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PMOC REPORT

2018 Risk Refresh

(Workshop Held February 27, 2018)

Honolulu Rail Transit Project Honolulu Authority for Rapid Transportation (HART)

City and County of Honolulu Honolulu, HI

June 2018 (FINAL)

PMOC Contract Number: DTFT60-14-D-00012 Task Order No. 1: Programmatic Project No: DC-27-5274 Work Order No. 22 OPs Referenced: OP 1, 21, 32C, 32D, 33, 34, and 40 Jacobs Engineering Group, Inc. 319 E. Warm Springs Road, Suite 200, Las Vegas, Nevada 89119 William Tsiforas, (702) 938-5400, [email protected] Length of Time Assigned: Five Years (February 18, 2015 through February 17, 2020 Disclaimer This Project Management Oversight Contractor (PMOC) report and all supporting reports and back up materials contain the findings, conclusions, professional opinions and recommendations stemming from a risk-informed evaluation and assessment, prepared solely for the Federal Transit Administration (FTA). This report should not be relied upon by any party, except FTA or the project Sponsor, in accordance with the purposes of the evaluation and assessment as described below. For projects funded through FTA’s Major Capital Investment (New Starts) program, FTA and its PMOCs use a risk-informed process to review and reflect upon a Sponsor’s scope, schedule, and cost, and to analyze the Sponsor’s project development and management. This process is iterative in nature. The results represent a “snapshot in time” for a particular project under the conditions known at that point. The evaluation or assessment and related results may subsequently change due to new information, changes in circumstances, additional project development, specific measures a Sponsor may take to mitigate risks, Sponsor’s selection of strategies for project execution, etc.

Honolulu Rail Transit Project PMOC Report – 2018 Risk Refresh June 2018 (FINAL)

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TABLE OF CONTENTS TABLE OF CONTENTS .............................................................................................................. i LIST OF TABLES ....................................................................................................................... iii LIST OF FIGURES ..................................................................................................................... iii

1.0 EXECUTIVE SUMMARY .............................................................................................. 1 1.1 Introduction ..............................................................................................................1 1.2 PMOC Review .........................................................................................................1 1.3 Findings....................................................................................................................1

1.3.1 Management Capacity and Capability (MCC) Review ...............................2 1.3.2 Project Scope and Project Delivery Review ................................................4 1.3.3 Project Schedule Review .............................................................................5 1.3.4 Schedule Risk Analysis................................................................................6 1.3.5 Project Cost Estimate Review ......................................................................8 1.3.6 Cost Risk Analysis .....................................................................................10

2.0 INTRODUCTION........................................................................................................... 16 2.1 Project Sponsor ......................................................................................................16 2.2 Project Description .................................................................................................16 2.3 Project Status .........................................................................................................18 2.4 Project Budget ........................................................................................................18 2.5 Project Schedule .....................................................................................................19 2.6 Project Timeline .....................................................................................................19 2.7 Project Management Oversight Contractor (PMOC) ............................................19 2.8 Evaluation Team ....................................................................................................20

3.0 MANAGEMENT CAPACITY AND CAPABILITY REVIEW ................................. 21 3.1 PMOC Assessment ................................................................................................21

3.1.1 Staff Retention ...........................................................................................21 3.1.2 Management Plans .....................................................................................23 3.1.3 Operations and Maintenance ......................................................................24

3.2 Recommendations ..................................................................................................24

4.0 PROJECT SCOPE AND PROJECT DELIVERY REVIEW .................................... 26 4.1 PMOC Assessment of Project Scope .....................................................................26 4.2 PMOC Assessment of Project Delivery .................................................................27 4.3 PMOC Recommendations .....................................................................................28

5.0 PROJECT SCHEDULE REVIEW ............................................................................... 29 5.1 Documents Reviewed ............................................................................................29 5.2 Schedule Management ...........................................................................................29

5.2.1 Project Management Capacity and Capability ...........................................30 5.2.2 Systems, Tools and Software .....................................................................30 5.2.3 Project Control Plans, Procedures, and Contractual Requirements ...........32

5.3 Technical Review...................................................................................................33


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5.3.1 Mechanical Soundness Check....................................................................33 5.3.2 Fundamental and Reasonableness Soundness Check ................................43 5.3.3 Schedule Contingency ...............................................................................47 5.3.4 Readiness to Perform FTA OP 40 Risk Assessment .................................47

5.4 Conclusion .............................................................................................................47 5.5 Recommendations ..................................................................................................48

6.0 SCHEDULE RISK ANALYSIS .................................................................................... 49 6.1 PMOC Assessment ................................................................................................49

6.1.1 Methodology ..............................................................................................49 6.1.2 Schedule Risk Analysis..............................................................................51

6.2 Schedule Contingency Review ..............................................................................58 6.2.1 Adjusted Project Schedule for Risk and Contingency Analysis ................58 6.2.2 Contingency Analysis ................................................................................58 6.2.3 Findings......................................................................................................59 6.2.4 Recommendations ......................................................................................59

7.0 PROJECT COST ESTIMATE REVIEW .................................................................... 60 7.1 PMOC Assessment ................................................................................................60 7.2 Estimate at Completion (EAC) Review .................................................................60 7.3 Findings..................................................................................................................61 7.4 PMOC Recommended Adjustments ......................................................................62 7.5 Recommendations ..................................................................................................67

8.0 COST RISK ANALYSIS ................................................................................................ 68 8.1 Purpose ...................................................................................................................68 8.2 Methodology ..........................................................................................................68 8.3 Risk Identification ..................................................................................................69 8.4 Cost Risk Assessment ............................................................................................70

8.4.1 Methodology ..............................................................................................70 8.4.2 SCC Adjustments .......................................................................................71 8.4.3 Baseline Beta Values .................................................................................72 8.4.4 Beta Value Adjustments ............................................................................76 8.4.5 Cost Risk Analysis .....................................................................................77 8.4.6 Cost Contingency .......................................................................................79

8.5 Risk Mitigation ......................................................................................................80 8.5.1 Primary Mitigation .....................................................................................80 8.5.2 Secondary Mitigation .................................................................................80

8.6 Conclusion .............................................................................................................81 8.7 Recommendations ..................................................................................................82

9.0 LIST OF ACRONYMNS ............................................................................................... 83


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LIST OF TABLES Table 1. Adjusted Stripped BCE ......................................................................................... 10 Table 2. Risk Model Data ................................................................................................... 12 Table 3. Cost Comparison by SCC ..................................................................................... 14 Table 4. Key Project Events ................................................................................................ 19 Table 5. PMOC Evaluation Team ....................................................................................... 20 Table 6. HART Management Plans .................................................................................... 23 Table 7. Remaining Construction Contract Packages ......................................................... 26 Table 8. Schedule Document Submittal History ................................................................. 29 Table 9. Calendars within Remaining Activities in HART MPIS ...................................... 35 Table 10. Software Settings .................................................................................................. 39 Table 11. Technical Data Summary ...................................................................................... 41 Table 12. CPS to APS Milestone Comparison (Data Date 27-APR-18) .............................. 52 Table 13. Proposed Adjustments .......................................................................................... 63 Table 14. SCC 80 Adjustments ............................................................................................. 64 Table 15. 2018 Adjusted Base Cost Estimate ....................................................................... 65 Table 16. Adjusted Stripped BCE ......................................................................................... 67 Table 17. PMOC Adjustments to HART Estimate $YOE .................................................... 72 Table 18. Imported Beta Values for Risk Profile 1 ............................................................... 73 Table 19. Imported Beta Values for Risk Profile 2 ............................................................... 73 Table 20. Imported Beta Values for Risk Profile 3 ............................................................... 73 Table 21. Imported Beta Values for Risk Profile 4 ............................................................... 74 Table 22. Beta Values Risk Refresh ..................................................................................... 75 Table 23. Risk Model Data ................................................................................................... 78

LIST OF FIGURES Figure 1. Project Completion Date Confidence Level ........................................................... 7 Figure 2. Cost Risk Model Results ....................................................................................... 13 Figure 3. Project Line Segments .......................................................................................... 17 Figure 4. Project Map ........................................................................................................... 18 Figure 5. Project Staff Turnover ........................................................................................... 21 Figure 6. CCUR Electrical Crew Resource .......................................................................... 36 Figure 7. CCUR Partial Crew Resource Reports ................................................................. 37 Figure 8. HART Basis of MPIS Schedule: Example Cost Curve ........................................ 38 Figure 9. Longest Critical Path (Opened Projects Total Float Setting) ................................ 44 Figure 10. Risk Assessment Process ...................................................................................... 51 Figure 11. Risk Assessment Steps and Schedule Types ........................................................ 51 Figure 12. BetaPert Three Point Estimation Technique ......................................................... 53 Figure 13. RSD - Estimate Uncertainty Model on APS ......................................................... 54 Figure 14. IRM Risk Register ................................................................................................ 55 Figure 15. Project Completion Date Confidence Level ......................................................... 57 Figure 16. Timeline of Schedule Risk Analysis Dates ........................................................... 58 Figure 17. Cost Risk Model Results ....................................................................................... 79


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1.0 EXECUTIVE SUMMARY

1.1 Introduction

The Honolulu Authority for Rapid Transportation (HART) continues to advance the Honolulu Rail Transit Project (“Project”) in accordance with the Federal Transit Administration (FTA) New Starts requirements. FTA assigned Jacobs as a Project Management Oversight Contractor (PMOC) on September 24, 2009, to monitor the Project and provide FTA with “information and well-grounded professional opinions regarding the reliability of the scope, cost, and schedule” of the Project. That effort continues with this update report, which represents the PMOC’s assessment of Risk and Contingency Management. 1.2 PMOC Review

The 2018 risk refresh is an update of the risk assessment that was completed in advance of the Full Funding Grant Agreement (FFGA) in 2012. Risk Refresh workshops were held in April 2014 and April 2016. For this current effort, the PMOC reviewed any Project changes since 2016 that may affect the management capacity and capability of the project sponsor as well as changes associated with Project’s current FFGA scope, schedule, cost estimate, and risk and contingency management. A workshop was held on February 27, 2018 that included representatives from HART, FTA, and the PMOC. A FINAL DRAFT of the risk refresh report was provided to HART on April 10, 2018 with HART providing comments on April 26, 2018. Subsequently, HART provided updated cost and schedule documents. This final report is based on the updated project information that was provided by HART through May 2018. This assessment is governed by the following FTA Oversight Procedures (OP):

OP 21 – Management Capacity and Capability Review OP 32C – Project Scope Review OP 32D – Project Delivery Method Review OP 33 – Capital Cost Estimate Review OP 34 – Project Schedule Review OP 40 – Risk and Contingency Review

1.3 Findings

Based on the outcome of the reviews conducted, the PMOC presents the following findings:

The revised Revenue Service Date (RSD) should be no earlier than September 2026, which represents the 65% confidence level in the Schedule Risk Model.

The predicted FTA model outcome at the p50 level is $8.299 billion (excluding $855 million in finance costs). With $855 million in finance costs the total project cost would


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be $9.154 billion. However, this report does not analyze any potential changes to finance costs based on the higher capital costs.

HART’s current Estimate at Completion (EAC) of $8.165 billion falls short of the p50 predicted FTA model outcomes by $134 million.

1.3.1 Management Capacity and Capability (MCC) Review

HART has experienced frequent organizational changes since the FFGA was executed in December 2012. There are still concerns regarding HART’s Management Capacity and Capability and its ability to retain experienced key staff (internal and consultant) on the Project. The PMOC has tracked a trend of frequent turnover of key staff since the FFGA was executed, which has resulted in “management capacity” issues. HART continues to have difficulty filling positions due to challenges stemming from the project’s geographic location and salary restrictions. HART must ensure their consultants have sufficient “bench strength” to backfill positions with qualified personnel. HART executive management has implemented some staffing changes with a goal of streamlining the organization and becoming more efficient in its decision making. HART can transition some of the key positions from consultants to its own organization, resulting in the agency having greater ownership and control of the project. However, before HART can transition some key positions from consultants to its organization a classification and compensation study should be completed to bring HART salaries on par with other transit agencies. There are currently several key positions that remain vacant. The most critical positions that HART must diligently work to permanently fill include:

Project Controls Manager – Manager resigned effective the end of March 2018 and has been filled on interim basis. This is a critical position and HART must make it a priority.

Director of Readiness & Activation – Current manager will be resigning effective June 30, 2018. This will be a critical vacancy given the transition of Operations & Maintenance responsibilities to the Department of Transportation Services (DTS).

Director of Planning, Permitting and ROW – Manager resigned effective May 11, 2018. Position will be filled on interim basis until a permanent replacement is identified.

There are several positions that HART should consider staffing either through existing resources or new resources including:

Senior Construction Claims Specialist or a Specialized Claims Consultant Transit Planning Manager Rail Activation/System Testing & Integration Manager

HART’s update of the management plans must incorporate any organizational changes that have occurred or are proposed. It is critical that any changes be documented in the various management plans immediately.


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HART and DTS have begun planning for the transfer of responsibilities per Charter Amendment 4. There are numerous items for which a resolution must be obtained and properly addressed in a transition plan including:

Source of funding for Operations & Maintenance Transfer of HART staff to DTS (where applicable) Staffing needs for DTS Safety and Security approach and staffing during testing and operations (interim and full) Long gap between proposed interim opening and full RSD Development of a detailed roadmap for transition of Operations & Maintenance

responsibilities DTS is developing an organizational chart and staffing plan. Their initial plan consists of a hybrid organization that pulls staff from each of the four DTS divisions and other City departments. The FY2019 proposed budget includes 10 DTS positions dedicated to rail. However, a new position of Deputy Director of DTS position will be created that will be the lead for rail operations and maintenance. This will not occur until FY 2020. The projected Interim Opening is scheduled for December 2020. The PMOC has expressed concern that the transition plan may not be adequately developed, and sufficient resources may not be allocated, to support pre-revenue testing and revenue operations. Recommendations

(1) Project Management Plan (PMP) and supporting plans and procedures must be updated to reflect any recent organizational changes.

(2) Reevaluate the Staffing Plan to be more effective and fill any gaps in technical capability of the organization.

(3) Where applicable, HART must strive to transition the key management positions currently occupied by the PMSC and General Engineering Consultant (GEC) to HART, in order to have greater ownership and stronger control of the project.

(4) Actively monitor the management of the program to ensure that project staff and all consultants/contractors implement the approved plans and procedures.

(5) Develop an effective process to preserve critical technical capabilities during any significant reduction in force.

(6) Provide training to key existing staff members through the National Transit Institute (NTI) or other similar organizations to enhance their transit project management skills.

(7) Move “Change Order” Authority to the Project Team and establish strict budget controls to be enforced by HART Procurement and Chief Financial Officer.

(8) HART’s Project Director, Deputy Directors, Project Managers, PMSC, GEC, and Construction Engineering & Inspection (CE&I) consultants must focus more heavily on meeting construction project schedules and cost containment of the project.

(9) HART and DTS must develop a detailed roadmap for transition of Operations & Maintenance responsibilities.


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1.3.2 Project Scope and Project Delivery Review

The general scope of the project has remained largely intact since the FFGA, although changes to the method of contracting and outside influences on the execution of the scope have been significant. Construction of the West Oahu/Farrington Highway Guideway Segment (WOFH), Kamehameha Highway Guideway Segment (KH) and Maintenance and Storage Facility (MSF) are complete. Construction of the Airport Guideway and Stations (AGS) has begun under a Design-Build (DB) Contract. Procurement of the City Center Guideway and Stations (CCGS) DB Contract is anticipated to begin in July 2018. However, HART has begun evaluating the potential for Public-Private Partnership (P3) that could affect the City Center Guideway and Stations (CCGS) procurement. A decision on whether P3 will be utilized is expected to be rendered in June 2018. The cost estimate and schedule provided by HART for review are based on DB methodology for CCGS. Therefore, this report does not consider any potential for P3 at this time. The following observations were made regarding the project scope review:

Several third-party agreements have yet to be finalized. Design issues that affect the interface with other contracts, including the Core Systems

Contract (CSC), must be resolved. Detailed cost estimates have not yet been prepared for several potential Contract Change

Orders (CCO). HECO’s imposition of further restrictions on work near high-voltage lines, including

requirements for undergrounding them, may cause further delays and costs. HART’s award of CCUR will help mitigate some of these concerns, but full mitigation will not occur until all applicable task orders under the CCUR contract are issued.

The amount of rework that will be needed to bring the City Center design to completion may be considerably more extensive than HART anticipated, since the new DB contractors will likely plan on using only the concept design; their responsibility for the final design may mean that they will not be able to use any of the essentially-complete elements of the earlier design-bid-build (DBB) packages.

Real estate acquisition to support construction in the City Center Segment will continue to require significant coordination and effort by HART.

HART has actively interfaced with the Hawaii Department of Transportation (HDOT) State Oversight Agency (SOA). This has proven to be beneficial to the project. HART must continue to be proactive with regard to planning and implementation associated with the interim revenue service to ensure they meet the HDOT Safety and Security Program Plan requirements for start-up activities.

The following observations were made with regard to the project delivery review:

The change in strategy for the City Center Segment has had a significant impact on the Master Program Integrated Schedule (MPIS) and has contributed to the erosion of the schedule contingency. However, the implementation of CCUR will help mitigate some of the concern with additional potential float erosion.


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Any delay to the CCGS DB Contract now has a direct impact on the target RSD and could impact the project cost.

HART’s Contract Packaging Plan (CPP) will continue to require significant management effort to ensure proper interface coordination.

There is concern whether bidding competition for the remaining packages will be strong enough to assure pricing within budget.

Recommendations

(1) HART must take a more proactive approach to ensure contractors establish and meet schedules.

(2) Site access and permitting issues must be resolved early to avoid delays and extras.

(3) HART must continue to review and proactively vet all potential Contract Change Orders (CCO). Detailed cost estimates must be prepared early in the process to ensure the individual contract budgets will not be adversely impacted.

(4) Continue to review all post-Record of Decision (ROD) changes to ensure they do not have an impact on the environmental documentation, the project scope, project cost, project schedule, or future operations.

(5) Prioritize resolution of required third-party agreements, real estate acquisitions, and coordination between various contractors and designers.

1.3.3 Project Schedule Review

The PMOC reviewed HART’s Master Program Integrated Schedule (MPIS) with a Data Date of April 27, 2018. Summary of PMOC Findings It is the PMOC’s professional opinion that HARTs MPIS is mechanically sound and meets the technical requirements of fundamental soundness. The PMOC has identified several recommendations HART should strongly consider and incorporate into their project control functions and deliverables including a few recommendations that will also improve their management capability and streamline management capacity performance. Recommendations

(1) HART should focus on filling all open project control positions. (2) HART should enforce consultant project control conformance to schedule

management plans and procedures (timely CEI Technical Schedule Reviews) and respective fundamental roles and responsibilities for those individuals who fail to perform.

(3) HART should increase the prioritization of completing the transition of document management systems from the obsolete Contract Management System.

(4) HART should continue to improve change control procedures. This is directly related to claims avoidance and dispute resolution techniques.

(5) MPIS and Basis of Schedule (BoS) must be synchronized with the WBS. The current WBS is under revision and is incomplete.


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(6) Schedule File Log (F9 Report) – HART should further reduce the amount number of activity logic ties that contain an excessive amount of lag due to Start-Start (SS), Start-Finish (SF), and Finish-Finish (FF) relationship types, as well as continue improvements by reducing or eliminating out-of-sequence progressing and the use of constraint dates.

(7) HART should re-evaluate the use of certain activities beyond the RSD and consider alternative schedule management methods to provide cost or resource loading in their schedule, whereas, they have already encountered resource loading technical issues.

(8) HART should improve the real estate acquisition activity descriptions for more clear translation to the parcel identification numbering system in the BoS.

1.3.4 Schedule Risk Analysis

The Revenue Service Date (RSD) identified in the FFGA is January 31, 2020. HART’s current target date for the start of full revenue operations is December 2025 (per MPIS with Data Date of April 27, 2018). Summary of PMOC Findings Using the estimate uncertainty model and risk events, an Impacted Risk Model (IRM) was generated and represented in the probability distribution histogram. The probability percentage points for the IRM are:

50% Confidence level completion date – June 17, 2026 65% Confidence level completion date – September 01, 2026 80% Confidence level completion date – November 20, 2026 100% Confidence level completion date – May 14, 2027

FTA OP 40 states that a confidence level of at least 65% of reaching the proposed RSD should be considered. The IRM RSD P65 date of 01-SEP-26 takes into account threat risk events that are in the risk register. The IRM RSD may be improved by applying potential mitigation efforts to reduce, avoid or eliminate such risks. Figure 1 presents the histogram for the IRM. The yellow arrow indicates HART’s current MPIS RSD date of December 31, 2025.


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Figure 1. Project Completion Date Confidence Level

The following observations were made with regard to schedule risk review:

The HART MPIS does not contain a sufficient amount of time contingency as activity total float continues to erode. Several schedule deficiencies attributable to unrealized total float depletion such as ambiguity in activity calendars is noted in the OP-34 Schedule Review Report. HART addressed the PMOC’s comments and provided a subsequent MPIS in early May 2018, which was used to conduct this final schedule risk assessment.

Most risk uncertainty exists within the City Center alignment and longest critical path Core System activities.

HART’s delays to procurement of the of the City Center contract may adversely impact the project critical or near critical paths if not resolved soon.

The PMOC Impacted Risk Plan (IRM) distribution of P65 for RSD is 01-SEP-26.

08-Jul-25 16-Oct-25 24-Jan-26 04-May-26 12-Aug-26 20-Nov-26 28-Feb-27

Distribution (start of interval)

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

Hit

s

0% 17-Jun-25

5% 20-Aug-25

10% 27-Oct-25

15% 05-Dec-25

20% 05-Jan-26

25% 18-Feb-26

30% 05-Mar-26

35% 13-Apr-26

40% 24-Apr-26

45% 20-May-26

50% 17-Jun-26

55% 14-Jul-26

60% 07-Aug-26

65% 01-Sep-26

70% 25-Sep-26

75% 23-Oct-26

80% 20-Nov-26

85% 24-Dec-26

90% 20-Jan-27

95% 03-Mar-27

100% 14-May-27

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Impact Risk ModelEntire Plan : Finish Date


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Time and effort extending beyond the project RSD date for contract closeout activities is not included within this schedule risk analysis.

