The following article is based on reporting by Alan Finder, David Firestone and James C. McKinley Jr. and was written by Mr. Finder.

Twice in the last five years, senior New York City hospital officials had serious doubts about their ability to manage the troubled $1 billion reconstruction of the Kings County Hospital Center.

Each time they considered whether to turn the effort over to a state construction agency with long experience in large public projects. But each time they decided to press ahead -- a decision that one former head of the hospital system, Dr. James R. Dumpson, now concedes was a mistake.

Those two moments of doubt -- when warnings of disaster were made but no one in authority seemed able to respond -- illustrate the failure of the city's Health and Hospitals Corporation to master the largest construction project it has ever undertaken: a renovation now 32 months behind schedule, with the delay costing an estimated $100,000 a day.

Two months after Mayor Rudolph W. Giuliani suspended the decade-old project, Kings County Hospital is a symbol of governmental mismanagement. And while a joint Federal and local inquiry into possible corruption is under way, the problems seem more fundamentally rooted in a pattern of ineptitude in which the pressures and uncertainties of politics sometimes overrode the judgments of professionals.

The hospital officials who began to question their agency in 1988 and 1989 and again in 1992 and 1993 were reluctant to risk declaring the Kings County job a failure and publicly asking the state to step in, several present and former participants in the project said.

And because of instability and turnover within the top ranks of the hospitals corporation, the senior officials who considered asking the state to take over the project during the last two years had no idea that their predecessors had contemplated the same thing only three years earlier.

In the end, many participants said, the reconstruction job was undermined less by any one specific decision than by a general inability to manage effectively, to follow through on major decisions and to control both the complex politics and the challenging design and construction of a huge public project.

"They never had the ability to manage a project like this," said Jerry A. Davis, the project's chief architect.

For example, in 1992, seven years after planning had begun, hospital officials considered breaking the job into 200 prime contracts to satisfy demands for more involvement by minority-owned companies. "Is this the right thing to do?" Mr. Davis recalls being asked. "I said, 'It's insane.' " A compromise of 111 contracts was reached, an outcome that left Mr. Davis warning -- correctly -- that it would cause delays and cost overruns.

About the same time, the hospitals corporation first awarded a $4 million contract to excavate the site of the new main hospital. The contract was ultimately awarded a total of four times to three different companies -- and the paperwork still was not completed when Mr. Giuliani suspended work in February.

Interviews with dozens of participants in the Kings County project and a review of internal audits, letters and other documents of the Health and Hospitals Corporation point to several broad problems that brought the project to a standstill.

First, it was a result of the hospital agency's inexperience with a job as complicated and expensive as rebuilding Kings County, New York's largest public hospital, while it remained open.

It resulted, too, from several significant decisions that immensely complicated an already challenging task. Among them was the agency's decision -- dictated largely by hospital and community politics -- to place the new main building in the middle of the crowded Kings County campus. That forced the construction of two additional buildings and the demolition of six others, adding perhaps three years to the project.

But as much as anything, the failure to rebuild the hospital on time and within budget reflects a lack of continuity at an agency that has had four presidents and an acting president since 1985.

Now, the Investigations

Today, after having spent $110 million, hospital officials are evaluating whether a new, 1,200-bed complex planned a decade ago still makes sense at a time when hospitals' inpatient populations have declined amid a new emphasis on preventive care.

The city Department of Investigation, the Brooklyn District Attorney and the United States Attorney in Brooklyn are looking into the project. Among the concerns is whether a private consultant and a state Assemblyman, who are law partners, had a conflict of interest when they advocated the hiring of minority contractors at Kings County.

The hospital is also at the center of a political struggle, with some black elected officials in Brooklyn accusing the new Mayor of stopping the reconstruction to punish black New Yorkers who did not support him last November.

The Site Confident Steps Toward Disaster

New York City officials have been talking since the early 1960's about renovating Kings County, which consists of 23 buildings spread over a 24-acre campus in the Flatbush section of Brooklyn. In 1983, as the city emerged from the fiscal crisis of the 1970's, hospital officials started planning an ambitious rebuilding of the antiquated complex, much of which was completed in 1932.

By the mid-1980's, as New York's fiscal picture improved, some senior hospital officials had grown confident that their agency could handle the huge rebuilding project. "We were starting to deliver projects, admittedly smaller projects, on time, and we were able to hire really top quality constructions managers from the industry," said Dr. Jo Ivey Boufford, president of the Health and Hospitals Corporation from 1985 to 1989. "We had as much confidence at that point from a professional point of view as we would have going to another entity."

