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Four years ago the Honolulu rail authority was anxiously awaiting proposals from construction companies vying for the contract to finish the last stretch of the elevated rail line through the city center.

Today, the Honolulu Authority for Rapid Transportation finds itself in almost exactly the same situation — waiting for new proposals to finally extend the rail line into the dense city center, and hoping those bids will be affordable.

And once again the outcome of the bidding in Honolulu’s volatile construction market is uncertain. Hanging in the balance are hundreds of millions of dollars in federal funding for the much-delayed rail project, and perhaps HART CEO Lori Kahikina’s future with the project as well.

HART estimated last year that the 3-mile guideway and six train stations in the city center would cost somewhere between $1.1 billion to $1.4 billion. But the new bid proposals are scheduled to open on July 23 at a time when Honolulu is well into a construction boom that is putting upward pressure on bid prices.

“Everybody’s busy right now,” said Joseph Uno, a construction cost estimator and former member of the HART board of directors. “All of the contractors and subcontractors are busy, so people are paying premiums to get your work done. So, I think that’s a big risk, that there may not be enough money.”

Past Bids Resulted In Major Changes

It was the sky-high price that prevented HART from awarding a contract to develop the city center segment of the rail line four years ago, and the HART board did not renew the contract of former CEO Andrew Robbins after that effort failed.

The two responses to HART’s solicitation for the city center job in 2020 each came in at more than $2.7 billion, forcing the city to cancel that procurement and do some dramatic, painful cost cutting.

The city then shortened the rail line by more than a mile to end the city segment near South Street, instead of at Ala Moana Center. The city also deferred construction of two rail stations as well as a $330 million, 1,600-stall parking garage at Pearl Highlands.

Those changes and adjustments to the path of the guideway along Dillingham Boulevard reduced the estimated cost of the city center segment by hundreds of millions of dollars.

But construction delays can be costly, and the current surge in Hawaii’s construction market in recent years could have a major impact on the bidding.

Carl Bonham, the executive director of the University of Hawaii Economic Research Organization, said employment in the Hawaii construction industry is setting records today. There were more than 41,000 construction workers on the job in April, and “we’ve never seen that number before,” he said.

HART did a risk assessment for the project earlier this year that concluded “labor constraints” in the Honolulu market are one of the top risks for the city center rail segment, according to consultant Hill International Inc. Hill monitors the Honolulu rail project on behalf of the Federal Transit Administration.

Bonham pointed out during a recent public meeting that contractors can respond to the labor shortage by importing construction workers into Hawaii, but there are extra costs and delays generally associated with that.

One major contributor to the ongoing local construction boom is the U.S. Navy’s $3.4 billion submarine dry dock facility at Pearl Harbor, which is the most expensive construction project in Navy history.

Federal officials estimate the dry dock project and 63,000 tons of steel. If that massive consumption triggers a spike in the local price of materials, the rail project could feel the impact.

Paul Brewbaker, principal and economist with TZ Economics, said Hawaii construction prices surged in 2021 as the pandemic waned and the local economy reopened.

Inflation in the industry has leveled off since then, he said, but prices remain higher now than four years ago for construction and almost everything else.

Another top risk for the city center segment is “constrained competition,” according to Hill International.

If too many local companies are already busy with other jobs or choose not to bid on this one, that could affect the availability of contractors and sub-contractors to participate in the rail project. And that could also affect prices.

In fact, HART delayed the city center procurement process last fall specifically to give companies more time to become licensed to work in Hawaii, a move that was meant to encourage competition.

According to HART’s , market conditions and labor constraints as the city seeks to award the city center segment remain the most serious risks for the entire project.

As part of the city center solicitation last year, an optimistic HART board invited bidders to submit proposals for the additional “optional work” of building the last mile of the rail line from South Street to Ala Moana Center as the city originally planned.

But HART will only build that last mile to Ala Moana if it has enough money available, and no one knows yet if that will actually happen. The solicitation suggests the extra 1-mile chunk of guideway and two stations along through Kakaako would cost an estimated $300 million to $500 million.

Kahikina did not respond to a request to be interviewed about factors that might affect the award of the city center contract. HART said in a written statement that the rail authority “cannot discuss an active procurement. And in particular, we cannot speculate on the bids that will be submitted or the underlying factors that will be considered.”

Both HART and Kahikina have much at stake in the city center procurement.

HART successfully launched interim rail service from Kapolei to Aloha Stadium last June, but the project is still running a decade behind its original schedule, and is vastly over budget at more than $9.9 billion.

For HART, finally awarding the city center contract would be a major milestone because that contract will make up the bulk of the estimated $2 billion in remaining construction work for rail.

The Federal Transit Administration has agreed to release $250 million of the money it has already pledged to the Honolulu project if HART can successfully award the city center contract at an affordable price.

For Kahikina, that contract may be important for both personal and professional reasons. The HART board of directors has criticized Kahikina in each of her evaluations in the past two years, and her current contract is scheduled to expire at the end of this year.

Kahikina has been seeking a new multiyear contract, and Honolulu Mayor Rick Blangiardi has urged the board to grant that request.

But Kahikina had a heated public dispute with HART Chairwoman Colleen Hanabusa in April, and later complained publicly that the exchange amounted to workplace “bullying.” Hanabusa then asked the city to investigate Kahikina’s allegation.

Employees and members of the public have turned out for board meetings in recent weeks to support Kahikina. But unidentified critics who spoke to the board in a closed-door executive session earlier this month have accused her of creating a toxic work environment that prompted some employees to quit.

Michele Chun Brunngraber, chairwoman of the HART Human Resources Committee, said in April the pivotal issue for Kahikina will be whether HART under Kahikina can finally sign a deal with a contractor to build that last rail segment at a price the city can afford. She described that as “the bottom line.”

Hill has reported that at least two bidders are competing for the city center job, but the bidders have not been publicly identified.

The HART board will consider the issue of a new contract for Kahikina at its meeting on Friday.