Recommendations The revised RSD should be no earlier than September 2026, which represents the 65% confidence level in the Schedule Risk Model utilizing an MPIS with data date of April 27, 2018. 1.3.5 Project Cost Estimate Review

The original FFGA Project Budget was $5.122 billion, including $644 million in allocated and unallocated contingency and $173 million in financing costs. HART’s current Estimate at Completion (EAC) of $9.020 billion includes $904 million in contingency and $855 million in financing cost. The capital cost is $8.165 billion (including contingency but excluding financing). HART has expended $3.125 billion through April 2018. The major documents provided to the PMOC to support the cost review include:

December 2017 Contract Packaging Plan (CPP) April 2018 SCC Spreadsheet (HART_FFGA_HRTP SCC Cost Workbook_2018.05.17) April 2018 Forecast (Summary FFGA EAC Monthly Trend_2018.04.27_Final.xlsm) April 2018 Expenditures (2018.04.27 Actuals CPP by SCC.xlsx) DB550 – CCGS ICE (DB 550 CCGS Estimate_2017.09.12.pdf) DB275 – PHPG ICE (DB 275 PHGT Estimate_2017.02.09.pdf) Staffing Plans for HART, PMSC, GEC 3, CE&I East, CE&I West, CSC Support, and

Safety & Security Support Subsequent to the risk workshop and FINAL DRAFT report, HART provided updated forecast information. It must be acknowledged that some cost reductions had occurred since original data date for Risk Refresh of December 2017. Additionally, there were new or increased cost exposures identified since the time of the risk workshop. The PMOC incorporated all additive and deductive changes to the forecast that were identified by HART. The PMOC evaluated the cost estimates for each SCC for mechanical soundness and consistency. These mechanical checks were used to determine if there are any material inaccuracies within the estimate. Components of the estimate were found essentially to be mechanically correct in the tabulation of the unit cost, application of factors, and translation to an SCC spreadsheet for most of the direct cost and soft cost contracts. However, the PMOC did identify some discrepancies with specific estimate amounts. Summary of PMOC Findings The following specific observations were made with regard to the cost estimate review:

The total amount of contingency identified in HART’s EAC was $904.4 million. The PMOC did not identify any “latent” contingency.


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Some variances had been noted between contract amounts as shown in various documents provided by HART in December 2017. These inconsistencies were discussed with HART during the February 2018 workshop. HART’s updated documents reconcile most of the PMOC’s concerns about traceability and the potential for errors or omissions in the budget. However, HART staff has noted that additional effort is required to reconcile all inconsistencies between the various documents. The PMOC does not anticipate that there are any significant discrepancies that would adversely impact the project budget.

HART’s April 2018 forecast includes all potential Change Orders and issues identified by HART.

HART expended $3.125 billion through April 2018. The expended costs are categorized by contract and segregated into FTA SCCs. The PMOC noted there are variances between expended amounts in the April 2018 Forecast and the April 2018 SCC Spreadsheet. Specifically, HART has expended costs coded to SCC line items in the April 2018 Forecast, but there is no corresponding budget associated for those line items. The PMOC used a pro rata approach to distribute any discrepancies for input into the cost risk model.

Some components of the cost estimate are still undergoing refinement by HART (e.g. right-of-way, CCGS, PHPG).

The individual Basis of Estimate (BoE) were updated for the Independent Cost Estimate (ICE) for the CCGS and Pearl Highlands Parking Garage DB Contract (PHPG). However, there is some lack of uniformity across the individual BoEs:

o The application of markups was inconsistent. o The application of the General Excise Tax (GET) varied. o Escalation rates varied between contracts.

The PMOC utilized the “Direct Cost” from HART’s Independent Cost Estimate for CCGS and PHPG and applied markups at percentage rates where appropriate based on our professional opinion. The PMOC recommends adjustments associated with the percentages for markups for items such as Engineering costs, GET application, Escalation, and General Conditions/Overhead. This is the same methodology that was used for the 2016 Risk Refresh.

Escalation is not separately and fully addressed in the various cost documents provided by HART such as the Basis of Estimate (BoE). It was included in the ICE for the CCGS and PHPG, but it was not consistently applied. Additionally, HART did not provide an update of the full FTA SCC Workbook. The full FTA SCC workbook would provide detail on escalation being used to develop a project estimate.

The PMOC believes HART’s April 2018 Forecast may not be fully reflective of the sequencing identified in the current MPIS. The MPIS was recently revised, but the ICE for the CCGS and PHPG were prepared prior to the schedule update. Based on these findings, the PMOC recommends adjustments to account for this potential shortfall associated with escalation.

Due to extension of the RSD, there may be some potential costs associated with maintenance of already constructed work. This scope is not specifically included in the current EAC. The PMOC did not include an adjustment for this item.

Contract closeout continues to be an issue for HART, which can add significant soft costs to a project.


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Following is a summary of the Adjusted Stripped Base Cost Estimate (BCE):

Table 1. Adjusted Stripped BCE

HART Estimate 7,260,645 Allocated Contingency (PMOC Calculation) $822,602 Unallocated Contingency $81,807 Financing $855,000

TOTAL $9,020,054 Stripped Cost $7,260,645 HART Forecast Change Orders Included PMOC Adjustments $203,900

Adjusted Stripped BCE $7,464,545 Incurred Costs (through April 2018) $3,124,705 All values in $1,000

Recommendations

(1) Prepare detailed cost estimates for all identified potential or possible contract change orders.

(2) Update CCGS estimate to allow for potential mitigation measures. (3) Refresh ROW estimate to reflect current property costs and include costs for

Temporary Construction Easements and other impacts, specifically for CCGS. (4) Update manpower charts to account for new positions and reflect current MPIS to

validate SCC 80 costs are accurate. (5) Verify budgets and any ongoing estimate refreshes include adequate funds for

escalation. (6) Revise any budgets or contracts impacted by the revised RSD as shown in the

update to the MPIS. (7) Reconcile coding of SCC line items. This effort will ensure budget, contract and

EAC forecast utilize the same “base” information and are appropriately coded to ensure accurate monthly reporting and for inclusion in Before & After Study Report.

1.3.6 Cost Risk Analysis

In February 2018, the PMOC participated in a risk refresh workshop with HART, the purpose of which was to discuss HART’s progress in its risk management efforts and PMOC’s observations and reflections from its initial review of HART’s updated scope, cost, schedule, and risk information. The PMOC has subsequently performed regular monitoring visits to the project and has refreshed its earlier risk assessment based upon an updated understanding of project risks and updated schedule and cost information provided by HART. For the purposes of its risk refresh, the PMOC considered the project in four separate elements, which are termed here as “risk profiles”:


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Risk Profile 1 is associated with direct work contracts that are 90% or more complete. Risk Profile 2 is associated with contracted and in progress direct cost work less than

90% complete. Risk Profile 3 is associated with yet-to-be-contracted direct cost work. Risk Profile 4 is associated with “soft costs.”

During and subsequent to the February 2018 risk workshop, information was provided indicating that HART was aware of additional costs or deduction that should be included, which the PMOC incorporated along with its own independent estimate adjustments. The PMOC has prepared this risk refresh based upon additional information provided by HART through May 2018. The PMOC has reviewed HART’s updated risk register and has found that HART has represented risk directly related to the work. The risk register includes magnitude and likelihood estimates that are based on much improved risk management techniques since the prior 2016 PMOC review. The HART Risk and Contingency Management Plan (RCMP) has been updated to provide an improved description of risk management policies that if fully implemented should act as a safeguard to proactively determine whether current and future risk threatens the project. Full implementation of this effort will require strong management priority, especially to prevent concerns over budget increases from influencing the candid exposure of project risk. The PMOC separated the project into four distinct risk profiles to better model the effect of risk upon the project. The cost risk assessment recognized general reductions in risk due to advancement of construction and design. However, concerns that relate to historically experienced issues of management capability and capacity, market conditions, and construction complexities—especially as the project proceeds toward downtown Honolulu—are expected to continue and are factored into the risk analysis. It is recognized that efforts have been made to recover contingency levels through cost reduction measures, value engineering, and revised project delivery strategies. However, these types of changes are increasingly less likely and less effective. Table 2 presents the corresponding numeric data results from the risk model.


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Table 2. Risk Model Data

All values in $1,000; excludes finance costs.

The risk analysis indicates a recommended budget of $8.299 billion (excluding finance) to maintain a project protect level at p50, compared to the current HART EAC of $8.165 billion (excluding finance), which falls at p42. HART’s current EAC falls short of the p50 predicted FTA model outcome by $134 million. Figure 2 shows these values graphically.

Part 2

Mostly complete >90%

In construction <90% Not bid Soft costs

Sponsor total estimate (SCC 10-90) (42%ile) 8,165,054 1,321,868 3,268,891 1,388,045 2,186,250Sponsor exposed contingency 904,409 46,414 465,598 247,052 145,345

Sponsor stripped estimate (SCC 10-80) 7,260,645 1,275,454 2,803,293 1,140,993 2,040,905Latent Contingency 0 0 0 0 0

EAC stripped estimate 7,260,645 1,275,454 2,803,293 1,140,993 2,040,905

Secondary mitigation 0

Inflation Adjustment 0 0 0 0 0Adjustments 203,900 0 75,800 69,073 59,027Adjusted estimate 7,464,545 1,275,454 2,879,093 1,210,066 2,099,932

Percent complete 98% 26% 0% 54%

Funding value (50%ile) 8,298,555 1,291,726 3,266,924 1,568,601 2,344,654Base Funded Contingency amount 834,010 16,272 387,831 358,534 244,722

Contingency % 11% 1% 13% 30% 12%Secondary Mtigation Level (65%ile) 8,575,587 1,297,130 3,395,750 1,687,694 2,425,943

Secondary mitigation target amount 277,032 5,405 128,825 119,094 81,289Secondary mitigation % 4% 0% 4% 10% 4%

Secondary mitigation provided 0

Lower report range value (40%ile) 8,138,317 1,288,599 3,192,410 1,499,716 2,297,635Median value (50%ile) 8,298,555 1,291,726 3,266,924 1,568,601 2,344,654Upper mid value (65%ile) 8,575,587 1,297,130 3,395,750 1,687,694 2,425,943Upper range reporting amount (80%ile) 8,944,814 1,304,334 3,567,447 1,846,422 2,534,284

Risk analysis

YOE PMOC values

Funding value @ (50%ile) & Secondary Mtigation Level (65%ile)

YOE Sponsor values

Overall

Part 1 Part 3 Part 4


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Figure 2. Cost Risk Model Results

The recommended estimate represents the p50 value from the FTA risk assessment model, when adjusted for the specifics of this project. The historic-trended model indicates 40%-likely to 80%-likely range of $8.138 billion to $8.945 billion (excluding finance). Secondary mitigation is difficult to cost-effectively obtain at this stage where major portions of the project are already contracted for construction and design is largely complete. However, the upcoming major City Center work provides a significant opportunity for Secondary Mitigation items that may be priced at market levels. It is recognized that Secondary Mitigation opportunities have been proposed, but of many items have not been fully vetted by executive management and many indicate target decision dates that are immediately upcoming or past. In order to preserve these opportunities, the items must be defined before the procurement and identified as potential future deductive alternates. A potential level of Secondary Mitigation protection is the p65 level; should this level be desired, the amount of Secondary Mitigation to be developed would be $277 million. Table 3 presents the comparison of costs by SCC for the FFGA budget, current HART EAC, and PMOC p50 and p65 Targets.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

7,000.00 8,000.00 9,000.00 10,000.00 11,000.00 12,000.00

Millions

Probability distrbution

HART EAC p42

Modeled p50


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Table 3. Cost Comparison by SCC

SCC SCC

Description

2012 FFGA Budget

2016 HART EAC

2018 HART EAC

2018 PMOC

p50 Target

2018 PMOC

p65 Target

10 Guideway & Track Elements 1,275,329 1,525,967 1,369,701 1,397,670 1,397,670 20 Stations, Stops, Terminals, Intermodal 506,166 631,094 747,048 770,009 770,009 30 Support Facilities 99,425 115,478 100,807 100,807 100,807 40 Sitework & Special Conditions 1,103,867 1,272,832 2,239,662 2,257,805 2,257,805 50 Systems 247,461 357,180 311,132 311,132 311,132 60 Row, Land, Existing Improvements 222,188 208,798 240,000 315,800 315,800 70 Vehicles 208,501 191,475 211,390 211,390 211,390 80 Professional Services 1,183,826 1,517,800 2,040,905 2,099,932 2,099,932

90 Allocated Contingency (Incl. above) - 822,602 (Incl.below) (Incl.below) 90 Unallocated Contingency 101,871 613,478 81,807 834,010 1,111,042

Sub-Total 4,948,635 6,434,102 8,165,054 8,298,555 8,575,587 Financing Cost 173,058 393,058 855,000* 855,000* 855,000* Total Project Cost 5,121,693 6,827,160 9,020,054 9,153,555* 9,430,587*

All values in $1,000 *The report uses the existing $855 million in finance costs. Total finance costs and total project costs may differ based on revisions that would be required to the finance plan to cover the increased project costs.

