Cost overruns hit bullet train again amid new financial crunch
The California bullet train is facing at least another billion dollars of proposed cost increases from its contractors, following a history of sharp cost growth on construction work over the last eight years, the Los Angeles Times has learned.
The state’s High-Speed Rail Authority has mostly approved such increases in the past, and if it does so again, contractors could proceed with one of the biggest price escalations since bullet train construction began in the San Joaquin Valley.
The continued cost increases — and the likelihood of similar problems surfacing over the next few years — are deepening the already difficult financial condition of the $100 billion project.
The state has budgeted $22.8 billion to build a partial segment from Bakersfield to Merced. Originally, construction of the Los Angeles to San Francisco system was pegged at $33 billion. But the surging costs will probably force the state to dig deeper into its future funding just to complete that 171-mile leg in the valley.
The teams building bridges, viaducts, trenches and overpasses in the valley have submitted dozens of new claims for delays and design changes, asserting they are the authority’s fault, according to several of the project’s technical and business officials and internal documents reviewed by the Times.
The officials asked to remain nameless because they were not authorized to talk to the media.
The costs are being driven by changes in designs submitted in the original contracts, delays in moving underground utilities and long-standing problems buying all of the land along the right of way.
Rail authority Chief Executive Brian Kelly declined to discuss the size of the cost increases, but said they are growing due to erroneous past decisions. Kelly, who became CEO in January 2018, said he had fully expected some of the additional construction expenses, because not all of the designs were completed when contracts were previously issued.
In an interview, Kelly said, “I do not endorse their numbers. We do not see the evaluations the same way,” but added that he has been prepared for the potential overruns.
“I have budgeted for those costs. It is not new,” Kelly said, adding that the project is addressing past problems and will avoid repeating them in the future.
In May, Kelly issued a written report that acknowledged there were significant pending change orders, though it did not include the proposed prices. The report indicated that at least some of the proposed change orders were in dispute.
The scope of the new cost increases has not been disclosed in any public documents and the rail authority has declined to provide lawmakers with updates on change orders as they are submitted by contractors. Under rail authority policy, change orders are only disclosed after they are approved.
Assemblywoman Laura Friedman, D-Glendale, chairwoman of the Assembly Transportation Committee, has urged the rail authority to amend its plans as the costs have risen.