California High Speed Rail Costs Escalate 50 Percent in 2 Years

The highly respected Californians for Responsible Rail Design (CARRD) has released a new cost estimate for the phase 1 Los Angeles to San Francisco high-speed rail line. Based upon an analysis of California high-speed rail Authority documentation, including stimulus grant applications and other internal sources, CARRD estimates that the line will now cost $65 billion, rather than the current estimate of $43 billion.

The CARRD release indicated:

Our analysis, based solely on official and publicly available Authority documents, determines the
current project costs are approximately $65 billion. The $43 billion figure was inaccurate, even at the time it was made.

CARRD also pointed out that there has been no recent update to the official cost estimates and that the planned October 1, 2011 update, required by state legislation, may not be released on time because of contract negotiation difficulties with Price Waterhouse Coopers.

Even as environmental and planning work has advanced, no update to the official capital cost estimate has been made. This is true even when the only alternatives in most segments still being studied are significantly more expensive than those used to calculate the $43 billion number

However, CARRD cautioned even this 50% increase in just two years may understate the eventual costs:

...we have received some feedback that these numbers may actually be too conservative since there still is very little engineering information about some of the most technically challenging parts of the project (like the mountain passes).

The new CARRD cost estimate is consistent with the perennial cost escalation that has been noted in such projects by Oxford University professor Bengt Flyvbjerg and others, who found that passenger rail systems typically have cost overruns of 45 percent.