During the February 2018 risk workshop, it became clear that HART had begun to advance it’s cost and risk tracking procedures to become more aware of the cost implications and to begin to develop a more robust system to respond to and resolve known risks. In the prior major FTA/PMOC risk review, these measures were severely lacking. These improved efforts are a positive development toward project cost-risk protection. The project has experienced and is expected to experience significant challenges as it moves toward the next phase of completion. Continuation of integration of visible and independent risk management into the project is an important safeguard. Recommendations

(1) At this risk refresh, the PMOC recommends a funded contingency at p50 of approximately 11%, or $834 million, be added to the stripped and adjusted estimate of $7.465 billion equating to an overall recommended budget of $8.299 billion (excluding finance).

(2) HART has committed to develop an effective contingency drawdown control curve and has committed to tracking remaining contingency against that control curve. It is strongly recommended that this system be fully implemented as soon as feasible.

(3) The recommended amount of budget increase reflects the condition of no viable Secondary Mitigation being presented. However, the upcoming major City Center work provides a significant opportunity for Secondary Mitigation items that may be priced at market levels. In order to preserve these opportunities, the items must be defined before the procurement and identified as potential future


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deductive alternates. A potential level of Secondary Mitigation protection is the p65 level; should this level be desired, the amount of Secondary Mitigation to be developed would be $277 million.

(4) The HART Risk and Contingency Management Plan (RCMP) has been updated to provide an improved description of risk management policies that if fully implemented should act as a safeguard to proactively determine whether current and future risk threatens the project. Full implementation of this effort will require strong management priority, especially to prevent concerns over budget increases from influencing the candid exposure of project risk.

(5) It is recommended that continued emphasis be maintained to manage and track the actions needed to pro-actively assess and resolve risks once they are identified.


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2.0 INTRODUCTION

The Honolulu Authority for Rapid Transportation (HART) continues to advance development of its Honolulu Rail Transit Project (“Project”) in accordance with the Federal Transit Administration (FTA) New Starts requirements. The Project is intended to provide improved mobility in the highly-congested east-west corridor along Oahu’s south shore between Kapolei and the Ala Moana Center. FTA assigned Jacobs as the Project Management Oversight Contractor (PMOC) on September 24, 2009, to monitor the Project and provide FTA with “information and well-grounded professional opinions regarding the reliability of the scope, cost, and schedule” of the Project. That effort continues with this update report, which represents the PMOC’s assessment of Risk and Contingency Management. The 2018 risk refresh is an update of the risk assessment that was completed in advance of the Full Funding Grant Agreement (FFGA) in 2012. Risk Refresh workshops were held in April 2014 and April 2016. For this current effort, the PMOC reviewed any Project changes since 2016 that may affect the management capacity and capability of the project sponsor as well as changes associated with Project’s current FFGA scope, schedule, cost estimate, and risk and contingency management. A workshop was held on February 27, 2018 that included representatives from HART, FTA, and the PMOC. A FINAL DRAFT of the risk refresh report was provided to HART on April 10, 2018 with HART providing comments on April 26, 2018. Subsequently, HART provided updated cost and schedule documents. This final report is based on the updated project information that was provided by HART through May 2018. 2.1 Project Sponsor

The City and County of Honolulu (“City”) is the overarching FTA grantee (“project sponsor”). The City’s Department of Transportation Services (DTS) and HART have executed a Memorandum of Understanding, which delineates each agency’s roles and responsibilities so as not to jeopardize the City’s standing as an FTA project sponsor. HART is responsible for the New Starts grants for the Project and may share responsibilities with DTS for grants using Section 5307 or other FTA funding sources. 2.2 Project Description

The Project is an approximately 20-mile elevated fixed guideway rail system along Oahu’s south shore between East Kapolei and Ala Moana Center in Honolulu, Hawaii. The alignment is elevated, except for a 0.6-mile at-grade portion near Leeward Community College. The Project includes 21 stations (20 elevated and 1 at-grade), 80 “light metro” rail transit vehicles, administrative/operations facilities, surface and structural parking, and maintenance facilities. HART plans to deliver the Project in four guideway segments:

Segment I (West Oahu/Farrington Highway) – East Kapolei to Pearl Highlands (7 miles/6 stations)


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Segment II (Kamehameha Highway) – Pearl Highlands to Aloha Stadium (4 miles/3 stations)

Segment III (Airport) – Aloha Stadium to Middle Street (5 miles/4 stations) Segment IV (City Center) – Middle Street to Ala Moana Center (4 miles/8 stations)

Figure 3. Project Line Segments

Additional Project information:

Additional Facilities: Maintenance & Storage Facility (MSF) and parking facilities Vehicles: 80 vehicles, supplied by the Core Systems Contractor (CSC), which is also

responsible for systems design, construction, and operations. The CSC is a Design-Build-Operate-Maintain (DBOM) contract.

Ridership Forecast: Weekday boardings – 104,300 (2020); 119,600 (2030) FFGA Budget: $5.122 billion HART’s Recovery Plan Budget: $9.020 billion FFGA Revenue Service Date (RSD): January 31, 2020 HART’s Recovery Plan RSD: December 2025


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Figure 4. Project Map

2.3 Project Status

The FFGA was executed on December 19, 2012. Construction of the West Oahu/Farrington Highway (WOFH) guideway segment, Kamehameha Highway (KH) guideway segment, and Maintenance & Storage Facility (MSF) are complete. Construction of the stations within the WOFH and KH segments has begun under three separate construction contracts. Design under the Core Systems DBOM Contract is nearing completion, and the first two railcars have been delivered to the MSF. Construction of the Airport Guideway and Stations (AGS) has begun under a Design-Build (DB) Contract. Procurement of the City Center Guideway and Stations (CCGS) DB Contract is anticipated to begin in July 2018. However, HART has begun evaluating the potential for Public-Private Partnership (P3) that could affect strategy and timing of the CCGS procurement. A decision on whether P3 will be utilized is expected to be made by June 2018. The cost estimate and schedule provided by HART for review are based on DB methodology for CCGS. Therefore, this report does not consider any potential for P3 at this time. 2.4 Project Budget

The original FFGA Project Budget was $5.122 billion, including $644 million in allocated and unallocated contingency and $173 million in financing costs. HART’s current Estimate at Completion (EAC) of $9.020 billion includes $904 million in contingency and $855 million in financing cost. The capital cost is $8.165 billion (including contingency but excluding financing). HART has expended $3.125 billion through April 2018.


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2.5 Project Schedule

The Revenue Service Date (RSD) identified in the FFGA is January 31, 2020. HART intends to begin interim revenue service from East Kapolei Station to Aloha Stadium Station in 2020. HART’s current target date for the start of full revenue operations is December 2025. The current Master Project Integrated Schedule (MPIS) includes approximately 12 months of contingency. 2.6 Project Timeline

The following table presents some of the key events that have occurred since the 2016 Risk Refresh.

Table 4. Key Project Events

Date Event March 2016 First Light Rail Vehicle (LRV) arrives in Honolulu March 2016 2016 Risk Refresh Workshop July 2016 AGS DB Contract awarded October 2016 HART submits Interim Recovery Plan with forecast of $8.6 Billion to complete the project November 2016 Charter Amendment 4 passed that transferred responsibility for Operations & Maintenance of

rail system from HART to DTS effective July 1, 2017. April 2017 HART submits Recovery Plan that addresses Plan A (full build-out) and Plan B (partial

build-out) July 2017 DTS assumes responsibility for Operations & Maintenance of rail system from HART. August 2017 CCGS procurement cancelled. September 2017 State Legislature passes Act 1, which provides additional funding through an extension of

GET and an increase of Transient Accommodations Tax (TAT) September 2017 HART submits updated Recovery Plan November 2017 LRV dynamic testing begins on the guideway December 2017 – March 2018

HART provides updated cost and schedule information based on CCGS procurement cancellation

February 2018 2018 Risk Refresh Workshop April 2018 FINAL DRAFT report provided to HART. HART subsequently provided comments and a

conference call was held to discuss the FINAL DRAFT report May 2018 Updated cost and schedule project information provided by HART.

2.7 Project Management Oversight Contractor (PMOC)

This report represents an update of the PMOC’s assessment at the time of FFGA of HART’s management capacity and capability as well as an assessment of the Project’s current FFGA scope, schedule, cost estimate, and risk and contingency management. This assessment is governed by the following FTA Oversight Procedures (OP):

OP 21 – Management Capacity and Capability Review OP 32C – Project Scope Review OP 32D – Project Delivery Method Review OP 33 – Capital Cost Estimate Review OP 34 – Project Schedule Review OP 40 – Risk and Contingency Review


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2.8 Evaluation Team

The following table presents the PMOC Evaluation Team and their respective roles associated with the assessment of the Project.

Table 5. PMOC Evaluation Team

Name Firm Role Timothy Mantych Jacobs Engineering Group Program Manager William Tsiforas Jacobs Engineering Group Task Order Manager Charles Neathery Jacobs Engineering Group Construction Management, Project Controls,

Schedule Risk Assessment Timothy Morris Jacobs Engineering Group Cost Estimating Alvin Nakamura Jacobs Engineering Group Construction Management Arun Virginkar Virginkar and Associates Vehicles, Systems Bob Merryman ORC Training LLC Real Estate David Sillars Independent Contractor Risk Manager


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3.0 MANAGEMENT CAPACITY AND CAPABILITY REVIEW

The PMOC reviewed HART’s organization, policies and procedures in accordance with FTA OP 21: Management Capacity and Capability Review dated September 2015, to determine whether there were any significant changes that would affect management of the Project. 3.1 PMOC Assessment

HART has experienced frequent organizational changes since the FFGA was executed in December 2012. There are still concerns regarding HART’s Management Capacity and Capability and its ability to retain experienced key staff (internal and consultant) on the Project. HART continues to have difficulty filling positions due to challenges stemming from the project’s geographic location and salary restrictions. HART must ensure their consultants have sufficient “bench strength” to backfill positions with qualified personnel. The following chart graphically represents the turnover of key positions on the project since the start of Preliminary Engineering in 2008. The chart identifies the tenure and transition of staff with the number of individuals that have held the position since 2008. It must be noted that the amount of turnover in these key positions is atypical for many Major Capital Projects.

Figure 5. Project Staff Turnover

3.1.1 Staff Retention

Challenges attracting and retaining experienced staff and key management positions was always anticipated. However, such challenges are far greater than expected. It was recommended that HART update its staffing plan to address transition of staff from the Program Management Support Consultant (PMSC) to HART during the construction phase. Staffing plans form a basis for the recruitment, development and deployment of technical personnel in the organization. Career path planning and succession planning are effectively used to facilitate the retention of technically capable personnel. This remains a critical recommendation that HART has yet to fully adopt.

