Honolulu officials have just awarded what they hope will not be the last major construction contract for the island’s cash-strapped rail transit system.
Shimmick/Traylor/Granite, a California- and Indiana-based joint venture that’s new to the project, was picked Tuesday for its $875 million proposal to build rail’s next 5.2 miles of elevated guideway and four stations, getting the project as far as Middle Street.
The firm beat out two other finalists: joint ventures Healy/Hawaiian Dredging and Nan-POSEC-HLRT, rail’s top executive announced at a media briefing.
Healy/Hawaiian Dredging bid $1 billion, while the Nan venture bid nearly twice as much as Shimmick — $1.5 billion — for the same work.
Honolulu Authority for Rapid Transportation Executive Director Dan Grabauskas touted Shimmick’s contract price as “good news” because it came in on the high end of a price range that the rail agency estimated a little more than a year ago.
However, he added that the price likely won’t change rail’s larger cash problems. The project still faces a budget deficit that officials now put at $1.5 billion to go all the way to Ala Moana Center.
Tuesday’s construction contract to Middle Street is the last one that rail officials say they can sign without some new influx of cash.
The Shimmick joint venture will replace Kiewit Infrastructure West Co. to build the next stretch of elevated rail guideway. Kiewit won contracts in 2009 and 2011 to build the first 10 miles or so of guideway, but HART revealed Thursday that the firm opted not to compete for the project’s next phase.
Asked why the firm had not pursued the work, Grabauskas simply stated, “I don’t know.”
“Kiewit does not publicly discuss the reasons we do not pursue specific projects,” Kiewit Public Involvement Manager Alyssa Tenorio said in an emailed statement Tuesday. “However, we can say that after careful analysis of these projects we decided to remain focused on our commitments to the West Oahu/Farrington and Kamehameha Guideway projects and other project pursuits in Hawaii.”
Along with erecting the guideway from Aloha Stadium to Middle Street, Shimmick will build stations at Pearl Harbor Naval Base, Honolulu Airport, Lagoon Drive and Middle Street, near a major bus hub at the Kalihi Transit Center.
“They gave a very strong proposal both in terms of quality as well as … the price,” Grabauskas said Tuesday. Due to the large scope of work, the contract was not automatically awarded to the lowest bidder. Instead, rail officials spent several weeks analyzing each proposal and considering other factors beyond just price.
Shimmick has previously worked on a Bay Area Rapid Transit expansion project and a new bridge at the Port of Long Beach in California, according to its website. Some of the subcontractors it’s teaming with for the new rail contract have already worked on the project, including Parsons Transportation Group and Wilson Okamoto Corp., according to documents provided by HART.
Shimmick officials weren’t available for comment late Tuesday, but others who vied for the contract said that how much risk a firm was willing to tolerate could account for the wide range of proposal prices.
“It’s going to be a big battle with HART during construction” because there’s so much underground utility work there, Nan Shin, owner of Nan Inc., said Tuesday after the proposals were unsealed.
Nan has already been awarded rail work, including a $27 million contract for utility relocation along the airport guideway section. On Tuesday Shin estimated there is more than $200 million in utility relocation work remaining along the 5.2-mile stretch of Shimmick’s contract — and he wondered whether the winning venture included that work in its price.
“We are doing some of it, and we are finding unforeseen conditions,” Shin said.
Grabauskas acknowledged Tuesday that “there’s always unknowns” that could drive up costs in the form of change orders, but the project will continue to rely on its contingency dollars should such problems arise.
HART’s budget estimates for the work awarded to Shimmick on Tuesday have varied over the years — they’ve even fluctuated up and down for reasons that aren’t entirely clear.
In 2012, as part of its now-outdated financial plan, the rail agency estimated it would cost $512 million to build the 5.2 miles of guideway and four stations around the airport, documents show.
Shimmick’s $875 million bid does barely fall within a subsequent price range that HART quoted in an April 7, 2015, request for proposal. It estimated the work would cost between $750 million and $875 million.
Later that year however, in October, rail officials had a lower estimate for the same work, at $673 million, according to a HART project cost summary. Then, in March, they estimated it would cost $820 million.
The Shimmick award is what’s known as a design-build contract, meaning the joint venture will now have to create much of its own designs — even though the city has already paid other firms some $54.5 million to do much of that design work under earlier contracts.
Last year rail officials said that they will be able to incorporate at least some of the detailed design work that’s already been done.
Grabauskas added Tuesday that Shimmick’s proposed price indicates rail officials are getting better at predicting contract costs — despite the “crisis of confidence” that has hit rail in recent months over its skyrocketing costs.
“We really do believe that we have a handle on estimating … the price of (what) stations are going to be,” he said. “The real crapshoot for us was we had not bid guideway since 2010. So we had six years and a lot of changes under our belt.”
Many of the problems that have helped drive up rail’s final price tag relate to the final four miles heading into Honolulu’s urban core, such as the project’s daunting utility clearance problems, Grabauskas said.
It remains to be seen whether those four miles will be built.
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