CEO Report

Brian P. Kelly, CEOMay 2021


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Comprehensive Program / Construction Update:

I want to present to you a comprehensive construction update. This is timely, as we are approaching an important milestone: 100% design of all the construction packages underway in the Central Valley. On the 119, we’re starting to see the end of this, rather than being stuck at the beginning. Looking forward to your questions and answers.


WHERE WE ARE NOW & WHERE WE ARE GOING

  • Status of Design for Construction
  • Progress of Right-Of-Way
  • Known Anticipated Change Orders Identified in This Briefing
    • The 2020 Business Plan increases Central Valley Segment construction budget baseline from $12.4B to $13.8B accounting for known change orders
    • All accounted in the revised budget and these subjects have been identified on page 91 of the 2020 Business Plan
    • Here’s where we are and here’s what we get by getting the full scope in for these
  • Anticipated Discussion On 2021 Program Baseline Budget
    • Staff will bring 2021 Program Baseline budget to the Board of Directors mid-year
    • Discussion with the FRA will impact schedule.
    • Revised budget will be necessary to get construction work done in the Central Valley
    • It will include program contingency, known cost increases (2020 Business Plan)

FUNDING BREAKDOWN

I just want to remind you of our funding breakdown:

  • Proposition 1A (passed in 2008)
    • $9.95 billion funding
    • Remaining $4.2 billion requested in 2021 Governor’s May Revise Budget, assure we can continue our construction work in the Central Valley
  • Cap-and-Trade
    • 25% of annual proceeds appropriated to HSR through 2030.
  • American Recovery and Reinvestment Act (2008)
    • $2.5 billion awarded by Obama Administration
    • Required construction to begin in the Central Valley
    • Required HSR to spend grant money by September 2017 (complete, all funds spent)
    • Pushed Authority into construction before design and right-of-way were complete
    • Required Authority to match funding by December 2022 (complete)
  • FY 10 grant
    • $929 million
    • Entered litigation after Trump Administration rescinded money
    • In active settlement negotiations with Biden Administration

WHAT DOES GETTING TO 100% DESIGN MEAN?

This image below is designed to inform the Board about the importance of getting to 100% design. 100% design leads to greater certainty. Certainty drives unknowns to knowns.

With 100% design:

  • Third party requirements can be determined
  • Then the Design-Build scope is fully known
  • Right of Way footprint is finalized
  • Contract change orders are defined
  • And this all gets a box around Construction Project Management, rendering a scope and budget estimation and a reliable contract completion date

A flowchart showing the impact of 100% complete design on the project. It helps determine third-party requirements, then makes the design-build scope known, then the project has more certainty, because the right of way footprint is finalized and the parcel acquisition number is absolute and the contract change orders are defined, meaning known scope incorporated into contracts. So finally construction project management is achieved. Scope and budget is now estimated based on the completion and there is a reliable contract completion date. This process moves the project to earned-value metric for project monitoring.


DESIGN NEAR COMPLETION

Chart showing relationship between risk and uncertainty and steps between design and construction, showing less uncertainty the closer to construction the project is. From the Projec tManagement Institute, Inc.

  • The three Design-Build contracts were awarded early in the design process – at the time design was only at about 15%.
  • Typical design-build contracts:
    • Design at 30% or greater
    • Key pre-construction activities are substantially complete before construction begins, including right-of-way acquisition
  • Typical Design-Bid-Build Contract:
    • Design at 100% at time of contract award
  • In 2021, with design now nearly 100% complete the number of right-of-way parcels is 2,304 (1,812 delivered)
    • Number can go up and down a little bit based on design alternatives which removes the needed parcels, and finalized designs sometimes increases parcels
  • Authority’s Stage Gate process will:
    • Strengthen project development, risk management and oversight.
    • Ensure design is well-advanced before construction contracts are awarded.
    • This will help us greatly.

OVERALL UPDATE

A map showing the extent of CP 1, 2-3, and 4.

  • 119-Miles of Construction
  • CONSTRUCTION PACKAGE 1
    • 32 Miles
    • Avenue 19 in Madera County to just South of American Avenue in Fresno County
  • CONSTRUCTION PACKAGE 2-3
    • 65 Miles
    • Just south of Fresno to 1 Mile North of the Tulare/Kern County Line
    • Some of the most challenging elements in right of way acquisition.
  • CONSTRUCTION PACKAGE 4
    • 22 Miles
    • Tulare/Kern County Line to Poplar Avenue
    • In the best shape in the number of parcels in hand.

 

 

 

 


READY FOR CONSTRUCTION (RFC) PACKAGES – PROGRAM WIDE 2018-2021

Graph showing number of ready for construction design packages over time for the whole construction program (11 of 164 in 2018 to 151 of 164 in early 2021. 164 expected complete by end of 2021).


