Honolulu’s $8.3 billion rail project is now officially stuck.

On Tuesday, the Honolulu Authority for Rapid Transportation awarded an $875 million construction contract to a joint venture of three companies to build roughly five miles of guideway and four stations from the airport to Middle Street.

It’s the last major construction contract that can be signed unless city officials find more money to pay for an additional four miles of guideway and eight stations — as originally planned — to go through downtown Honolulu to the Ala Moana Center.

HART Guideway waipahu construction Sugar Mill Farrington Hwy1
HART officials say they do not have enough money to proceed with rail beyond Middle Street. Cory Lum/Civil Beat

During a press conference, HART Executive Director and CEO Dan Grabauskas said the $875 million price tag was good news because it shows that HART is getting a better handle on its cost estimates for future construction.

HART had estimated the final contract would cost from $750 million to $875 million.

The contract was awarded to a joint venture of Shimmick/Traylor/Granite, all three of which are mainland-based construction companies. Grabauskas said the group’s final proposal of $875 million was the “best value” of the three analyzed by HART.

The highest price proposal was $1.5 billion, which came from a different joint venture that included local contractor Nan Inc., which has previously been awarded rail contracts for station construction and utility relocation.

Top Three Offers Initial Price Best and Final Offer Difference
Shimmick/Traylor/Granite JV $910,000,000 $874,750,000 -$35,250,000
Healy/Hawwaiin Dredging JV $1,087,000,000 $1,007,988,000 -$79,012,000
NAN-POSEC-HLRT JV $1,581,872,000 $1,524,159,979 -$57,712,021

Grabauskas said the price gap between proposals is largely due to each contractor’s assessment of risk. For example, Grabuaskas said that all the contractors were worried about relocating utilities along the rail line because there’s a lot of uncertainty about what’s actually hidden underground.

“If you look at big mega-projects, risk is actually a huge component because of unknowns, uncertainties, complexity interfaced with other things happening,” Grabauskas said. “That’s why you’ll hear us talk about having conversations with companies to reduce their anxieties over risk.”

The rail project faces a significant shortfall of more than $1 billion and officials are now working with the Federal Transit Administration on a “recovery plan” to figure out how best to complete the rail system with the money that’s available.

The FTA awarded Honolulu a $1.55 billion grant to build a 20-mile commuter rail system with 21 stations. There’s no longer enough money to do that.

Grabauskas said he has told contractors interested in the hoped-for final segment of the project to hold off until the city figures out what to do next.

The FTA gave the city an Aug. 7 deadline to develop a financial recovery plan.

Honolulu Mayor Kirk Caldwell has since asked for extension until June 2017 so that he can find more money to build the remainder of the project, which could include asking the Legislature for another general excise tax extension or lobbying the federal government for more cash.

Grabauskas said Tuesday that the FTA has not yet responded to Caldwell’s request.

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