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Hanover Inn Renovation: “The biggest waste of money for any institution that I have ever seen in my life.”

We have already reviewed both the colossal budget overruns in the renovation of the Hanover Inn and the conclusion that this work makes no economic sense at all from a business perspective. Now let’s look at why the costs ran up as they did.

After discussing the Inn project off the record with insiders who know the workings of the College’s Office of Planning, Design & Construction, and reviewing the bid process with companies that have worked with the College, it is more than clear to this writer that Dartmouth’s management of its large construction projects is totally inept. That perception is widely shared in the building industry.

A little background: the Inn’s ca. 1966 building has long required a thorough renovation, but due to an aberrant hiring process and out-of-control compensation, the hotel was never profitable enough to pay for its upkeep. Over the years, after observing this mismanagement, experienced local hotel operators approached the College about taking over the Inn’s day-to-day operations, but each time they were rebuffed.

Finally, in April 2010, after working for more than 18 months with architects in Burlington, the College announced that it was going to make a $10-13 million investment in the Inn in conjunction with Cambridge-based Carpenter & Company, a real estate firm run by Richard Friedman ‘63. Around that time, the implementation planning for the project seems to have been given over to the Metric Corporation of Boston. In October 2010, the Dartmouth College Real Estate Council approved a total investment of about $16 million in the Inn; in November 2010 the Trustees announced that the renovation itself would cost $13 million; and as late as March 2011, the College represented to the Town of Hanover Planning Board that the renovation would cost about $12 million. Shortly thereafter, following a year of design work, Metric, an experienced builder, put together a detailed renovation estimate of around $20 million. This figure was in line with the commercial requirements for a 109-room hotel.

However at that point, the College’s notoriously inefficient and bureaucratic building department decided to assert itself. The College unexpectedly stepped back from Metric and chose to put the project out to bid. Chief Facilities Officer Linda Snyder (the wife of President Kim’s longtime pal, Executive Vice President/CFO Steve Kadish) had the College ask for proposals from Engelberth Construction of Keene, NH (builder of the McLaughlin Cluster and other College projects), Suffolk Construction (currently erecting the Visual Arts Center), Metric Corporation, Daniel O’Connell’s Sons in Franklin, Massachusetts, and Pizzagalli Corporation of Burlington (a longterm builder for the College).

Remarkably, most of these companies refused to bid on the project. Their reasons were varied — at least the reasons that they gave for public consumption. But in speaking with various builders, the notorious difficulty of working with Dartmouth came up over and over again. Associate Provost Mary Gorman (following her Yale MBA, she worked for several years as an administrator and houseparent at Exeter, before coming to the College), who is no longer with the College, and now Linda Snyder (who would on the surface seem to have some experience in construction administration) have earned a reputation in the New England construction trade as “completely incompetent,” “incapable of making decisions,” “causing endless delays,” and unknowledgeable about large construction projects. As one senior executive summarized: “The operation there is pathetic. The war stories that I could tell you…” He concluded with the statement about the Hanover Inn renovation cited in this post’s headline.

The College’s reputation for disorganization and a lack of professionalism has led to many companies building a Dartmouth premium into their bids. Several construction industry executive estimated that 25%-50% of the cost of any College project is a supplement over what a client from the private sector would pay. Only a small part of this premium is profit; a much greater percentage of the high bids covers executive time, interminable bureaucratic procedures, the cost of delays, the overtime cost of subsequent rush orders, and the unending changes in supposedly finalized plans.

Needless to say, none of my sources would speak on the record, but the veracity of their remarks can be found in the soaring cost of projects like the Hanover Inn. As one manager said, he could build a fine, new 109-room hotel in downtown Boston for much less than the $41.6 million that the College will pay to renovate the Inn.

Sources note also that President Kim has been fully involved in the planning process for the Inn’s renovation, and he directly approved its renovation budget.

Hanover Inn Reservation.jpgAddendum: The administration has announced that the Inn will re-open for business in time for Commencement this coming June (I was able to make a reservation on Expedia for June 12 — at right). Given that the project is still undergoing demolition, and the Town of Hanover has not yet granted it a building permit, it seems impossible that this deadline can be met, except at a truly enormous cost.

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