High-Stakes Poker at the Rail-to-Dulles Table

The high-stakes maneuvering over the $4 billion Rail-to-Dulles project is heating up. It turns out that the Bechtel/Washington Group construction consortium has a rival, a team headed by Fairfax developer WestGroup. The state has a no-bid, public-private partnership proposal from Bechtel to build the Metro extension. But according to Alec MacGillis at the Washington Post, state officials may entertain a bid from the rival WestGroup group.

On the upside, WestGroup may come up with a lower bid for the gigantic project. One of its team members is Dragados, a Spanish company that specializes in the large-bore tunneling needed if the Metro line is to run underneath Tysons Corner rather than above ground. On the downside, there’s no guarantee that WestGroup will submit a better bid, and the bid solicitation itself will create another delay could run up construction costs and spook federal funding, which is already looking tenuous.

The Kaine administration faces tough choices in a very high-stakes game. It will be interesting to see how well the Kaniacs play big-league political poker.

(P.S. Kudos to MacGillis at the WaPo for his solid ongoing reporting of the Rail-to-Dulles controversy. The Post’s coverage is much improved from earlier this year.)


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6 responses to “High-Stakes Poker at the Rail-to-Dulles Table”

  1. Toomanytaxes Avatar
    Toomanytaxes

    This should be interesting – West Group versus Bechtel. It probably means that West Group realizes that there is a fair risk that the entire project, especially with the addition of tunnel, cannot pass the FTA’s cost/benefit test. Absent a passing grade, the project would forfeit $900 M in federal funding. (Keep in mind that the federal rules consider the entire cost for the project and not just the federal share. Thus, the increased costs for a tunnel count as a negative.)

    The Post has done a much better job at covering all sides of a complicated issue. However, there has not been any discussion of the cost overrun issue, despite many contemporaneous and similar stories concerning cost overruns for the Wilson Bridge and Springfield Interchange. Why?

    An engineering friend who was involved in transportation projects for part of his career has informed me that the typical transporation infrastructure project with federal funding has final costs that exceed the final budgeted costs by a factor of 2.1. So, if the laws of averages hold, the Silver Line conceivably becomes an $8.4 B project, rather than a $4 B project.

    If so, from whose pockets does the additional $4 B and change come? Who pays and at what cost? Dulles Toll Road users; local businesses, many of which won’t receive the financial windfalls coming to West Group and other Tysons landowners; residential taxpayers? Would Richmond be forced to open its wallet? What would be the impact on other transportation needs in Virginia?

  2. nova_middle_man Avatar
    nova_middle_man

    Everything is crazy right now but at last check the airport authority was running things so it looks like the potential cost overruns will most likely be passed onto Dulles toll road users.

    http://www.mwaa.com/corridor
    second link real page 13 16 in adobe

  3. Toomanytaxes Avatar
    Toomanytaxes

    NoVA MM – I’ve recently seen a rough cost estimate for constructing the Tysons Tunnel, based in large part on the costs for constructing the Metro’s Green Line gap project. The estimate, adjusted for inflation (which is quite high for construction) falls in the range of $1380M to $1640M.

    What would that do to toll prices? If this estimate is at all reasonable, isn’t it likely that there would be a strong push to fund some of the costs from local real estate taxes paid by ordinary citizens and businesses?

  4. Toomanytaxes Avatar
    Toomanytaxes

    A person I know in McLean who is quite active on local issues sent me more details on the cost estimate that he, in turn, received from a couple of engineers.

    This estimate for constructing the Tysons Corner tunnel for the Silver Line that suggests the cost would be in the range of $1.38 B to $1.64 B, based on the costs for constructing the Green Line tunnel in 1997-99, adjusted for differences in the projects and for inflation. The Green Line gap project cost $643 million to build. (http://www.roadstothefuture.com/Metro_ColH_GA_Opening.html). The Green Line tunnel has 2.9 miles of track and two stations. The estimate assumes each station would cost $75 M. It removes the two stations ($150 M) and $35 M for utility costs, leaving $458 M, or $158 M per mile for constructing the main line (Green Line).

    The Tyson’s tunnel would be 3.9 miles long with four stations. Those facilities would cost $616 M (3.9 miles tunnel & track) $300 M (four stations at $75 M each), $5 M (utilities – a lot less than at U Street in the District) for a total of $921 M – in 1998 dollars. 1998 was used for the benchmark because it is just past the midpoint of the construction term for the Green Line project. The inflation increase using CPI-U (which is apparently lower than the increase in construction costs), is 1.24, so the minimum cost of the tunnel is $1.142 B. The estimate believes, however, that the actual cost is probably above $1.25 B with the run-up in materials costs. This includes signals, lights and station hardware, but not the infrastructure that were cut to save money, but need to be added back in for the system to be user friendly and attractive. The estimate adds $80 M for those items. There also must be added costs for the maintenance and protection of traffic plan – about $100 M – and the tunnel entrances – about $50 M. This puts the estimate for constructing the entire tunnel in the range of $1.38 B to $1.64 B excluding any contingency for unusual conditions. The estimate pegs the total cost for Phase I at $2.9 B to $3.6 B.

    I’m not an engineer. I am not arguing that this estimate is correct. Rather, it is one more educated view of the costs that should be surfaced. It’s easy to low-ball cost estimates in order to get approval, only to have the lid pop off when its too late to do anything but stick it to taxpayers and toll road users. We need to know the costs up front.

  5. Jim Bacon Avatar
    Jim Bacon

    TMT, If this estimate is even in the ballpark, the tunnel would be a financial disaster. A cost of $200 million (a number that has appeared in print) is one thing; $1.4 billion (or higher) is in another league entirely. Against the methodology you outlined, however, the task force of engineers that recommended the tunnel to Gov. Kaine said that the tunnel costs would be modest.

    If nothing else, this exercise points out the risk of cost overruns. (Anyone hear of the Big Dig?) The contracting authority, presumably the Metropolitan Washington Airports Authority, will have to write strict terms and conditions in which the design/contractors would suffer significant financial penalties for overruns. If the contractors aren’t willing to sign, that’s a tacit admission that the risks are too high.

  6. Toomanytaxes Avatar
    Toomanytaxes

    As I indicated in the post, I am not arguing that this new “swag” at the costs for tunneling through Tysons is correct. But it seems at least reasonable based on its ties to the Green Line and its adjustments. It is quite possible that the new tunneling technology could be more efficient than what was used in the District for the Green Line. But how much more efficient?

    At the same time, construction inflation since the late 1990s is substantial. That factor cannot be ignored. Neither should the potential gains to made from rebuilding Tysons or the large campaign contributions given by the landowners, agents and contractors. A spokesperson for an organization pushing the Silver Line has stated that the proposal is not about transportation, but rather, about land development.

    The State’s best case for the Silver Line admits there is no significant improvement in traffic if the project is built. Another factor not being discussed are the opportunity costs for spending all this money on the Silver Line. Could those dollars be spent better elsewhere?

    All of these factors (and more) make a strong case that the Silver Line needs more sunlight and press scrutiny. This should occur now, rather than after the fact. Virginia does not need to be the subject of “Big Dig II.”

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