Meeting_Body
CONSTRUCTION COMMITTEE
MAY 20, 2026
Subject
SUBJECT: FISCAL YEAR 2027 PROGRAM MANAGEMENT ANNUAL PROGRAM EVALUATION
Action
ACTION: RECEIVE AND FILE
Heading
RECOMMENDATION
Title
RECEIVE AND FILE this report summarizing the FY27 Program Management Annual Program Evaluation (Attachment A).
Issue
ISSUE
The Annual Program Evaluation (APE) is a priority initiative to provide transparency into the performance of Metro’s capital program. A comprehensive review of the risks associated with the costs and schedules of the program is conducted annually. This report summarizes the results of the FY27 APE review performed by Program Management, Program Controls, and Countywide Planning and Development departments, with additional participation from Operations.
Background
BACKGROUND
The Annual Program Evaluation initiative began in 2016 to provide consistent yearly evaluation of Metro’s capital program. Metro is responsible for delivery of one of the largest transportation infrastructure programs in the country, and the APE provides current information and transparency into the performance of capital projects. The APE is a project management tool summarizing a variety of initiatives to improve cost and schedule certainty, current trends, and provides the Board with the current status of the various project budgets through completion.
The APE aligns with Program Management’s mission statement that “together we build World Class transportation to transform the quality of life in our communities.” In support of the mission statement, the APE initiative comprehensively evaluates Metro’s capital program, including Transit, Highway, and Regional Rail projects. Planning projects anticipated to transition to design and construction during fiscal year 2027 are also included.
Discussion
DISCUSSION
Findings
The Program Management Department is responsible for a diverse portfolio of transportation infrastructure projects. The APE report is primarily focused on existing projects estimated at $5 million or greater, new projects that will carry-over through FY27, and projects which are anticipated to transition from planning to implementation during FY27. The total value of projects in development and implementation decreased slightly from $33.7-$35.9 billion in FY26 to $32.4-$34.9 billion in FY27. In addition, three additional projects are nearing transition from Planning to Implementation phase, which are currently estimated at $11.9-$13.3 billion. The FY27 Program Management APE presentation in Attachment A includes a complete project listing. The list of projects is grouped into the following categories:
• Major transit projects under construction with a life of project (LOP) budget greater than $1 billion
• Capital projects with a LOP less than $1 billion
• Alternative delivery projects/Preconstruction budget development
• Projects in development/shovel ready
• Projects in closeout
• Capital Projects - Planning to Implementation
With the significant number and size of Program Management projects and the aggressive implementation schedule for delivering Metro’s capital program, Metro’s capability and capacity to deliver multiple complex projects on-time and within budget creates unprecedented challenges to project delivery. These challenges are further exacerbated by risks in the infrastructure marketplace including workforce constraints, cost escalation, and the fluctuating price of construction materials. As summarized in the attached report, Staff continue to complete and implement several strategic initiatives to improve planning, consistency, transparency, risk management, and discipline to project delivery. These strategic initiatives are complementary and performed in conjunction with the Early Intervention Team (EIT) to benefit from this proactive agency-wide engagement at significant stages of project development.
In addition, many initiatives have been continuously implemented to foster improvement, such as:
• Staff consultant ratio - Program Management has established an aspirational consultant to staff ratio and created a tracking system across all projects; however, reaching the 50/50 goal will be an on-going effort for all current and future PM projects.
• New Recruitment Strategies - Partnering with Chief People Office, aggressive recruitment for high value positions, securing new talent to grow our own future PMs, salary study specific to PM this FY.
• Deliver Progressive Design Build (PDB) and Construction Manager/General Contractor (CM/GC) projects - the alternative delivery process/procedure manuals and training is complete; however, delivering PDB and CMGC projects are progressing and will remain an on-going effort.
• Third Party and Utilities - Implementing new Master Cooperative Agreements (MCA) with City of LA, implementing and executing new MCA’s for other Cities in transit corridors (e.g. SEGL, ESP2, Noho to Pasadena), pursuing utility cooperative agreements with LADWP and SCE, City of LA Executive Directive 16 for Olympics projects, and self-permitting initiatives.
• Professional Services Soft Costs - Monitor, control, and reduce professional services costs as a percentage of the construction cost
• EIT - Continue to use the Early Intervention Team framework to ensure proactive agency-wide collaboration, issue resolution and readiness at key stage gates early in the project lifecycle.
