The Honolulu rail transit project has reached a milestone of sorts with the approval of the first change order that will add to the cost of a rail contract.

The $3.9 million change order came to light Thursday in a report submitted to the Honolulu Authority for Rapid Transportation project oversight committee. The change order will add to the cost of the $483 million design-build contract for the first 6.5 miles of the rail guideway from East Kapolei to Waipahu.

That contract was awarded to Kiewit Infrastructure West Co., and the change order is needed to cover the cost of insurance for workers’ compensation coverage, general liability, builders’ risk and other risks, according to information provided by a HART spokeswoman.

Kiewit did not build those costs into its original bid because insurance coverage for the project was supposed to be provided through an umbrella insurance program for all contractors working on the rail project, said Toru Hamayasu, interim executive director for HART.

That umbrella coverage was supposed to be provided under what is called an Owner Controlled Insurance Program, but a bid protest delayed the establishment of the program, Hamayasu said. The bidding for the umbrella insurance program was handled by the city and is now being redone, he said.

In the meantime, Kiewit needs to have insurance coverage in place to proceed with work on the rail project, and HART agreed to the $3.9 million change order to allow Kiewit to buy the necessary coverage directly.

Hamayasu said the Kiewit contract came in about $90 million below what HART had expected to pay for the design-build contract from Kapolei to Waipahu. The money for the change order will come from $861 million in contingency funding budgeted for the project.

Donald G. Horner, chairman of the HART Finance Committee, said the overall estimated cost of the project has dropped to $5.17 billion, including contingency funding that will be needed to cover unexpected expenses.

Horner said he understands concerns by some members of the public that cost overruns could dramatically inflate the cost of the rail system.

"We have the (Federal Transit Administration), we have our board, we have some really talented people, hard-working, experienced people ensuring that doesn’t happen, but that doesn’t mean that we won’t be using some of that contingency funding," Horner said. "Our goal is to make sure that when and if we use it, that we’re really careful in how we use it and when we use it. There’s a lot of discussion before that money is spent."