Katy Freeway Project Costing $300 Million More

[Lowbrow]

March 31, 2005, 1:42AM

Katy Freeway project costing $300 million more, audit finds

By LUCAS WALL

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[111486]

Do you know what 300 million dollars can do for light rail expansions, except fitting more cars on a freeway to sprawl out to the suburbs.

[pineda]

Thank you very much for bringing this to my attention, Lowbrow. This story had several interesting pieces to it. Williamson's moaning and groaning over TxDOT's staffing level caps in this story continues a tirade that he got on at the TTC meeting last month. Steve Radack (an ELECTED official) blaming of the courts and those greedy landowners (who voted FOR him) who are stopping progress for others, in his opinion. And probably the most interesting was about Jon Lindsay, the sneaky devil, who's busy wreaking havoc in Austin championing the cause of more powers of eminent domain for the state. Wonder how his wife feels about what he's proposing, I believe she's a judge herself in Harris county courts.

[kjb434]

Looking at the track record for other projects that come close to this size and complexity, I'd expect the actually cost to be significantly more. When projects get this large and have many pieces (outside of the actual highway construction), cost estimates are just that. TxDOT knew this would happen. The news media just blows it out of proportion.

[pineda]

Maybe TxDOT knew that, kjb34, but I don't think the general population did...

[kjb434]

That's what happens most of the time. The populace is not informed enough, but the information is there for anyone who wants it.

I just don't like it when the media portrays it like TxDOT has done something evil in this case. All bids on TxDOT projects are public record and anything that changes with the project as it move forward is also public record.

I realize that most people aren't going to go look for this stuff and the news media won't cover it unless it has something that will shock readers and viewers. I would just like for people to understand the process and how things work with the government projects. Actually these kinds of think happen all the time with private projects too. A $1.5 million subidivion paving and utility job can easily go to $2 million when construction is going on. Some blame can go to lack of preparation by engineers and contractors. Some things can't be controled (such as Mother Nature being a delicate flower).

[Rehan]

Maybe TxDOT knew that, kjb34, but I don't think the general population did...

<{POST_SNAPBACK}>

"But the plans were on display ..."

"On display? I eventually had to go down to the cellar to find them."

"That's the display department."

"With a torch."

"Ah, well the lights had probably gone."

"So had the stairs."

"But look, you found the notice didn't you?"

"Yes," said Arthur, "yes I did. It was on display in the bottom of a locked filing cabinet stuck in a disused lavatory with a sign on the door saying Beware of the Leopard."

[jtmbin]

Looking at the track record for other projects that come close to this size and complexity, I'd expect the actually cost to be significantly more.  When projects get this large and have many pieces (outside of the actual highway construction), cost estimates are just that.  TxDOT knew this would happen.  The news media just blows it out of proportion.

<{POST_SNAPBACK}>

I hope you're kidding. This project is obviously going to cost at least twice as much as "promised". If any of us in the real world made the mistakes and oversights that were detailed in the story we would be out of a job. It's not worth $3,000,000,000.00 dollars to me to expand the Katy Freeway to a ridiculous size without a commuter rail compenent. Unlike you, I don't this is OK and business as usual.

Remember, ALL of the west side politicians who shoved this project down our throats swore up and down that the inclusion of rail was not possible due to costs and that lowering the freeway, just as is inside the loop, to decrease its detrimental affects on adjacent neighgorhoods was also too costly. The project is already more costly than those two changes to the plans were projected to cost.

But Hey, we are a nation that re-elected a President who misled us into a war that has cost the lives of tens of thousands of human beings based on "mistaken information", so I certainly don't expect anyone to be held accountable for this billion dollar blunder. All the parties involved will probably get promoted. It's the new American Way.

[MaxConcrete]

Remember, ALL of the west side politicians who shoved this project down our throats swore up and down that the inclusion of rail was not possible due to costs and that lowering the freeway, just as is inside the loop, to decrease its detrimental affects on adjacent neighgorhoods was also too costly. The project is already more costly than those two changes to the plans were projected to cost.

