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Kiewit's team was the only one deemed qualified through the request-for-qualifications process, and thus, was the only team bidding on the project, said Lisa Levy Buch, chief communications and strategic development office of the Foothill Gold Line Construction Authority, project manager for the line.
The builder's final bid — after months of back-and-forth between the authority and the contractor — was $994 million, compared with the Foothill authority's most conservative estimate of $645.5 million, Buch said.
"We had three independent cost estimates all at $645.5 million and below: and Metro, a separate agency from us, looked at it and said our most conservative estimate was too high," Buch said.
The Foothill authority carries Gold Line in its moniker, rather than A line, because that was the line's original name before Metro renamed its lines several years ago.
The construction authority's board didn't consider it an issue that Kiewit was the only bidder to emerge from the request for qualifications process, because it constructed the last three projects for the authority and has historically come in as the lowest bidder by $50 million, Buch said.
The project was being constructed using the design-build model where a single entity handles both the design and construction phases of a project under a single contract.
"We are going to pivot from design-build, because what we learned is that design-build is no longer favored in the contracting community, because it puts the onus on the contractor to take on a lot of risk," Buch said. "We are pivoting, because we believe we have the funding necessary to do the project, we just need to do it in a way that is more favorable to the contracting community and in a way that provides more competition."
The Foothill Authority now plans to use a Construction Manager at Risk process, which is more like a traditional design-bid-build process, Buch said. The authority will hire a design firm through a request-for-proposal document expected to be released in June. The design firm will "cost out," the project, and then the authority will hire a construction manager to work with the design firm.
The change means the contractor can bid on the project when it's closer to construction, so the costs will be more certain, Buch said.
"First COVID-19, and then the ongoing wars are affecting the economy," Buch said. "All those things make the future risks much greater than anyone was willing to bid on. Kiewit had padded risk costs on top of everything to ensure they would have a profit in the end."
"They came in $300 million over our most conservative estimate, so they were very, very risk averse," Buch said.
Kiewit takes pride in its 20-year relationship of safely delivering projects on time and on budget for the Foothill construction authority, including three projects where Kiewit was the lowest bidder, according to a statement provided to The Bond Buyer.
"We are disappointed this bid was cancelled and we could not agree on the cost of this important infrastructure project for the region, but we stand by our ethical, detailed efforts to provide a realistic estimate for this contract," Kiewit said.
Those efforts included working "transparently with the Authority to discuss construction, supply chain and subcontractor/vendor costs, and identify cost-savings opportunities," and "comparing data with one of the Authority's third-party estimators during the process as costs increased due to inflationary issues," Kiewit said.
"Independent cost estimates often don't reflect larger projects' scope and complexity, as well as current market conditions," Kiewitt said. "The result is contractors' competitive bids don't align with client budgets, which don't match the actual cost of the work."