PositionStaff

Since2008

Executive Director 5

Deputy Executive Director 2

Chief Financial Officer 2

Project Director 1

Risk Manager 5

Director Design and Construction 4

Design Manager 1

Construction Manager 7

Project Controls Manager 4

Director of Planning, Permitting, ROW 4Quality Manager 1

Safety & Security Manager 3

Note: White indicates position is/was vacant.

20182014 2015 20162008 2009 2010 2011 2012 2013 2017


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The PMOC also recommends that HART be proactive in transitioning key management positions currently occupied by the Program Management Support Consultant (PMSC) and General Engineering Consultant (GEC) as early as possible. This transition is necessary for HART to have more ownership and maintain stronger continuing control of the project. HART executive management has implemented some staffing changes with a goal of streamlining the organization and becoming more efficient in its decision making. HART can transition some of the key positions from consultants to its own organization, resulting in the agency having greater ownership and control of the project. However, before HART can transition some key positions from consultants to its organization a classification and compensation study should be completed to bring HART salaries on par with other transit agencies. There is a sense that critical decisions continue to be rendered “by committee” within the Project Management organization; although this process appears to be less pervasive than it had been. However, it must be eliminated altogether since it is not an effective means for management on a capital project of this size. HART has recently implemented a significant change in their Construction Management Plan (CMP) that has provided the Construction Engineering and Inspection (CE&I) consultants more autonomy to make decisions related to the contracts they manage. The PMOC agrees that eliminating redundancy in construction oversight and requiring that the CE&I consultants be held accountable for schedule and cost compliance is positive improvement. However, HART has also recently moved the change order authority to the Procurement Department. The PMOC believes this has removed decision making authority from the project team and could affect the decision-making autonomy provided to the CE&I consultants, HART Construction Managers, Director of Engineering and Construction, and the Project Director. The PMOC recommends that change order authority be given back to the project team with strict budget controls developed and enforced by HART Procurement and the Chief Financial Officer. There are currently several key positions that remain vacant. The most critical positions that HART must diligently work to permanently fill include:

Project Controls Manager – Manager resigned effective the end of March 2018 and has been filled on interim basis. This is a critical position and HART must make it a priority.

Director of Readiness & Activation – Current manager will be resigning effective June 30, 2018. This will be a critical vacancy given the transition of Operations & Maintenance responsibilities to the Department of Transportation Services (DTS).

Director of Planning, Permitting and ROW – Manager resigned effective May 11, 2018. Position will be filled on interim basis until a permanent replacement is identified.

There are many positions that HART should consider staffing either through existing resources or new resources, including:

Senior Construction Claims Specialist or a Specialized Claims Consultant Transit Planning Manager


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Rail Activation/System Testing & Integration Manager One of the key recommendations from the 2014 Risk Refresh was that HART hire a Project Director. HART hired a Project Director in the fall of 2014, which has resulted in some positive changes in the way the Project is managed. However, the Project Director has not been provided the autonomy necessary to make the changes required or to lead the project effectively.

3.1.2 Management Plans

Although HART’s Executive Management team has implemented staffing changes in order to optimize and streamline the agency, the most recent update of the PMP does not fully address these changes (e.g. identification of two Deputy Executive Directors). All of HART’s management plans must incorporate any organizational changes that have occurred or are proposed where applicable. Table 6 provides the status of the management plans.

Table 6. HART Management Plans

Plan Rev. Date Approved Status Before-and-After Study Plan 0.0 January 4, 2018 Approved/Baselined Bus Fleet Management Plan (BFMP) 4.0 January 4, 2018 Approved/Baselined Buy America Plan (BAP) 2.0 December 6, 2017 Approved/Baselined Configuration Management Plan (CFMP) 2.0 February 28, 2018 Approved/Baselined Construction Management Plan (CMP) 3.0 December 11, 2017 Approved/Baselined Construction Safety and Security Plan (CSSP) 4.0 December 7, 2017 Approved/Baselined Contract Packaging Plan (CPP) 5.0 December 13, 2017 Approved/Baselined Force Account Plan 2.0 December 7, 2017 Approved/Baselined HART Procurement Manual 0.0 December 13, 2017 Approved/Baselined Interface Management Plan (IMP) 3.0 January 12, 2018 Approved/Baselined Mitigation Monitoring Plan (MMP) 2.0 January 4, 2018 Approved/Baselined Operation and Management Plan (OMP) 1.0 February 28, 2018 Approved/Baselined Preliminary Hazard Analysis (PHA) 3.0 December 7, 2017 Approved/Baselined Project Financial Plan (PFP) 0.0 December 24, 2012 Under internal Review Project Management Plan (PMP) 6.0 February 28, 2018 Approved/Baselined Public Involvement Plan (PIP) 1.0 December 6, 2017 Approved/Baselined Quality Management Plan (QMP) 3.0 February 23, 2018 Approved/Baselined Rail Activation Plan 1.0 January 4, 2018 Approved/Baselined Rail Fleet Management Plan (RFMP) 1.0 December 11, 2017 Approved/Baselined Real Estate Acquisition Management Plan (RAMP) 6.0 March 14, 2016 Under internal review Risk and Contingency Management Plan (RCMP) 2.0 March 6, 2018 Approved/Baselined Safety and Security Certification Plan (SSCP) 6.0 January 11, 2018 Approved/Baselined Safety and Security Management Plan (SSMP) 6.0 February 28, 2018 Approved/Baselined Sensitive Safety Information Plan 1.0 December 13, 2017 Approved/Baselined Staffing and Succession Plan 5.0 May 25, 2012 Under internal review System Integration and Test Plan (SITP) 1.0 December 7, 2017 Approved/Baselined

It is critical that HART actively monitor the management of the program to ensure that project staff and all consultants/contractors implement the approved plans and procedures.


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A Decision Milestone Matrix was previously developed by HART, and staff had begun updating the matrix on a regular basis. However, this practice was not continuously implemented. The HART Risk Manager has recently resumed updating the Decision Milestone Matrix. The PMOC continues to hold Cost Containment Workshops with HART monthly to review Cost Reduction Measures. HART must make quick decisions and implement cost reduction measures. The Chief Financial Officer and Director of Procurement must develop strict budgetary controls to contain costs and the HART Project Director, Deputy Directors, Project Managers, PMSC, GEC, and CE&I consultants must be more concerned with the cost management side of the project's status than any other element of project execution. It is imperative that HART maintain control of project costs and that HART maintain control of elements likely to impose changes to the project that could introduce additional cost. 3.1.3 Operations and Maintenance

HART and DTS have begun planning for the transfer of responsibilities per Charter Amendment 4. There are numerous items for which a resolution must be obtained and properly addressed in a transition plan including:

Source of funding for Operations & Maintenance Transfer of HART staff to DTS (where applicable) Staffing needs for DTS Safety and Security approach and staffing during testing and operations (interim and full) Long gap between proposed interim opening and full RSD Development of a detailed roadmap for transition of Operations & Maintenance

responsibilities DTS is developing an organizational chart and staffing plan. Their initial plan consists of a hybrid organization that pulls staff from each of the four DTS divisions and other City departments. The FY2019 proposed budget includes 10 DTS positions dedicated to rail. However, a new position of Deputy Director of DTS position will be created that will be the lead for rail operations and maintenance. This will not occur until FY 2020. The projected Interim Opening is scheduled for December 2020. The PMOC has expressed concern that the transition plan may not be adequately developed, and sufficient resources may not be allocated, to support pre-revenue testing and revenue operations. 3.2 Recommendations

(1) Project Management Plan (PMP) and supporting plans and procedures must be updated to reflect any recent organizational changes.

(2) Reevaluate the Staffing Plan to be more effective and fill any gaps in technical capability of the organization.

(3) HART must strive to transition the key management positions currently occupied by the PMSC and GEC to HART, to ensure greater ownership and stronger control of the project.


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(4) Actively monitor the management of the program to ensure that project staff and all consultants/contractors implement the approved plans and procedures.

(5) Develop an effective process to preserve critical technical capabilities during any significant reduction in force.

(6) Provide training to key existing staff members through the National Transit Institute (NTI) or other similar organizations to enhance their transit project management skills.

(7) Move “Change Order” Authority to the Project Team and establish strict budget controls to be enforced by HART Procurement and Chief Financial Officer.

(8) HART’s Project Director, Deputy Directors, Project Managers, PMSC, GEC, and Construction Engineering & Inspection (CE&I) consultants must focus more heavily on meeting construction project schedules and cost containment of the project.

(9) HART and DTS must develop a detailed roadmap for transition of Operations & Maintenance responsibilities.


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4.0 PROJECT SCOPE AND PROJECT DELIVERY REVIEW

The PMOC reviewed the Project in accordance with FTA OP 32C: Project Scope Review and OP 32D: Project Delivery Method Review, both dated September 2015, to determine whether there had been any significant changes regarding the scope or delivery method of the Project. 4.1 PMOC Assessment of Project Scope

The general scope of the project has remained largely intact since the FFGA, although changes to the method of contracting and outside influences on the execution of the scope have been significant. Construction of the West Oahu/Farrington Highway Guideway Segment (WOFH), Kamehameha Highway Guideway Segment (KH) and Maintenance and Storage Facility (MSF) are complete. Construction of the Airport Guideway and Stations (AGS) has begun under a Design-Build (DB) Contract. Procurement of the City Center Guideway and Stations (CCGS) DB Contract is anticipated to begin in July 2018. However, HART has begun evaluating the potential for Public-Private Partnership (P3) that could affect the City Center Guideway and Stations (CCGS) procurement. A decision on whether P3 will be utilized is expected to be rendered in June 2018. The cost estimate and schedule provided by HART for review are based on DB methodology for CCGS. Therefore, this report does not consider any potential for P3 at this time. Since the workshop in February 2018, HART has awarded DBB511 – City Center Utility Relocation (CCUR) contract. This utility work was separated from CCGS to control costs, potentially reduce overall time to construct, reduce contract interfaces, and leverage innovation by the contractors. HART had previously included $408 million (excluding contingency) in their forecast. HART awarded the contract with a not-to-exceed amount of $400 million (excluding contingency). This award has been incorporated into the PMOC’s risk analyses. The PMOC primarily focused its scope and cost reviews on those contract packages that have not yet been awarded or have significantly changed since the 2016 Risk Review. These contract packages include:

Table 7. Remaining Construction Contract Packages

Contract ID Contract Description DB550 City Center Section Guideway and Station Group (CCGS) DB DB275 Pearl Highlands Parking Garage (PHPG) and H2 Ramp DB

The scope of the Project is still well-defined. However, overall progress of the project is delayed due to legal action, delays with third party agreements (as with HECO over actions regarding parallel high-voltage power lines), and decisions to repackage contracts. HART could begin procurement in the summer of 2018 for the PHPG and H2 Ramp. However, it is likely HART will delay this procurement until there is more certainty with the project budget. It is also possible this contract could be included in a P3 option.


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The drawings for all four line segments include right-of-way plans, drainage plans and details, demolition plans, guideway plans and profiles, typical cross sections, utility plans, roadway plans, signing and striping plans, maintenance of traffic plans, traffic signal plans, street lighting plans, structural drawings, landscaping plans, station drawings, and contact rail installation plans. The following observations were made regarding the project scope review:

Several third-party agreements have yet to be finalized. Design issues that affect the interface with other contracts, including the Core Systems

Contract (CSC), must be resolved. Detailed cost estimates have not yet been prepared for several potential Contract Change

Orders (CCO). HECO’s imposition of further restrictions on work near high-voltage lines, including

requirements for undergrounding them, may cause further delays and costs. HART’s award of CCUR will help mitigate some of these concerns, but full mitigation will not occur until all applicable task orders under the CCUR contract are issued.