Whenever a project involves a lot of right-of-way acquistion and utility relocation there is a certain amount of risk. That risk factor definitely exists on the Katy Freeway, and it resulted in the overruns. Tunneling is probably the greatest risk factor for a project - witness the Big Dig in Boston. A current project in a much worse predicament than the Katy Freeway is the East Bay span in San Francisco (unique design with lots of steel=high risk). In contrast, building a freeway over greenfield terrain is very low risk. That is why the central Texas turnpike network in Austin is coming in under budget.

Keep in mind that the projected costs and overruns would have been proportionately even higher if the freeway had been trenched. They estimated an extra cost of $500 million for the trench, but the risk would have gone up much more (due to more utility relocations) and realistically this could have added $1 billion to the cost.

So I think we should be thankful that the west side politicians and TxDOT stood firm with the at-grade option and no rail. Otherwise, we would probably be looking at $3.5 to 4 billion.

[N Judah]

Well, you'd think they would let us know what that risk factor would be like and at least be up front with us when selling us the project (not that it needed to be "sold" -- it's not like we had to vote on it to get it built, like with light rail). I understand what you're saying about risk but it seems like they disingenuously gave us a low estimate so that no one would raise hackles. Your last sentence almost makes it seem like we should be "thankful" that the freeway wasn't more expensive because a higher expense involves more risk -- risk which they neglected to tell us about. It's like saying sure, you just shot me in the back with a pistol, now let me shake your hand for doing me the "favor" of not shooting me in the back with a shotgun.

[kjb434]

The risks were always known. It exists in any proposal for new projects and it contributes heavily to the the selection. Again, the newpapers and news media in general have just taken the numbers off the top without doing research into the projects to tell the whole truth. TxDOT didn't lie or mislead about anything. The information is out there for everyone to see. It's just that no goes and look and when the report from the news comes out everybody complains.

[VelvetJ]

Most people aren't crazy. Most of us expected and can understand overruns, but $300 million dollars and growing, is not a drop in the pan. This is serious EXRTA money, considering a commuter rail component was foolhardily not included in the project.

And kjb434, you are making it sound much simpler than the reality of it. You are coming across like the project could run 2 Billion dollars over budget, but as long as it's posted "out there", it's ok. $300 million and growing is not ok.

Maxconcrete- Your last paragraph just floored me. Not to mention you seem to be making excuses for this gigantic growing overrun, but it is your opinion not including rail was wise because of the cost?

[N Judah]

The risks were always known.  It exists in any proposal for new projects and it contributes heavily to the the selection.  Again, the newpapers and news media in general have just taken the numbers off the top without doing research into the projects to tell the whole truth.  TxDOT didn't lie or mislead about anything.  The information is out there for everyone to see.  It's just that no goes and look and when the report from the news comes out everybody complains.

<{POST_SNAPBACK}>

But this information wasn't out there for everyone to see. That's what the auditor said, and Ric Williamson accepted the auditor's findings. They based their estimates on preliminary engineering, and upon further review found that it would be significantly more expensive. But since it wouldn't be politically feasible to reveal that to the public, they decided to hide the real expected costs and put the project on an accelerated schedule so that it would be halfway done before anyone found out.

And, not only that, but the preliminary cost analysis failed to take into account things it *should* have -- things like the cost of securing the right of way, administrative costs, and the costs of moving water and sewer lines. I don't see how any of these things are risks, and even if they were I still think they should have still been included in some form or another.

A friend mentioned something to me the other day about how whoever is building I-10 will probably get some pretty big bonuses for completing it so far ahead of time. This got me wondering how much these will be, and how much these will contribute to the total cost of the widening project. Anyone have any ideas?

[kjb434]

Risks were there from the beginning and known. The risk was buying all of the Right of Way (ROW). Typically most freeways in Houston have large ROW where expanding is not a serious issue other than traffic tie ups. The Katy Freeway outside of Loop 610 use the existing ROW of Highway 90. NOTHING EXTRA. This is why TxDOT had to wait so long to rebuild this (From the book HOUSTON FREEWAYS). And it would be a longer wait if the tolled portions weren't added. Buying ROW is a very fickle process that can cause problems. If you look at the overall cost overuns, I'd bet you that most of it is contributed to ROW accquisition and the paper work and adminstration cost to deal with it. This happens on many transportation facilities that are brand new. Louisiana had this problem with I-49 from Lafayette to Shreveport. This was a completely new freeway. A 20 miles stretch required the digging of a recreational lake to supply the fill for the road. If anyone who has dealt with large volumes of dirt in construction can tell you, you can never predict the outcome. You'll dig 1 million cubic yards and when you place it will be 700,000 or 1.2 million cubic yards. Its a phenomenon that engineers can't seem to solve. And since dirt is different everywhere, no one solution will work. This could have blown the cost estimates out of the water big time, but the project needed to be built and LDOTD took the risks.

