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Audit: CA Rail Plagued by Cost Overruns

Tuesday, November 27, 2018

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A recent audit indicates that cost overruns—currently totaling $600 million for three projects, with $1.6 billion total estimated to complete them—associated with the California high-speed rail project are largely due to poor planning and contract mismanagement.

According to the report from the state auditor, the California High-Speed Rail Authority’s choice to move forward with the bullet train project “cannot demonstrate that the large amounts it has spent on its contracts have been necessary or appropriate.”

Project History

The project, connecting northern and southern California, has doubled in cost and is now more than 11 years behind schedule. Earlier this year, the authority estimated that the first phase of the project would not open until 2029, and that costs had increased from $67 billion to $77.3 billion.

Phase 1, running 520 miles long, will connect downtown San Francisco with the downtowns of Los Angeles and Anaheim, implementing the use of rail through Central Valley. Phase 2 is to involve an extension north from the Central Valley to Sacramento, also running east from Los Angeles through the Inland Empire and then to San Diego, totaling 800 miles. Construction firm Tutor Perini-Zachry-Parsons was selected for the Central Valley work.

According to The Fresno Bee, the decision to award construction contracts for work in the Valley before sufficient land purchases and planning had occurred was motivated by a 2017 deadline for project completion. In turn, this deadline was informed by an agreement between the state and the Federal Railroad Administration for $2.6 billion in federal funding. The agreement was later amended to require that the money be spent by September 2017, with project completion targeted for 2022.

As it stands, the full system is slated to be operational by 2033, costing more than $98 billion. The end date relies on $40 billion in funding being secured, however.

Audit Report

California State Auditor Elaine M. Howle notes in the report that “even with a grant deadline extension until December 2022, the Authority could miss the new deadline unless Central Valley construction progresses twice as fast as it has to date. Missing the deadline could expose the State to the risk of having to pay back as much as $3.5 billion in federal funds.”

Howle’s audit was requested earlier this year by the State Legislature, also reporting that despite being aware of the risks, the authority “began construction in 2013—a decision that has led to contract changes, project delays and cost overruns.” There have also reportedly been lapses in how the agency oversees its contractors and other entites.

“Contract changes have resulted in significant time delays, and the Authority has had to continually extend expected completion dates,” the report notes. “Cost overruns for three active Central Valley projects reached $600 million in June 2018, and the Authority estimates an additional $1.6 billion to complete them.”

The audit also notes that the rail authority lacks the funding it needs to connect work being done in the Valley with electrified commuter-rail tracks between Gilroy and San Francisco. Also accounting for past schedule forecasts and cost estimates, concern remains high over whether the authority can accomplish its goals.

Recommendations include: quarterly detailed progress reports being made to the Legislature regarding Valley projects, hiring additional state employees to monitor compliance with contracts and holding contractors accountable for their work.


Tagged categories: Auditing; Government; NA; North America; Ongoing projects; Program/Project Management; Project Management; Rail

Comment from peter gibson, (11/27/2018, 10:24 AM)

Thanks to that fool gov. brown we have the train to nowhere. They have no hope of securing $40bn to complete it. Now he's gone the state is saddled with that stupid thing. Dallas-Houston is feasible because that is a straight shot. CA is geographically a zig-zag state.What a mess.

Comment from Raymond Merrill, (11/27/2018, 4:56 PM)

In the immortal words of Gomer Pyle, USMC: "SOOPRIZE, SOOPRIZE, SOOPRIZE."

Comment from Tony Rangus, (12/3/2018, 10:37 AM)

I wonder if people of the former city, Paradise, could use the 40 billion? Back in the 1960's I remember folks telling me that when an Interstate highway was built through cities that it was for urban renewal and job creation, ergo I 805 in San Diego, I wonder...?

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