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Honolulu Rail-Line Construction Delays Cost $76M

Construction delays related to Honolulu's awarding of rail contracts before it had all the necessary federal approvals have proven to be a major headache.

Thu May 29, 2014 - West Edition
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HONOLULU (AP) Construction delays related to Honolulu’s awarding of rail contracts before it had all the necessary federal approvals have cost taxpayers $76 million so far.

The costs are tied to three contracts awarded to Kiewit Infrastructure West Co. and its joint venture, Kiewit Kobayashi, between 2009 and 2011, the Honolulu Star-Advertiser reported.

The firms hired staff, set up offices and acquired construction equipment after deals were signed. But they had to wait as long as 22 months to start work because it took the city until February 2012 to get all the federal approvals it needed.

The city decided to award the construction contracts at an early stage in part because it wanted to “demonstrate to the public that tangible progress was being made’’ on rail, according to a December 2011 letter from the city to the Federal Transit Administration.

Honolulu Authority for Rapid Transportation board members agreed to pay Kiewit and Kiewit Kobayashi $34.4 million as part of the change orders. That brought the total for the delays to $76 million.

The city had set aside $32.5 million, apart from its main contingency fund, to cover the most recent payouts, rail officials disclosed. Previously, officials had declined to reveal how much they had budgeted for those payments, citing negotiations with Kiewit.

While the $32.5 million covers Kiewit’s claims for delays up until August 2012, it doesn’t factor in increased costs for material and personnel as construction proceeds, rapid transit authority Executive Director Dan Grabauskas said.

The delay costs also don’t include expenses the project incurred during its yearlong, court-ordered halt on construction, rail officials say.

Together, the delay costs and expenses linked to delays from the recently resolved court challenges have cost Oahu’s rail project at least $176 million and represent two of its most bothersome budget drains, with “substantial consequences to our bottom line,’’ Grabauskas said.

Grabauskas said the rapid transit authority has estimates of how much more increased costs could add to the construction-delay total, but he declined to reveal that estimate, again citing potential future negotiations with Kiewit.

“Clearly this is a very significant event that we move to resolve these claims,’’ rapid transit board Chairman Ivan Lui-Kwan said. “We’ve had challenges and claims, and one by one we’ve picked them off.’’

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