Some officials also hoped that by doing the project themselves they could avoid the debacle involving the construction of Woodhull Medical and Mental Health Center in Brooklyn, a project that had been overseen by a state agency, the Facilities Development Corporation. When Woodhull opened in 1982, it was six years behind schedule and had cost four times its original estimate.

By September 1986, a consultant completed a master plan for Kings County, calling for a large new main hospital building of about 1.4 million square feet, and substantial renovation of many existing buildings. Cost estimates ranged from $500 million to more than $1 billion.

A Critical Misstep

In May 1987, the Health and Hospitals Corporation selected the architects and a construction manager. By June 1988, the planners had resolved a critical question: whether to put the new main hospital building in the middle of the Kings County campus or in a less-crowded corner to the northeast.

The central location won out, producing a cascade of complications that added up to three years of work, according to officials who helped oversee the project.

The decision forced hospital officials and the architects to plan the demolition of six buildings and part of a seventh. They also had to add two new buildings to replace those demolished. The two buildings cost a total of $16.7 million and are the only parts of the project that have been completed.

The city also had to spend $13.7 million to reroute electric, telephone and steam lines around the site of the new main building.

This work could have been avoided, two former project executives said, if the planners had decided to put the new hospital in a then-vacant section of the campus a few blocks to the northeast. "We would have saved millions if we had built it there, and it would have been built faster," said a former project manager, who spoke only on the condition of anonymity.

But there was pressure to place the new main building in the center of the campus. Members of the hospital's Community Advisory Board, representing residents of central Brooklyn, had long sought more cooperation between Kings County and the State University's Health Science Center at Brooklyn, a hospital and medical school commonly known as Downstate, which is across Clarkson Avenue from Kings County.

Advisory board members thought that if the new hospital was placed directly across the street from Downstate, the two institutions might be bound more closely. The State Health Department has also tried for years, without success, to get Kings County and Downstate to end what state officials see as a broad duplication of medical services.

Some doctors at Downstate had more mundane reasons for insisting that the new main building be in the middle of the campus. Putting the new hospital on the vacant site would have meant an extra walk of about three blocks.

Excavation For $110 Million, Not Much to See

Critics have faulted the Health and Hospitals Corporation often in recent months for spending $110 million at Kings County and having only a hole in the ground to show for it.

In fact, the hole was never dug.

On April 30, 1992, hospital officials opened the bids on a contract that would finally start excavation for the new main building. The officials declared the lowest bidder, the Cross Bay Contracting Corporation, to be ineligible because the company had not submitted preliminary paperwork to qualify for the job. They awarded the contract the next day to the second-lowest bidder, the Blandford Land Clearing Corporation.

That set in motion a series of events that delayed the start of excavation for at least a year. Cross Bay went to court to contest its disqualification, and three months later, Justice Herman Cahn of State Supreme Court in Manhattan ordered the hospitals corporation to accept Cross Bay's bid.

Convictions and Complications

But in July 1993, as Cross Bay prepared to begin excavation, hospital officials learned that a Cross Bay official had been convicted of mail fraud in 1987. Hospital officials canceled the contract and in late September awarded it again to Blandford.

Eleven days later, the corporation ordered Blandford to stop all work after the City Comptroller, Elizabeth Holtzman, found that it had misrepresented and omitted information in required background forms.

By late November, the corporation reached agreement with a third excavation contractor, Macro Enterprises. When Mr. Giuliani halted work at Kings County two months ago, city officials had completed a background check of the contractor, but not of its subcontractors.

Contracts One Project Split Into Hundreds

From the beginning, the officials who planned the rebuilding of Kings County were determined to include construction companies owned by women and minorities. "There was a real desire to make a major construction project redound to the economic improvement of that community," said Dr. Boufford, the former president of the hospitals corporation.

To that end, the corporation awarded a $349,000 contract in December 1988 to Darryl E. Greene & Associates, to help hospital officials identify qualified construction companies with black, Hispanic or female owners and to nurture the companies through the intricacies of major construction work. The contract was renewed and expanded twice in subsequent years.

