SACRAMENTO, Calif. —California High-Speed Rail Authority members say cost overruns are hurting the project's public image and are demanding answers. Board members approved $50 million in contract amendments for unexpected construction and envi...
http://trn.trains.com/news/news-wire/2017/09/22-high-speed-budget-overruns
Brian Schmidt, Editor, Classic Trains magazine
What is the total amount of the contracts involved ? A high percentage or a low one ? Seems suspect that there is no indication of the total value of the contracts in question . Media hype or not ?
As far as DEN and the big dig they were $ Billions over .
blue streak 1 What is the total amount of the contracts involved ? A high percentage or a low one ? Seems suspect that there is no indication of the total value of the contracts in question . Media hype or not ?
Without access to the projects books, including contract terms and conditions, determining the percent of the noted contract changes is not possible. There is a more worrisome concern however.
If I remember correctly the results of a GAO audit, the original cost estimate for the project before debt servicing was $33 billion. It grew to nearly $98 billion before sticker shock forced the project managers to scale it back to the $64 billion stated in the accompanying article.
Let’s assume that it could be built for $64 billion, which I believe is unlikely for a project of this magnitude. There is still the debt service costs that have to be include in the overall project costs.
Without access to the project’s funding plan, which does not appear to have been finalized, knowing how the project will be financed in detail is out of the question. However, let’s suppose that the project, which will be funded with California State Bonds, California Cap and Trade revenues, and U.S. Treasury long bonds, gets by with a rate equal to the U.S. Treasury long bond rate, which by the way, would be a deal given California's poor bond ratings.
Assuming a long bond rate of 2.78% for a new issue U.S. Treasury long bond and a maturity date of 30 years, with monthly payment of principal and interest, which is a common payment scheme, the cost of the project would be approximately $94.2 billion. And this is assuming no further escalations of costs, which is probably not realistic.
Rio Grande Valley, CFI,CFII
Streak,
If you had clicked to the linked article from the Seattle Times you would find that $43 million was assigned to the following specific projects.
$35 milliion added to the contingency budget for the 32 mile Madera to Fresno segment bringing the contingency budget to $190 million on a $1.5 billion contract.
$10 million added to a $36 million Environmental and Engineering contract for San Francisco to Merced segment.
$3 million added to an unidentified project in the Central Valley.
The missing $7 million is either media hype, or writer got tired or editor cut for length, or several line items too small to mention. Your guess is as good as mine. Not to worry, it is only 14% of the headline amount.
Mac
I think the cost overruns are ridiculous but this is what happens nowadays with large public works projects. Government bureaucrats do not manage money tightly like they used to. Massive waste and fraud ensues. I am pretty confident if we ever did a nationwide audit of K-12 spending or for that matter State spending on Universities we would also find massive waste and abuse of the taxpayers money. So sad this project that was excessive in cost already at $50-60 Billion, almost doubled in it's price tag to well over $100 Billion.
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