

But Nelson and other officers of the organization, according to records and transcripts filed with the commission, blamed the cost overrun on unanticipated design changes to the station and weather difficulties that delayed the dredging of the Pilottown slip where the barge station eventually will sit.

Some of the buildings in Pilottown were damaged by Hurricane Katrina in 2005 and the crew quarters needed to be rebuilt, according to a 2010 presentation the Crescent City Pilots made to the fee commission.

“It wasn’t until after the project was almost completed that we learned there was a significant cost overrun,” said Fee Commissioner John T. Hyatt, of New Orleans. “If somewhere down the road, all of a sudden, the costs change significantly, it is incumbent for that party to come back to the agency and say, ‘Look, we got an issue.’ That isn’t what happened here.”

Hyatt is vice president at The Irwin Brown Co., an international freight forwarding operation.

He is one of the few commissioners to have visited the station, which is floating on a barge at a dock in Hancock County, Miss., while the site at Pilottown is prepared.

“This is not the Taj Mahal,” Hyatt said.

The station itself is fairly basic, with rooms where the pilots can sleep while awaiting vessels, space for a weight room and a day room that the river pilots will furnish themselves. The facility also has modern technology, including satellite phones, sewerage treatment and back-up generators.

During the construction, inspectors found that the facility was too low to withstand storm surges, according to commission records. Making the structure taller required changes to the barge. The air conditioning then needed to be modified, which required expensive changes in the electrical system.

Design changes increased the estimated $7.7 million cost of the structure by $1.5 million, and another $790,000 was added to the $3.3 million estimated cost of the barge.

Much of the cost overrun will come from preparing the slip at Pilottown, where the barge structure will sit. The barge will be filled with water that will stabilize the structure in the marshy area, without sinking it into the muck, and making it easier to move, if necessary.

But the slip has filled with silt and requires significant dredging. The Crescent Pilots told the fee commission the dredging would cost about $1 million. It likely is going to cost closer to $5 million.

The commission is expected to hire forensic engineer Dreux Seghers, of Ocean Springs, Miss., to investigate what occurred during construction and the reasons for any delays and overruns.

“That report will go a long way to reflecting what occurred and what possibly should have occurred,” said Fee Commission Chairman Alfred S. Lippmann, a Morgan City lawyer.