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Michael Petrone, manager of the J&M Café in Seattle, looks for cracks under his restaurant in Seattle last week.

John Lehmann/The Globe and Mail

Michael Petrone had a sinking feeling soon after the rescue effort began near his bar in this Pacific Northwest city's historic Pioneer Square district.

Suddenly, tables at the J&M Café were covered in dust each day. Then the windows would not shut as easily as usual – or the doors. Even for a saloon that was a gold-rush watering hole more than 100 years ago, this was odd. One day, Mr. Petrone went into the basement and found large rats roaming everywhere. That was not the worst. He also discovered a two-metre crack the width of a silver dollar in the foundation of the building.

"That's when I knew we had a serious problem," says Mr. Petrone, the manager.

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The legendary tavern, Seattle's oldest bar, is at the epicentre of one of the most troubled, and most scrutinized, urban construction projects in the world. A plan to replace a crumbling elevated viaduct in the downtown core with a 3.2-kilometre tunnelled roadway under the city has gone seriously awry. Civic officials are wondering aloud whether the projected $3.1-billion venture (a number now almost meaningless) will have to be abandoned at a potential loss to taxpayers and contractors in the billions.

Seattle's bad dream began more than a year ago, when a specially designed tunnel-boring machine nicknamed Bertha suddenly stopped working after completing just 10 per cent of the job and is stuck down there. Since then, a complex and costly effort has commenced to rescue the damaged machine, an endeavour that has involved more drilling to build a vertical pit out of which the massive head of Bertha will hopefully one day rise.

Some are even invoking memories of Boston's infamous Big Dig, now recognized as the most expensive highway ever built in the United States. Plagued with problems that led to horrific cost overruns totalling nearly 200 per cent, it was finally completed at a cost of nearly $15-billion. (The original estimate was $2.8-billion). Widely viewed as the worst megaproject debacle in U.S. history, the tunnelled roadway was opened in 2007 after taking 15 years to build.

It is one of the reasons the unfolding nightmare in Seattle is being watched by cities around the world – including in Canada – all of which have aging transportation infrastructure that needs to be replaced.

The rescue site is near the Seattle waterfront. Drilling efforts have also involved pumping millions of litres of water out of the shaft to reduce pressure that could threaten the integrity of its walls. This pumping has coincided with the discovery that a several-square-block area of nearby Pioneer Square, once a staging site for Klondike gold-rush miners and now a major tourist destination, has sunk more than an inch in the past several months. Civic engineers have also had to address a huge crack that opened up in one of the streets in the neighbourhood.

"There was no doubt in my mind it was connected to the drilling efforts to get Bertha," Mr. Petrone says of the damage to his building. "You could feel the place shake from the moment they started. Things have definitely shifted."

Meantime, work to complete the rescue shaft continues. The workers need to dig 36 metres to reach Bertha, and as of this week had about 12 metres to go. The operation is being overseen by the Dutch firm that retrieved the wreckage of the Russian naval submarine Kursk from the bottom of the Barents Sea in 2001. The company has had to design a custom-made modular crane capable of lifting all 1.8 million kilograms of Bertha (imagine an object similar in size and weight to a space shuttle) to ground level so it can be repaired – if it can. The cost of the salvage operation is expected to exceed $200-million and be completed this spring, barring further surprises.

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The concept of a tunnel to replace the viaduct had been around for years. The ugly overpass hampers pedestrian access to the city's waterfront and ruins million-dollar views. A tunnel was an ideal alternative, but it was the most expensive option, and Seattle voters rejected it in a 2007 plebiscite before approving it in 2011.

Councillor Mike O'Brien was one of those who never saw the logic in a tunnel. He would prefer a solution that encourages people to take public transit, saying the 20,000 trips on the viaduct each day – mostly from West Seattle to downtown – could be taken by bus on a ground-level road built at a fraction of the cost. He and former Seattle mayor Mike McGinn felt the tunnel was a financial risk and environmentally unfriendly.

Mr. O'Brien is now one of those publicly expressing concerns that the project could be a bust.

"Absolutely it could be," he said in an interview. "When I look at what's transpired over the last 14 months, how can anyone say with confidence that it's going to get built for sure? I'm not saying it won't, but it's certainly easy to be skeptical at this point."

The councillor says the project is almost certain to incur substantial overruns. What is still unclear is who will be responsible for them. The city was supposed to come up with $700-million of the $3.1-billion the project was expected to cost, with the state supplying the rest. Seattle had planned for $400-million of its contribution to come from tolling the tunnel for 20 years, but a review concluded the projection was wrong. Now, the city has had to scale back its toll revenue forecasts, leaving a $200-million gap in its funding plan.

The state has spent 70 per cent of its contribution already and the tunnel is only 10 per cent built, Mr. O'Brien says. And then there are the additional costs of the delay, losses that could overwhelm Seattle Tunnel Partners, the consortium building the tunnel.

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"It is a company that exists only to build this tunnel," Mr. O'Brien says. "It doesn't have huge cash reserves. Are they going to take a billion-dollar loss just to save face, or do they walk away? They could easily decide we've lost enough money, we're going to wash our hands of it, we're done. People default on contracts all the time."

Seattle attorney John Ahlers, a specialist in construction law, is another who has been watching the viaduct replacement project closely. And he has also expressed concern that it could die on the vine.

"I can't give you a range of percentages, but it's possible it may not be feasible to drill a 60-foot [18-metre] diameter tunnel with the equipment and technology that exists today. If that is the case, something else will have to be done."

Mr. Ahlers said a raft of lawsuits is almost certain to flow from the problems encountered so far. If, for instance, conditions underground turn out to be different from the geotechnical assumptions indicated by the Department of Transportation, which is overseeing the project for the state, the contractors could sue for costs linked to the delays.

He said several suppliers are already incurring extra costs.

"Trucking companies, subcontractors, you name it, they all set aside certain volumes of work because they expected to be working on the tunnel," he said. "And knowing this they didn't take other projects. There's going to be a multiplier effect that happens here in terms of expenses suffered because of the delays."

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The state remains optimistic the project will be completed – the latest best guess is 2017 – and that the contractors will cover any overruns.

"This is a design/build contract," Matt Preedy, deputy administrator for the viaduct replacement program, said in an e-mail. "Costs the contractor is incurring as a result of the current stoppage are the contractor's to manage."

As for Pioneer Square, Mr. Preedy said an architect hired by the state to investigate found no evidence that the original tunnelling or subsequent Bertha rescue effort has caused any structural damage in any of the 60 buildings investigated.

"In a handful of buildings, we did see recent, minor cosmetic damage and we are continuing the monitoring process to better assess the cause," Mr. Preedy said.

Back at the J&M Café, Mr. Petrone would beg to differ. He does not call the crack in the foundation of his building cosmetic. He says work to fix doors and windows in the place will cost thousands. Yet he remains fairly serene about the entire matter and is in no hurry to start a lawsuit to recoup his costs.

"First of all, I have nothing to prove," he says, sitting at a table in the bar on a January afternoon. "The wall is cracked and [the crack] has gotten bigger and pieces of cement are falling off every day. Pipes downstairs are separating because of the vibration. The plumbing and electricity couplings are falling apart. What else do I need to say?"

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Mr. Petrone says he is certain some law firm situated in Pioneer Square will eventually get sick of what's going on and launch a lawsuit. When it does, others will likely join in. He would be happy if the state simply paid for his repairs. And he thinks it will – eventually.

"I actually supported this tunnel idea," he says. "Too bad we couldn't just open and shut our eyes and it would all be built. As it stands now, God knows when it will be completed, if it is at all."

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