April 30, 2008
Metro changes contractors

I'm not sure how big a deal this is.


Metropolitan Transit Authority officials announced Tuesday they have ended talks with Washington Group International to be prime contractor on four planned light rail lines, saying the two sides were "hundreds of millions" of dollars apart.

Metro now will try to reach an agreement with Parsons Transportation Group, which ranked second among three candidates for the job when WGI was chosen in January 2007, Metro President and CEO Frank Wilson said.

Wilson said WGI will be compensated $77 million for design and engineering work to date, most of which has been paid. He said Parsons will build on that head start, allowing the projects to move forward on schedule.

The Metro board last week approved paying Parsons up to $12 million for work it will perform through December.

Metro announced the change at a hastily called news conference.


According to Miya, the topic of the press conference was not known to the attendees, or even to some Metro vice presidents, and City Hall didn't know it was coming. That's a little odd.

Wilson said Metro and WGI were "hundreds of millions" apart on the cost of the project and on how to share various risks that could affect costs -- such as delays, inflation, governmental action and unforeseen environmental impacts. The two sides had been in negotiations for a year.

[...]

A financial capacity analysis prepared for Metro this month put the cost of the entire Metro Solutions Phase 2 plan at $2.6 billion. However, that includes a fifth light rail project, the University line, which is longer and likely to be more costly than the others.

Wilson said Metro plans to start construction on the East End line in June and on the North and Southeast lines in September. Construction on the Uptown line is expected to depend on funding for the University line.


I don't know if this is going to add delays to the construction schedule, or if it's removing obstacles by getting past this impasse. The report I saw on KHOU last night (which for some reason I can't find on their site now) says Metro plans to break ground on the East and North lines in June, and still expects to meet the 2012 date for completion. It also said they expect to hear from the FTA about funding in July. Here's hoping for good news on that score.

Posted by Charles Kuffner on April 30, 2008 to Planes, Trains, and Automobiles
Comments

If negotiations with the Washington Group took over one year and could not come to a resolution, what makes METRO think it will come to a resolution with the other consultants in shorter time period?
Interesting that Mia lists three main reasons for changing consultants:
1. too expensive by "hundreds of millions"
2. not willing to assume enough risk
3. not sensitive to local minority sub-contractor process

Posted by: Gonzalo Camacho on April 30, 2008 5:18 PM

As someone in this industry, I've got some bad news for Metro. All 3 of the technically acceptable finalists (WGI, Parsons and Fluor) are very busy at this time. That demand is likely going to make them unwilling to feel the need to negotiate too much.

And when coupled with steadily increasing costs for commodites that become construction materials I would anticipate that the cost estimates are going to continue to rise so delaying just to try to get a better deal could be penny wise, pound foolish.

Posted by: Patrick on May 2, 2008 8:20 AM