Considerations
2026 Construction Market Outlook
Building on major milestones achieved in 2025, which included the openings of the LAX/Metro Transit Center, Foothill Gold Line Extension Phase 2B to Pomona, and Rail to Rail Active Transportation Corridor, Metro continues to advance the delivery of its bold and ambitious Measure M and R capital programs. This progress is occurring against a backdrop of heightened regional, national, and global volatility.
Los Angeles County remains in recovery from the Eaton and Palisades wildfires, while evolving federal tariff policies have injected significant uncertainty into construction material supply chains. Concurrently, escalating geopolitical tensions are affecting global energy markets, shipping routes, and material lead times. These forces compound longstanding market pressures that have persisted since the passage of Measure M in 2016, including rising capital costs, inflation, supply chain fragility, constrained real estate availability, and sustained demand for skilled construction labor.
To assess the implications of these conditions on Metro’s capital delivery program, a 2026 Construction Market Analysis was prepared. The analysis included a focused evaluation of market drivers affecting labor availability, material pricing, contractor bidding behavior, and escalation assumptions, with the goal of supporting informed fiscal management and timely project delivery. Key findings include:
• Federal Trade and Tariff Impacts: Expanded and volatile tariffs on steel, aluminum, copper, lumber, and derivative products are driving material price uncertainty and increasing risk premiums in contractor bids.
• Labor Market Constraints: The construction industry continues to face a persistent skilled labor shortage driven by an aging workforce, slower employment growth, and strict immigration policies. Broader labor constraints across the entire construction sector may indirectly affect labor availability and pricing for transportation projects.
• Escalation and Bidding Dynamics: Contractors are increasingly pricing risk into bids in response to market volatility, resulting in escalation exceeding historical norms in recent years. The report recommends higher escalation assumptions in estimating to reflect these market conditions.
In response to these challenges, the analysis outlined strategic actions for Metro, including continued use of collaborative delivery methods, enhanced cost estimating and market monitoring practices, streamlined permitting and interagency coordination, and proactive contract strategies to manage price volatility. Collectively, these measures are intended to help Metro navigate a complex and evolving construction market while maintaining progress on critical transportation investments for Los Angeles County. Key findings of this analysis are summarized in Attachment A.
Alternative Delivery Projects Update
The Alternative Delivery Process/Procedure (ADP) Manuals version 2, for PDB and CM/GC contracts are currently in process, with associated training implemented and ongoing. Eight alternative delivery contracts have been awarded, with the G-Line and I-105 ExpressLanes fully negotiated and under construction, ESFV and the NoHo to Pasadena projects nearing final negotiation and initiating early construction, and Southeast Gateway Line and Link US are early in the preconstruction processes. A new project delivery selection procedure has been adopted and is actively in use. For the Sepulveda Transit Corridor, Program Management continues to support Planning efforts in advancing engineering design and exploring innovative financing mechanisms in coordination with the Project Development Agreement team. Looking ahead, delivery selection for Eastside Phase 2 and the K Line to Torrance will be completed this year, with those contracts expected to come to market in FY27.
Overall, alternative delivery contracts have yielded positive results, with eight procurements completed and all exhibiting generally positive outcomes. Key areas of improvement include streamlining processes to reduce the time required to reach a firm fixed price. Additionally, significant challenges remain as contractor pricing, construction materials, labor, production rates, and risk values have consistently exceeded Independent Cost Estimates, making negotiations more difficult. In response, staff are preparing Version 2 of the manual to incorporate lessons learned. Positive trends include a Project First mentality amongst the Metro project team, consultants, and contractors, strong partnerships, early contractor involvement for value engineering, favorable procurement results, improved visibility and access to cost drivers, and active bilateral executive engagement. Looking ahead to FY27, the focus will be on maintaining partnerships and commitments while completing construction on I-105 and the G-Line, finalizing successful price negotiations, initiating construction on ESFV, Noho, SEGL, Vermont, Link US, and D7/D18 ZEB, and awarding contracts for ESP2, 2028 Games projects, and the K Line to Torrance project.
Equity_Platform
EQUITY PLATFORM
All of the capital projects have project-specific community engagement activities and equity impacts. The projects have been grouped and assessed under five categories of high-level equity impact, as described below.
Major Transit Capital Projects
These major projects support transit access and connectivity through new construction and expansion across Los Angeles County. While specific project areas vary in demographics, land use, and jurisdiction, , all of the projects intend to improve access to key opportunities at essential destinations, such as jobs, health care, school, and neighborhood amenities, via high-quality transit.
