First Phase 2 Rail-to-Dulles Bid Comes in Below Estimates

I didn’t get to this last week, but it’s too important to overlook… The low bid for half the work associated with Phase 2 of the Rail-to-Dulles project came in at $1,178,000,000 — seemingly way below the estimated $2.7 billion total cost for the project. The bid was submitted by Clark Construction Group.

The contract is for the largest of three design-build packages for Phase 2, representing about 50% of the work. The 11.4-mile extension of the Silver Line west of Tysons will have six Metro stations.

Clark Construction edged out Bechtel Transit Partners, which is finishing work on Phase 1. Bechtel had submitted a bid only $24 million higher. The bids clustered within a fairly narrow range. Of the five bids offered, the high was $1,378,000,000.

The Metropolitan Washington Airports Authority (MWAA) said it would not formally award the bid until after a review to validate that the proposal properly responds to the solicitation. That review was supposed to occur Friday.

Bacon’s bottom line: This appears to be very good news. The bid implies a total Phase 2 project cost of about $2.3 billion, or roughly $400 million lower than the official estimate. Perhaps the most notable aspect of the bid is that Clark Construction is an open-shop enterprise. Had MWAA imposed a Project Labor Agreement (PLA) requirement on the job, non-union companies might have been discouraged from bidding, making the process significantly less competitive.

The other good news is that the lower bid gives MWAA some breathing room on the setting of rates on the Dulles Toll Road, revenues from which comprise the single-largest funding source for Phase 2. Assuming the other two components of the project come in under estimate as well, this savings, combined with the $300 million contribution under the General Assembly’s transportation-funding plan, suggests that the toll rates will come in way below the worst-case projections.


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17 responses to “First Phase 2 Rail-to-Dulles Bid Comes in Below Estimates”

  1. This is great news because I-66 needs a lot of help……

  2. Wow! prior posts on Dulles would bring out a plethora of people and comments!

    One of the things that we noticed down our way – when it comes to infrastructure projects – is that it’s coming in at 20% lower and even more than that because the economy is still not fully recovered and the companies are “hungry”.

    there is a concern that they are low-ball bidding.. and that if they don’t get more than their bid later on that they could go broke in the middle of the project.

    so the bidder-qualification phase is all important to be sure to weed out the companies that are on the edge financially and have a prior record of not coming in on budget.

    if you want a good example at the consumer level – go to WalMart or Lowes and look at a Toro then go to a business that only sells mowers or power equipment and look at the SAME model. They look just alike, but they are not the same!

    moral of the story – you often DO get what you pay for and if you want low bid – you’ll surely get it…. ๐Ÿ™‚

  3. DJRippert Avatar

    Good things happen when the state government stays out of it.

  4. The bid does not include the parking ramp to be built in western Fairfax County or the additional rail cars. So the final cost will be higher. It’s encouraging though that the bids were somewhat less than what some expected.

    Too bad we didn’t have a truly competitive bid for Phase 1.

  5. constructionandlaborguy Avatar

    Agree with Larry that bids are super competitive because firms are hungry. Construction unemployment is about 15 percent and real industry unemployment is likely 20 percent. Today there are more bidders and profit margins are thin. So bids are coming in below budget.

    While I appreciate your analogy, just because there is healthy competition does not mean quality will automatically suffer.

    Remember that competitive market forces lead to positive innovation and efficiencies.

    But you are right, prequalification is important. MWAA did a good job prequalifying these firms. These aren’t shoddy fly by night contractors. The shortlisted firms are some of the best around.

    Toll road users and taxpayers are hoping bids will come in below budget. Competition certainly helps achieve this objective.

    Also, local taxpayers are hoping the stations and parking garages of Phase 2 that were pushed off onto Fairfax and Loudoun County governments will experience low costs and rigorous competition…

  6. People are making the same mistake I made when I first heard about the $1.4 Billion to $1.6 Billion contract estimate. What happened to the $2.7 Billion to $2.8 Billion estimate, I wondered.

    But this contract that MWAA is considering now, is not the full Phase 2 contract – this contract is ‘Package A’, that is one of two contract ‘packages’ for Phase 2 that will certainly be put out for bid, and there is a third contract package that may be put out for bid by MWAA if Fairfax County and Loudoun County default on their expected payments of $236 million and $168 million respectively for the ‘County Elements’, that are the Rt 28 Metrorail station and the five Phase 2 parking garages.

