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The Honolulu rail project offers a long list of lessons including how a lack of proper planning, independent review, and project oversight contributes to the damaging impacts of change orders, construction delays, and cost overruns.
The rail project was envisioned as a way to alleviate the traffic congestion plaguing the community. The goal was to build a light rail project that would make it easier for commuters to get from the suburbs of West Oahu and surrounding rural areas to downtown Honolulu.
Construction on the 20-mile route began in 2011 and was planned to be partially usable by 2018 with completion by 2020. However, due to numerous problems including a lack of planning, land issue questions, financial issues, and Federal Transit Administration (FTA) support, the rail project is not expected to be completed until 2025.
This blog is part of our regular series focused on lessons learned from large-scale projects. Read about the Boston Big Dig and California high-speed rail.
Our goal with this series is to highlight the lessons from projects that haven’t gone as planned, showing how these lessons should be used to improve the decision-making process before digging starts.
If you have large-scale or mega-construction project you’d like us to take a deep dive on, contact me with your ideas and suggestions.
The Honolulu Rail Project Vision
There is no denying that traffic congestion is a problem for anyone trying to get into or out of Honolulu.
With commuters spending up to 4 hours a day in their cars, something had to be done. The plan was that this 20-mile light rail route would take the pressure off the outdated highway infrastructure giving citizens an easier and more environmentally-friendly way to get around.
This is a vision that on paper looks good and is one that could have a positive impact for everyone. However, consider these details from a recent citylab.com article:
Honolulu city officials predict that traffic congestion will spike by 23 percent in 2030 if the rail is not built. With the rail, a 21 percent increase in traffic is projected, so long as rail ridership reaches the city’s forecast of 116,000 daily passengers—a number widely criticized as inflated.
An independent review of the project ordered under former Hawaii Governor Linda Lingle found that the rail would likely garner a substantially smaller number of daily riders—too few to keep the project in operation.
“We are told it will reduce traffic by one percent,” says Ann Kobayashi, a member of the Honolulu City Council. “To spend $10 billion to reduce it by that little, does that make sense? If you’re asking me, no, it doesn’t. There’s something wrong here.”
The situation now is that even though the project is over budget and behind schedule, too much work has been done to abandon the project. They are now locked into what researchers call an Escalation of Commitment (EOC).
The EOC suggests that the tendency of people or organizations is to become locked-in and entrapped in a particular course of action and thereby ‘throw good money after bad’ to make the venture succeed.
This comes as construction is beginning in Honolulu – the most challenging aspect of the project with concerns including existing utilities, limited space in which to work, special permissions for historic preservation, and a yet-to-be-filled construction contract.
What are the Primary Issues with the Honolulu Rail Project?
A number of mistakes that could have prevented and mitigated with proper independent review and oversight have resulted in the project being at least 5 years behind schedule and at least $4 billion over budget.
Poor Planning
The lack of planning and review of the project has ultimately resulted in the multiple change orders, cost overruns, leadership changes, and budget problems.
The Honolulu Authority for Rapid Transportation (HART) project went forward without fully planning the entire 20-mile route, this resulted in numerous change orders to correctly plan construction in an area that includes Native Hawaiian burial grounds, limited space, and the proximity of power lines.
Compound this with questions about how this commuter train will really alleviate traffic congestion and improve life for the island citizens. The stations are not in easy walking distance of key areas including Waikiki Beach and Diamond Head park. Many commuters will still be forced to drive to stations and then take a bus to their ultimate destination.
Insecure Funding
The Office of the Auditor’s report audit reveals that because local politicians feared that state lawmakers would divert an excise surcharge tax planned to pay for the project – the first major Honolulu rail construction project was rushed.
This initial first step in poor planning and fears over funding has had huge trickle-down impacts for the rail project. The auditor’s report reveals that city officials were so concerned about funding and paying for the construction project that the plan was to get bids from contractors when business was slow – in an attempt to get better pricing and to save money.
As a primary example of the project’s mismanagement, the auditor noted that Mayor Mufi Hannemann had promised the project was “shovel ready” during a speech in October 2009, a week after awarding the first $483 million construction contract to Kiewit. Within four months, however, “delays in required federal approvals resulted in Kiewit starting to accrue delay costs that ultimately would be passed on to the city.” (Blistering audit blames political rush to construction for ballooning rail costs)
The funding problems for the Honolulu rail project can be summed up with these key facts:
Honolulu signed a $483 million contract to design and build the first elevated section in 2009.
The environmental impact study was not completed at this time. The surveys of archeological and historic sites were also not completed. The city had not defined plans with the electric utility, the state university or other land owners along the 20-mile route.
Honolulu also hadn’t received the final approval from the FTA for a $1.55 billion grant it needed to complete the project – making up 30 percent of the budget.
These initial problems with funding and inadequate contract review are having deep impacts 9 years later. Change orders, construction delays, and cost overruns have turned a project that was envisioned as helping island citizens into being a construction headache, tax burden and as the most expensive rail project in the world, per capita.
“There is no question that the Honolulu rail project is the most expensive per capita of any publicly funded rail project in the modern age,” said Randal O’Toole, a transportation expert and senior fellow at the Cato Institute, a policy think tank based in Washington, D.C.
Even if the U.S. Federal Transit Administration kicks in the $1.5 billion it promised to help defray Honolulu’s costs — which at the moment is not a sure thing — the average Oahu resident would still be on the hook for $8,917. (Honolulu rail project most expensive in the world)
The Honolulu rail project will cost each Oahu citizen $13,700. The trickle-down impacts of this will likely include the cancellation of other projects that can offer real tangible benefits to island residents.
How Can You Do Construction Differently?
Do the planning, get the independent review, ask for and expect project oversight, and be accountable to the citizens you’ve pledge to help.
When you do this, you can prevent the initial project problems that have plagued the Honolulu rail project. Now, I did not dig into the numerous problems highlighted by the Audit of the Honolulu Authority for Rapid Transportation: Report 1 by the Office of the Auditor – State of Hawai’i. I urge you to read this report and think about what should have been differently.
Consider the conclusion of the auditor’s report:
Over-promise, under-deliver. It has been the hallmark of the Honolulu Rail Transit Project’s near-decade long, stop-and-go journey. From Mayor Mufi Hannemann’s October 29, 2009, announcement of a “shovel-ready” project that would be on time and on budget to HART’s 2014 – 2016 monthly progress reports that the FTA felt may have contained tainted data, the City’s optimistic projections eventually met cold, hard reality, which resulted in delays, change orders, cost overruns, and budget shortfalls.
Know that with a partner such as PCS, you can prevent the numerous change orders, contract headaches, cost overruns, and lack of planning that have hurt the Honolulu rail project.
I urge you to work with an independent partner who gives you an honest review and account of every aspect of your planned construction project. Do not assume that everything will work out or fall-into-place.
As we have seen from the Honolulu rail project, such misguided assumptions and decisions have resulted in construction chaos that will cost Oahu citizens for years to come.
About the authorLee Thomas, MBA is the chairman and CEO of Project Cost Solutions. Lee has over 20 years of hands-on operational process experience under his belt. He is deeply committed to seeing your construction project succeed.
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