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.

37 Replies to “Capitol Hill Tunnel Bid 12% Under Estimates”

  1. Great news! Obviously costs can still rise, but if we really did come in under projections, how could the surplus funds be used? Speed up construction to Northgate? Add features at the stations (such as more pedestrian undercrossings at the Brooklyn station)? Or even speed up U Link?

    1. Well, Sound Transit has been collecting less tax revenue than projected. So I think the lower cost makes up for the lost revenue, which will keep projects from being delayed.

    2. Ah, sorry, I do need to hammer that home as well. As Oran says, this doesn’t mean there’s more money, it means there’s not a crisis.

      1. Well, isn’t there more money overall? I mean, doesn’t ST have a mandate to collect and spend a certain amount of money for the system, and if they can get it done cheaper, they can spend the rest of that money on other things?

        As for the reason for the low bids, I’m in the construction industry, and this is standard right now. Bidders are HUNGRY, and you often see MUCH more competition for projects these days. A bid that would have gotten 2 or 3 GC’s bidding suddenly gets 8 or 10. Every project i’ve seen bid in the past year has been below budget. One project I’m on came in 37% below budget.

        I just hope they can get the North Link bids out while the environment is so competitive. But, i understand with less money coming in, it’s tough for them to hire enough staff.

      2. “I mean, doesn’t ST have a mandate to collect and spend a certain amount of money for the system, and if they can get it done cheaper, they can spend the rest of that money on other things?”

        No, it doesn’t work that way. They have a mandate to build certain light rail lines, and if it costs less than they expect it just means that less of the cost will have to be financed and they can roll back the taxes sooner. There’s no “extra” money.

      3. ‘No, it doesn’t work that way. They have a mandate to build certain light rail lines, and if it costs less than they expect it just means that less of the cost will have to be financed and they can roll back the taxes sooner. There’s no “extra” money.’

        However, could the “extra” money from lower bids on University Link go to cover the increased costs of Sounder to Lakewood (for instance), which is also part of the same mandate? That would be *extremely* worthwhile, since that bridge over Pacific Ave. just keeps getting more expensive.

    3. Well, if tax revenue picks back up, any excess money should be to turn the tunnel boring machines speed up to 11. Finish that thing as quick as possible. By 2016 I’ll have turned from a young chap into an old man in a home.

      And while they are out of different sub-areas, the east-link needs to be constructed like yesterday. Start work on the I-90 segment even if we haven’t finalized what happens when we get onto Bellevue Way.

      1. Yes, we can’t do I-90 until they finish the I-90 HOV project, which if Mercer Island legislators have their way, will be around 2020.

  2. I may have to move as it seems Ballard may never have rail transit. We can’t even finish a bike path.

    1. Unless you want to turn 15th or 24th NW and the side of 14th and 16th or 23rd and 25th backing up to the arterial into solid condo developments for a block each side of the stations, you’re not going to get rail in Ballard. It’s not on a through route, so you have to generate all the traffic supporting the capital expenditure yourself. The same thing is true of West Seattle.

      Right now both neighborhoods are mostly single-family dwellings. Yes, there are some apartments along both arterials, but not enough even to fill 10 minute headway buses in the rush hour. How do you propose to defend the huge capital cost of rail with the necessary crossing of the waterway with those loads? It just does not make sense.

      1. Perhaps you might want to take a look at some real data before making such judgements. Have a look at this document: 2008 Route Performance Report.

        See which route provides the most rides per revenue hour during peak times in the West subarea? The 15. Downtown to Blue Ridge/North Beach via Ballard. The 15 Express isn’t far behind. And even off-peak the 15 is one of the most productive routes in the whole system. Just the other day I got on the 15 northbound at 8 PM and even with a 60-foot bus it was “get friendly in the aisles” time.

        And it’s not like Ballard isn’t already being overrun with condos. With West Seattle you have more of a point, though I imagine a West Seattle-Ballard line would be more palatable to all of Seattle’s voters than a Downtown-Ballard line. After all, that was the proposed route of the monorail that Seattle voted for.

      2. Ananda, the route already has plenty of potential ridership. See, for instance, the 2000 Intermediate Capacity Transit study by the city.

      3. I don’t think you know what you are talking about. Buses to Ballard and West Seattle are all quite busy. Go look at the route performance report if you don’t believe me.

