Metro to pay more for less risk on rail lines

By MIKE SNYDER Copyright 2010 HOUSTON CHRONICLE

Metro's board next month will consider paying light rail contractors an additional $100 million in exchange for the contractors absorbing the risks of increased costs that could far exceed that amount, Metro President Frank Wilson said today.

Wilson said negotiations that ended late Wednesday led to an agreement to increase the base amount of the contract from $1.46 billion to $1.56 billion. Under the revised agreement, he said, 98 percent of the costs would be fixed rather than the 75 percent under the existing contract.

Inflation alone could add as much as $130 million in costs over the course of the seven-year contract, Wilson said. The new contract terms also would protect the transit agency from absorbing any cost increases caused by delays the contractors cannot control, such as natural disasters or new regulatory laws, he said.

“It will change the price and fix the risk,” Wilson said. “We don't want to go through years of construction not knowing what this is finally going to cost us.”

A joint venture of four companies led by Parsons Transportation Group is under contract to build the north, east, southeast and Uptown rail lines. Metro expects the Federal Transit Administration to provide $900 million for the north and southeast lines, while the other two will be locally funded.

Metro also is seeking federal funds for the fifth line in its plan, the University line. The agency cleared another step in that process this week with the release of the final environmental impact statement for the line, Metro officials said.

nancy@callnancyfurst.com