Los Angeles Metro pays Kiewit $300M in settlement of freeway construction controversy

Dive Brief:

The Los Angeles Metropolitan Transportation Authority has agreed to pay Kiewit Corp. $297.8 million for change orders related to the company's work on an Interstate 405 carpool lane, according to the San Diego Union-Tribune reported.
Kiewit and the Metro have locked horns through the years-long construction process over the cost of delays and changes to the 10-mile project, which opened in 2014 with a price tag of $1.6 billion — 55% higher than the initial estimate. Kiewit originally requested $518 million in its 2014 lawsuit.
Major points of contention between the two were the cost of delays resulting from having to locate and move underground utilities during construction, as well as design changes that Kiewit said forced it to double its project workforce. Kiewit was issued the design-build contract for the Interstate 405 carpool lane in 2009.

Dive Insight:

Kiewit claimed that the removal and relocation of 9 miles of utilities along the construction route — as well as having to deal with third-party utility companies — cost $30 million. The Metro said the agreement underscored the importance of managing underground utilities before allowing work to begin on such a large project.

Kiewit Infrastructure, a division of Kiewit, is currently working on Project Neon, the Nevada Department of Transportation’s $1.5 billion overhaul of the Las Vegas "Spaghetti Bowl," the Interstate 15 and U.S. Highway 95 interchange.

Orange County, CA, just embarked on its own I-405 project, a $1.2 billion lane expansion that will be the biggest design-build contract ever in the county. The Orange County Transportation Authority awarded the contract to OC 405 Partners, and Measure M's half-cent sales tax hike will help pay for it, along with other local, state and federal financing. The project will also be the first design-build transportation project under a new California law allowing the method to be used for highway projects. More than half of U.S. states now permit the use of design-build on public projects, a delivery method that proponents say saves money on change orders and allows for a smoother design and construction process.