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ABOUT THAT TUNNEL

WASHINGTON DC 02.09.2017

THE SIXTH ANNUAL DC REGION AFFORDABLE HOUSING

The Future of HUD, Finance, Development and More Under a New Administration

Buwa Binitie -- Dantes Partners
David Godschalk -- Telesis
Bo Menkiti -- The Menkiti Group
ABOUT THAT TUNNEL
Last week's decision by Gov. Christie to terminate the Access to the Region's Core project—so as not to have “an open-ended pocketbook”—is understandable, says LePatner & Associates construction guru Barry LePatner. But the decision didn't reflect the long-term best interests of the region.
LePatner & Associates' Barry LePatner
After all, it was construction cost overruns that nearly sent Massachusetts to bankruptcy for the Big Dig, and what's responsible for the ongoing “boondoggle” at Ground Zero, says Barry. But he doesn't think it's necessary to make concessions to the "well-recognized inefficiencies" of the construction industry: refusing to accept the risks of completing projects on budget, and demanding that owners pay for all costs, regardless of how long it takes. “Developing a detailed scope of work for a mile-wide tunnel across the Hudson River is not an impossibility,” he says. But how could NJ Transit and the Port Authority make a project like this work? Look at fixed-price contracts and define the actual costs for all defined work to be performed, says Barry.
New Jersey Transit Penn Station Tunnel
Mike Brotzman
By articulating all reasonably anticipated contingencies, a specified fixed price could be added as the maximum amount that might be paid. The project would have doubled capacity between NJ and Midtown, with two new commuter rail tracks and an expanded Penn Station. Barry says that every $1B spent on an infrastructure project adds 30k jobs. With contractors facing a 17.2% unemployment rate, almost twice the national average, it would immediately employ over 6k workers. A true fixed-price contract approach would protect the interest of the taxpaying public, he says, while correcting the major transit congestion problem, which jeopardizes movement of the commercial shipping interests through NJ and NY.