        With all of the construction in the past few years I wouldn’t be surprised if many parts of Ballard are at 50 units per acre or above. Yes West Seattle is less dense than some other parts of the city, but it is still fairly populated and has a lot of areas where the existing use is far less dense than the zoning allows.

        For that matter Ballard and West Seattle are already far more dense than much of the Rainier Valley.

        While I doubt the line will look as good as Downtown to Northgate numbers wise, I have no doubt it will likely look at least as good as East Link.

      4. Plus a Ballard to Seattle route would have stops in Lower Queen Anne and Belltown, which would generate significant ridership on their own.

    2. datajunkie, I wouldn’t worry too much. We just need a big public outreach to come up with a project and fund it.

  3. I’m guessing the underbids won’t result in speeding-up U Link. The downside of these low bids is that Sound Transit’s sales tax revenue is also coming in less than forecasted. I think the best that can be expected is that the low bid will add more of a cushion to any unexpected costs that might arise between now and 2016, especially during construction of the Broadway-Husky Stadium tunnel under Portage Bay.

    1. Correct that–under Montlake Cut. Portage Bay was scrapped when ST decided to go to Husky Stadium. Still, the tunnel between Broadway and Husky Stadium has potential for unexpected costs.

  4. I also think that some companies are cutting their desired profits so they can win projects and get through the recession without going out of business.

    1. Having contractors hungry for work only helps those with projects to build. If the contractors are busy they tend to demand more because they can.

  5. Good point, Ben, and one that should be made more often. When a project this big is completed, though, several years down the road from the initial cost estimate, people see the reports on the “final” numbers and if they exceed the initial estimate, then it’s assumed someone screwed up. But it doesn’t take much inflation or even that big a jump in the price of steel for a big project’s cost to quickly increase! And that doesn’t even account for all of the changes that are inevitably made as people review the project & add features, or encounter on-the-ground situations and adjust to them appropriately.

    1. actually, it would take a lot of inflation to make the cost of a project increase significantly.

      estimators build in inflation and escalation costs into an estimate report.

      cost overruns are issues of oversight (botched soils reports, scope creep), poor decisions regarding payouts and bad management. it’s very rarely an issue of material cost.

  6. Anyone heard of any news on the First Hill Streetcar? I thought they wanted to speed up completion from 2014 to 2012? Also, I thought ST was speeding up the U-Link to 2014?

    1. I don’t know where you heard that about U-Link.

      The “they” who want to speed up the streetcar is the city. Sound Transit has money programmed into their budget for 2015-ish (for an opening date around the same time as U-Link, I think) but the city wants to fund it earlier, perhaps for service as early as 2012. We haven’t had any news on that in a bit.

      1. Ah, but the city might not want to speed up the First Hill SC under M or M.

        Yes, it’s in the ST2 plan so I can’t imagine the new Mayor being able to stop it directly, but he sure could make things messy if he wasn’t onboard.

      2. I doubt there will be any money offered up by the city to accelerate the Pill Hill Streetcar. I doubt there will even be a consensuses on the route by 2012. I would expect that at least if Mallahan wins in November there will be a major shake-up at SDOT and at least a year before new personnel can be brought in and be effective. It seems like it would be wise to include a terminus at the Capitol Hill station. I suppose if it were brought on line earlier it could be turned around short of there until construction is complete. It will be a big job to do it right.

      3. The final decision on the routing of the First Hill SC is supposed to happen this year from what I understand.

        I have no idea if McGinn, Mallahan, or Murray would put up city money to get the line open earlier. Probably not given the current tight budgets. I doubt any of them would actively try to stop it. Though I suppose Mallahan, given his previous comments about them blocking traffic, might actually be that anti-streetcar.

      4. Mallahan would likely try to stop the streetcar, as I understand it.

        I hope we have the streetcar planning wrapped up before Nickels is out of office.

      5. Its more about the permitting though isn’t it? The city still can drag its feet on granting the appropriate permits. I believe that was Nickles’ threat with the Viaduct.

  7. I suppose Mallahan, given his previous comments about them blocking traffic, might actually be that anti-streetcar.

    Or maybe he’s so anti sharing traffic lanes that he’d push for dedicated ROW :*)

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