CENTRAL VALLEY RIGHT-OF-WAY UPDATE

Pie chart showing parcels required (2,292), parcels remaining to be delivered (440), and parcels delivered (1,852), which is 81% of the parcels needed. Up to date as of May 20, 2021.

  • 2018 to 2021:
    • 487 Parcels Delivered.
    • 399 Additional parcels added due to refined design.

This graph shows, as of May 20, 2021, the number of parcels needed is 2,292. The number of parcels remaining to be delivered is 440, and the number delivered is 1,852, approximately 81% of the parcels needed in hand. We expect to have all in hand by the end of 2023. Please know that this graph is the latest data we have.


CONSTRUCTION PACKAGE 1 – GENERAL UPDATE

  • Construction Package 1 (CP 1) is the first construction contract executed on the Initial Operating Section
  • The northern most section, extends 32-miles between Avenue 19 in Madera County to East American Avenue in Fresno County
  • Includes 22 grade separations, 3 viaducts, a major river crossing over the San Joaquin River and 2 trenches
  • Estimated Completion Date: December 2023

CP 1 Metrics Snapshot
Decorative icon, design plans.Design Completed92.5%
Decorative icon, map with pin.Right-Of-Way Parcels Acquired82.3%
Decorative icon, workers in hard hats.Utility Relocation57.3%
Decorative icon, girder lifted by crane.Structures Complete / In Progress69.7%
Decorative icon, built structure.Miles of Guideway Complete / In Progress40.6%
Decorative icon, sheet of paper with words on it.Overall Contract62.8%
As of May 20, 2021.
Graph showing number of ready for construction design packages over time for CP1 (9 of 40 in 2018, 37 of 40 in early 2021. 40 expected complete by end of 2021).
  2018 2021100% Completed ETA
Decorative icon, design plans.Design Packages Ready for Construction9 of 38VS.37 of 40Q3 2021
As of May 20, 2021.


CP 1 Change Orders

  • There are a lot on this project. We report these numbers to the Finance and Audit Committee every month.
  • Total number of change orders 383 (executed through Feb 2021)
  • Percent of change orders (dollar value) that are time impact 16% (Executed)
  • Percent of change orders (dollar value) that are scope 84% (Executed)
  • Many of these are part of third-party requirements we need to meet. Utilities, local authorities, or for example the intrusion protection barrier from the freight railroads.
  • Most due to 5 major change orders
    • Intrusion Protection Barriers: $280M
    • Northern Extension: $202M
    • Third Party Utility Relocations: $250M
    • Herndon Ave Grade Separation: $85M
    • Time Related Change Orders in delay of getting ROW to date: $190M

CP 1 Contract Value Change Over Time

Graph showing the original and present contract value over time for CP1 ($1.023 billion in 2014 to $2.362 billion in early 2021).


CP 2-3 Significant Pending Change Orders to Complete Construction

  • Golden State Boulevard (Fresno)
    • Realignment – North/South: 3.8 miles total realignment; increase from 2-4 lanes, widen sidewalk and add bicycle lanes
    • Utilities- Add water, sewer and storm water utilities to accommodate realignment
      • Purpose: Agreement with City of Fresno to avoid impact on existing businesses
  • McKinley Avenue – North Weber Avenue Junction Configuration
    • Change configuration to increase bridge length, relocate traction power substation, City of Fresno traffic control system and utility work
    • We’ll be updating the board more on these soon.
      • Purpose: City of Fresno changed designation of the road
  • Belmont Avenue Overcrossing and Grade Separation
    • Relocate proposed bridge to deconflict with AT&T line, including demolition of UPRR bridge, increasing bridge length and width and changing the Fresno Trench design under Belmont overpass
      • Purpose: City of Fresno requested design refinement
  • BNSF/UPRR Maintenance Roads
    • Construct access roads for adjacent railroad maintenance (10.5 miles for UPRR and 11.2 miles for BNSF)
      • Purpose: Included as a commitment in the agreements with the railroads
  • Last major one related to CP1: Guideway Construction for Caltrans SR-99 (Between Clinton and Ashlan Avenues)
    • Construct additional 2.5 miles of at-grade guideway plus Intrusion Protection Barrier walls between Clinton and Ashlan Avenues
      • Purpose: Scope was unassigned prior to October 2019 and was not included in original scope to be constructed by Caltrans.