    Since the total estimate for Phase 2 was $2.7 Billion to $2.8 Billion, and Package A was estimated to be $1.4 Billion to $1.6 Billion, then the rest of the prices for ‘Package B’, the 64 rail cars, and other costs, must add up to $1.1 Billion to $1.4 Billion.

    However, Package A did not come in between $1.4 Billion and $1.6 Billion, it came in at about $1.178 Billion – so, it appears at this point that there has been a reduction in cost of between $222 million and $422 million from what was expected, meaning that the price will be about $2.65 to $2.78 Billion. The total cost of Package B, the 64 rail cars and other things are not yet known.

    Package A, the bid prices for which were just released by MWAA, covers mostly the construction and installation of guideway and track elements, stations (including the Rt 28 station for which Fairfax County is expected to pay approximately $101 million), site work and relocation, and the traction power stations. It appears that this contract package will be awarded to Clark Construction Group and Kiewit Infrastructure Co. South at $1,1777,777,000.

    Package B, which has not yet been put out for bid, consists mostly of the rail yard at the Dulles airport. I expect this will come in at about $250 million, based on the cost of a comparable yard in Seattle Washington.

    Package C, which has not gone out to bid by MWAA yet, may not go out from MWAA at all. This package consists of the five Phase 2 parking garages, estimated to cost approximately $303 million altogether.

    The counties may or may not default on their payments for the Rt 28 station and the five Phase 2 parking garages, because their payment of these costs is conditional on the Counties managing to obtain financing for that. However, for the purpose of lowering the apparent cost of the project, it is assumed that the Counties will supply the price of the ‘County Elements’, estimated by MWAA at $404 million. Therefore at this point, this $404 million is not consideered part of the Phase 2 price.

    The two other packages together, plus other costs including the 64 rail cars at about $150 million total, add up to the $2.7 Billion to $2.8 Billion Phase 2 estimate, that is now a $2.65 Billion to $2.78 Billion dollar estimate.

    Assuming that the Counties do not default on the total expected $404 million ‘County Elements’ payment, package 3 will not be considered part of Phase 2 for the purposes of the official estimates. The remaining two packages, plus the 64 rail cars, would then be expected to cost about $1,178 million plus $250 million plus $150 million, which would total about $1,578 million. What about the other $1.22 Billion, then? This is actually the $1.1 Billion to $1.4 Billion of ‘other costs’ mentioned above.

    In an April 17, 2012 KPMG audit of Phase 1, a number of miscellaneous costs appear in Phase 1, significanly including a ‘Professional Services’ cost of $700 million. Do a web search on ‘ KPMG Audit Dulles Metrorail Phase 1 ‘, it’s on several websites incuding metwashairports dot com.

    In that KPMG Audit of Phase 1, many other items appear in the Phase 1 price. I think these items will exist in Phase 2 as well, eating the remaining $1.1 Billion to $1.4 Billion. $700 million for ‘Professional Services’ goes a long way toward doing exactly that.

    Time will tell what the final Phase 2 cost will be. Just don’t confuse the price of Package A with the total price for Phase 2, and don’t expect the total price of Phase 2 to be much less than we were told.

    This brings us to the financing. The US DOT Inspector General recently released a report in which he says that although MWAA, Fairfax County and Loudoun County have sent a signed Letter of Interest about a Tifia loan assistance, they have not yet made actual Tifia loan applications! See page 6 of the reort, which is Page 7 of this pdf:

    Hmm, no actual Tifia application yet. This is not exactly what we were led to believe – many of us were were waiting to hear that this had been awarded! But it makes sense, given that the actual cost of Phase 2 is not yet known, and will not be known until the costs of Package B, the 64 rail cars, and the County Elements have been resolved. It’s just odd that we were told – by the now outgoing US Sectretary of Transportation – that chances for this loan assistance were looking very good. Personally I have my doubts, but it’s a red herring anyway – if they can’t borrow the money through Tifia, they’ll get it by floating great big bonds. Our great grandchildren might get it paid off, or they might not. Nobody seems to care.

    This rail project has been a pack of lies for more than a decade, so none of this should be surprising. Personally, I think the Silver Line should be renamed the Bait & Switch Railroad. The logo could be a big BS. I think that would be very appropriate.