If TxDOT had businesses and/or homeowners that decided at the last minute they don't want to sell or want more money, that'll change things. Also, many home owners and retail owners had their places appraised right before TxDOT was to purchase to try to inflate the price. TxDOT can't anticipate this. It doesn't always happen, but when it does it'll add to the costs.

The questions about incentives (bonuses for finishing early) or predetermined in the contract with the builder and has a maximum. This concept has been used in Texas and in many places around the world. The cost are know from the beginning. It also works the other way around, if they don't finish early they are penalized also.

The ROW risks would not be as bad if the original planner had given plenty of ROW back when it was first built. It true that TxDOT may still had to buy some more for now, but it would be strips of ROW that probably just could be taken from the Electrical and railroad ROW that paralleled it. Inside Loop 610, the planner (a different guy) bought wide ROW so this problem would not have happend.

Also, this issue of rail. TxDOT is not in the railroad business, but as was said many times before, Metro had the concept of rail included in the design so the center tollway can be removed and converted to rail. The bridges were over design to handle rail cars. The entrance ramp from the Northwest transit center would allow the cars to move from the outside to the inside the highway. That entrance ramp had to be designed to handle a rail car also. And not just for weight, but also for turning and inclines.

I'm no defender of Ric Williamson and have serrious questions about him after meeting him at an ASCE meeting. The Katy Freeway project has been in planning long before Ric was in charge.

Every engineer would love for their cost estimates to be on target. It's kind of a contest at our engineering firm, but rarely we have the risks that TxDOT has to deal with. Most of our projects or for private developers. The risks have been weighed early and most projects wouldn't get off the ground if it is too risky. Some developers want only a low risk project. TxDOT could just avoided expanding this freeway. And no, a rail line in lieu of widening would not be able to handle the traffic. A rail line in tandem maybe would help. And that is what they did. It is up to metro now to finish the concept. Also, all those Houston business insterests wanted a rail line, but it was TxDOT objective to beginning that this was a highway project and not a multimodal project. They helped where they could. Also, making it a multimodal project would have delayed the construction for years.

[N Judah]

If you look at the overall cost overuns, I'd bet you that most of it is contributed to ROW accquisition and the paper work and adminstration cost to deal with it. This happens on many transportation facilities that are brand new.

<{POST_SNAPBACK}>

I have a very hard time believing that right of way issues could *double* a project's cost. The article at the top chalks up $121 million of the overrun to purchasing ROW. That leaves about $1 billion for other things.

Plus there's still the issue of the selective omission of certain costs. Not estimates gone wrong, mind you, but costs that were apparently left completely out.

[GovernorAggie]

Right of way issues alone may not double a $1.2 billion project cost, but it can make a big difference--especially in a heavily commercialized corridor. You're not just buying land, but you're also paying mitigation to help people move to similar or compatible land and location. All of that costs. TxDOT had to pay businesses for their prime commercial land and then also account for the costs of the business moving to similar prime commercial space.

kjb434, now it makes sense that some of the structure for the Katy seem so much more substantial than other freeways. the Transit Center overpass just seemed abnormally huge to me, but now I see that it was also built strong enough for rail. Thanks for the info.

Lastly folks, check HGAC for info on future projects. Some are 20 years into the future but that's no excuse to not care.

