Last week, the Massachusetts Bay Transportation Authority abruptly cut ties with four contractors working on the 4.7-mile Green Line extension to Somerville and Medford, outside Boston. The announcement came shortly after reports that the cost of the light rail project had ballooned to about $3 billion, an increase of a billion dollars.
State officials said the decision doesn’t mean the project will be cancelled, although transportation chief Stephanie Pollack wouldn’t rule out that possibility, reports the Boston Globe.
The Green Line extension has a lot going for it. The project will serve some of the most densely populated areas of New England, and ridership is expected to be robust — about 49,000 trips per day. It enjoys widespread political support and will run along existing rail rights-of-way, so the political controversies that can accompany land acquisition are not an issue. It has secured nearly $1 billion in federal funding and benefits from a legal mandate requiring the state to offset some of the pollution effects of the Big Dig by improving transit.
So how did the cost rise so much and what does it mean for the project?
A major factor was the way MassDOT and the MBTA chose to contract out the project, according to Rafael Mares of the Conservation Law Foundation, a regional environmental non-profit.
Officials at the MBTA and the state were hoping to speed implementation with a form of project delivery called “Construction Manager/General Contractor” (CM/GC). The advantage of this method is that it allows construction to begin before the design process is totally complete. This was a new contracting method for Massachusetts and it required the approval of the state legislature.
However, there was “a long list of flaws in how it was implemented,” said Mares. The MBTA more or less admitted as much in a presentation explaining the decision to cut ties with contractors [PDF]. For one thing, the agency says, there was never a “reliable cost estimate” for the project.
The state divided the project into seven different “packages” and offered White-Skanska-Kiewit — itself a joint venture between three contractors — an automatic no-bid contract if its estimate was within 110 percent of the estimate offered by an independent firm.
Rather than reject estimates from WSK that came in too high and then open the process to competition, MBTA and the state allowed the process to devolve into a “Marco Polo pricing game,” said Mares. WSK would submit an estimate and if it was higher than 110 percent of the independent estimate, the firm would come back with a revised number, until its estimate was as close to the maximum number as possible, he said.
Once WSK had the contract in hand, costs grew without a sufficient transparency mechanism in place. “Ultimately MassDOT and MBTA are responsible because it’s their job to protect us,” Mares said. “The contractor [WSK] took advantage of this process at the same time.”
MassDOT and MBTA’s decision to end the contracts will surely delay the project. But political observers doubt that the state will cancel it altogether.
For one thing, Massachusetts still has to reduce pollution under the terms of the Big Dig legal agreement. “If they don’t do this project, they’ll have to do another project that would get them 110 percent of the air quality benefits,” said Mares. “Quite frankly, I doubt that they could conceive of a project that could do that.”
Somerville is one of the most densely populated areas in the nation, but it’s underserved by transit. Few other American transit expansion proposals can match the 49,000 additional daily trips projected for the Green Line extension. “Nobody is questioning the value of this project,” Mares said.
So what’s next?
Mares says he’s not sure the project costs will drop to the level of previous estimates (around $2.3 billion). However, he says there’s a good deal of value engineering that could be done. And just opening the remaining “packages” to an open bidding process will likely save hundreds of millions, he said.
There are other sources of potential cost savings as well, but they involve some pain for current transit riders. Tolerating longer construction-related closures at existing commuter rail stations — where the extension will run — could save a surprising amount of money, Mares said. The previous contract allowed only very limited service disruptions, mostly nights and weekends — an expensive approach.
Those temporary inconveniences, he says, “would be much better than not building the Green Line or not building certain stations.”
Ultimately, a better transit expansion opportunity than this one isn’t likely to present itself in the Boston region. “This is a light rail project in the existing right of way, and they have almost a billion in federal funding,” said Mares. “If they can’t make this project happen, I don’t know what they could make happen.”