  7. both good comments and I unfortunately would not be surprised at Bob Bruins scenario actually playing out.

    The folks who run MWAA probably think that lower than expected bids means they have money for other stuff they previously could not afford!


    The METRO thing still intrigues me in that even the opponents of how it is being done – seem to believe that it will be (eventually) an important asset to the region and it’s mobility.

    NoVa without METRO right now would be what? would it be better off and less broke on METRO spending?

    So just curious – are Bob and Construction Guys supporters of METRO Rail for the region – or not?

    I’m sort of an agnostic on this but I assume no matter the rhetoric – that a good majority of people basically support the idea of METRO – just would like it to be done “better”.

  8. Cover Up Avatar

    What you obviously don’t know is that Clark is doing the Baggage facility at Dulles Airport right now with the unions under a project labor agreement. They also did the tunnel at Dulles airport for the Aero Train under a project labor agreement. So obviously Clark is ok working with the unions when they know they need to hire skilled trades. Business and labor can and should work together. Enough political games.

  9. I come from Long Island, I wandered around in New York City, I lived in Philadelphia. Of COURSE public transit is an asset.

    But you don’t put a train where a bus line should go. What Dulles Rail SHOULD have been, from Tysons Corner on west, was Bus Rural Transit. Forget the ‘one seat to the airport’ nonsense, hardly any travelers will be using the rail line to get to Dulles airpor. That was admitted in the above ground-below ground debates. We discovered that it was fine if the Metro station was 1200 feet from the terminal, because mostly airport employees would be using it. People try to deny this now, because the argument is no longer convenient – but look it up, and you will find this is true.

    To the extent that makes sense (i.e., don’t rush to do this in an unpopulated swamp somewhere), BRT should be set up in its own separate right of way, to establish and reserve a future rail right of way. The BRT system will establish a transit corridor that will grow if it was properly selected. Then when it grows, at some point it becomes appropriate to convert section after section of it to rail.

    Don’t borrow Billions of dollars to put rail into what should be a BRT corridor, and then choke on the payments. And ESPECIALLY, don’t borrow Billions to pay a double price for a rail line where a BRT corridor should go, as is happening in most of the Dulles Rail / Silver Line project.

    A recent article in DC Streets Blog was interesting, because it shows me that the lies against BRT are starting to collapse. More and more areas are wising up and pushing for BRT instead of rail, despite ridiculous pricing estimates that pretend that BRT will cost $452 million per mile. $452 million per mile is two times what the Dulles Rail / Silver Line cost per mile – and the Dulles Rail / Silver Line in turn cost two times what it SHOULD have cost per mile (and that’s before the finance costs are tacked on). The DC Streets Blog author saw the huge lie that was in the number she had cut and pasted, and she retracted the bogus $452 million per mile BRT figure and apologized for having cited it. Check out this article.

    Meanwhile, other reporters are saying “Oh, well heavy rail is expensive.” Since that is true, especially when a rail line like the Dulles Rail / Silver Line is double priced, I guess they can get away with that claim. So we don’t hear about the multi-Billion dollar double prices. They say, “Who cares about that stuff? It’s in the weeds. Etc.” And people are satisfied with that answer. What can I say.

    1. I pretty much agree with BOb Bruins and if you think about it – the HOT lanes from the beltway to Stafford County will in effect, be BRT i.e. multiple commuter buses leaving from multiple commuter lots headed to multiple destinations but each one on a mostly dedicated origin/destination.

      I also like THAT KIND of BRT because it’s more private sector than public transit.

  10. constructionandlaborguy Avatar

    Bob is correct. A lot could go wrong with future bid packages as far as cost overruns. MWAA shifted crucial parts of the project to localities to give the illusion of a lower overall project cost, but left the localities huge loopholes to avoid building them. MWAA threatened the localities with including plans to include new stations in their communities if they didn’t agree, so of course they agreed. We will see how it all shakes out soon enough.

    There is no chance they will get TIFIA money. None.

    “Cover Up” – while I can’t confirm Clark has hired unions on the projects you referenced, I can confirm Clark was not forced to sign a PLA for them. There is a big difference between voluntarily using unions and being forced to use them via a PLA requirement. MWAA, led by LIUNA boss Dennis Martire, tried to force contractors to use union labor via a PLA, before the PLA requirement was scrapped.

