Much has been said and written since the city administration withdrew from the public-private partnership (P3) procurement for the Honolulu rail transit project.

First a few facts about why P3s are considered a useful mechanism to incorporate into our rail initiative. The use of P3s has grown over the last four years. In the first half of 2020, even with a global pandemic, the U.S. is leading the world rankings for new P3 projects.

P3 projects continue to perform. In 2019, a construction economics study in Canada concluded P3s outperform non-P3 projects in both cost overrun and schedule delay. In 2018 a study by the Transport Research Board in the U.S. concluded that P3 project delivery provides value for money vs. design-build in delivering projects sooner and transferring life cycle and maintenance cost risks.

The P3 advantages are many:

1. P3 has attracted major “mega-builders” to Hawaii and promoted competition. The project’s City Center construction presents unique challenges and requires a special category of builder with technical know-how. We were pleased when multiple, major national and international developers teamed with local firms that stayed with us for two years and are still at the table. At the same time they were cancelling their participation in other cities, due to COVID and other reasons. This has already been a successful outcome with the P3 procurement, and HART doesn’t want to lose this level of competition.

2. Compared to traditional contracting, the P3 is structured to promote schedule certainty and the reduction of claims and change orders that increase costs and delays, which have plagued the project in the past.

3. Although cost certainty was the primary objective noted in a white paper that HART wrote (and is still the focus of the P3), it predicted some $360 million in cost savings compared to non-P3 procurement, the majority realized from operations and maintenance (O&M) savings. Neither HART nor especially the city should lose this advantage of the P3 procurement.

4. The white paper discussed the P3 allocating risks to the party better able to manage and mitigate them; for example, the transfer of interface risk from HART to the P3 partner, reducing the need for oversight staffing. This issue contributed to past claims and change orders, which the P3 is designed to avoid, and it won’t be possible under design-build contracts.

5. Long-term cost certainty for O&M and capital asset replacement. Many U.S. rail systems degrade over time for lack of capital re-investment. While the city has a 13-year commitment from Hitachi Rail for ongoing O&M, the P3 structure secures pricing for the following 17 years, and includes replacing material and equipment. This will ensure that the rail system maintains its high performance and stays in good repair.

When the city announced its P3 withdrawal in September, HART didn’t believe it was in the best interests of the project or the taxpayers to follow suit and lose many of the benefits noted above. HART thought it best to take the time to conduct post-proposal meetings. No one knows the costs of the remainder of the project better than the P3 builders. We feel it’s important to meet with them to determine if there is a viable path forward, knowing that cancellation would mean a long, costly delay.

After we complete our analysis, if it makes sense to continue the P3, the city may wish to rejoin. If not, HART will have no choice but to go to re-procurement, and present our plans, P3 or otherwise, to the Federal Transit Administration, hoping to prevent any lapsing of federal funds.

The rail project continues to face challenges, including relocating utilities along Dillingham Boulevard. HART intends to bypass Dillingham for now and instead move utilities between Iwilei and Ala Moana Center. Guideway construction will also follow this approach. We want to engage the P3 proponents to optimize our approach and understand all cost implications.

HART also initially pursued the idea to extend the contract with airport area contractor STG to build part of the guideway along Dillingham Boulevard, but abandoned the idea based on building conditions and cost estimates provided by the contractor. If the P3 is brought to a halt, HART is open to revisiting the idea to determine if it’s worth pursuing.

HART, like the public, is concerned about project funding, given the decline in GET and TAT revenues, plus increased costs for the City Center section. HART and the mayor agree that a phased approach makes great sense. HART is determining how much can be built with available funding. We are conferring with the city and plan to make presentations to the HART board, City Council and the state Legislature, which has shown interest and support for P3.

The phased approach is appropriate whether or not we pursue the P3. The advantage of continuing with the P3 is that we can gain the intimate cost and schedule knowledge much sooner, and call for best and final offers.

HART believes that a logical approach to completing Honolulu’s rail project, as outlined above, is the most appropriate path forward. The selection of a P3 proponent under the current procurement process will get us there with less delay and with more cost certainty.

Andy Robbins is CEO of the Honolulu Authority for Rapid Tranportation, the semi-autonomous agency responsible for bullding Oahu’s rail project.