Purple Line Completion Delayed, Over Budget


Maryland transit officials recently announced that the opening of the Purple Line light-rail project is delayed to 2026, and that costs needed to complete construction are over $1 billion than originally anticipated.

The 16.2-mile, 21-station Purple Line that will link Prince George’s and Montgomery counties has faced numerous delays since its start, including when the original contracted team quit last year over disputes.

In November last year, transit officials selected Maryland Transit Solutions (MTS), comprised of Dragados USA Inc. and OHL USA Inc., as the new design-build contractor to complete the Purple Line. The selection will be submitted to the Board of Public Works for approval later this month.

Delay and Budget Details

WTOP News reports that MDOT has cited the rising cost of materials, a shrinking labor force, material shortages due to supply chain challenges, increases in the insurance market and other factors post-pandemic as reasons for the delay and rise in price.

Originally estimated to cost $2 billion to complete construction, officials now estimate they will need $3.4 billion, also pushing the service opening back from March 2022 to fall 2026. This includes about $1.1 billion of construction costs already paid.

Additionally, the cost for the public-private partnership (P3) agreement has increased from $5.6 billion to $9.3 billion. The new, proposed P3 agreement funding would go towards building, operating and maintaining the line for several decades. The additional $3.7 billion for the long-term financial agreement would include the additional construction costs, as well as a $250 million legal settlement previously paid to the original contractor after the team quit, state officials said.

“Taking the Purple Line P3 Agreement amendment to the Board of Public Works is the next step needed to move the Purple Line from construction into an active light rail line that creates a truly interconnected regional transit system,” Maryland Transit Administration’s Holly Arnold said in a statement.

If the new construction contract and P3 are approved on Jan. 26, financing would need to be secured in February, according to reports from The Washington Post.

Matthew Pollack, who oversees the Purple Line project for the Maryland Transit Administration, praised the new construction team’s “years of experience” on projects, which have included P3s.

“We think that they’re creating the missing piece to this whole program,” Pollack said. “We are going to have the right team in place now to run this project to completion.”

Pollack added that the Purple Line was at a lower risk of future cost overruns because state officials have the necessary environmental permits while state contractors have continued to move underground utility lines, which could be two major causes of projects going over budget.

The new long-term financial agreement will have the private concessionaire to cover additional construction costs with $140 million of its own equity and by incurring more debt, with the state paying for these via monthly payments over 30 years after the line opens. These payments originally amounted to $154 million annually, but are expected to average $240 million annually, according to MDOT.

The Purple Line’s own fare revenue isn’t expected to fully cover these costs for about 15 years, so state officials previously said they would used fare revenue from the MARC commuter rail to make the difference. Jaclyn Hartman, MDOT’s chief financial officer, said that additional money for the debt could come from other state transit revenue as well.

State officials say that full-scale construction is currently scheduled to start later in the spring. Under the new contract, the entire line would open at once and not in two phases as previously planned.

“This is the right team and the right time,” Arnold said. “This project has been needed for such a long time. We’re going to get it across the finish line.”

Purple Line Saga

According to the Maryland Department of Transportation and the Maryland Transit Administration, the Purple Line is a 16-mile light rail project that will run from Bethesda, in Montgomery County, to New Carrollton, in Prince George's County, eventually providing a direct connection for Metrorail Red, Green and Orange Lines at Bethesda, Silver Spring, College Park and New Carrollton. The project will also connect with MARC, Amtrak and local bus options. The Purple Line will be powered by a catenary system.

Owned by MDOT and the MTA, plans began with assessments in 2002-08, followed by a draft environmental impact study and light rail being selected as transportation. The FTA issued the final record of decision in 2014, followed by Purple Line Transit Constructors—a partnership consisting of Fluor (Irving, Texas), Lane Construction Corp. (Cheshire, Connecticut) and Traylor Bros Inc. (Evansville, Indiana)—being chosen in 2016 to assist with the project.

Through the public-private partnership, PLTC agreed to work on the design, build and operation, as well as maintenance of the system for 35 years. Other teams collaborating on the project at the time included: the Washington Metropolitan Area Transit Authority, Montgomery and Prince George's counties, the Maryland-National Capital Park and Planning Commission, the Maryland Department of Transportation State Highway Administration and local municipalities.

In March 2019, a judge cleared a lawsuit that might have brought construction to a halt. A few months later, in September, officials announced that the line would open in phases, starting in Prince George’s County, where the first stations would open. At the time, trains were being built in New York and planned to arrive for testing in 2021.

By October, WTOP News reported that issues with concrete at a Maryland Metro entrance shaft, labeled defective by the state, were just one of many issues plaguing the project after the outlet had requested documentation on the project.

According to the documents, in 2016 and 2017, there was more than one instance of 47 oversight reports where contractors were traversing private property without necessary permission and attention to traffic safety issues. While more minor issues were easily resolved, there were also instances where construction was commenced without the proper approvals, such as in July 2018, when designs were returned with a request for revisions, but construction still began two weeks later.

In December, problems identified with the concrete included: cracks in approach slabs, concrete out of tolerance, pockmarks and footprints. The sidewalk has issues with “honeycombed sections, voids and does not meet the minimum cover requirements for welded wire reinforcement,” according to the report.

By October 2020, corrective work was slated for completion by the summer, with the interior build-out commencing by the end of 2021. At the same time, project officials expected the project to reach completion in April 2023, though those involved with the project emphasized that they were still aiming for the end of 2022.

Regarding PLTC leaving the project, Washington Business Journal reported that the state's transportation agencies said in a statement that the Purple Line has experienced delays "in conjunction with litigation" since 2016 and have been "actively engaged in discussions to mitigate the impacts of litigation and change order requests on both the project schedule and costs."