    Larry, as far as rail, I’m generally supportive of it, but with rail comes great responsibility (maintenance costs; increased population density that strains other infrastructure; equitably paying for it via the tax code and user fees). I’m not an expert on all of these topics so I don’t know if it is being done the best way possible. My hunch is no. There is always room for improvement. But should perfection hinder progress?

  11. re: ” But should perfection hinder progress?”

    well heckfire..then why the complaints ?


    it sounds to me, ya’ll beat me up if I’m wrong, but even the critics here are willing to see a subsidized METRO …. as an asset and the complaints are more a matter of degree in overall support – as opposed to opposition to the concept of METRO as something that will always be subsidized. (or do we see METRO like we do public schools where we really don’t characterize them as “subsidized”?)


  12. Professor Beltway Avatar
    Professor Beltway

    Several fundamental problems facing Dulles Rail Phase 2 have yet to be addressed by Virginia, MWAA and the Federal Transit Administration.

    Population densities in western Fairfax County average under 3,000 residents per square mile and under 2,000 per square mile in eastern Loudoun County areas to be served by Dulles Rail. By contrast, population densities inside the Capital Beltway in Northern Virginia and Washington, DC range from 5,000 to over 10,000 per square mile.

    Federal and state officials have ignored transit service design guidelines which show development supportive of heavy rail include total employment of 125,000 to 250,000 and population densities in excess of 6,667 per square mile:

    Density levels supportive of Metrorail are unlikely to be reached in the next 20 to 30 years, if ever, in the western part of the Silver Line corridor.

    Loudoun County has adopted a comprehensive plan with a population at build-out of under 500,000 persons versus a build-out of over 1 million that existed in 2002 when the draft EIS was issued.

    Future office space demand will be far lower than in prior decades resulting from the phasing out of traditional offices with secretaries and file cabinets, technology advances such as cloud computing and growth in home based employment.

    Total office space occupied in Tysons Corner as of Q1 2013 is less than the space occupied in Q1 2000.

    Loudoun County residential development has slowed from a range of 5,000 to 6,000 housing units annually in the period 2000 to 2005 to an average of 2,000 per year in 2009 and 2010 and over 2,900 in 2011.

    Due to increased land values and higher home prices, little affordable housing can be built in Metrorail station areas in the foreseeable future.
    Residential development near Route 606 station is unlikely as the area is in the runway approach zone.

    Air passenger totals at Dulles have declined since 2005 while those at Reagan National have increased. New international service has helped boost international passenger totals handled. Domestic air passenger traffic at Dulles Airport has been falling since late 2005 when Independence Air’s parent declared bankruptcy.

    According to MWAA, available airline seats for domestic carriers serving Dulles have declined by 17% during the last year.

    Then there is the potential negative impact of sequestration and related employment cuts for defense and other federal contractors, many of whom are located in Tysons Corner and the Dulles Corridor. These may result in fewer autos on the Dulles Toll Road and riders on the Silver Line.

    We need to see an independent analysis of projected Dulles Toll Road traffic and Silver Line ridership under various economic and demographic scenarios, not the rosy projections made in 2002.

  13. re: the “right” density. I’m on board with that idea – completely but if you do have the “right” density, is it still a net negative proposition in terms of farebox?

    what financial proposition defines a financially viable METRO?

    it would seem to me that if you have a defined ROI (even if not positive) that then you have a potent argument for and against expansion..

    with the exception that the Smart Growth folks will tell you (and I agree) that transportation infrastructure drives growth along the corridors built whether they be road or rail and that backfitting them after the fact is a very costly proposition.

    My understanding is that transit is justified even at a loss as the mobility infrastructure that has to be provided to people who provide basic services at low wages… and that without it – we’d have problems.

    obviously that’s overly dramatic but it does seem to be what underlies the justification for a transit infrastructure that is never going to be self-supporting – neither initial infrastructure nor operational.

    So my question – what is the acceptable ROI for METRO?

