Rail’s changing course on design plans means wasted funds

Honolulu rail officials have spent just over $100 million in final design plans to build the second half of the island’s 20-mile transit project, but they’re not certain how much of that work they’ll ultimately use.

So it’s unclear for now how much of that money will be wasted.

That’s because the private firms that recently started competing to build the guideway and stations from Aloha Stadium into town will now have to create their own design plans — even though other firms already did most of that design work under earlier contracts.

The redundancy stems from rail officials changing course three times since the project began on how they approach design and construction.

Honolulu Authority for Rapid Transportation officials say the latest change, which occurred in December, will help rein in rail’s skyrocketing costs going forward. Even though the competing firms will need to come up with their own plans, they’ll also be able to incorporate at least some of the detailed design work that’s already been done and paid for, helping to drive down future costs, they add.

However, HART officials also acknowledge that it’s not clear how much of the completed designs, for which they’re already paid at least $101.2 million, might eventually be used to build the actual project.

“It’s still salvageable, but it would have been a lot better not going so far,” said Rex Huffman, a Florida-based building industry consultant and member of the advocacy group Design-Build Institute of America, of the design work that’s already been done. “It makes no sense. They’re already designed, so what’s the design-builder going to do?”

At issue is the city and HART’s switching back and forth between two common industry approaches to package the rail work that’s gone out to bid.

For rail’s first 10 miles of guideway, the city awarded what are known as “design-build” contracts, in which a single firm, Kiewit Infrastructure West Co., handled both the design and construction work. Later, HART switched to “design-bid-build” contracts — an approach in which one firm handles the design work and then another firm builds those plans.

Design-bid-build is the more traditional approach, while design-build is more of a growing trend in the building industry that offers contractors more flexibility and potential cost savings, industry experts say. Under the design-build model, the contractor is also liable for the design.

HART Deputy Executive Director Brennon Morioka said that rail was originally planned as a design-bid-build project because at that time most firms in Hawaii were used to that traditional approach.

Morioka said he didn’t know why the city then opted early on in the project, in 2009 and 2011, to take the alternate route and issue design-build contracts to Kiewit. The move predated his time at HART, he said. In any case, the project reverted to design-bid-build after the Kiewit contracts because that was how rail had been envisioned, he said.

Starting in 2011, as part of that return to design-bid-build, HART awarded four contracts to firms AECOM and Perkins+Will, totaling $116.3 million. The firms needed to provide an array of design work for rail’s final 9 1/2 miles of guideway and the 12 stations that will run along that route, including structural, geotechnical, architectural, utility, traffic control and environmental design.

For the guideway work, AECOM was contracted to prepare “final construction plans” and “detailed specifications.” HART would then eventually hire different firms to build the remaining elevated guideway using those plans.

Then, in December 2014, when the public first learned that rail faced as much as a $1 billion shortfall, HART officials revealed that they would switch back to the design-build approach based on their talks with local construction firms on the best way to control costs.

The local firms also recommended repackaging the work so that they could build sections of the guideway and their corresponding stations together, according to HART Executive Director Dan Grabauskas.

“The overwhelming response from the business community, the construction community has been, ‘If you give us station and guideway together, and you make it a design-build, which lets us be more creative and work with you on savings, then we prefer that method,’” Grabauskas told the Honolulu Star-Advertiser editorial board in December, while meeting with the group about rail’s financial challenges.

Grabauskas and other rail officials only briefly alluded to the existing AECOM and Perkins+Will designs — and they didn’t mention their costs.

“We think that there’s gong to be an advantage for us to be able to give those designs to a design-builder, who’ll have to … have their own designer of record,” Grabauskas said in that December meeting. “But they’re going to be able to see what we think is the best way to do certain things. But instead of dictating to them, we’re going to allow them to give us some creativity on how they think that they can accomplish the mission maybe more creatively.”

Meanwhile, in a typical design-build contract only as much as 30 percent of the design gets passed along to the contractor, mostly as a starting point for them to innovate their own final design, both Morioka and Huffman, the Florida consultant, said last week.

AECOM’s two guideway design contracts, however, are listed as 87 percent and 94 percent complete, according to HART documents. AECOM’s contract to design four stations around the airport is 86 percent complete, and Perkins+Will’s contract to design 12 stations in the heart of town is listed at 55 percent complete.

In such a situation, with so much of the design work already done, “you’ve taken it too far,” Huffman said.

But Morioka on Friday said that the existing designs weren’t a waste and that they would still be useful.

Rail’s utility-relocation contractors would certainly use utility design work that AECOM did, Morioka said, although he said he doesn’t know how much of the overall contract that utility design work represented. Additionally, firms bidding for the contracts would use at least some of that work so that they could offer HART a competitive price, he said.

“I wouldn’t want to guess what a contractor is going to be thinking,” Morioka said Friday. “At the end of the day, cost is a big factor in whether they’re going to win this contract or not.”

Using the design-build approach, HART officials estimate that it will cost between $1.5 billion and $1.7 billion to build rail’s second half of the guideway and its 12 stations. The semiautonomous agency didn’t have estimates on how much it might save by using the design-build approach for that work, Morioka said.

Currently, several companies are competing to build the 5.2 miles of guideway and four station around the airport. Rail officials have shunned requests from the Star-Advertiser to identify those companies, so it’s difficult to get a sense of what they might actually do with the existing designs.

The companies that responded last month have to get their bid proposals for that work in by January, so the public likely won’t get an idea of how much they used the existing designs — if at all — until next year.

Existing Design Contracts