In April, PLTC requested an additional $187.7 million and five extra months to complete work regarding a required “crash wall” slated to go between a portion of the Purple Line and CSX freight tracks.

The following month, PLTC announced that it planned to withdraw from the project as a result of a three-year ongoing dispute with MDOT and the MTA over extensive delays and cost overruns. However, PLTC reported that its other consortium, Purple Line Transit Partners (Meridiam, Fluor and Star America Infrastructure Partners) had agreed to take over the project.

According to reports, PLTP also held a public-private partnership with the state of Maryland for a larger design-build and operating contract, worth $5.6 billion. In its release, PLTC said it would be exercising a clause in the design-build agreement which allowed for withdrawal if total project delays reached 365 days. However, according to The Washington Post, the project was already approaching 1,000 days’ worth of delays from various legal battles, right-of-way acquisition and design changes.

In June, the PLTP formally notified state transportation agencies that it intended to terminate the partnership in 60 days, citing more than $800 million in cost overruns. Two months later in August, Baltimore Circuit Court Judge Jeffrey M. Geller filed a temporary restraining order that prevented PLTP from walking off the project.

At the beginning of September, Geller ruled that the joint venture could quit over the cost overrun dispute, though transit officials could attempt to salvage the partnership. By the end of the month, construction came to a halt, as PLTP proceeded with its decision to depart from the endeavor.

Following the court’s decision, Maryland transportation officials planned to take over day-to-day management of the project but were still making efforts to come to a settlement with PLTP. Should the JV stick with its plans to leave, state officials estimated the decision would add another one to two years of delays to the project, which is already two-and-a-half years behind schedule.

In November, MDOT announced that it had agreed to pay an additional $250 million to the remaining companies that have agreed to manage construction of the delayed and cost disputed Purple Line project in an effort to salvage the 36-year, $5.6 billion PLTP partnership.

The settlement amount was reported to cover what PLTP and its associated construction team spent on a lawsuit filed by project opponents and the state’s delay in providing right of way.

Originally made up of primary construction contractor Fluor, and infrastructure investors Meridiam and Star America, despite the settlement, Flour announced that it would still be leaving the partnership, having quit last month over delays and cost escalations.

According to The Washington Post, the deal revived one of Gov. Larry Hogan’s signature transportation projects and a public-private partnership that imploded in September following three years of cost disputes.

Until a new design-build contractor replaces Flour, MDOT said at the time that it would oversee subcontractors on a variety of work to keep the project moving, such as paving, moving utility lines and manufacturing light-rail vehicles, among others.

The settlement was sent to the state’s Board of Public Works in December.

In January, the Maryland Board of Public Works, comprised of Hogan, Comptroller Peter Franchot and Treasurer Nancy K. Kopp, unanimously approved a $250 million legal settlement to resume construction on the Purple Line project.

PLTP is making additional efforts as a means to keep costs low and prevent further delays. Some of the efforts include exploring ways to expedite the remaining work and reducing its internal rate of return from the project by 20%.

Regarding Flour, the prior contractor and its construction partners received $100 million before the end of 2020, with the state intending to pay the remaining $150 million within 12 months, after the contractor has been replaced and a new agreement is signed between it, the state and PLTP.

As part of the settlement, Meridiam and Star America have agreed to spend up to an additional $50 million to keep construction moving until a new contractor is on board.

And in March 2021, PLTP announced that three design-build contractors were short-listed to complete the project. The contractors include: Halmar International; Maryland Transit Solutions (a team of Dragados USA and OHL USA); and Tutor Perini and Lunda Construction Co., a joint venture.

In June, Maryland’s three-member Board of Public Works approved an agency request to add $183.5 million to cover expanded project responsibilities for the partially built Purple Line project.

The contract modification will reportedly bolster the budget for the project management consulting team (AECOM, RK&K and WSP USA), which has overseen a much scaled-back construction effort since the original Fluor-led design-build group quit the half-finished project last year in a dispute relating to cost overruns totaling $800 million.

Agency officials reported that the unanimously approved funds were driven by the costs associated with the unexpected need to assume temporary control. In addition, the modification of the “program management consultant services” contract would add four years to the original agreement.

The funds are noted to be unrelated to the $250 million settlement the state reached with PLTC last fall.

Later that year, Veronica Battisti, spokeswoman for the Maryland Transit Administration, reported that the agency's private team managing the project planned to select a new contractor in December and have a new construction contract finalized by Feb. 17.

While a new construction contract was previously slated to be finalized sometime this month, Battisti reported that construction teams bidding on the project had requested more time to submit proposals.

In a submission to the state’s Board of Public Works, MDOT reported that a new opening date and cost to complete would be determined once the contractor was onboarded and the contract finalized. In its submission, MDOT also requested to the Board of Public Works that it would like to pay the private consortium an unspecified amount “to facilitate the restructuring of the project financing” that would occur after the new contractor is selected.

MDOT pointed out that the money wouldn’t be an additional cost, in that it would pay for completed work now, rather than via the future payments, thus reducing financing costs associated with the project’s risks.

The Board of Public Works is scheduled to consider MDOT’s request at its Sept. 15 meeting. At that time, the board will also be considering the project’s time change, in that it modifies a $250 million Purple Line legal settlement approved in December.

At that point, the timing was reportedly five months later than originally planned, and the repeatedly delayed project was roughly two-and-a-half years behind schedule, according to the project’s previous contractor.


Tagged categories: Contractors; Contracts; Government contracts; Mass transit; NA; North America; Ongoing projects; Program/Project Management; Public Transit; Rail

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