So far, the costs of building high speed rail have come in under budget, going by the contracts issued so far for construction segments in the Central Valley. That’s a very good sign for a project that critics deride as a costly boondoggle.
But many of those critics think the real bill is yet to come. If we just wait, they say, we’ll see costs soar once change orders roll in from the contractors.
The Fresno Bee’s Tim Sheehan took a look at this issue and found that, so far, the predictions of change order doom haven’t materialized:
For the first chunk of construction on California’s ambitious high-speed train program, a 29-mile section between the south end of Fresno and the northeastern edge of Madera, the authority established a contingency allowance of about $160 million for unforeseen costs over the awarded contract of about $1 billion to design and build the segment.
Through late January, about $14.1 million in change orders submitted by the contractor have been approved by the agency – and that includes some $5.3 million already included in the budget for dealing with asbestos and other hazardous materials along the route.
Leaders with the rail authority assert that they’re doing everything they can to keep a lid on costs, and that they’re confident in their ability to minimize the effect of change orders on the project’s budget and schedule. They point out that almost $11 billion is embedded in the statewide project budget as a contingency allowance.
So far, everything is going as expected. The change orders are well within the budget – and more importantly, not all of them are being accepted. It’s not as if the contractor can just submit a change order and it’s automatically adopted. The California High Speed Rail Authority is being very assertive in how it deals with them:
Others, however, have been rejected by the authority. “For instance, on a viaduct, we wanted the contractor to design them to accommodate the future installation of (sound-buffering) walls,” Morales said. “The contractor said that wasn’t specified in the contract and submitted it as a change order.” The dispute went to a three-member arbitration panel – a provision of the contract – which ultimately ruled in the state’s favor.
This all strikes me as a well-designed, well-planned, well-managed project that is likely to come in at or under budget, especially considering the contingency funds that have been set aside. Most of the delays facing the project stem from legal proceedings initiated by project opponents, and I’ll have more on that later this week.
But not everyone is convinced things are going smoothly. Our friends at Californians for Responsible Rail Design, a group of Palo Alto-based project critics, read Sheehan’s article a bit differently:
— CARRD (@CALHSR) February 7, 2016
While I suppose that’s possible, there’s no actual evidence to support this speculative claim.
Building HSR in the Central Valley is, from a technical perspective, the easy part. The more challenging sections come in tunneling under the mountains to get from the Valley to the coast. If any part of this project is going to have major cost overruns, it’ll be in those tunnels.
But if the CHSRA can continue doing a good job managing project costs and change orders in the Central Valley, that is a good indicator that they will indeed be able to bring this project in on budget. Dan Richard has already signaled that it may not come in on time, but that’s largely due to political and legal factors outside their control. When it comes to things they do control, they’re doing an exemplary job.