[kjb434]

Don't count out estimates going wrong. Concrete (particularly cement in concrete) is a volatile commodity. The cement powder is often transported by train because of the shear weight of the material. The price is driven by demand, cost for transport, and availability. There are only couple of places in the US that produces this stuff. A lot of this material also comes from overseas. It is very possible that this could double in the unit price. Mixed concrete for a road project will usually bid for about $100 a cubic yard (average and includes labor for building forms). It is not uncommon for this to vary in price. Usually the contractor takes the hit if the price goes up, but it is not enough typically to run the project over. TxDOT may have made an exception since these projects are so large. One concrete truck is about 9 cubic yards. A project like the Katy Freeway will take well over a thousand truckloads of concrete. Also, many portions of the project needs to use a different class of concrete for the ramps and pier foundation. The price goes up for these pieces. Also, if a pump truck is needed for placing the concrete, the price goes up. All the many items that the contractor bids on can change after bid. Typically the contractor is stuck with the lost if the price climbs up, but I'm thinking TxDOT is watching this project closer than many smaller projects and will make exceptions for an extreme change in materials pricing.

Also, TxDOT cannot hide certain aspects of costs. It is recorded public documents. I regularly have to pull TxDOT prices from previous jobs. You can compare the price from the orginal engineers estimate. Many items often vary both ways. Some items cost more, some cost less than the assumption. TxDOT keeps tract of past projects so construction companies can have good esimates when they bid for the job. Usually these numbers are an average for the district (Houston) and the state with the date of the last update. Also, the engineer generate and estimate also. It is possible for TxDOT to bid a job expecting the cost and all the bidders will bid higher than the estimate. It also can go the other way. It is very possible that all the bidders had a consistently higher price for the project because they new of an upcoming trend in the construction materials that TxDOT didn't see. TxDOT numbers are based on previous projects.

If all the bids come in higher, even $300 million higher. TxDOT really has no room to argue. It may pull the project and rerun some numbers to see where the contrators are coming up with their numbers. TxDOT can decide to kill the project because it'll cost too much, or it can move forward. It seems they decided to move forward.

[pineda]

So, it sounds like if you wanted to bid on a TxDOT project, you should just bid it really low, just to get the job, and then once you're well into it, just tell TxDOT that you *forgot* some stuff or that costs went up, or whatever....Who audits these bid results, comparing them to what was promised and what was delivered? Is anyone (these big companies like Williams Brothers) ever slapped down or penalized for this type of behavior? Or is the big money paid by Williams and others like them to PAC groups and politicians enough to make people look the other way, consistently? Just wondering, do you know?

[kjb434]

I'm only saying this may happen on large projects.

What I think really happend was that all the bidders came in higher than TxDOT's estimate. If every company comes in higher in the bid than the original esitmate, it is usually assumed to be an error by the engineers making the estimates.

TxDOT still has to sign off on the bid and accept it. There are instances in the field where the construction company can ask for more money. It is done through the process of a change order. Engineers have to approve of the change order because a quantiy estimate was wrong. Not a price esitmate. So, if the engineer said that 1 million cubic yards of concrete are needed and the contractor caught something and realized it'll take 1.4 million, he'll have to justify it TxDOT. Several reviews will need to happen and then the change order will be processed. Engineers have to review the amount change and see if it is reasonable.

The goal of every engineer is to have a project with no change orders and for the bid to come on targe with the estimate. But this is usually just a pipe dream especially for large projects. Also, no set of plans ever produced are a perfect set. There is no way to take into account everything in a design. Things happen in the construction stage.

Lets say a pipeline needs to be moved or lowered because of the new facility. This is a cost aspect of a project. Most residential developers will tailor their land plans to avoid pipelines at all cost unless they have to cross it. Many times just to lower a pipeline for a residential street will cost near a million or more. The Katy Freeway, particularly outside I-10 has numerous pipelines. TxDOT is at the mercy of the pipeline company to move a pipeline and for the cost. The cost for moving and lowering a pipeline is usually tied into to amount the pipeline company will lose for the pipeline being out of service. The longer it takes to perform move or lowering, the more it cost. It can be predicted, only estimated.

Powerlines are the same way. TxDOT had to remove a whole powerline corridor.

This project was in no way a cake walk. The US59 expansion from Shepherd all the way to Sugarland was easier than this.

This biggest part of this is that we don't know the whole story. Unless some wants to pull all the estimates and the finals and start comparing, we can't know. These will include all adminstration costs also incase someone thinks that money is being pushed there to hide it. Admin costs are based on a percentage of total construction costs. Is it what is needed? Not really, it is usually more than what is needed, but this number is set.

We can find all this out because it is all documented. Nothing is hiddened as was speculated above.

[pineda]

Houston Community Newspaper weighs in on the costs over-runs