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Rail system development plans raise some suspicions

People in California may have heard about the state’s plans to develop and construct one of the nation’s largest and most ambitious high-speed rail systems, which will ultimately span the majority of the length of the state from Sacramento to Southern California. This massive undertaking has garnered a lot of attention from the media and the construction industry from the get-go, with the latest controversy coming in in the form of the winning construction bid, which came in unexpectedly low.

Like all large-scale government construction contracts, the project was put out for bid. Many pundits, as well as the high-speed rail authority, had estimated the cost of the project to be anywhere between $1.5 and $2 billion, but surprisingly, the winning bid came in well below that estimate. The low bid was $1.2 billion, a number that has raised suspicion and skepticism that the project can truly be completed at such a low cost.

The winning bid came in at almost $500 million below the next closest competitor in the bid process, which seems unfathomable to many who are familiar with the construction and engineering industry. However, the chairman of the California High Speed Rail Authority has defended feasibility of the winning bid, saying that the fact that they are using the design-build approach will save significant construction, research and engineering costs.

In many construction projects, the government will hire one firm to design the project before putting the bid for construction out to competing construction firms. However, the design-build process, according to the CHSRA chairman, allows more collaboration throughout the process, and could minimize the likelihood of cost-overruns and change orders. Just whether the design-build process can cut costs this far and deliver satisfactory results remains to be seen, and many in the California construction industry will be following developments with the rail project closely.

Source: The Atlantic “That Winning Bid for California’s High-Speed Rail: Is It Suspiciously Low?,” James Fallows, Dec. 13, 2014