It’s been more than two years since building resumed on Honolulu’s rail transit system, but the project continues to cope with its earlier construction delays and those costs are proving more expensive than officials had anticipated.
On Thursday, members of the Honolulu Authority for Rapid Transportation board approved the latest change order to cover escalating costs of materials and labor, stemming from 33 months of delays — an $11.8 million payout.
HART does not expect to pay as much for escalation costs for the Kamehameha Highway stretch because it’s a shorter length than along Farrington, HART Executive Director Dan Grabauskas said Thursday.
|
The money will go toward Kiewit Infrastructure West’s rising costs of labor, concrete, tools and fuel to build the first seven miles of rail’s elevated guideway, after the construction firm faced delays outside of its control. In 2014 the HART board approved an initial $15 million to help Kiewit cover delay-related escalations costs for that same stretch, which runs mostly along Farrington Highway.
Rail officials say the nearly $27 million total should cover all of Kiewit’s escalation for that seven miles, although they don’t have the full actual costs yet. They added that they would audit Kiewit’s costs before paying the construction firm with the fund the board approved.
Kiewit’s escalation costs won’t end there, however. The firm is building an additional three miles of guideway to the east, along Kamehameha Highway, and HART officials say they’re still negotiating how much to pay for escalation costs. Kiewit has contracts to build the first 10 miles of rail guideway, from East Kapolei to Aloha Stadium.
Overall, HART is already paying more for rail escalation costs than officials originally thought.
In December 2014, when HART publicly revealed that rail faced a major budget shortfall, it estimated it would have to pay only $10 million to $20 million more in remaining escalation claims. At that point HART reported having already paid nearly $50 million toward delay-related escalation claims.
Rail’s 33 months of construction delay date back to 2010. That year, under former Honolulu Mayor Mufi Hannemann, the city gave Kiewit notice to start construction before the rail transit project had all of the proper federal approvals in place. As HART board member Ivan Lui-Kwan described it Thursday, the city “jumped the gun.” Kiewit mobilized crew and equipment but could not proceed.
The city eventually got the approvals it needed, and construction proceeded in February 2012. Then, construction stopped in August 2012 when the Hawaii Supreme Court deemed that rail officials needed to complete a full archaeological inventory survey along the entire 20-mile line before building the project.
HART has now estimated the total cost of its delays from premature notices to proceed and legal challenges at more than $200 million.
Rail’s existing contingency fund will cover the escalation costs, officials say. The City Council on Wednesday approved a five-year extension of the state general excise surcharge that’s funding most of rail project. Rail leaders say they expect the extension to raise approximately $1.5 billion in additional funds — but that money will help cover future contracts, not the escalation costs tied to the earlier delays.
HART does not expect to pay as much for escalation costs for the Kamehameha Highway stretch because it’s a shorter length than along Farrington, HART Executive Director Dan Grabauskas said Thursday. Also, construction on Kamehameha started later, so the impacts from the delay shouldn’t be as harsh, he added.
Grabauskas said HART is taking steps to avoid future such delays and their resulting escalation costs on rail’s remaining construction.
Board members discussed the change order at their previous meeting in December but asked HART staff to provide more details before voting making a final decision. Prior to approving the change order, board Chairman Don Horner expressed concerns whether the nearly $27 million would be sufficient.
“This isn’t done until it’s done,” he said. “I don’t know how you can say you have a cap.”