City Hall

Consultant: Trust Us, Contingency on Tunnel is Within "Industry Standard"

By Erica C. Barnett January 31, 2011

Tunnel consultant John Newby told members of the city council's viaduct replacement committee that they had no reason to worry that cost overruns on the tunnel would be larger than the $160 million contingency fund on the project---or that the city would be stuck with paying for overruns.

This morning's hearing, to discuss three agreements the council plans to sign with the state, featured the usual leading questions and predictable responses. For example, Sally Bagshaw, who's supported the tunnel since her days as head of Allied Arts, asked, "Is there anything in any of these documents that would put the city at risk" for paying for overruns; Newby replied that no, "The contract is very clear" about which parts of the project the city and state are responsible for.

Both Newby and tunnel project manager Ron Paananen said that although the state had reduced the contingency fund on the project from 24 percent to 15 percent of the total project cost, that was still "well within the industry standard" for risk on big tunnel projects. "If the [tunnel] boring machine is stopped for six months, that's still only $25 million---less than 20 percent of the [$160 million] contingency," Newby said.

The tunnel backers' assurances prompted a question from the council's lone tunnel opponent, Mike O'Brien: How could the council trust the state's reassurances, given that a much simpler project, the widening of SR-18 near Maple Valley, went over budget by 76 percent? "I've heard all these explanations about everything that's being done that could be done, and then I see a story about a project that has a 76 percent cost overrun," O'Brien said. "It's hard for me to imagine that [the SR-18] project is riskier than the deep-bore tunnel."

Paananen responded that the tunnel has gone through more study than the Maple Valley project, which, he added, was "much larger, in terms of the natural environment" than the deep-bore tunnel. The road is surrounded by wetlands where contractors were illegally stashing logs and other debris. Additionally, Paananen said, the tunnel contract is a design-build contract, where the contractor is responsible for both designing and building the project; the SR-18 contract was design-bid-build, where the state takes on liability for project design.

Contacted after the meeting, O'Brien said he wasn't reassured by Paananen's statements. "My interpretation of his response was, 'Well, we learned a lot then and we're not going to make those mistakes again.' In 2003 [when the SR-18 project started], were they saying, 'This project has a lot of risk'? This was a relatively simple highway-widening project in a rural area." Additionally, O'Brien said, the lack of wetlands in downtown Seattle is more than offset by other risk factors. "We might not have any environmental concerns, but we do have billion-dollar buildings" to worry about, O'Brien said.

Tunnel opponent Cary Moon, head of the People's Waterfront Coalition, says the state's level of scrutiny on the tunnel project is lower than on much simpler projects like Mercer East, where the city widened Mercer St. in South Lake Union. "That project was relatively simple---a breeze compared to this," Moon says. "Why are they not bringing that same level of scrutiny to this? The risks and financial stakes are much higher."
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