The amount of rework that will be needed to bring the City Center design to completion may be considerably more extensive than HART anticipated, since the new DB contractors will likely plan on using only the concept design; their responsibility for the final design may mean that they will not be able to use any of the essentially-complete elements of the earlier design-bid-build (DBB) packages.

Real estate acquisition to support construction in the City Center Segment will continue to require significant coordination and effort by HART.

HART has actively interfaced with the Hawaii Department of Transportation (HDOT) State Oversight Agency (SOA). This has proven to be beneficial to the project. HART must continue to be proactive with regard to planning and implementation associated with the interim revenue service to ensure they meet the HDOT Safety and Security Program Plan requirements for start-up activities.

4.2 PMOC Assessment of Project Delivery

HART has significantly revised its strategy for delivery of the utilities, guideway and stations on the east segments of the alignment. HART had intended to utilize multiple DBB contracts for these elements. HART’s consultant advanced the design of the utilities and guideway for the Airport and City Center Segments to near 90%. HART awarded the Airport Section Utility Relocation Contract in July 2014 to complete some advanced utility work prior to award of the Airport and City Center Guideway and Utilities DBB Contract. HART began procurement of the Airport and City Center Guideway and Utilities DBB Contract in mid-2014. The stations within the Airport and City Center Segments were to be built under a separate DBB contract. However, following the opening of the WSSG bids, a thorough review of its Contract Packaging Plan (CPP), and the realization that the engineer’s estimate for Airport and City Center Guideway and Utilities DBB Contract was trending significantly higher than budgeted. HART made the decision in 2015 to switch to DB and award two separate contracts. By making this procurement change, HART hopes to control costs, potentially reduce overall time to construct, reduce contract interfaces, and leverage innovation by the DB contractors.


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The following observations were made regarding the project delivery review:

The change in strategy for the City Center Segment has had a significant impact on the Master Program Integrated Schedule (MPIS) and has contributed to the erosion of the schedule contingency. However, the implementation of CCUR will help mitigate some of the concern with additional potential float erosion.

Any delay to the CCGS DB Contract now has a direct impact on the target RSD and could impact the project cost.

HART’s Contract Packaging Plan (CPP) will continue to require significant management effort to ensure proper interface coordination.

There is concern whether bidding competition for the remaining packages will be strong enough to assure pricing within budget.

4.3 PMOC Recommendations

(1) HART must take a more proactive approach to ensure contractors establish and meet schedules.

(2) Site access and permitting issues must be resolved early to avoid delays and extras.

(3) Continue to review and proactively vet all potential Contract Change Orders (CCO). Detailed cost estimates must be prepared early in the process to ensure the individual contract budgets will not be adversely impacted.

(4) Continue to review all post-Record of Decision (ROD) changes to ensure they do not have an impact on the environmental documentation, the project scope, project cost, project schedule, or future operations.

(5) Prioritize resolution of required third-party agreements, real estate acquisitions, and coordination between various contractors and designers.


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5.0 PROJECT SCHEDULE REVIEW

The PMOC followed the requirements outlined in the FTA OP 34: Project Schedule Review, dated September 2015 to assess and evaluate the project sponsor’s project schedule. The PMOC Schedule Review report format is consistent with FTA OP 34 and addresses all the subcategories included under the categories listed below:

Schedule Management Review o Project Management Capacity and Capability o Systems, Tools, and Software

Technical Review o Mechanical Soundness Check o Fundamental and Reasonable Soundness Check o Schedule Contingency o Readiness to Conduct FTA OP 40 Risk Assessment

5.1 Documents Reviewed

The PMOC used the following information to support the FTA OP 34 review. The PMOC provided preliminary findings and recommendations to FTA and HART during the months of April and May 2018. One of the action items stemming from the meetings was for HART to provide a more updated and revised MPIS to more accurately reflect progress made since November 2017. The table includes a revised MPIS and Basis of Schedule (BoS) HART transmitted to the PMOC May 2018 and provided a technical correction to the Oracle P6 schedule file on May 23, 2018:

Table 8. Schedule Document Submittal History

Document Name Transmitted

to PMOC Status

(PMOC Comments) First Review Package MPIS 2017.11.24.xer 12/07/17 Submittal Package – Data date 24NOV17 INTERIM OPENING CPM – NOV 2017.PDF 12/07/17 Attachment to Submittal Package email RSD-LONGEST PATH NOV 2017.PDF 12/07/17 Attachment to Submittal Package email HRPT-Project Basis of Schedule DRAFT171017.pdf

10/20/17 Basis of Schedule

May 23 Revised Documents Basis of Schedule 2017.12.20_Addendum1_180517r1.docx

05/17/18 Basis of Schedule

1804 P6 Export revB.xer 05/17/18 Oracle P6 Schedule 1804 RSD Critical Path revB.PDF 05/17/18 Critical Path Report 1804-RevB Schedule Log.PDF 05/17/18 Schedule File Log (F9 Report)

5.2 Schedule Management

The following section includes review topics as listed in the FTA OP 34 “Schedule Management” subcategories followed by PMOC findings and recommendations as appropriate.


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5.2.1 Project Management Capacity and Capability

Organization, Experience and Qualifications HART has realized significant turn-over and retention challenges since the FFGA was executed in 2012. Although, the PMOC and HART acknowledge that the overall management and technical capability has improved since then, most notably the schedule and cost reporting deliverables. The current project control manager and Lead Scheduling Manager are highly qualified and are leading the project controls team in the correct direction. The PMOC has observed some project control functional disconnect between the CEI project staff and the HART project control management staff. For example, HART staff noted that it is not receiving Technical Schedule Review (TSR) Reports from one or more CEI project schedulers in the field even though this task is a primary function of their roles and responsibilities. The PMOC suggested HART impose accountability repercussions if need be to improve the overall functionality of required project control tasks and deliverables. Unfilled project control positions combined with underperforming consultant project control staff certainly weaken management capacity on this challenging project. HARTs previous PMP has partially addressed the position roles and responsibilities but not to the level recommended by the PMOC over time. Many factors can contribute to the underperformance of a team, but, unless responsibilities and accountabilities are clear, there is a significant risk that problems will arise. More definitive position descriptions, roles, and responsibilities will prevent staff member ambiguity and misunderstanding, and benefit new employee orientation. HART has an opportunity to greatly improve its PMP and training materials with improvements and enforcement of Responsibility Assignment Matrix (RAM). HART has satisfied the requirement, although staff positions must be immediately filled and consultant staff must either conform to schedule management process and procedures or be replaced. Furthermore, HART must find a permanent replacement for the recently vacated Project Controls Manager.

5.2.2 Systems, Tools and Software

5.3.2.1 Schedule Format: Is the schedule format consistent with relevant, identifiable industry or engineering practices?

HART is using the latest version of Oracle’s Primavera Project Manager (P6) scheduling software and is requiring all scheduling parties involved on the Project to use the same software. The schedule format is acceptable. The schedule software is more than acceptable and is considered the leading industry schedule management tool. PMOC Determination HART has satisfied the requirement.


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5.3.2.2 Does the Sponsor’s project scheduling software and IT infrastructure have the capabilities and scalability to manage the project and the consultants, suppliers and contractors?

HART’s computer hardware, server, supporting software packages, and interfaces with HART's existing repositories that support the project controls and project management reporting are adequate for the Project. HART intends to intertwine the Project Controls and Document Management systems with its existing system after the project is completed. HART is currently replacing the current document management systems as it is no longer supported by the Vendor which has been in the works for almost two years now. The PMOC recommends HART place more emphasis on this initiative because document control is one of the most important and fundamental components of a program control system. PMOC Determination HART has satisfied the requirement. 5.3.2.3 Describe the control methods used by the Sponsor

The PMOC conducted a detailed review and evaluation of the HARTs management control system to determine whether HART was efficient and effective in implementing the project. The PMOC also evaluated HART's project control system and organization as part of its Management Capacity and Capability Review and Technical Schedule Review which is routine on PMOC monthly project control meetings and site visits. These reviews included an evaluation of the tools, procedures, organization, and roles and responsibilities of the project control positions. PMOC Determination HART has satisfied the requirement. 5.3.2.4 Are the Sponsor schedule update procedures during Project Development,

Engineering, and Construction phases commensurate with the challenges of the project?

HART has provided consistent MPIS monthly progress updates for more than two years now since replacing their Project Controls Manager and Scheduling Manager. The PMOC has noted that HART must continue to enforce consultant conformance to the project control plans and procedures to more efficiently and effectively measure, track and control project work performance. Overall HART staff is implementing good


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progress update procedures and should continue focusing such conformance to similar requirements by the construction contractors. PMOC Determination HART has satisfied the requirement. 5.3.2.5 Describe how the Sponsor incorporates change control (scope, schedule and

budget) into the schedule management process.

HARTs implementation and conformance to their change control and configuration management control procedures has been less than satisfactory for quite some time. This observation is also evident with the outcome of disputed change orders across many contracts including the excessively delayed outcome of closing some contracts that have been completed more than one year. HART must significantly improve implementation and conformance of its change control procedures. Although the PMOC finds this category insufficient, the PMOC has witnessed improved oversight of the disputed change order process by HART management and project control staff. PMOC Determination HART has satisfied the minimal requirements and should place more emphasis on improving tasks and deliverables associated with this category. 5.3.2.6 Has the Sponsor incorporated claims avoidance techniques into their

schedule management process? How have they developed a dispute resolution, peer review or change control board, time impact analysis or claims mitigation processes?

This process initially begins with the development of project controls plans and procedures which were reviewed in several previous PMP revisions, especially during HARTs application for an FFGA in 2011-2012. Such procedures are incorporated into the schedule management process so the emphasis is more about implementing and ensuring conformance to the procedures. HART has experienced many disputed change orders and settled them with the construction contractors preventing claim litigation in the court system. The PMOC recently emphasized the risks associated with the change order process that require swift dispute resolution most importantly on the City Center alignment segment. The PMOC encourages HART to take a more serious and purposeful stance on increasing change order oversight and implementation as a means to reduce potential claims and increase impacts to the project cost and schedule. PMOC Determination HART has satisfied the minimal requirements and should place more emphasis on improving tasks and deliverables associated with this category.

