Monday, July 27, 2009

The Jacobs Report for Honolulu’s Proposed Rail

Here are three views for the Jacobs Spot Report of partial risk analysis conducted for Honolulu's proposed rail project as an advisory piece for the Federal Transit Administration.

Hannemann said "There will still be some give and take on the numbers. It may shift here and there, but the big picture is there's no way this project is way over budget. No way."

Okino said "This thing confirms that we're on a firm financial basis for this project. It verifies everything that we've been saying.

The Jacobs report says … given your willingness to buy your little city a five billion dollar 20-mile train with, and I quote the report, “automated short heavy rail vehicles,” then the past paperwork is in good shape and you can proceed to the next stage in the paperwork.

The Jacobs report was prepared for the FTA as a risk analysis supplement. An explicit approval by the FTA is not necessary. The FTA uses this risk analysis to avoid exorbitant cost and schedule overruns. Despite such risk analyses done for other projects, about one third of urban rail projects in the U.S. do have exorbitant cost and/or schedule overruns.

The report does not take a position on whether rail for Honolulu is good or bad.

The report does not take a position on whether the route and its length are good or bad.

The report does not take a position on whether steel on steel technology is good on bad.

The report says that given all of these choices made by the locals, Jacobs reviewed the paperwork vis-à-vis FTA requirements and rules and what has been prepared so far for Honolulu’s proposed rail allows the project to enter preliminary engineering (PE) so that, and I quote from the conclusion, “estimates undergo significant refinement once the project advances into the PE stage”.

The report does include dozens of alarming sentences such as:

Jacobs cannot provide a detailed opinion on the constructability of the project since the plans are at a conceptual level of detail.

The City did not include enough detail for utility related activities such as utility agreements, utility coordination and planning, underground utility exploration, relocations, abandonment and installation.

At the present stage of pre-Preliminary Engineering, one can be 90% confident that the proposed project will cost between 5.2 and 10.2 billion dollars (Figure 1-1, page 1-10 of Jacobs report.) Once PE is done and the project enters Final Design, then its price tag is expected to narrow: The project will have a 90% chance of being built for a budget ranging between 4.8 and 8.1 billion dollars. For those who understand risk analysis, this means that there is a 5% probability that the project will cost more than 8.1 billion dollars, and an equal probability that it will cost less than 4.8 billion dollars.

If the rail project entered Preliminary Engineering in summer 2009 and PE takes well over six months, followed by well over six months for Final Design which is necessary for construction, how can construction possibly start in December 2009 as Hannemann says?

For popular consumption this question is not answered based on reality. Rail will be proclaimed to “start” as necessary to provide a major photo op for Hannemann who immediately afterward will leave the ”bag” for someone else to hold. I hope that someone will be there to take the bag to the conveniently located Waimanalo Gulch landfill nearby!