That means the formerly $5.6-billion rail project is now a $5.76-billion project ($5.8 billion with rounding).
But MWAA officials found the silver lining so to speak. Despite news of cost overruns on the first phase of the rail line, MWAA President Jack Potter, was quick to emphasize that toll rates would not go up beyond previously scheduled increases. That’s largely because until officials know the final cost of the entire project, they can’t say how much Fairfax and Loudoun counties, MWAA and Dulles Toll road users ultimately will pay. As Potter noted, the overages in Phase 1 could be absorbed if Phase 2 comes in below its $2.7 billion cost estimate. Keep in mind the converse also is true: Should Phase 2 be over budget, toll road users could see future increases. (Note: Under the funding formula, MWAA, Fairfax and Loudoun counties will pay 25 percent of the cost of the rail line, but there is no cap or fixed percentage that Dulles Toll Road users will pay for the project. Already, the share they are paying steadily increased to more than half the cost.)
In a news release, MWAA touted the fact that the estimated $76 million overage adds only about 2.6 percent to the cost of the first phase.
The Metropolitan Washington Airports Authority announced Monday that design modifications made to enhance the safety and reliability of the Metrorail Silver Line, along with remaining work to finalize Phase 1 of the overall project, will add $76 million, or about 2.6 percent, to the previously announced Phase 1 cost. The new Phase 1 cost remains within the original federally approved Phase 1 budget.
But their math doesn’t take into account that the project was already $150 million over budget. Add the two together and Phase 1 comes in at roughly 8.1 percent over its original budget. The first phase, which includes four stops in Tysons Corner and one in Reston, has been the one bright spot for Metro at a time when overall rail ridership is down significantly. Yet even though passengers are riding the rail line, work remains to be completed on a number of items and final close-out of the project is not expected until 2016.
Potter said that the authority has reached a settlement with Bechtel, the lead contractor on the Silver Line’s first phase, on outstanding issues related to the its work. Such agreements aren’t unusual in large projects because of disputes often arise over a project’s schedule and whether work done by the contractor was part of the original agreement or an addition to what was previously agreed. People who have followed the saga of the Silver Line may recall that MWAA signed a special agreement with Metro that allowed the rail line to open for passenger service July 26, even all the work wasn’t completed. That agreement spared Bechtel from the possibility of paying large fines for finish the project in time.
Now, Potter said, a third party will hired to do some of the remaining work because the jobs are small and because in some instances “it’s cheaper than having Bechtel do it.”
Charles Stark, executive director of the Silver Line rail project said MWAA could have turned to arbitration or gone to court to settle any disputes with Bechtel, but thinks the agreement with the company will save money in the long run.
“A global settlement is a good idea when a contract has a number of fairly large claims [to settle],” Stark said. “To me going to court is a failure of both managements. Both end up spending a lot more than they would have if they’d been able to negotiate a settlement.”
Bechtel has not responded to requests for comment.
MWAA officials announced the cost-overruns and schedule change after briefing officials at the Department of Transportation. Among those who attended: the number three official at DOT, Peter M. Rogoff, under secretary for Transportation Policy and Therese W. McMillan, acting administrator for the Federal Transit Administration.
News that rail project’s second phase is 13 months behind schedule wasn’t unexpected. Officials close to the project had hinted that it wouldn’t make the July 2018 completion date listed in the contract. The question however, was how long the delay would be.
Potter said that more than 150 design changes have already been made, including a total redesign of the 11.4-mile Phase 2 to accommodate storm water management issues. While MWAA officials were able to tick off a list of other design changes , they were less forthcoming with how much the changes would cost. But as Pat Nowakowski, the former executive director of the Silver Line rail project said in 2011 when MWAA announced the first phase was $150 million over budget: “Anytime you make changes after a contract has been awarded, you wind up paying more money.”
Phase 2 has a $551.5 million contingency fund set aside for such occurrences (as of the end of February there was $530.7 in the fund). It will be worth watching how that money is spent. Project officials make monthly reports to MWAA’s board of directors.
Note: the first phase of the Silver Line had a $312.3 contingency fund. But by 2011, it had run through more than 70 percent of the funds — with two years of construction remaining (and in the end it took an additional six months for the project to be ready to be handed over to Metro.) As Potter said Monday, delays cost money.