CONSTRUCTION PACKAGE 2-3 – GENERAL UPDATE

  • Largest and in many ways the most complex stretch
  • Commercial settlement issues, we’ll be bringing more to the Board
  • Construction Package 2-3 (CP 2-3) is the second significant construction contract executed on the Initial Operating Section
  • Longest stretch, extends approximately 65 miles from the terminus of Construction Package 1 at East American Avenue in Fresno to one mile north of the Tulare-Kern County line
  • Includes approximately 36 grade separations in the counties of Fresno, Tulare and Kings, including viaducts, underpasses and overpasses
  • Grade separations are important safety measures. It’s good we’re building these but it adds to the complexity
  • Estimated Completion Date: December 2023

CP 2-3 Metrics Snapshot
Decorative icon, design plans.Design Completed91.7%
Decorative icon, map with pin.Right-Of-Way Parcels Acquired72.2%
Decorative icon, workers in hard hats.Utility Relocation49.1%
Decorative icon, girder lifted by crane.Structures Complete / In Progress53.1%
Decorative icon, built structure.Miles of Guideway Complete / In Progress70.8%
Decorative icon, sheet of paper with words on it.Overall Contract62.3%
As of May 20, 2021.
Graph showing number of ready for construction design packages over time for CP2-3 (2 of 109 in 2018, 100 of 109 in early 2021. 109 expected complete by end of 2021).
  2018 2021100% Completed ETA
Decorative icon, design plans.Design Packages Ready for Construction (of 109)2VS.100Q3 2021
As of May 20, 2021.


CP 2-3 Change Orders

  • Total number of change orders 297 (executed through Feb 2021)
  • Percent of change orders (dollar value) that are time impact 29% (Executed)
  • Percent of change orders (dollar value) that are scope 71% (Executed)
  • Most due to the following change orders
    • Agreement Settlement/Time Impact: $185M
    • Hanford Viaduct Substructure: $109M
    • Third Party Utility Relocations: $90M
    • Subsidence and Loss of Ditch Excavation: $61M

CP 2-3 Contract Value Change Over Time

Graph showing the original and present contract value over time for CP2-3 ($1.365 billion in 2015 to $2.123 in early 2021).


CP 2-3 Significant Pending Change Orders / Dispute Resolution to Complete Construction

Important commercial issues, we’ll be coming back to the board with some items.

  • Hanford Viaduct Superstructure
    • Finish superstructure of 6000-foot elevated guideway, configuration change due to Alternative Technical Concept accepted during original procurement
  • BNSF Intrusion Protection Barrier
    • Construct 15 miles of barrier
    • We will get this done, and make sure it is done fair
      • Purpose: Commercial issue related to how the contractor interpreted the RFP requirements from draft railroad agreement at the time of proposals
  • Deer Creek Viaduct
    • Contractor redesigned to 3000-foot viaduct to minimize elevated guideway
      • Purpose: Commercial issue pending dispute resolution
  • Cross Creek Viaduct
    • Contractor redesigned to 2500-foot viaduct to minimize elevated guideway
      • Purpose: Commercial issue pending dispute resolution
  • These are known and we’re working on them.

CONSTRUCTION PACKAGE 4 – GENERAL UPDATE

  • Southern most stretch. It is in a steady state right now.
  • Construction Package 4 (CP 4) is the third significant construction contract executed on the Initial Operating Section
  • 22-mile stretch bounded by a point approximately one mile north of the Tulare/Kern County Line at the terminus of Construction Package 2-3 and Poplar Avenue to the south
  • Will include construction of at-grade, retained fill and aerial sections of the high-speed rail alignment and the relocation of four miles of existing Burlington Northern Santa Fe (BNSF) tracks.
  • Estimated Completion Date: April 2022

CP 4 Metrics Snapshot
Decorative icon, design plans.Design Completed100%
Decorative icon, map with pin.Right-Of-Way Parcels Acquired77.2%
Decorative icon, workers in hard hats.Utility Relocation28.6%
Decorative icon, girder lifted by crane.Structures Complete / In Progress90.9%
Decorative icon, built structure.Miles of Guideway Complete / In Progress100%
Decorative icon, sheet of paper with words on it.Overall Contract65.9%
As of May 20, 2021.
Graph showing number of ready for construction design packages over time for CP4 (0 of 15 in 2018, 15 of 15 in early 2021).
  2018 2021100% Completed
Decorative icon, design plans.Design Packages Ready for Construction (of #)0VS.15Complete
As of May 20, 2021.


CP 4 Change Orders

  • Limited compared to others.
  • Total number of change orders 94 (executed through Feb 2021)
  • Percent of change orders (dollar value) that are time impact 35% (Executed)
  • Percent of change orders (dollar value) that are scope 65% (Executed)
  • Most due to the following change orders
  • Agreement Settlement/Time Impact: $51M
  • Intrusion Protection Barrier: $51M
  • A leading example, as required by the freight train organizations. It was subject to negotiation.
  • Wildlife Crossings: $17M

CP 4 Contract Value Change Over Time

Graph showing the original and present contract value over time for CP4 ($454 million in 2014 to $639 billion in early 2021).


