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LA Metro to Pay I-405 Contractor $300M

Wednesday, December 7, 2016

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The Los Angeles Metropolitan Transit Authority will pay nearly $300 million more to the contractor on a highway-widening project that took five years and already cost more than twice its original estimate.

The settlement between Metro and contractor Kiewit stems from the I-405 Sepulveda Pass Improvement Project, which added 10 miles of high-occupancy vehicle lanes to Interstate 405, known as the San Diego Freeway, in Los Angeles.

I-405 construction
Photographs courtesy of Metro. © 2010 LACMTA

The Los Angeles Metropolitan Transit Authority will pay nearly $300 million more to design-build contractor Kiewit over cost incurred during the I-405 widening project.

Kiewit’s allegations that the transit agency changed its plans several times and failed to account for utilities that stood in the way of the project, ultimately setting back the project’s timeline and costing the contractor in time and labor. The design-build contractor sought $518 million in damages via a suit filed in 2014, when most of the job was completed; the settlement, agreed to last week, sees the agency paying Kiewit $297.8 million.

The job, originally slated to take four years and budgeted at $1 billion, ended up coming in at $1.1 billion when it was completed in 2014, more than a year behind schedule. Costs have continued to inflate, and the new settlement brings the total to about $1.6 billion.

Notorious Traffic Jams

The highway expansion project was notorious in the L.A. area for its traffic-inducing closures and ever-growing delays. The 2011 freeway closure that became known as “Carmageddon” was part of the project, as was the February 2014 shutdown nicknamed “Jamzilla.” L.A. Weekly called the project “a long-running nightmare of sudden ramp closures, poorly advertised by Metro and made all the worse by baffling detours.”

Water pipe in Sunset Bridge

Utilitiy lines passed under where the work was done, with some running through the three bridges that were replaced, like this water utility pipeline running through Sunset Bridge during demolition.

Kiewit argued in documents filed in court that design changes made during the project incurred major expense for the contractor, and that it had to expand the number of employees on the job to 300, about double what it started out with, reports say.

Nine Miles of Utilities

According to the Times, workers on the project found nine miles of underground utilities during the job; dealing with one drainage culvert cost $30 million that was not accounted for in the original plans. The contractor also asserted that Metro’s agreements with utilities that would require swift cooperation did not apply to this job, meaning the utilities could not always be counted on to work with the contractor on its timeline.

Utilities under Sepulveda Blvd

Pipelines owned by Shell, Chevron, Exxon and Mobil, in addition to multiple natural gas lines and fiber optic and electrical wires, passed under where the work was done.

During the course of the project, Metro said that the California Department of Transportation, which was also involved in the planning, had identified what it thought were all of the utilities to be affected. That number more than doubled when the work began. Pipelines owned by Shell, Chevron, Exxon and Mobil, in addition to multiple natural gas lines and fiber optic and electrical wires, passed under where the work was done, with some running through the three bridges that were replaced, the agency noted.

Omaha, NE-based Kiewit is one of the largest contractors in the world, performing work related to building, transportation, water and wastewater, power generation, oil and gas, mining and other fields. With operations throughout North America and in Australia, the privately owned company is part of the Fortune 500.

'There Were Deficiencies'

In relation to the settlement, the chair of the Metro board, Duarte, CA, Mayor John Fasana, admitted the agency could have handled the project better. “Frankly, there were deficiencies,” Fasana told the Los Angeles Times. “We had some culpability,” he added, “and it was time to move forward.”

A study commissioned by Metro after the new carpool lane opened showed that commute times hadn’t been reduced after the project was complete. They were about a minute longer than before the expansion.


Tagged categories: Asia Pacific; Contractors; Design build; EMEA (Europe, Middle East and Africa); Funding; Infrastructure; Latin America; Lawsuits; North America; Program/Project Management; Roads/Highways; Transportation

Comment from Chuck Benesch, (12/7/2016, 8:40 AM)

Good old California, didn't know about the utilities under the project? then the Bay Bridge...argument for getting politicians out of things that should be done by professionals.

Comment from Scott Youngs, (12/7/2016, 10:56 AM)

Do you think Kiewit could have done a little more investigating before bidding the job? Metro should have known about the utilities and disclosed them. Equal faults on both sides... JMHO

Comment from M. Halliwell, (12/8/2016, 10:55 AM)

I don't know, Scott. Kiewit is generally pretty on the ball. I'm not sure how much more they'd be able to do within the bid window to identify that additional utilities were present. If the Ministry tells you there are X lines under their road, you'd expect them to know...what would give you reason to doubt them at the get-go? So, even if you did suspect more, roadways and bridges do not typically have land titles (to check leases and caveats) unless there is something like AbaData (an on-line database for pipelines, wells, leases and such) or a really good One Call system (in many jurisdictions membership is optional and response time can be 2-3 weeks) locally, then it's really hard to find out how many utilities are likely present and prove the Ministry wrong in a short period of time. Personally, I'd assume that Kiewit informed the Ministry once they found there were more utilities than the Ministry expected. That aside, I wonder what the scope of the other changes builds are a real problem for that as someone can click a mouse 1/2 way through the project and can set you back a year in the work.

Comment from Scott Youngs, (12/9/2016, 11:16 AM)

I understand the roadway dilemma, although inspection of the bridges to be torn down should have revealed the utilities there. That was my point and I should have clarified it. Shouldn't have been a lawsuit in the first place as the work needed was evident. You are spot on about the design changes...

Comment from M. Halliwell, (12/12/2016, 10:44 AM)

True enough long as the utilities were visible under the bridge. We have several locally that use large, joint conduits to ferry multiple utilities across...and they come together underground, not under the bridge. Kiewit could have looked at the underside of the bridges and thought 3 big conduits with 3 utilities in each (for example, if the Ministry said there were only 9 utilities)...but it turns out there are 6 in each. I'm not saying Kiewit is faultless...the earlier you bring a change or issue to the owner, the better...but it does sound like they got a bit more than they bargained for on this one.

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