The city is poised to pay Ansaldo Honolulu JV an additional $160 million on top of an existing $616 million deal to deliver Honolulu rail’s driverless trains and communications systems.
The settlement, which the Honolulu Authority for Rapid Transportation board is expected to approve Thursday, will cover more than 2,000 days of delays for Ansaldo since the Hitachi-based firm received a $1.4 billion total contract in 2011 to design, build, operate and maintain the project’s trains and signaling systems.
It’s the latest consequence of delays that have plagued the island’s 20-mile, 21-station project for the past decade or so. Last week, a report from the state auditor’s office flagged a separate $354 million in cost increases that occurred when the city awarded rail’s initial construction contracts too early.
On Monday, however, HART Executive Director Andrew Robbins touted the settlement with Ansaldo as a win for taxpayers. The sum is far less than the $275 million that Ansaldo originally submitted last fall, Robbins said. Also, it falls within what HART had budgeted to pay out for the claim, he said.
Robbins declined to specify what the rail agency had budgeted, however. He said doing so could hinder HART in its future dealings with the project’s contractors. Overall, the settlement is covered by the project’s current $8.3 billion construction budget, Robbins said.
HART officials saw the Ansaldo cost increase coming and budgeted for the expense, even though the magnitude of the dispute publicly didn’t surface until a board meeting in September, when board member Ember Shinn said the cost would be “mega-substantial.”
The settlement removes a key unresolved risk item that had loomed over the project, Robbins said.
The settlement announced Monday only covers Ansaldo’s costs to design and build rail’s control systems along the full rail line, which ends at Ala Moana Center. It doesn’t cover any delay costs associated with Ansaldo’s operating and maintaining the rail system, which is the second part of its total contract.
Robbins said he expected those costs wouldn’t be nearly as expensive, since rail’s operations and maintenance weren’t nearly as impacted by construction delays.
The settlement doesn’t preclude future potential claims from Ansaldo as construction heads into Honolulu’s urban core. That work is largely thought to be the most challenging of the project.
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