CP 4 Pending Change Orders to Complete Construction

  • SR 46 Construction
    • Lengthen and widen BNSF bridge to accommodate future State Route 46 widening to 4 lanes plus associated Wasco roadway realignments and roundabout (this segment is not required to fulfill the ARRA grant agreement scope/schedule)
    • Federal grant is still pending
      • Purpose: Result of an agreement made with Kern County

CALIFORNIA HIGH-SPEED RAIL TODAY

Important to let folks know what this means from an economic standpoint.

  • 5,500 + construction jobs created since construction began
    • 3,700 National Targeted Worker hiring (essentially those from disadvantaged communities)
    • 77% of our workforce resides in the Central Valley
  • 609 small businesses employed
    • 192 are Disabled Business Enterprises
    • 129 located in disadvantaged communities
    • 67 Disabled Veteran Business Enterprises
  • CA High-Speed Rail spurring the economy
    • $7.2 billion expended
    • 60,000 job years created to date
    • $11.4 billion total economic output through January 2021

LOOKING AHEAD

Over the next 12-15 months:

  • Working with the Legislature now on an appropriation of remaining Proposition 1A funds (2021 Budget Act)
  • Environmental clearance of first two segments into Los Angeles County
    • Bakersfield to Palmdale
    • Burbank to Los Angeles
  • Award Track and Systems contract, commence work in 2022
  • Complete negotiations with Federal Railroad Administration on grant schedule and retaining FY 10 funding, $929 million
  • Award contracts to advance design work on Merced and Bakersfield extensions, through 2022, getting the stage gate process going
  • Procurement for trainsets – 2022

CEO Report:


STATUS ON AGREEMENTS WITH THE CITY OF FAIRMEAD

Pleased to start with good news. I want to thank Director Escutia, who has asked me about the status of agreements with the City of Fairmead. Also want to recognize that during the public comment period for this meeting we had a couple of callers. I’m happy to announce that as of this morning, we’ve wrapped all three agreements with the County of Merced, and the cities of Chowchilla and Fairmead. This means all our environmental justice requirements have been met. This was only possible thanks to tremendous work by our Central Valley Regional Director Garth Fernandez, Authority Counsel Lisa Crowfoot, and Gary Kennerley. None of these agreements were easy. Each are meaningful and they are all vital for the community of Fairmead. I love public service when demonstrated at its best. Garth, Lisa and Gary demonstrated the very best of it. Thank you for that hard work.


BAKERSFIELD STATION PLANNING MOU

Planning division lead, Meg Cederoth has helped coordinate a high level MOU, collaboratively with the city of Bakersfield, on station development and station planning issues. It is countersigned by the mayor and key staff, both parties intend to work collaboratively and cooperatively on the process.


STATION PLANNING RFP

The Authority is planning a Request for Proposals (RFP) for advance preliminary design for the four stations in the Central Valley. We anticipate coming back to the Board later this year on the RFP.


ROAD 27

Road 27 is on schedule and good progress is being made. We’ll get back to you with a specific estimated reopening date.


WASCO & FEDERAL GRANTS

There has been a lot of interest in the federal grant application for the State Route 46 project in Wasco. I apologize, I was mistaken in informing the board that that grant was going to be announced at the end of April 2021. The FRA and USDOT will make the award in June. We’re not so far away from June. But it wasn’t as early as I thought. And we’re confident that we hit all the elements and purposes of the grant. But we don’t know how many applications came in from all over the country. Even so, I believe we’re in a good spot. Letters of support from various entities were delivered as well. And while we’re waiting for that grant, another USDOT funding opportunity, the RAISE grants, formally known as the BULD grants are opening. We are evaluating options for us to apply for those as well.


PEER REVIEW GROUP

I want to inform the Board: California State Controller Betty Yee appointed Professor William Ibbs to the Peer Review Group (PRG). Dr. William Ibbs is a civil engineering professor and consultant with 40 years of global experience with large infrastructure projects. Professor Ibbs is internationally renowned and teaches at UC Berkeley. I want to welcome Dr. Ibbs to the PRG. He will be meeting with them first at the end of June.


FEIR / FEIS FOR BAKERSFIELD TO PALMDALE / TWO-DAY MEETING

Lastly: The Final Environmental Impact Report / Environmental Impact Statement (FEIR/EIS) for the Bakersfield to Palmdale segment is coming up. The segment is 80 miles and will be the first segment we advance into Los Angeles County. To assure we have time enough to review those, the document will be published in June. At the August Board meeting, consideration of the Record of Decision (ROD) will come up. Please remember, these hearings for RODs are typically two-day meetings, so we’ll have ample time to fully consider the issues and comments. But August 19 is not currently scheduled as a two-day meeting. Staff will be working to coordinate. We do not yet know if the meeting will be virtual or in person, and are following the direction of the Governor, CalHR, and the California Department of Public Health as we approach a “normalization” this summer. We will get you more information about whether it will be virtual or in person as soon as we can.


Relevant Materials:


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