Builder contends low bid for high-speed rail in Valley realistic

The Fresno BeeApril 16, 2013 

An artist's depiction of a California high-speed train.

The contractors who joined up to submit the low bid to build California's first stretch of high-speed rail line in the central San Joaquin Valley have plenty of experience on large -- and expensive -- U.S. and international public works projects.

The bid of $985.1 million from Tutor Perini Corp. of Sylmar, Zachry Construction of Texas and Pasadena-based Parsons Corp. was well below the $1.2 billion to $1.8 billion forecast by California High-Speed Rail Authority engineers for the first 28-mile segment from Madera through Fresno.

The Tutor Perini/Zachry/Parsons bid was about $100 million below the next lowest proposal -- so low, in fact, that it prompted fears of a lowball bid with the potential for change orders that could drive up the final pricetag for the project.

U-T San Diego and California Watch reported that Tutor Perini, the lead firm in the consortium, has a history of cost overruns on its public works projects.

California Watch is an investigative journalism effort of the independent, nonpartisan Center for Investigative Reporting.

The Bay Citizen, a sister organization of California Watch, reported last fall that the company has had overruns of $765 million, or about 40%, on nearly a dozen large public works projects in the Bay Area since 2000.

Tutor Perini CEO Ron Tutor defended his company Tuesday, dismissing the reports as "complete media-fabricated (expletive)."

"Change orders affect everybody," he said in a telephone interview. "It's never been us more than anybody else."

Tutor Perini has been in business since 1894. Its recent major work in California has included the seismic renovation of the Richmond-San Rafael Bridge, the Interstate 80 West approach to the San Francisco-Oakland Bay Bridge, and a 10-mile trench for a freight rail corridor linking Long Beach and Los Angeles.

Zachry Construction was founded in Texas in 1924. The company's projects include a five-level freeway interchange in Dallas, as well as owning and operating three railroads. Parsons, in business since 1944, has worked on railroad projects in Amtrak's Northeast Corridor and Taiwan's high-speed rail system.

Together, Tutor Perini and Parsons worked as contractors on a $710 million BART extension to the San Francisco International Airport.

In traditional public works contracts, in which an agency's engineers design a project before it goes out for bids, contractors bid on projects based on the architectural designs and engineering specifications produced by the city, county or state.

Change orders -- and the corresponding cost increases -- result from owners requesting upgrades that weren't included in the contract; mistakes in the engineering drawings that push completion past the deadline; or unforeseen conditions that differ from what was outlined in the project specifications.

"Not to trash our customers' engineers, but many of them make a myriad of mistakes on the drawings they put out to bid," Tutor said.

The high-speed rail project, however, is being developed as a "design-build" program, in which the contractor is responsible for both designing and building the project. Because the contractor is also the architect and engineer, the builder essentially has no one to blame but his or her own team for costly design mistakes.

"Design-build dramatically diminishes the risk to the owner," Tutor said. "The truth is, if our engineers screw up, we're going to pay for it. ... No engineer makes perfect drawings, so we have to make an analysis on what is the risk for mistakes."

Susan Hines, a spokeswoman for the Design-Build Institute of America in Washington, D.C., confirmed that cost overruns tend to be far less with design-build projects.

"The whole purpose of using design-build, and having one single responsibility for the contract, is to avoid change orders, which is one of the major factors that lead to cost overruns," she said. "It's usually the changes by owners that add to the cost."

On average, Hines said, design-build projects are completed 30% faster and cost about 6% less than comparable projects under a conventional design-bid-build process.

The California High-Speed Rail Authority -- which has $6 billion in federal and state money to begin developing the statewide, $68 billion high-speed train system -- sidestepped questions about how the agency expects to avoid cost overruns from change orders or whether the authority is required to accept the lowest bid.

"Five world class teams competed for this opportunity and the process is ongoing, which will lead to a contract being presented to the authority's board of directors in the coming weeks," agency spokesman Rob Wilcox offered in a written statement.

"We're in the procurement process now, so we're not going talk about individual bidders," Wilcox said Tuesday.


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The reporter can be reached at (559) 441-6319, tsheehan@fresnobee.com or @tsheehan on Twitter.

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