  14. keitha800 Avatar

    This is all Horrifying News Clark Construction is one of the worst poorly organized construction Companies in the Country I wish the appointed people did some research on Clark They have screwed up so many Large Projects it isn’t Funny Lets try The VA Administration for example well do not come crying when you find out how bad Clark really is and Why a Hammer will cost you over $100.00 this Company is bad really Bad full of Change Orders and Playing Dumb as a Box Of Rocks,

  15. Just FYI, a Google search reveals no connection between Clark and that job.

    Google search on ‘ Kiewit-Turner VA Administration construction Clark ‘

  16. Meanwhile, part of the Dulles Rail / Silver Line Phase 2 ‘County Elements’ financial shell game that I have noted previously, appears to have fallen apart. It now appears that Fairfax County is planning to return tens of millions of dollars of cost to the Dulles Rail / Silver Line project.

    I discovered this as I reviewed a Fairfax County document on Wednesday morning (8/21/2013). I had thought that the Rt 28 / Innovation Center metrorail station had been entirely overlooked in the Fairfax County BOS Transportation Committee’s May 7, 2013 Tifia Status report – but now I notice, on page 4 of the May 7, 2013 Tifia status report, that the Rt 28 / Innovation Center “Station cost will have to be funding [sic] either in part or whole per the funding agreement (County funding agreement share 16.1%).”

    That interestingly cryptic statement means that Fairfax County is planning to return some of the $89 million NVTA-estimated station cost (that I still think is $101 million by the way) to the Dulles Rail / Silver Line project – a remarkable development that seems to have been completely unmentioned by County government, overlooked by the news media, and unreported to the People, for months! And given that the Tifia office wants a firm financial commitment before approving Tifia assistance, I submit that the uncertainty that this adds to the finance agreement must be weighing heavily on the Tifia assistance for the entire project.

    The May 7, 2013 Tifia status report document appears here:

    Also, that Tifia status report was included in the May 7, 2013 FC BOS Transportation Committee meeting agenda here (thus certifying its authenticity, since the above report is hosted on a third party site):

    Fairfax County has been far from candid. This should have been revealed to the public long ago. The May 7, 2013 Tifia status report was not disclosed, and it had to be discovered by an individual civic (which is how I learned about it). The FC BOS Transportation Committee was saying, in May 2013, from information dated from late April 2013, that the remaining cost of the Innovation station had to be returned to the rail project – and this was not reported. I only wish that I had been quicker to catch this apparently deliberately cryptic note about this return of tens of millions of dollars of cost to the rail project. Until Wednesday (August 21, 2013), all I noticed was that there were no numbers for the Rt 28 / Innovation Center station on the financial tables in the report. I missed the note in the upper right corner of Page 4, and I wondered if the people in Fairfax County government had forgotten about that rail station. Clearly they had not; it was the public that was supposed to forget.

    Page 4 of the May 7, 2013 Tifia status report says that the Rt 28 / Innovation Center “Station cost will have to be funding [sic] either in part or whole per the funding agreement (County funding agreement share 16.1%).” This appears in the upper right corner of the page.

    This is very cryptic. What it means is that instead of the full price of the Rt 28 station being paid by Fairfax County (with help from NVTA, etc) as planned in 2011 in the agreement famously brokered by former US Transportation Secretary Ray LaHood, Fairfax County appears to be choosing an escape option written into the various MOAs, whereby if the County can not get funding for the parking garages and in this case the Rt 28 rail station, then the cost reverts to the Dulles Rail / Silver Line project, to be split up according to the percentages of 16.1% from Fairfax County, 4.8% from Loudoun County, 4.1% from MWAA non-Dulles Toll Road funds, and 75% from the Dulles Toll Road tolls.

    November 11, 2011 Phase 2 MOA (the latest one):

    From page 5 of this MOA pdf:

    “3.2 Best Efforts to Seek Additional Funding Sources for Particular Project Phase 2 Facilities

    a. Fairfax shall use its best efforts, consistent with the legislative powers, duties, and responsibilities of its Board of Supervisors, to secure Additional Funding Sources that will be sufficient to fund the cost of the design and construction of the parking facility at the Herndon-Monroe Station, the parking facility at the Route 28 Station and the Route 28 Station itself.

    d. To the extent that either Fairfax or Loudoun, despite their best efforts as described above, is unable to secure sufficient Additional Funding Sources to fund the full cost to design and construct any of the Phase 2 facilities described in Sections 3.2(a) or 3.2(b) (any such insufficiency, individually or cumulatively, referred to hereinafter as a Funding Shortfall), then the amount of the Funding Shortfall shall be considered to be part of the total Dulles Rail Project Cost as that term is used in the Funding Agreement and as such will be funded as provided in the Funding Agreement.”

