Rail board approves $57M in change orders

Rail construction delays dating back to when Hono­lulu city officials awarded contracts to start building the proj­ect before they had the federal say-so to proceed have so far cost taxpayers $76 million — and that amount will likely grow.

Transit officials revealed the delay total Thursday as members of the rail authority’s board approved nearly $57 million in new change orders to help build the island’s elevated rail transit system, which is now taking shape.

The construction-delay costs are tied to three contracts awarded to Kiewit Infrastructure West Co. and its joint venture, Kiewit Koba­ya­shi, between November 2009 and June 2011. Once those deals were signed, the firms hired staff, set up offices and acquired construction equipment — but then had to wait as long as 22 months in some cases to start work because it took the city until February 2012 to get all the proper federal approvals.

The city had decided to award those construction contracts at an early stage, in part because it wanted to "demonstrate to the public that tangible prog­ress was being made" on rail, according to a December 2011 letter from the city to the Federal Transit Administration.

On Thursday, members of the Hono­lulu Authority for Rapid Transportation board, who are overseeing the 20-mile, 21-station proj­ect, agreed to pay Kiewit and Kiewit Koba­ya­shi a negotiated $34.4 million as part of the change orders. That move brought the total payout for the construction delays to $76 million, the rail proj­ect’s top executive said.

The city had set aside $32.5 million, apart from its main contingency fund, to cover the most recent payouts, rail officials disclosed publicly for the first time Thursday. Previously, officials had declined to reveal how much they had budgeted for those payments, citing negotiations with Kiewit — a move that prompted calls by the public for more transparency in that proc­ess.

While it covers Kiewit’s claims for delays up until August 2012, the total delay-costs figure doesn’t factor in increased costs for material and personnel as construction proceeds, HART Executive Director Dan Grabauskas said. The semiautonomous city government agency and its board were launched in 2011 after the Kiewit contracts were awarded.

Also, the delay costs don’t include expenses that Oahu’s rail proj­ect incurred during its yearlong, court-ordered halt on construction, rail officials say.

Together the delay costs and expenses linked to delays from the recently resolved court challenges have cost Oahu’s rail proj­ect at least $176 million and represent two of its most bothersome budget drains, with "substantial consequences to our bottom line," Grabauskas said Thursday.

Grabauskas said HART has estimates of how much more increased costs could add to the construction-delay total, but he declined to reveal that estimate, again citing potential future negotiations with Kiewit.

"Clearly this is a very significant event that we move to resolve these claims," HART board Chairman Ivan Lui-Kwan said. "We’ve had challenges and claims, and one by one we’ve picked them off."

Apart from the addressing construction delay costs, the HART board approved $22.5 million in construction change orders tied to a redesign of the maintenance and storage facility. Those costs will be covered by rail’s contingency fund, leaving about $585.5 million in that account, officials say.

In February the board had approved more than $4 million for the redesign — but that didn’t cover actual construction costs. The move will reconfigure the track layout so it can support "automated train operations" that won’t require workers to manually move train cars around the yard.

The changes made to the facility this year are a result of HART previously moving ahead with design work though the city was unable to discuss the proj­ect with Ansaldo Hono­lulu JV amid the legal challenges to Ansaldo’s contract award. In February, HART Finance Chairman Keslie Hui called it a "very expensive lesson."

Nonetheless, at Thursday’s meeting HART officials overseeing construction estimated the design changes, while costly, would save some $2.5 million a year in operations and pay for themselves in about 10 years.

HART board member Don Hor­ner expressed concerns about all the change orders due to city and transit officials’ premature action.

"It really says our planning and our designing on the front end was weak," he said. Hor­ner nonetheless voted with the other board members attending the meeting to approve, calling the facility redesign a capital investment that will yield savings on property tax costs in the future because those dollars will likely fund much of rail’s operations.