Today Sound Transit released the bids for the twin tunnels connecting the future Capitol Hill station with Central Link. The lowest bid is $153.6 million, $20.7 million or 12% under Sound Transit’s estimate of $174.3 million. These are much shorter than the tunnels that will connect the UW with Capitol Hill station.
This is good news, of course, but I want to talk about what’s going on here a little more. These estimates are generally quite accurate when they’re made – but most of these costs fluctuate with the construction market, as costs for materials like steel and concrete change over time.
There’s no way for Sound Transit to know what’s going to happen to these costs – if there were, they’d be the most effective commodities traders in the world! But this goes both ways. At the beginning of Sound Move, for instance, most materials and real estate were much less expensive than they are now – but during the late 90s and early 2000s, construction cost inflation was far higher than the consumer price index, the number we normally associate with inflation. Today’s estimates were largely made at the peak of the real estate boom, but as the markets have been rebounding, future contracts may not see double digit percentage savings.
I’m not sure of the timeline for the larger tunnel bids, I’d just caution that they may not see these savings. Regardless, this is great news.