    FUNDING AGREEMENT – Page 2 of the MOA, third paragraph:
    “…the Funding Agreement also provides that if Fairfax and Loudoun elect to participate in funding Phase 2, then Fairfax, Loudoun, and MWAA would be responsible for funding 16.1%, 4.8%, and 4.1%, respectively, of the total capital cost to construct the entire Project”

    FUNDING AGREEMENT – on Page 5 of the MOA, the remarkably convoluted 3.2.c shows the 75% from the DTR funds:
    “c. To the extent that Additional Funding Sources are used to pay any portion of the cost to design and construct any of the Phase 2 facilities described in Sections 3.2(a) or 3.2(b), then solely for purposes of computing the capital contribution percentages of the parties to the Funding Agreement, the amount paid by any such Additional Funding Sources shall not be credited as provided by the last sentence of Section 2.2(b)(3)(e) of the Funding Agreement, but instead shall be credited 16.1% against the Phase 2 funding obligation of Fairfax, 4.8% against the Phase 2 funding obligation of Loudoun, 4.1% against the Phase 2 funding obligation of MWAA from non-DTR Funds, and 75% against the obligation of MWAA to fund a portion of Phase 2 from DTR Funds, as those terms are used in the Funding Agreement.”

    Personally, I consider the conditional County payment plan to be a ridiculously complicated shell game, and I suspect that the various stakeholders do not want anybody to understand any of it. NVTA may be able to provide $41 million of the $89 to $101 million that the station will cost. Fairfax County is saying that it will dump some or all of the remaining costs of the Rt 28 Metrorail station back into the capital cost of the Phase 2 project, in order that Fairfax County will then only be responsible for 16.1%, rather than 100%, of that remaining cost. And I have not seen any news report whatsoever that mentions this in any way shape or form, which is remarkable because this has been known by Fairfax County transportation officials since April 2013.

    Because the other 83.9% of this remaining cost is then owed 4.8% by Loudoun County, 4.1% by MWAA from non-DTR funds, and 75% from MWAA from DTR toll funds, I think it is fairly evident that this will not reduce the tolls, and it also will not make Loudoun County or MWAA very happy. I wonder if Loudoun County staff noticed this and alerted their BOS. I’m not even sure that the Fairfax County BOS understands what this means. I have notified both Boards of Supervisors, some concerned civics, and every area transportation news reporter I could find. I am not sharing the correspondence I receive, but as of this moment I have only heard back from one civic, one reporter, and you.

    Loudoun County BOS is aware of its own option to dump the estimated $168 million of their Metro parking garage County Elements back onto the rail project. This is repeatedly noted in staff reports to their BOS. That would make 4.8% of their unpaid County Element costs due from them, and the remaining 95.2% of their unpaid funds (up to $160 million) would be due 16.1% from Fairfax County, 4.1% fom MWAA non-DTR funds, and 75% from MWAA from DTR toll funds. That fact, however, is not highlighted.
    From the ‘Fiscal Impact’ paragraph on Page 7 of that pdf:
    “The County has until July 1, 2014 to determine if the parking facilities should be placed back into the overall project cost of the Dulles Corridor Metrorail Project. Should Loudoun County make that determination, the 4.8% share of costs for the full project would increase by approximately $8.06 million.”

    OK, let’s review.

    Several tens of millions of dollars of County Element costs that made this project cost palatable just a few years ago, are now being returned to the Dulles Rail / Silver Line project – and there is no report of this, whatsoever, in the news? Such issues make the Tifia assistance less likely, and this makes the general secrecy of this May 7, 2013 Tifia status document all the more suspicious.

    Fairfax County is returning part of the Rt 28 / Innovation Center station cost to the project, citing the 16.1% agreement – and this was not immediately front page news? It was left to be discovered months later by an unpaid civic activist such as myself, before racing off for work? This is the reason for my suspicion of deliberate trickery, and there have been other remarkable examples of this from other participants in the Dulles Corridor Rail Project in past years (unreported $53 million error in Rt 28 / Innovation Center station price estimate, July 2011; unreported Inspector General investigation of financial risk of project, March 2012).

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