In what is being praised as a significant milestone for the troubled Honolulu rail project, the rail authority has reached an agreement that will finally allow it to close out major contracts with the company that built the first half of the elevated rail guideway.

The agreement calls for the rail authority to pay Kiewit Infrastructure West Co. an additional $13.2 million to resolve claims related to construction of the West Oahu/Farrington Highway contract and the Kamehameha Highway contract, which together extend from East Kapolei to Aloha Stadium.

“In my mind this is a major step forward to be able to start closing out major contracts, and that’s where we are today,” said Andrew Robbins, executive director of the Honolulu Authority for Rapid Transportation.

The HART board Thursday also unanimously approved a “recovery plan” for the rail project that maps out the path to completion of the project by 2025 or 2026. That recovery plan will now be submitted to the Federal Transit Administration for its approval.

Work on the 10.5 miles of rail line covered in the Kiewit contracts has been “substantially complete” for some time, and the final change order for $13.2 million approved by the HART board Thursday will resolve additional delay claims and other final issues involving contractor Kiewit Infrastructure West Co.

Among other requirements, Robbins said the deal calls for Kiewit to warranty the steel cables that bind together the concrete segments of the rail line, and also conduct acoustical and visual inspections for the next 20 years to ensure they function as they should.

“It’s really about getting what we paid for: a long-term, durable product,” Robbins said.

The new agreement also resolves some final delay claims for Kiewit, which already has been paid tens of millions of dollars for project delays.

The city awarded Kiewit the contract to build the portion of the guideway closest to Kapolei in 2009 even before the environmental impact statement for rail was completed. When the EIS was delayed and construction had to be put off, Kiewit filed a delay claim that was later resolved by HART for $22.2 million.

A lawsuit in connection with the project later caused more than a year of additional construction delays, and the HART board later approved spending at least $26 million more in the years that followed to resolve more Kiewit delay claims in connection with escalating materials and labor costs.

A Kiewit affiliate called Kiewit/Kobayashi Joint Venture built the rail maintenance and storage yard near Leeward Community College, and the city paid that joint venture another $15.9 million for increases in the cost of steel and other materials that were also tied to delays in that work.

The deal presented to the HART board Thursday includes final acceptance of the maintenance facility, also known as the rail operations center, said Charles “Sam” Carnaggio, project director for HART.

He said the latest $13.2 million settlement will be funded with money already set aside to cover contingencies in the two contracts, which means the latest change order will not increase the overall cost of rail beyond what is currently budgeted.

Carnaggio said HART’s “potential exposure” from the package of change orders was $90 million.

The board of the Honolulu rail authority also approved the new “recovery plan” for the city rail project Thursday, just in time to meet a deadline set by the Federal Transit Administration.

The recovery plan is the city’s updated outline for how it will complete the 20-mile rail line from East Kapolei to Ala Moana Center. It is the largest public works project in state history and has been plagued by years of delays and cost overruns.

The city signed an agreement with the Federal Transit Administration in 2012 that called for rail’s elevated guideway and 21 stations to be built for $5.26 billion by 2020. At the instruction of the FTA, the new recovery plan outlines a path to complete the rail project for $8.299 billion in construction costs plus $897 million in financing costs, for a total of $9.196 billion.

However, the Honolulu Authority for Rapid Transportation says in the recovery plan it is committed to holding its construction costs to $8.165 billion.

HART also says it is determined to finish the project in late 2025, but a consultant for the FTA estimates there is only a 65 percent chance the project will be completed by September 2026.

The HART board unanimously approved the 147-page recovery plan Thursday morning without any public discussion.

The FTA has withheld nearly $744 million in funding for the project until the city develops an acceptable recovery plan, and in September the FTA asked the city to produce the recovery plan by Nov. 20.

State lawmakers last year approved a $2.4 billion financial bailout of rail, and another major piece of the recovery plan fell into place last month when the HART board of directors authorized the use of a public- private partnership to develop the last 4.1 miles of the rail line through downtown Honolulu.

The new recovery plan incorporates that public-private partnership, or “P3” proposal, and also provides updated financial data for the rail project that shows higher-than-expected hotel and excise tax collections are giving the project another financial boost.

Robbins said he expects the FTA will approve the recovery plan because “I think we’ve addressed all the points that they were raising.” The Honolulu City Council has already approved the recovery plan.

The HART board Thursday also approved new operating and construction budgets for HART for the year beginning July 1. The operating budget of nearly $24.74 million is an increase of $1.26 million over the current year, while the construction budget for the coming year is $2.394 billion.