Another Honolulu Rail Contractor Demands More Money, Citing Years Of Delays
In a $324 million lawsuit, a key contractor alleges the city hasn’t resolved its claim because it wants to avoid further public criticism.
Long years of rail construction setbacks may again inflict pain on Honolulu taxpayers. Hitachi Rail Honolulu JV — one of the most important contractors working on the project — is demanding $324 million in compensation because of the delays.
Hitachi is responsible for installing and maintaining the operating system for the driverless trains on the 18.9-mile Skyline route. The entire rail line was originally supposed to be open to the public by 2020, but the latest estimates are construction won’t be finished until 2030.
Hitachi on Friday sued the city and the Honolulu Authority for Rapid Transportation alleging that “Defendants’ mismanagement of the Skyline rail project has led to countless delays and other errors.”
Hitachi also claims in the lawsuit the city “delayed any good faith efforts to resolve HRH’s claims, no doubt to delay further public criticism of its Skyline project mismanagement. As a result, HRH has effectively been required to fund a large part of the project itself.”
HART CEO Lori Kahikina did not respond to a request for an interview about the lawsuit Monday. HART issued a written statement saying it “cannot comment on an active claim.”
The huge new claim filed in Circuit Court is the latest in a string of lawsuits and delay claims that have already cost taxpayers dearly.
found that a series of dating back to 2009 triggered delay claims that increased the cost of the rail project in its early years.
Those older settlements included $108 million for Kiewit Pacific Co. for delays in construction of the West Oahu Farrington Highway segment of the rail line, and another $50 million in delay claims by Kiewit/Kobayashi JV related to building the rail maintenance and storage facility near Leeward Community College.
HART also announced a year ago it agreed to pay another $60 million to settle a lawsuit by Shimmick/Traylor/Granite Joint Venture for delays and other claims in the construction of the elevated guideway and stations from Aloha Stadium to Middle Street.
Hitachi’s predecessor, Ansaldo Honolulu JV, settled similar rail claims with the city in 2019 for $160 million, which covered more than 2,000 days of delays in earlier phases of the rail project.
, but lawyers for Hitachi said in the new lawsuit the city still has not paid out “a significant amount” of the $160 million it owes under the previous settlement.
Now Hitachi is seeking another $324 million for delays and other costs it alleges the city has caused since the 2019 settlement.
Detailed Claims Of Mismanagement
The lawsuit filed by Hitachi critiques the city’s overall management of the rail project, noting the city chose not to hire a single design-build contractor to develop the entire system “as is common in the rail industry.”
Instead, the city and HART opted to award smaller design and construction contracts among numerous contractors, including separate contracts for the three major segments of the elevated guideway.
Hitachi and Ansaldo were responsible for designing, installing and operating the train cars as well as control and power systems and other functions for the entire project. Deadlines were set for each task, but Hitachi could not do its job until other companies built the elevated guideway, stations and track.
According to the lawsuit, HART “was not up to the task of coordinating the numerous contractors involved – a task vital to the project delivery system HART chose. HART’s failures in leadership and coordination resulted in extraordinary delays and cost overruns.”
By 2019, the rail project was five years behind schedule, and Ansaldo and HART agreed to the $160 million delay settlement that year. As part of that settlement, new target dates were set for HART to give Hitachi access to the newly completed guideway and stations so Hitachi could complete its work.
But the lawsuit alleges HART “did not even come close to complying with the new milestone dates.”
The project has fallen another three years behind schedule since then, according to the lawsuit, which Hitachi alleges has further delayed its progress under its contract with the city.
Hitachi had to prematurely mobilize “hundreds of design and construction workers, and dozens of subcontractors and suppliers” for work that could not yet be done, and HART has not accepted responsibility for the delays, according to the lawsuit.
The suit claims Hitachi incurred nearly $92.5 million in premature mobilization costs, and nearly $53 million for cost escalations because work could not be done until years after it was originally scheduled.
The company is also seeking nearly $46 million for extra staffing costs because of the delays, and more than $38 million to cover subcontractors’ claims. The lawsuit alleges HART hasn’t complied with its contract with Hitachi in other respects, including failing to make allowances for the impact of the pandemic and the war in Ukraine.
“HRH had been trying to reach a resolution of these issues with HART for years, to no avail,” according to the lawsuit. “HRH can no longer continue to cover HART’s missteps and fund the Project without being fairly and reasonably compensated for its work.”
A Sensitive Time For HART
The claim for damages by Hitachi has been a subject of discussion by the HART board of directors in closed-door executive sessions in recent months, and board Chairwoman Colleen Hanabusa announced in late October the dispute with Hitachi had been scheduled for mediation.
That mediation failed, according to the lawsuit, and Hitachi’s decision to sue comes at a particularly sensitive time for HART.
Earlier this year HART announced that the only bid for construction of the city center guideway and stations was $1.66 billion, about $300 million higher than HART expected. That increased the total cost of the project to $10 billion, including the interest on money borrowed to fund construction.
The unexpected cost from the city center bid then forced HART to defer some other work on the project to free up money to cover that contract.
HART board members were assured by staff earlier this year that outstanding claims against HART such as the Hitachi claim had been figured into the new rail budget, but HART never announced how much it had budgeted to resolve the Hitachi claim.
Hill International Inc., a consultant that monitors the Honolulu project for the Federal Transit Administration, has among the top five current risks for the project because of its potential cost.
Read the lawsuit here:
