Local construction firm Nan Inc. was recently given one the Honolulu rail transit project’s largest and most consequential contracts: an award to relocate utilities along the city’s crowded Dillingham Boulevard corridor.

Nan bid $496 million for that utility work through Kalihi. On Thursday, one of the rail project’s top officials said the other firm vying for that contract, Hawaiian Dredging Construction Company, bid approximately $900 million — nearly twice as much for the same job.

That giant disparity in price concerned Colleen Hanabusa, who chairs the Honolulu Authority for Rapid Transportation’s volunteer board.

“Do we have to watch out for massive change orders?” Hanabusa asked HART Project Director Nathaniel Meddings during the board’s Project Oversight Committee meeting Thursday.

HART rail guideway construction near Middle Street and Dillingham.
Major utility relocation work along Dillingham is poised to resume next year. The two bids for that critical rail project were about $400 million apart. Cory Lum/Civil Beat/2022

Meddings told the board that Nan better understood what the utility relocation along Dillingham would entail because of “the knowledge they learned previously.”

The local rail agency in 2018 had awarded Nan a $400 million contract that essentially put the company on call for rail’s utility relocation work past Dillingham. That work stalled, however, as HART and the city failed to get the necessary designs approved in time. The contract was canceled last year, but not before Nan was paid some $100 million to do about 8% of the work.

On Thursday, Meddings said that HART’s evaluation committee for the contract bids gave Hawaiian Dredging a “significantly lower” score than Nan. Hawaiian Dredging did not spend as much time on its proposal and “the bid reflected that,” he told the board.

Meddings added that the biggest risk of changes to Nan’s scope of work — “and it absolutely will happen,” he said — is when what crews encounter under the street don’t match what’s in the design drawings.

HART and the companies whose utilities run along there have a process ready to reduce “standby delay” when those discrepancies happen, Meddings said.

In August, HART touted that the latest Nan bid was 3% less than what the rail agency had budgeted for that work.

Both Nan and Hawaiian Dredging have been awarded contracts to build stations along the elevated rail line’s western half. Those contracts have seen numerous change orders, and the costs to build those stations have soared amid “interface” issues, in which the stations and the elevated guideway components didn’t fit well together, among other problems.

Meanwhile, the Dillingham utilities — and HART’s inability to get them relocated in a timely manner — have been a key factor in the rail project’s skyrocketing costs and crippling delays.

The two private teams that competed in the city’s unsuccessful public-private partnership attempt in 2020 to finish rail each added about half of a billion dollars to their bids to cover the risks and uncertainties surrounding utility relocation, according to HART.

The rail agency hopes that once that utility relocation is out of the way, the next round of bids to eventually build the line into Kakaako will come in on budget.

Nan’s relocation work is slated to start early next year and run through 2026, according to HART. The agency anticipates completing the shortened rail line of 19 stations from west of Kapolei to Kakaako sometime between 2029 and 2031.

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