The Rail-to-Dulles heavy rail project is in big trouble — even more than it already was. A report by the Inspector General of the Department of Transportation, posted online this afternoon, highlights major project risks and recommends a potentially fatal change to the cost-benefit calculus used to determine whether the project warrants federal support.
Plans for financing the controversial Metro extension call for a $900 million federal “New Starts” grant, a $375 million federal loan and a $200 million federal line of credit. But there is intense competition nationally for federal transit funds, and Rail-to-Dulles must leap a number of hurdles, including a cost-benefit analysis, assurance that local funds will be available, and credible plans for managing the project. Among the alarums raised by the Inspector General:
Cost growth and schedule slippage. In December 2004, Phase One of the project to Tysons Corner was estimated to cost $1.52 billion and to be completed by 2009. By March of this year, the cost had escalated to $2.4 – $2.7 billion, and the completion date had slipped to 2013.
“Earlier this year,” writes the Inspector General, “the project was already near an unacceptable cost-effectiveness rating of low, when the cost estimate was much lower, $2.065 billion. Now the cost estimate could be as much as $2.7 billion. The project must achieve a final cost-effectiveness rating of at least medium-low or it will not be eligible for New Starts funding.”
Dulles Toll Road revenues. Under its agreement to manage the Dulles Toll Road, the Metropolitan Washington Airports Authority is responsible for funding improvements and repairs to the road. States the Inspector General: “The project could be endangered if these revenues are not sufficient to cover [rail] project costs and maintain the road. Users of the Dulles Toll Road could be subjected to large toll increases in the future if higher project costs require more and more local funding.”
Cost-Benefit Analysis. The Federal Transportation Authority has refined its methodology for calculating the cost-benefit ratio of transit projects. An old version of the software included as benefits certain travel-hours saved during off-peak hours. Now FTA officials are inclined to exclude those travel hours. With that change the economic viability of the project, marginal to begin with, becomes even more problematic.
Management oversight. The project’s complex organizational structure — management by the Virginia Department of Rail and Public Transportation transitioning to management by the MWAA, and then to ultimate ownership and operation by the Metropolitan Washington Area Transit Authority — increases the risk of cost overruns.
“In the past, we reported on projects that failed to implement an effective project management and oversight structure,” the Inspector General writes. “For example, the Boston Central Artery/Tunnel (CA/T) Project, which experienced massive cost overruns and schedule delays, presents many lessons learned regarding the project sponsor’s ineffective oversight. These lessons are relevant in light of the MWAA’s lack of experience in managing a mass transit project.”
Design-Build contract. Washington Metro was not a participant in negotiating the contract even though it will be forced to live with the consequences. The Metro needs guarantees of protection against defects in design and construction, and it needs assurances that the MWAA will not declare “substantial completion” of the contract on a product that does not meet Metro’s needs.
This report foreshadows the eventual federal rejection of the Dulles Rail project. And without federal funding, the project is a dead. The political reaction to this report undoubtedly will be furious. Virginia’s legislators will try to mau-mau federal administrators into revising their appraisal. But facts are facts, and Rail-to-Dulles faces stiff competition from transit projects around the country, each backed by its own lobbyists and Congressmen.
The Kaine administration had better start preparing a Plan B to improve mobility and access in the Dulles corridor.
