RTD braces for another increase due next month
By Kevin Flynn
Wednesday, June 18, 2008
RTD is bracing for another increase in the FasTracks program cost to be released next month, based on the new budget for just one of the projects approved Tuesday night.
With the West Corridor light rail’s new budget approved for an increase of 11.5 percent by the RTD board, cost figures for the other nine FasTracks corridors and related projects in the $6.1 billion program are being recalculated to account for surging materials prices.
Don’t expect it to hold at $6.1 billion.
The increases come at a time when RTD is trying to hold together the financial plan that pays for it all – a plan that’s being undercut by sales tax collections coming in short of projections.
The RTD board also approved the start of work under two construction contracts for the West Corridor capped at $338.7 million and $62.6 million.
Even at that higher cost, the deal is buying less – $28 million less, to be precise. Rider and public amenities that had been part of the original project have been slashed, including fewer security cameras and phones, less landscaping, fewer railings and benches, simplified noise walls and a narrower bike path.
Since FasTracks went up from its original price tag of $4.7 billion to $6.1 billion in May 2007, there has been another year of hefty inflation in the construction industry – fueled by hikes in steel, concrete and oil. The Colorado Construction Cost Index, a measure of costs for transportation projects maintained by the Colorado Department of Transportation, increased 6.1 percent last year.
RTD’s annual recalculation of all FasTracks project budgets is expected to be released by mid- to late July and transit officials aren’t talking specific numbers yet.
“It’s very early in terms of knowing where we’re going to be,” RTD spokesman Scott Reed said.
The West Corridor construction contracts help protect RTD from further increases in material costs on that job because they are structured as guaranteed maximum prices.
Denver Transit Construction Group, a joint venture between Herzog Contracting, of St. Joseph, Mo., and Stacey & Witbeck, of Alameda, Calif., will build the major portion of the system including the tracks, bridges, stations, crossings, drainage and grading. Its contract is $338.7 million. It includes an inflation hedge of $5 million more in case of cost increases but the contractor is responsible for any increase beyond that.
Balfour Beatty, an international rail contractor based in the United Kingdom, has a contract capped at $62.6 million to install the electrical system for the West Corridor, including overhead lines and power substations.
Some of the items trimmed from the scope, starting with the additional security cameras and phones, could be restored if the $40 million contingency fund remains in place toward the end.
But the major factors that fed the jump in the West Corridor line through Denver, Lakewood and Golden also affect the other projects – principally the continuing cost increase of materials, labor and rights of way.
If the same percentage increase were applied to the entire program, FasTracks’ costs could reach nearly $6.8 billion.
Unresolved right of way
With other FasTracks corridors still in preliminary design and environmental study, RTD is discovering unanticipated costs.
For example, planners on the FasTracks North Metro Corridor from Denver Union Station through Commerce City and Thornton completed a noise analysis this year indicating they will have to include more than 10 miles of noise-blocking walls along the Union Pacific freight tracks that they plan to use for diesel-powered commuter trains.
Originally, the North Metro Corridor was budgeted for only about eight miles of noise walls.
That cost increase, from $12.7 million to $16.5 million, has yet to be reflected in the North Metro Corridor’s $637.2 million share of the overall FasTracks budget. Two years ago, North Metro’s estimated cost was $420 million.
And RTD’s failure to reach agreement with the Union Pacific railroad to use some of the existing track right of way close to Union Station has the agency looking into alternate alignments for four corridors – including the East Corridor to Denver International Airport.
While those new routes should cost less than what UP was asking for its land, they still could cost more than RTD had originally budgeted for right of way.
The Regional Transportation District board approved a higher budget for the West Corridor light rail line through Denver, Lakewood and Golden, locked in contract prices and authorized start of work under two construction deals.
11.5 percent budget increase would take the project from $634.7 million to $707.6 million.
$338.7 million is the contract figure with Denver Transit Construction Group. A $62.6 million contract is with Balfour Beatty. They are so-called Guaranteed Maximum Price deals, under which the contractors bear the responsibility for future cost increases.
* The only exception is that RTD has agreed to provide up to $5 million to cover some increases in construction material costs that Denver Transit Construction Group might encounter.
© Rocky Mountain News
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