The contracts and Mr. Greene's ties with Assemblyman Clarence Norman Jr. -- the Brooklyn Democratic leader who has been an ardent supporter of the Kings County rebuilding and who is also a law partner of Mr. Greene's -- are among the aspects of the Kings County project now under investigation. Mr. Norman said he had not yet met Mr. Greene when he won his first contract, and he maintained that they did nothing improper.

By early 1991, in response to complaints from minority contractors and black elected officials, hospital officials began discussing whether to divide the 20 to 40 major construction contracts at Kings County into many smaller pieces.

Contractors Complain

Dr. J. Emilio Carrillo, then president of the hospitals corporation, contended in internal discussions that splitting up the contracts would make them more accessible to minority contractors, who generally lack the experience and financial resources of white-owned companies. He also argued that dividing the contracts would attract more bidders and thus drive down prices.

Dr. Carrillo took his idea to Mayor David N. Dinkins, who approved it, according to several hospital officials.

But the policy was not yet public, and minority contractors continued to complain to local elected officials. In the summer of 1991, the politicians stepped in. That August, many local elected officials, joined by more than 100 minority contractors, met in a large auditorium at Downstate with Dr. Carrillo and other senior officials of the hospitals corporation. The hospital officials announced that they were considering splitting up the contracts, but did not specify a number. Soon, some hospital officials were talking privately of as many as 100 to 200 prime contracts.

In a letter dated Aug. 16, 1991, Mr. Davis, the chief architect, told Dr. Carrillo that having so many small contracts on a project as huge as Kings County was highly unusual and would likely lead to extensive delays and added costs.

But Romeo R. Adams, then a senior vice president at the hospitals corporation, and Mr. Greene, the agency's consultant, continued to push for as many as 200 prime contracts, Mr. Davis said. Finally, in the latter half of 1992, after Mr. Adams had been eased out by a new corporation president, Dr. Billy E. Jones, officials settled on 111 prime contracts. The internal debate had lasted at least 18 months.

Pinning Blame for Delays

Early last month, Joseph Quinones, a senior director of the hospitals corporation, said that dividing up the contracts had delayed construction by two years. He said that redesigning, the performance of the construction manager and the problems with the excavation contract had also caused delays. But he said the contracting delays far outweighed the others.

Mr. Norman and other Brooklyn politicians argued, however, that the other problems were equally responsible for the delays. "The emphasis is being put on the affirmative action program because the Mayor wants to knock it out," Mr. Norman said. "This is political payback."

Rudolph J. Rinaldi, a former city Buildings Commissioner who is now executive director of the State Dormitory Authority, said that dividing up a construction job into 100 parts is not unprecedented. His agency is overseeing a $270 million rebuilding of Roswell Park, a major hospital and cancer research center in Buffalo. The project is divided into more than 100 prime contracts to allow more participation by minority-owned companies, he said.

"You can do 100 contracts, but you have to manage it," he said.

Second Thoughts Talks With State Led Nowhere

While the severity of the problems at Kings County has become clear only in recent months, some senior members of the Health and Hospitals Corporation had long worried that the job was too big for the agency.

Anthony F. Japha, who was then the corporation's vice president in charge of capital programs, said he became concerned in 1988 and 1989 that the agency lacked the experience to oversee the job. He began talks with the Dormitory Authority.

"It became apparent to me that there were a number of things in which H.H.C. did not have a comparative advantage when it came to large construction projects," said Mr. Japha, citing the Dormitory Authority's financial and management systems, its experience and reputation within the construction industry.

But the informal discussions with state officials broke down. Several participants said they could not recall why. "The conversations just kind of faded off into nothing," said Thomas A. Devane, the deputy executive director for planning and development at the Dormitory Authority.

Dr. Boufford said there was just a general feeling at the hospitals corporation that it could get the job done.

A few years later, in 1992 and 1993, a new management team at the hospitals corporation -- unaware of the earlier talks with the state agency -- also thought about asking the Dormitory Authority for help.

Disturbed about the escalating problems at Kings County, Dr. Dumpson, then chairman of the corporation's board, said that he and Dr. Jones, the president, discussed among themselves "whether we should continue to rebuild this hospital or whether we should ask the State Dormitory Authority to do it for us."

The idea was not pursued, Dr. Dumpson said, in part because the project was too far along, and too much money had already been spent.

"In hindsight," he said, "I wish that Dr. Jones and I had done what we considered several times, and that is to say: 'Stop this. We will go no further.' And ask an outside body to do it for us."

Copyright 1993 The New York Times Company