The following is re-posted from the Aug. 24 Sound Transit web page, The Platform.
The economic boom has benefited our region in many ways. At Sound Transit, the boom has boosted revenue and given voters the confidence to invest in new transit infrastructure. But that growth also presents construction challenges for agencies along the West Coast, including Sound Transit. Today we released new cost and schedule estimates for Lynnwood Link. Updated project estimates show costs trending $516 million higher than was estimated in Sound Transit 2. Work by project staff to bring these costs down will take several months and will push timing for project completion from December 2023 to mid-2024.
There are four primary reasons for these upward cost pressures, and they will be intuitively familiar to anyone who has looked out at the cranes dotting our skylines:
Market Conditions — With so much construction activity in the region, there is an acute shortage of skilled labor. The cost of building materials is increasing, and contractors are being more selective in choosing work, leading to higher contract bids.
Real Estate — Everyone has watched Puget Sound home values rise precipitously. As real estate values rise, so do our property acquisition costs.
Scope Changes — As we have worked to finalize design with our partner cities, the project scope has increased to facilitate better bus/rail integration, improve fire/life/safety features, and increase construction mitigation in surrounding communities.
GC/CM Contracting — Finally, we are using the General Contractor/Contract Management (GC/CM) delivery method. GC/CM contracting methods typically result in costs that are 5 to 10 percent higher than a typical design-bid-build contract, but provide the key benefit of offsetting higher final design cost estimates by significantly reducing risks and costly change orders during the construction process.
Currently, Sound Transit staff is working with our final design and construction management consultants, together with our GC/CM contractors, to identify cost saving concepts through a comprehensive value engineering effort. The same team is also working with our project partners — the state Department of Transportation and the cities of Seattle, Shoreline, Mountlake Terrace and Lynnwood — to revisit project requirements toward identifying cost-saving opportunities.
In the coming months, through this value engineering effort, we hope to bring costs down by the time we baseline the project budget in early 2018. In the interest of full transparency, we are communicating these issues to the public now to provide a clear understanding of the work that lies ahead.
Funding uncertainty at the federal level also plays a key role. The Trump administration has proposed canceling a $1.1 billion grant that Lynnwood Link has been due to receive, but we are hopeful that Congress will retain this funding. Until that time, however, we cannot award contracts in the expectation of those funds, and this has the inevitable effect of delaying the project.
Sound Transit has benefited in years past from putting projects out for bid during slower economic periods with more competitive bidding environments. Today in our booming economy, we find ourselves at the other end of the curve. The good news is that budgets for the Northgate and East Link extensions have been established and are trending well within range. Going forward, as market conditions continue to evolve, we will keep a close eye on our upcoming procurements for the Federal Way and Downtown Redmond extensions.