5.2.3 Project Control Plans, Procedures, and Contractual Requirements

Schedule Control begins with the establishment of “standardized” project control, contractual requirements, and conformance procedures. Requirements refer to the contract terms and conditions, specifications, procedures, and guidelines associated with the individual contracts for


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the vendors, contractors, and consultants on the project. Conformance refers to the assurance that all parties abide by the contractual specifications and requirements. Standardization refers to the approach of requiring all scheduling parties to use the same input and output forms so that all reporting information is consistent. PMOC Determination HART has satisfied the minimal requirements and should place more emphasis on improving tasks and deliverables associated with this category. 5.3 Technical Review

The following section includes review topics as listed in the FTA OP-34 Schedule Review “Technical Review” subcategories. Each review topic includes a description explaining the relevant information included in the MPIS and Basis of Schedule (BoS). Graphics are included when necessary to support the PMOCs determination. 5.3.1 Mechanical Soundness Check

53.1.1 Basis of Schedule

HART always includes a BoS with every major MPIS revision or at frequent requests made by the PMOC. HART provided a revised BoS in December 2017 to support the MPIS Schedule Review and Schedule Risk Assessment. The PMOC did find inconsistencies with information contained in the BoS and the MPIS such as the WBS, Calendar Library, distinction of Federal and Hawaiian State holidays which is currently under revision in the MPIS. HART provided a revised BoS with their revised MPIS transmitted to the PMOC in May 2018. HART also addressed several of the PMOCs preliminary findings and recommendations such as correcting the calendar library and correcting the work breakdown structure. HART addressed a significant amount of the calendar library issues and partially addressed the WBS. A considerable amount of information provided in the BoS was used to support the PMOC OP-34 Schedule Review. PMOC Determination HART has satisfied the requirement. 5.3.1.2 Schedule Breakdown Structure (SBS)

The Schedule Breakdown Structure (SBS) describes the taxonomy of the various schedule “types” which comprise the MPIS. The BoS describes the relationship between schedule types and explains how the information is integrated between schedules and schedule users, including the construction contractors, vendors, real estate acquisition


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department, design consultants and the HART. HART established an SBS and has incorporated improvements as the project has progressed well into the construction phase. PMOC Determination HART has satisfied the requirement. 5.3.1.3 Hierarchical Structure

The Work Breakdown Structure (WBS) is a sorting and organization of project-specific information (budget, cost and schedule) usually determined by the owner. A WBS is defined by activity code or WBS fields in the scheduling software. HARTs MPIS uses a combination of WBS code fields and activity code fields. HART is currently revising the MPIS WBS to incorporate minor improvements and simplify data code fields. The undergoing revision actually caused the PMOC to spend more time than expected conducting the OP-34 Schedule Review as some activity codes used in the past were deleted making the overall WBS not as intuitive and more difficult to organize for custom reporting. HART staff mentioned they are aware of the issue as the they continue to revise the MPIS WBS. PMOC Determination HART has satisfied the minimal requirements and should place more emphasis on improving the WBS immediately. 5.3.1.4 Standard Cost Codes (SCC)

The MPIS does not have a WBS specific to SCC and is not necessary. PMOC Determination Requirement not relevant for the MPIS. 5.3.1.5 Calendars

The scheduling software calendar library dictates the number of work periods and non-work periods, usually measured in units of hours or days. The calendar(s) also can be used to incorporate non-work periods such as holidays, weather days, or other seasonal restriction periods such as the installation of temperature-sensitive materials. The utilization of multiple calendars is practical and necessary during schedule development and should be monitored and reviewed frequently to track historical information. The HART MPIS contains an excessive amount of Calendars probably incorporated by a multitude of scheduling parties that are not using a standard calendar library established by HART. This is a prime example of not establishing and maintaining schedule management architecture amongst the scheduling parties. It has created a maintenance nightmare and the PMOC recommends HART mandate all scheduling parties use a Project standard Calendar library immediately. The PMOC generated a MPIS scheduled report sorted by Calendars for all remaining activities in the MPIS. A summary of the Calendar names is provided in Table 9.


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Table 9. Calendars within Remaining Activities in HART MPIS

HART has addressed several of the PMOCs preliminary findings and recommendations such as consolidating the duplicative calendars in the MPIS. PMOC Determination HART has satisfied the requirements. 5.3.1.6 Resource Loading & Cost Loading

Cost and resource loading includes the planned utilization of material, labor and equipment resources required to perform the work. The resource library may contain material, labor and or equipment resources as a basis for determining and quantifying activity original durations and remaining durations as work is performed, measured and progressed in the schedule, typically interfaced with earned value management. When resources are assigned to an activity, the quantity to complete and units per time period of the driving resources determine the activity’s duration. In addition, the activity resources

Calendar Name Description 7d wk- NO Hol 7 work days per week with no holidays 5 Day Workweek 5 work days per week and with holidays xGL Std 5d wk- HI Hol 5 work days per week with Hawaiian holidays Standard 5 Day Workweek-2 5 work days per week and with holidays 2 – 5 Day w/Holidays-1 5 work days per week and with holidays 1 – 7 Day No Holidays 7 work days per week with no holidays 07-Day Workweek 7 work days per week with no holidays KHG 7 – 7 Days per week (All Days) 7 work days per week with no holidays GCS- 5 Day w/Holidays 5 work days per week and with holidays 9HART WOSG 29OCT15 and other non-explained exception days, federal

and Hawaiian holidays 5d w/Hols (State) 5 work days per week with State holidays GCS – 7 Day No Holidays 7 work days per week with no holidays 7d wk – NO Hol-1 7 work days per week with no holidays 2 – 5 Day w/ Holidays 5 work days per week and with holidays CCGS PLAN A 5 DAYS WITH HOLS& WEATHER

5 work days per week and holidays and random non-work days to account for inclement weather are included in this calendar

EE 5 Day Workweek w/Holidays 5 work days per week and with holidays Standard 5 Day w/HI Holidays 5 work days per week with holidays 7d wk – NO Hol(Proj) 7 work days per week with no holidays Work Week 5 work days per week with no holidays 7 Day 7 work days per week with no holidays Standard 5 Day Workweek (KHSG) 5 work days per week with holidays and random exceptions HART 5D w/Hols 5 work days per week with holidays HART 7D 7 work days per week with no holidays HART WOSG Calendar Days 7 work days per week with no holidays HART WOSG 7 work days per week with holidays xStd. 5d wk-HI Hol 5 work days per week with Hawaiian holidays 7d wk – NO Hol(Proj) 7 work days per week with no holidays


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can be “leveled”, “smoothed”, “squeezed” or “crunched” as analysis and management decisions are evaluated for remaining work to be performed. An adequately-resourced schedule combined with earned value management (backward looking) and trending analysis (forward looking) are prudent schedule control methods, especially during the project schedule update process, regardless of the project phase. The MPIS resource library contains codes accounts for labor and major equipment. The list of resource code accounts is illustrated in the far-left column of Figure 6 and the City Center Utility Relocation (CCUR) resource assignment is represented by the histogram in Figure 6.

Figure 6. CCUR Electrical Crew Resource

HART also included several resource histograms in their BoS representing the various CCUR utility crews as shown in Figure 7.


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Figure 7. CCUR Partial Crew Resource Reports


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Likewise, HART included an example cost curve in their BoS representing the various CCUR utility crews as provided in Figure 8.

Figure 8. HART Basis of MPIS Schedule: Example Cost Curve

PMOC Determination HART has satisfied the requirement. 5.3.1.7 Software Settings

Scheduling software settings must be standardized in an environment of multiple scheduling parties. Inconsistent use, whether incidental or with purpose of manipulation, can generate significant variances in output information. The schedule software contains calculation settings that apply to cost and resource loading, critical path, predecessor and successor logic connectivity, percent complete, cost and resource utilization, and actual work performed. Many, if not all of these settings are crucial for progress update and critical path calculation. CPM schedule specifications and related contractual


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requirements seldom address or completely specify which scheduling software setting conditions are required for a given project or program. This oversight may lead to intentional manipulation of software settings to favor the end user. Special attention is needed to ensure that schedule calculations accurately generate and avoid distorting schedule forward and backward pass CPM data. The scheduling software calculation settings should be monitored to ensure that they are consistently used and not randomly changed or manipulated, especially on large programs that require multiple design and or construction schedules. HART should make sure all software settings are standardized and consistently used by all scheduling parties on the Project. The contractual documents should clearly state which settings should be used. The following table describes the standard default settings used within the MPIS schedule software. The contract requirements do not stipulate which scheduling software settings are to be used, although the PMOC recommends that all scheduling parties consistently use the default settings as “marked” in Table 10.

Table 10. Software Settings

The PMOC reviewed the schedule and observed that all settings are in compliance with industry standards of care. HART does not address software settings in the Project Schedule specifications or General Conditions. However, HART should consider doing so for any remaining contracts to be procured. PMOC Determination HART has satisfied the requirement. 5.3.1.8 Schedule File Log

The fundamental element that supports the integrity of a schedule is the internal schedule calendar structure, default settings and calculations utilized with the scheduling software. Before schedule information can be interpreted with confidence, a check must be performed to ensure the information in the schedule is fundamentally correct and contains logical activity relationship connections. A fundamental soundness check must be performed after every schedule update to ensure the information and logic contained in the schedule is correct and properly represents actual work performed.

Description Settings Logic Calculation Retained Progress Override

Start-to-Start Lag from: Actual Start Early Start

Schedule Durations: Contiguous Interruptible

Show Open ends as: Critical Non-critical

Calculate total float as: Most Critical Start float Finish float

Inter-project relationships: With update Without update Ignore

Auto Cost Rules: % Complete link to RD

Yes No


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The Schedule File Log generated by the scheduling software indicates valuable technical information that must be reviewed every time the schedule is revised or progress updated. This procedure is a critical quality control method that must be performed. The Schedule File Log includes data categories for:

Schedule / Leveling Settings Statistics Errors and Warning Results, and Exceptions

The most common scheduling mistakes are usually indicated in the Errors and Warnings and Exceptions categories. During schedule development and updating, it is common to accidentally omit relationship connections or inaccurately enter progress update information; this report is the best method to prove and correct such integrity issues.


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Table 11. Technical Data Summary

Schedule Log Categories with Data MPIS Statistics # of Projects 16 # of Activities 20814 # of Activities Not Started 2213 # in Progress 363 # Completed 18238 # of Relationships 50440 # of Constraints 15 Settings Scheduling Yes Leveling No Ignore relationships to / from other projects No Make open-ended activities critical No Use expected finish dates Yes When scheduling progressed activities Retained Logic Calculate start-to-start lag from Early Start Define critical activities as Longest Path Compute total float as Finish Float Calculate float based on finish date of Each Project Calendar for scheduling relationship lag Predecessor Errors and Warnings # without Predecessors 24 # without Successors 25 Out-of-sequence Activities 35 # with Actual Dates > Data Date 0 Milestone Activities with invalid Relationships 12

Scheduling/Leveling Results # of Projects Leveled 16 # of Activities Leveled 20814 Data date April 27, 2018 Latest calculated early finish (post-construction/RSD)

April 09, 2030

Exceptions Critical Activities (*based on various software settings) *1 Activities with unsatisfied constraints 0 Activities with unsatisfied relationships 0 Activities with external dates 15

Open-ended Activities Typically, open-ended activities should only include the first start activity and the last finish activity. Although, it is acceptable to also include milestone activities, usually finish milestone, open ended without a successor. Generally open-ended activities are caused by an oversight wherein an activity is missing a predecessor or successor. This usually occurs during schedule development and when activity relationships are revised during routine progress updating. Caution should be used during schedule progress updating because a minor oversight can create an unintentional open-ended activity. It only takes one incorrect logic connection, or open-ended activity, to severely undermine the integrity of a schedule. Routine quality control procedures include the review of


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open-ended activities to ensure they are properly used and connected to the appropriate relationship chains. The MPIS contains forty-nine (49) open-ended activities. Besides the schedule start and project completion milestone, other open-ended activities are summary level of effort and a non-construction related activity for Owner Controlled Insurance Program (OCIP) Brokerage services. Some of these activities are used for cost loading purposes. Out-of-Sequence Progressing Out-of-sequence progressing is an important indicator because it identifies errors, omissions, and other potential problems that can distort milestone dates and general progress information, thus affecting the schedule as a whole. Proper activity progress updating and review will prevent out-of-sequence progressing problems. In addition, maintaining a minimal amount of open-ended activities is conducive to “good housekeeping” practices and overall a more manageable task during schedule updating. For this reason, many schedule specifications require that only the start and end activities can be open-ended. The Schedule File Log indicate thirty-five (35) activities containing out-of-sequence progress. After investigation, the PMOC determined these activities do not cause adverse impact to the schedule forward and backward pass calculations. The PMOC does however, recommend HART continue to reduce the amount of out-of-sequence progress activities during routine progress update reporting. Activities with Actual Dates > Data Date When activities are progressed, the early start date is changed to an “Actual Start” date indicated by the letter “A” next to the date. During progress updating, a common mistake is progressing activities beyond the Data Date. Other common mistakes include entering a percent complete in an activity without entering an Actual Start date. There are no activities containing actual dates beyond the data date of 27-APR-18. Milestone Activities with invalid relationships This refers to certain types of milestones containing invalid predecessor or successor relationships. There are no issues identified at this time. Settings – Critical Path The critical path can easily be distorted by excessive use of constraint dates, out-of-sequence progressing, open-ended activities, and other improper progress update procedures. A common oversight is the misinterpretation of a schedule’s true critical path. Sometimes a schedule calculation caused by the excessive or improper use of constraint dates may adversely impact the critical path software calculation. Consistent monitoring of the critical path during progress updates and variance reporting is crucial and reconciled by evaluating the Schedule File Log.


