High-Speed Rail: First Stop California

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High-Speed Rail: First Stop California

Issue 2 of 2014

The future of transportation was a hot topic for attendees of DBIA’s 2014 Design-Build in Transportation Conference in San Jose, Calif.

With California’s airports and highways at capacity, DBIA convened a panel of representatives from the California High-Speed Rail Authority to discuss the substantial design-build high-speed rail project they are overseeing and respond to the audience’s questions regarding the environmental review, risk management and the challenges the project faces.

“Design-build is expected to unlock value by allowing innovation in design and construction means, methods, sequences, techniques and procedures,” said Jon Tapping, the Director of Risk Management and Project Controls for the California High-Speed Rail Authority (the Authority).

Los Angeles to San Francisco is the busiest short-haul air route in the country, with five million annual passengers taking hundreds of flights daily. The planned 800-mile high-speed rail line is set to connect these two metro areas. This massive design-build project is the first in the United States, and will take more than a decade to complete with a final cost of around $68 billion.

Building California’s first High-Speed Rail Line

To maintain an aggressive schedule, the Authority made the decision to use design-build and divide the high-speed rail project into phases.

The first phase from Madera County to Fresno has received environmental clearance, is already under contract and construction is set to begin. The second phase, from Fresno to Bakersfield, is expected to have environmental clearance later this year and construction should begin in late 2015.

In order to efficiently navigate the national Environmental Policy Act (NEPA) approval process, the Authority divided the project into nine pieces, each of which will receive NEPA certification separately. The benefit of this approach is that work on one section can begin while the NEPA review is ongoing in another.

The high-speed rail project will serve as an excellent textbook case, since concepts such as cost plus contracts, preliminary development agreements, alternative technical concepts, fixed price contracts and public-private partnerships will all be utilized on different phases of the project.

Regarding risk management, the Authority appointed Jon Tapping to serve as the dedicated risk manager reporting directly to Authority CEO, Jeff Morales. “The first step in a design-build project is to determine what risks there are, which ones can be mitigated and then who to assign each risk,” Tapping said.

Brian Papernik, an attorney with Nossaman LLP advising the Authority, emphasized that the risk aspect of any project is where design-build plays a vital role. He has pushed the Authority to have one-on-one check-ins with the design-build entities. Papernik said that having the design-builders participate in managing the risks is “extremely helpful” in maintaining a positive project outcome.

Project Challenges

While high-speed rail is a major part of transportation infrastructure abroad, it is still a new idea in the United States. Tom Fellenz, chief counsel for the Authority, is not put off by those who are not supportive of the project, saying, “When the [Bay Area Rapid Transit] program was being planned, people called it ‘the train to nowhere.’ now look at how successful it’s become.” He offered similar historical perspective when asked about legal action. “There were over 2,000 lawsuits around the Golden Gate Bridge project and there’s only been a few for high-speed rail. So, I’d say we’re doing quite well.”

Panelists did acknowledge that the project continues to face challenges. Like many large projects, there are concerns about funding. The Initial Construction Section will cost $6 billion and is fully funded from voter-approved bonds and federal assistance. For the rest of the project, panelists said the Authority was looking at state, federal and local appropriations as well as bonds or possibly private investment. California Governor Jerry Brown has also suggested funds raised from California’s Cap and Trade program could be allotted to the project, pending state legislative approval. The Authority is currently studying the profitability of the train once it’s running to help attract private sector support.

Future of High-Speed Rail

While California has made the most progress to date with high-speed rail, lines are also being planned in Texas and Florida. The Authority turned to design-build for the California project, Tapping says, “because it is a proven project delivery method in California and the nation that promotes efficiency, accelerates delivery and advances cost certainty.” With high-speed rail operating in more than a dozen countries worldwide, the United States has some catching up to do if it wants to have the most up-to-date transportation infrastructure.