Meeting_Body
CONSTRUCTION COMMITTEE
OCTOBER 23, 2024
Subject
SUBJECT: REGIONAL CONNECTOR PROJECT CLOSE-OUT
Action
ACTION: APPROVE RECOMMENDATION
Heading
RECOMMENDATION
Title
INCREASE the Life-of-Project (LOP) budget for the Regional Connector Transit Corridor Project (Project) by $39,000,000 from $1,755,840,570 to $1,794,840,570 to fully resolve claims and complete the close out the Project.
Issue
ISSUE
The Project is a 1.9-mile underground light rail transit subway in Downtown Los Angeles connecting the A, E, and L Lines of Metro’s light rail transit system. The Project was placed into Revenue Service on June 23, 2023, after over a decade of planning, design, construction, testing, and start-up. The Board Report requests a LOP budget increase to address a series of unresolved request for changes (RFCs). This LOP budget increase encompasses a settlement of a comprehensive claim submitted by the design/build Contractor, Regional Connector Constructors (RCC), which fully resolves all outstanding changes, and closes out the Project.
Background
BACKGROUND
The Regional Connector FFGA (Fully Funded Grant Agreement) was originally executed in February 2014 with a budget of $1,402,932,490, a Revenue Service Date of May 29, 2021, and a maximum Federal Section 5309 New Starts Financial Contribution of $669,900,000.
As reported to the Board previously, from the outset, the Project experienced budgetary pressures due to a variety of causes. These include minimal initial contingency funding for significant project risks, insufficient funding for the professional, agency, and services, increased costs due to differing site conditions related to utility relocation, cost increases from repeated litigation-related impacts and delays, cost increases due to longer than anticipated durations for plan and permit approvals, and the resultant schedule impacts and mitigation expenses from all these factors.
By virtue of deliberate and measured budget increases authorized by the Board in November 2015 and January 2017, the Project budget was right-sized to meet the scope and risks identified. Budget and schedule performance since the January 2017 budget and schedule re-baseline action was largely ahead of or consistent with planned values through early 2020. From there, a slight but consistent project under-performance on schedule through 2021 occurred.
Discussion
DISCUSSION
The Project included complexity due to the integration of different control system elements from the existing transit lines covering three generations of technological improvements. The near 100% tunnel alignment was constructed through one of the oldest and most congested areas in Downtown Los Angeles, specifically through the heart of the Financial and Arts Districts.
Accordingly, impediments presented themselves during the execution of the work. Among the challenges were mitigating traffic management demands, supporting and maintaining third-party power and wet utilities under downtown streets, and interfacing with Metro’s operation of three busy light rail lines for access to power and controls - while minimizing impacts to revenue service.
Ultimately many of the issues described above translated into requests for contract change orders that were, due to points of disagreement, deferred for resolution until the Project was put into revenue service. This resulted in several dozen contract changes that remained unreconciled even after many months of focused negotiation between the contractor and Metro executives.
These remaining Request For Changes (RFCs) were consolidated into a claim submitted by the contractor totaling over $160 Million. The claims were all reviewed anew by Metro and RCC staff and consultants with the intent of reaching agreement between the two parties. This closing negotiation effort had run its course after 13-months of negotiations subsequent to the initiation of revenue service. With the Project heading towards a structured mediation process with a third-party mediator, the project team was able to come to a mutual agreement and the parties have consented to a total closing settlement of $55 million, a suspension of further negotiations, and a declaration that all changes are thus resolved and closed.
Due to the settlement amount, the project must increase the LOP budget to make final payment and properly close out the Project. Because the Project has existing contingency, the net increase to the LOP budget is only $39 million.
After achieving the start of revenue service in June of 2023, the project has worked to complete all open items and receiving final approvals for all work within the City of Los Angeles right of way. After completion of station construction, the project team has identified additional safety enhancements, such as bollards, with Metro SSLE (Safety, Security, and Law Enforcement) and Operations that will be included before formal close of the project. With the increase in LOP budget, the project team will be able to close out all remaining financial items with the contractor and install the remaining safety enhancements. After the completion of the last remaining construction punch list items, the contractor, RCC will have completed all work, and Metro can officially close the contract.
Determination_Of_Safety_Impact
DETERMINATION OF SAFETY IMPACT
This proposed action has a positive impact on safety by funding the additional safety enhancements noted above.
Financial_Impact
FINANCIAL IMPACT
Funds required for the LOP increase were included in the Adopted FY2024 Budget and have been accrued pending approval of this action.
Impact to Budget
The source of funds for the LOP increase is TDA Article 4. These funds are eligible for Bus and Rail Operations.
Multi-year Impact
The sources of funds for the Project are capital-eligible funds identified in the recommended Funding Plan as shown in Attachment A. With respect to the $39,000,000 increase, Attachment B shows the Measure R and Measure M Unified Cost Management Policy (the Policy) analysis and funding strategy required for cost increases to Measure R and Measure M Projects.
To comply with the Policy, Metro staff has evaluated potential offsetting cost reductions, including scope reductions, and value engineering, and has determined these are not feasible. .
Equity_Platform
EQUITY PLATFORM
The Regional Connector Project provides regional benefits to transit riders, including those commuting from Equity Focus Communities by connecting the three rail lines and reducing the need for transfers. In addition, all three stations (100%) are within or adjacent to Equity Focus Communities. By providing the new three stations, workers, students, and residents from and outside of Downtown now have additional transportation options and better transit connectivity throughout the county.
Implementation_of_Strategic_Plan_Goals
IMPLEMENTATION OF STRATEGIC PLAN GOALS
The recommendation supports strategic plan goal #1) to provide high-quality mobility options that enable people to spend less time traveling and #5) to provide responsive, accountable, and trustworthy governance within the Metro organization.
Alternatives_Considered
ALTERNATIVES CONSIDERED
The alternative would be to not approve the LOP Budget increase. Staff does not recommend this alternative because the project would proceed down an extended, costly, uncertain, and protracted formal dispute resolution process.
Next_Steps
NEXT STEPS
Upon approval by the Board, staff will close the design/build contract. Closing-out the balance of the Project will follow.
Attachments
ATTACHMENTS
Attachment A - Funding/Expenditure Plan
Attachment B - Measure R and Measure M Unified Cost Management Policy Analysis
Prepared_by
Prepared by: Mat Antonelli, Deputy Chief Program Management Officer, (213) 893-7114
Carolina Coppolo, Interim Deputy Chief Vendor/Contract Management Officer, (213) 922-4471
Reviewed_By
Reviewed by: Tim Lindholm, Chief Program Management Officer, (213) 922-7297