Multi-modal Capital
These projects are anticipated to expand multi-modal options for travelers through a variety of interventions, including light rail, active transportation infrastructure, and high-occupancy vehicle lane improvements. While project types and geographies vary, the shared impact is anticipated to diversify modes and costs of travel choices.
Infrastructure Capital
Infrastructure maintenance and improvements, such as the Division 20 Portal Widening Turnback, contribute to safe and accessible conditions for Metro riders and the general public, including soundwall protection, wayfinding, grade and modal separation, and transit station upgrades.
Regional Rail
The projects that fall under the Regional Rail capital program will expand transit and other multi-modal choices for travelers in Los Angeles. Anticipated improvements include improved station access, increased rail capacity, and safer right-of-way improvements between different modes.
Highways
The highway capital projects, such as I-5 North County Enhancement Project and I-105 Express Lanes, will improve safety conditions for travelers and the surrounding project areas of existing highway corridors via soundwall protection, high-occupancy vehicle lane expansion, highway safety design, and some multi-modal infrastructure. These projects are not anticipated to encroach on surrounding communities or further burden neighborhoods adjacent to existing highways.
Vehicle_Miles_Traveled_Outcome
VEHICLE MILES TRAVELED OUTCOME
VMT and VMT per capita in Los Angeles County are lower than national averages, the lowest in the SCAG region, and on the lower end of VMT per capita statewide. These declining VMT trends are due, in part, to Metro’s significant investment in rail and bus transit.* Metro’s Board-adopted VMT reduction targets align with California’s statewide climate goals, including achieving carbon neutrality by 2045. To ensure continued progress, all Board items are assessed for their potential impact on VMT.
The projects in this report have mixed outcomes, but on the whole, most of the projects in this report will likely decrease VMT in Los Angeles County. Within this suite of projects, Metro seeks to reduce single-occupancy vehicle trips, provide a safe transportation system, and increase accessibility to destinations via transit, cycling, walking, and carpooling. Some of the projects within this status report include items that will ease congestion for cars and trucks, or expand vehicle capacity, resulting in the possibility of increased VMT. However, these projects also provide for carpooling infrastructure and reinvestment of funding towards transit projects. In addition, the projects’ multi-modal benefits may contribute to offsetting the possible increase in VMT.
While the agency remains committed to reducing VMT through transit and multimodal investments, some projects may induce or increase personal vehicle travel. However, these individual projects aim to ensure the efficient and safe movement of people and goods. Although the Highway projects and Express lanes projects may not directly contribute to the achievement of the Board-adopted VMT Reduction Targets, the VMT Targets were developed to account for the cumulative effect of a suite of programs and projects within the Metro region, which individually may induce or increase VMT. Additionally, Metro has a voter-approved mandate to deliver multimodal projects that enhance mobility while ensuring the efficient and safe movement of people and goods.
*Based on population estimates from the United States Census and VMT estimates from Caltrans’ Highway Performance Monitoring System (HPMS) data between 2001-2019.
Implementation_of_Strategic_Plan_Goals
IMPLEMENTATION OF STRATEGIC PLAN GOALS
The recommendation supports Strategic Plan Goal #1 - Provide high-quality mobility options that enable people to spend less time traveling. This will be accomplished by planning and delivering multiple capital projects on time and on budget.
Next_Steps
NEXT STEPS
Program Management will request the resources required for project delivery success through the FY27 Budget process for Board approval. Project managers will work to deliver projects safely, on time, and within the Board-approved budgets. Quarterly project updates will continue to be provided to the Board throughout the year. Projects identified in this APE requiring LOP adjustments will return to the Board for a request for approval as necessary. In addition, staff will continue to pursue continuous improvement initiatives.
Attachment
ATTACHMENT
Attachment A - FY27 Annual Program Evaluation
Prepared_by
Prepared by:
Sameh Ghaly, Deputy Chief Program Management Officer, (213) 418-3369
Mat Antonelli, Deputy Chief Program Management Officer, (213) 893-7114
Michael McKenna, Deputy Chief Program Management Officer, (213) 922-4239
Daniel Estrada, Interim Senior Executive Officer, Project Management Oversight, (213) 893-7130
Ray Sosa, Chief Planning Officer, (213) 547-4274
Conan Cheung, Chief Operations Officer, (213) 418-3034
Reviewed_By
Reviewed by:
Tim Lindholm, Chief Program Management Officer, (213) 922-7297
Sharon Gookin, Deputy Chief Executive Officer (213) 418-3101
