Changes could add hundreds of millions of dollars to first 29 miles of bullet train

Several of the bullet train's biggest claims and change orders could cost more than 30% above original estimates for the first segment. Above, supports for a bullet train viaduct near Madera.

March 28, 2016 3 AM PT

The California rail authority is facing hundreds of millions of dollars in potential change orders and other prospective cost increases on the first 29 miles of the bullet train system, state and private contractor documents show.

The change orders and other claims are coming from construction firms, utilities and railroads involved in that first segment, according to the documents.

Several of the biggest claims and change orders could cost 10% to more than 30% above original estimates for the segment, which is to run between Madera and Fresno. Scores of smaller claims could mean additional spending.

Higher costs for the first construction phase of the project would carry implications for the entire $64-billion system.

The rail authority has repeatedly asserted that Central Valley contracts were signed for below budget amounts. If claims submitted after those contracts were signed send costs above budget, they will call into question the rail authority’s cost projections for the full system.

The contractor team on the first segment has sent the rail authority a log that includes more than 300 pending change orders and notices, about 200 of which do not yet include cost estimates. The team, led by Sylmar-based Tutor Perini, won a $1-billion contract in 2013 for the first segment. The Times obtained a copy of the log dated last November and a subsequent update in January.

Asked about the notices, state officials said the documents are not yet official claims or demands, and should not be considered final.

“The fact that the contractor will submit change orders or claims to us is really just the start of the process,” rail authority Chairman Dan Richard said in an interview. “It is not a self-executing process.”

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The requests will be audited by the authority to see “if the costs they claim really did happen,” Richard said. “After that there will be the process of what really caused those and who has the responsibility.”

He noted that the process also works in the other direction. “We will have claims against the contractor for not being ready to do things they should have been ready to do.”

Ron Tutor, chief executive of Tutor Perini, did not return a call requesting comment.

The rail authority has approved about $14 million in change orders, and the logs from Tutor Perini include an additional $51.7 million that the company has estimated.

Among the unpriced change orders is a potentially large claim Tutor Perini is preparing against the state for project delays. The firm cited the state’s failure to deliver land parcels over a two-year period after the contract was awarded.

The state had virtually none of the land acquired in 2013 when it awarded the Tutor Perini contract, and limited construction did not begin until July 2015.

Tutor Perini believes the state owes it $65 million for a 17-month delay, according to company documents obtained by The Times. A second delay of seven months could be priced at $30 million, according to experts who have looked at the computations.

Rail authority spokeswoman Lisa Marie Alley said the authority has not received a formal claim from Tutor Perini about the delays.

It will take time for the state and contractors to decide on the costs of change orders. But construction industry experts who reviewed the logs said those changes could be costly. Several estimated they could exceed $400 million on the initial contract.

They based their estimates on the large volume of change orders, lengthy delays and the significant revisions of the original plans.

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“If you award a contract and promise to make the land available and it isn’t there, it can have consequences,” said William Ibbs, a UC Berkeley civil engineering professor who has consulted on high-speed rail projects around the world. “Delay claims occur all the time.”

The Tutor Perini computed costs include idle-equipment charges, overhead, higher prices for materials and additional insurance, among other items. The company parked dozens of pieces of heavy construction equipment in yards near the Fresno project.

The rail authority has set aside a $160-million contingency fund for potential cost overruns on the segment, which, including work by utilities, is estimated to cost $1.2 billion to $1.8 billion.

But project chief Gary Griggs of Parsons Brinckerhoff, the state’s lead consultant, last month warned the authority board that it might have to increase that contingency fund by an additional $150 million.

In addition to problems raised by Tutor, potential costs have risen for utilities, highway relocations and freight railroad issues.

This month, a report by rail authority staff warned that a $150-million cost increase was projected for just two companies, communications giant AT&T and utility provider PG&E.

Alley said the increased costs relate to design issues and “a better understanding of utility impacts.” Part of the problem involves what construction managers call “unexpected conditions,” in which the lines are not where blueprints show.

“The state did research with PG&E to find gas and electrical locations, but those lines are not always where you think they are or as deep as you think they are,” said Fresno public works director Scott Mozier. Fresno has no direct role in the matter, except handling its own water and sewer pipes.

Railroads are discussing tens of millions of dollars in compensation for impacts on their operations, including relocation of their tracks, barriers separating their lines from future bullet train tracks and other uses of their property.

The two freight railroads did not respond to requests for comment.

One of the major unpriced change orders on the Tutor Perini log involves the relocation of a one-mile stretch of Golden State Avenue in Fresno, a major north-south four-lane highway.

The contract originally would move the road by about 25 feet, but business owners protested to Fresno Mayor Ashley Swearengin, saying it would damage their operations. Swearengin negotiated a new plan to relocate the highway by about 400 feet around the back of the businesses, said Mozier, the public works director.

The work includes relocating a flood retention basin, moving utilities, gutters and much more, at a cost likely to get into the high tens of millions of dollars, according to one engineer close to the project. Alley said the agency is negotiating a price for the change and would not speculate about the cost.

“This change was important to us because [it] resulted in fewer impacts to property owners, which is a key element of this program,” Alley said.

The Golden State realignment concerns some Fresno leaders, though the project still has the strong support of Swearengin.

“Right here in the first mile in Fresno, you have a major change,” said Steve Brandau, a city councilman whose district includes the realignment section. “How many times is this going to happen by the time they get to Los Angeles?”

Brandau said he is worried that Fresno could be left torn up if the project stumbles, adding that rail authority officials routinely disregard his requests for information on construction plans in his own district.

Lawson Rock & Oil Inc., the state’s largest hauler of crude oil, has a large truck yard on Golden State Boulevard that was among the affected businesses. Owner John Lawson, a member of the Fresno County planning commission and a former member of the California Transportation Commission, said the rail authority made a major error in awarding the Tutor Perini contract when it had such little property in hand.

“When they awarded Tutor the contract, the state owned three or four pieces of property,” Lawson said. “That was pretty stupid. If they can build this for [$64 billion] like the liars say, I say build it. But when it gets to $150 billion they are going to be in deep trouble.”

Higher costs for the first 29 miles could be just part of broader increases affecting the entire 118 miles of construction in the Central Valley.

A detailed analysis of the bullet train project by Elizabeth Alexis, a private investment manager and cofounder of a Bay Area group critical of the project, asserts that the Central Valley construction segment from Madera to near Bakersfield is now about $1.2 billion above the 2012 budget of $5.8 billion — a 21% jump. A spreadsheet that details the changes was submitted to the Legislature and the rail authority.

“Their plans change all the time, so it is hard to track on an apples-to-apples basis how their costs have changed,” she said. “None of their documents allow this direct comparison.”

In a report this month, the Legislative Analyst’s Office concluded that the amount, schedule and cost of work in the Central Valley have changed over time, making it “difficult to determine how well the high speed rail authority is adhering to the budget for that segment.”

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