A contractor for the Honolulu Rail Project, Kiewit/Kobayashi, has just received approval from the city to obtain an additional $15.9 million to cover increasing prices for steel and other materials. Kiewit/Kobayashi has a $195 million contract with the city to create a storage and maintenance facility for the rail cars. They are also purchasing the steel for the train tracks for the entire 20-mile rail line. Executive Director for the Honolulu Authority for Rapid Transit (HART), Daniel Grabauskas, stated, “Steel has gone up in price, and concrete has gone up in price, and those costs were not fixed in the contract.”
City officials admit that there could be an additional change order increase as the price of steel continues to rise. However, the city notes that they have $861 million budget in as “contingency funding” to pay for unexpected costs like change orders. The city expects to spend $5.27 billion for the entire rail project. Chairman of the Finance Committee for HART, Don Horner, stated, “We are locking in all of our prices for steel for the entire project now so we won’t have the risk going forward. We are doing a substantial step in the project by locking down commodity prices, for example, like steel.”
Opponents to the Honolulu Rail Project expressed their concern that the city is not financially prepared for all of these change orders and that the city should expect more such delays in the future. Those standing against the Rail Project argue that the city awarded the contracts too early and now have to deal with cost increases.
Source: Honolulu Star Advertiser, 4-20-2012, www.staradvertiser.com
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