Rail’s estimated cost was $5.2 billion at the time of the full funding grant agreement with the federal government in 2012. Now it is $10 billion.
City and rail officials are asking for another $3 billion to complete the project. Legislators should just say no, at least until they know where the first $7 billion is going, and have reason to believe corrective action is being taken.
We suspect waste, gross incompetence and perhaps fraud; we see no reason to think it will not continue; and we believe all of this has safety as well as fiscal implications.
Without an independent forensic audit of rail engineering, management and finances, legislators cannot possibly make an informed decision.
Rail and city officials initially argued against a new rail audit. Now they support an audit, but only if it is conducted by city auditors who have been instructed to assume honesty on the part of all Honolulu Authority for Rapid Transportation (HART) employees, contractors and subcontracts.
Incredibly, the people now asking for another $3 billion without accounting for the first $7 billion, say independent forensic auditors with special expertise in rail engineering and construction would cost too much.
They also contend that much of the cost overrun can be explained readily, but their numbers do not add up. For example, they point to lawsuits, unexpected escalation of construction costs on Oahu, unexpected electric company demands and unexpected safety issues, such as the discovery of 165,000 deteriorating plastic shims and concrete spalling in recently constructed columns. Here’s why this is nonsense.
The first lawsuit did not delay construction or contract bidding, and the total of its direct and indirect costs was only $6.3 million, according to HART. The second lawsuit resulted in a 13-month delay when a unanimous Hawaii Supreme Court ruled the city had started construction without first completing an archaeological study, as required by law. That increased costs by almost $40 million, again according to HART. Added together, the direct and indirect impact of these lawsuits was less than one-half of one percent of HART’s initial cost estimate.
Blaming overruns on unexpected construction-cost escalations is equally bogus. According to data from the state Department of Business, Economic Development and Tourism, construction-cost inflation on Oahu for the last six years has been less than what been forecast in the rail’s environmental impact statement.
It’s true that city and rail officials failed to anticipate numerous problems in dealing with the electric company and other utilities, but they have yet to provide a detailed accounting of the costs. They also have yet to explain why they did not anticipate the safety issues, or evidently the cost of addressing them.
There is more to be explained. For example, we know 10 miles of completed guideway cost $568 million; contracts have been signed for the next 5.2 miles of guideway for $744 million; the rail yard and 10 stations have been completed or contracted for another $562 million; and rail cars add $400 million. That totals slightly less than $2.3 billion. Yet to be contracted and built are 11 stations and 4.8 miles of guideway.
Only a forensic audit will explain how roughly $4 billion of actual construction costs can balloon into a total cost estimate of over $10 billion. For example, are billions of dollars going to local “consultants,” whose names do not appear in the master contracts?
Rail needs to be audited, but by independent experts. A non-independent, non-forensic audit would be little more than another waste of taxpayer money.
Panos Prevedouros is a civil engineering professor at the University of Hawaii-Manoa; Randy Roth is a retired UH law professor; and Cliff Slater is a retired local businessman.