Minneapolis light-rail bids are too high, agency says

Dive Brief:

The head of the agency responsible for Minneapolis' $1.9 billion Southwest LRT light-rail project said the four civil construction bids submitted are too high and thus are likely to be rejected, the Southwest Journal reported.
Bids for the 14.5-mile rail extension range from $796.5 million to $1.1 billion. The budget for the construction portion of the project was not disclosed, but it is not the only cost the full budget must cover.
The move delays the contract award to Q1 2018, with construction beginning later that year and wrapping up in 2021. The Metropolitan Council is expected to postpone its application for a $929 million federal grant to Q2 2018.

Dive Insight:

The Council was expected to pick a winning bid this fall after delaying the bid opening three times to address technical questions. The likely rejection of the current bids is just the latest hurdle for the project, however, and it won't be the last.

Last spring, Minnesota state legislators voted down a measure that would have provided the cash required to get nearly $1 billion in matching funds from the Federal Transit Administration. Republican lawmakers even asked the federal agency to send those funds to other state infrastructure projects. The FTA didn't bite. The Council prevailed by soliciting area counties to supply the money instead.

Adding to its financial challenges, the LRT project also faces delay-driven cost increases. A report last August put costs up $18 million from initial projections, with the potential for increases of $1 million per week due to expenses related to hiring outside consultants and designers.

Escalating costs have the potential to derail a project, particularly one that requires public funding. In Boston, an extension to the city's Green Line was halted when costs spiked, leading the Massachusetts Bay Transportation Authority (MBTA) to fire the lead contractors, scale back their plans and negotiate a new deal in order to have a shot at keeping federal funding. Mismanagement by MBTA officials was also found to have contributed to the cost overruns.