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The Settings category in the Schedule File Log indicates a critical path setting for “Longest Path.” There are also different settings related to multiple projects within the MPIS and HART must be careful when using the setting for calculating “critical path for each project” versus calculating “critical path for opened projects” because both settings provide difference critical paths. The HART MPIS includes several activities that extend into year 2030 for OCIP, fare collection operation and maintenance, and other administrative and program management tasks. These activities can severely confuse a reporting audience if they are unfamiliar with the purpose of said activities. HART must clearly communicate with its reporting audiences and also better clarify the use of such activities in the Basis of Schedule as well. Constraint Dates The Schedule File Log indicates the use of fifteen (15) constraint dates. The current use of constraint dates does not adversely impact the schedule forward and backward pass calculations. The PMOC will remove most of the constraint dates in order to perform the schedule risk analysis. Relationship Ties The MPIS does not contain a fatal amount of improper relationship ties considering the amount of activities is greater than 20,000. PMOC Determination HART has satisfied the requirement although continuation of improvements is needed. 5.3.1.9 Critical Path Analysis

PMOC review and comments are provided in the section above.

5.3.2 Fundamental and Reasonableness Soundness Check

5.3.2.1 Schedule Quality and Detail

Quality The MPIS quality and detail has significantly improved over the past two years. HART project control staff has been very collaborative with the PMOC and open to incorporating improvements and recommendations provided by the PMOC. Likewise, HART staff have included schedule management best practices and improvements over the course of the construction phase. Such improvements include revisions to schedule management procedures and change control procedures as well. Detail The MPIS is presented in a logical manner through the use of an intuitive WBS and descriptive activity tasks and milestones. The MPIS does not contain many complex or multiple activity relationships. Most of the MPIS activities do not contain multiple predecessors or successors as the schedule logic is predominately linear in nature. The


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MPIS activity detail is sufficient and traceable to the individual construction contractor detailed schedules. PMOC Determination HART has satisfied the requirement. 5.3.2.2 Scope Inclusivity

The MPIS scope inclusivity is aligned well with HARTs Contract Packaging Plan using the scheduling software WBS and activity coding specific to the corridor segments and individual contracts. The primary unknown, though not detrimental to scope inclusivity, is a final decision on the contract delivery method for the City Center guideway and stations contract. It is currently a Design-Build although HART is considering a Private-Public Partnership (P3). PMOC Determination HART has satisfied the requirement. 5.3.2.3 Discernible Critical Path and Near Critical Paths

Oracle P6 utilizes various critical path software calculation settings by identifying critical activities either by Total Float or by longest path. The “Longest Path” calculation is the truest indication of a project’s critical path because it discriminates between near-critical activities and the most critical activities. The HART MPIS is composed of 16 individual projects within one “.XER” P6 electronic file. The software settings can be changed to calculate float base on “Each Project” or by “Opened Projects”. The longest path is drastically different when applying and comparing these to settings. For instance, the PMOC typically uses the “Opened Projects” setting to calculate the overall “program” longest critical path. The major flaw using this setting is that it generates only two activities on the longest path, and one is a summary level of effort activity [see Figure 9].

Figure 9. Longest Critical Path (Opened Projects Total Float Setting)

The longest path using the “Each Project” total float calculation setting produces several dozen activities however, the PMOC cautions HART to be careful as to not misinterpret the overall program critical path as many of the activities on the “Each Project” setting are truly not most critical to the overall completion of the full alignment. This is further compounded by the excessive use of constraint dates, and errors and warnings such as open-ended activities, and out-of-sequence progress activities. This of course is one of many downfalls of using very powerful scheduling software which requires an experienced team of schedulers and project control reporting specialists.


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The HART MPIS does generate a discernible critical path by project but the PMOC has verified that more MPIS schedule revisions are necessary to more accurately portray the overall program longest critical path. HART should re-evaluate the use of certain activities beyond the RSD and consider alternative schedule management methods to provide cost or resource loading in their schedule, whereas, they have already encountered resource loading technical issues. Near Critical Paths Near critical paths are, simply put, the chains of activities that contain the least amount of total float other than the longest critical path. It is possible for these activity chains to overtake the critical path activities if the critical path activities are progressed and completed more rapidly than its near critical paths. Management should always focus on the critical path but not lose sight of the near critical paths as they could eventually become more critical towards the end of the project than the critical path. The result is referred to as merge bias, due to excessive logic density and total float proximity of near critical paths. This typically occurs when schedule compression pushes an excessive number of activity chains against the project completion milestone, thereby exceeding resource availability and causing project delay. PMOC Determination HART has satisfied the requirement.

5.3.2.4 Durations

HART has significantly improved the BoS which contains activity duration buildup and production factors for major items of work including guideway substructure and superstructure activities. PMOC Determination HART has satisfied the requirement. 5.3.2.5 Schedule Sequencing

The MPIS, the Basis of Schedule, and the Contract Packaging Plan address the current design and construction packaging strategy. The MPIS WBS also separately identifies construction activity by project segment, which illustrates the sequencing among construction segment procurement and installation. A majority of the alignment is on an overhead guideway structure requiring very repetitive construction installation of piers, columns, bent caps, precast units, deck work and track work. Construction contractor crewing requirements are based on the optimization of gantry erection systems for construction of the aerial guideway structure. The sequencing proceeds in an easterly direction starting at the Farrington/West Oahu segment.


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The schedule WBS is organized and clearly segregated by the Project segments. Optimization of aerial guideway structure gantry equipment and coordination with the Core Systems Contract seems intuitive and is a reasonable work sequence approach. This category predominately focuses on the construction phase and the optimization of equipment and labor forces for similar and consecutively executed work elements. The Basis of Schedule includes logical assumptions for crew sizing and optimization related to pier, bent, and aerial structure installation, much of which is based on production factors supplied by the construction contractor. Reviews The MPIS contains a sufficient amount of activities that represent review periods for permitting, real estate acquisition, and final design review. Some of these activities and review tasks will increase in detail as the MPIS is expanded and refined. Agreements The MPIS contains a sufficient amount of activities that represent agreement tasks including interagency and third party agreements. The FTA and PMOC have suggested that the activity durations for various department agreements should be carefully evaluated, as the varying department resources may be too limited and constrained to meet the project’s peak demands. The PMOC remains concerned, though, that HART has not completed all project third party agreements. Material and Equipment Procurement The MPIS does not contain activity detail describing equipment and material procurement mainly because these work items are incorporated into the more detailed construction contractor schedules as the MPIS is more summary in nature. Professional and Engineering Service Agreement Procurement The MPIS contains a sufficient number of activities that represent the procurement of professional services for planning, consultant services, general engineering consultant, final design, and program and construction management. Delivery Methods The MPIS contains a sufficient number of activities that represent the procurement of professional services for both design-build and design-bid-build project delivery methods. Construction processes and durations and contingency buffer The MPIS has improved justification of activity durations as documented in the BoS. Real Estate and Easements The MPIS contains a sufficient amount of activity detail for real estate acquisition and easements. The PMOC does recommend HART improve the activity descriptions for each parcel as there is no traceability to the identification numbering system used within the current activity descriptions. This should be included in the BoS as well. The PMOC


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remains concerned, though, that HART has not completed more acquisitions on the easterly end of the project alignment. PMOC Determination HART has satisfied the requirement.

5.3.3 Schedule Contingency

HARTs MPIS contains one activity to represent “Buffer Float”, ACT ID PRGCTG-1 “Program – Testing Reserve” of 377 calendar days with a completion date eight (8) years and one month from the MPIS data date of 27APR18. HART revised their stance on the inclusion of latent float by revising their Basis of Schedule and including a list of activities that include a portion of contingency in each activity duration as listed below:

ACT ID DBOM-9615 “CSC Component Testing – Kapalama Sta. (7 days contingency) ACT ID DBOM-9620 “Full System Testing City Center (23 days contingency) ACT ID DBOM-9631 “Pre-Revenue Service Operations testing (18 days contingency) ACT ID DBOM-9265 “Final Demonstration Test Period (10 days contingency) ACT ID DBOM-9615 “CSC Component Testing – Kapalama Sta. (7 days contingency) Total contingency = 57 days

Otherwise stated, the MPIS contains a contingency amount of 13% total float. The most probable cause of total float depletion will be associated with construction activity taking longer than planned, actual duration greater than original duration. This is also a metric known as activity pacing (AD/OD) where a factor greater than 1.00 indicate delays associated with poor production or poor estimates of original durations. This metric is very important and is a determining factor of how much estimate uncertainty factor the PMOC applies to the schedule risk analysis pre-mitigated model. The MPIS contains several calendars ranging from 5-day work weeks to 7-day work weeks. Most of the construction activities contain a 5-day work week meaning weekend work, night time work, and double or triple shift work could be implemented as a means to mitigate delays if excessive float depletion occurs. PMOC Determination HART has satisfied the requirement.

5.3.4 Readiness to Perform FTA OP 40 Risk Assessment

The PMOC has determined HARTs MPIS April 2018 update is fundamentally and mechanically sound enough for the PMOC to conduct a Schedule Risk Analysis. 5.4 Conclusion

It is the PMOC’s professional opinion that HARTs Master Project Integrated Schedule (MPIS) is mechanically sound and meets the technical requirements of fundamental soundness. This determination is based on the latest FTA OP 34 guidelines.


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5.5 Recommendations

(1) HART should focus on filling all open project control positions. (2) HART should enforce consultant project control conformance to schedule

management plans and procedures (timely CEI Technical Schedule Reviews) and respective fundamental roles and responsibilities for those individuals who fail to perform.

(3) HART should increase the prioritization of completing the transition of document management systems from the obsolete Contract Management System.

(4) HART should continue to improve change control procedures. This is directly related to claims avoidance and dispute resolution techniques.

(5) MPIS and Basis of Schedule (BoS) must be synchronized with the WBS. The current WBS is under revision and is incomplete.

(6) Schedule File Log (F9 Report) – HART should further reduce the amount number of activity logic ties that contain an excessive amount of lag due to Start-Start (SS), Start-Finish (SF), and Finish-Finish (FF) relationship types, as well as continue improvements by reducing or eliminating out-of-sequence progressing and the use of constraint dates.

(7) HART should re-evaluate the use of certain activities beyond the RSD and consider alternative schedule management methods to provide cost or resource loading in their schedule, whereas, they have already encountered resource loading technical issues.

(8) HART should improve the real estate acquisition activity descriptions for more clear translation to the parcel identification numbering system in the BoS.


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6.0 SCHEDULE RISK ANALYSIS

The PMOC assessed the Project Schedule in accordance with FTA OP 40: Risk and Contingency Review dated September 2015. 6.1 PMOC Assessment

The purpose of the FTA OP 40 is “to describe the review, analysis, recommendation procedures and reporting requirements expected by the FTA from the PMOC as regards the risks associated with the Grantee’s project and the Grantee’s plan for mitigating and managing risk through various means including the use of cost and schedule contingencies.” This review focuses on the elements of schedule uncertainty associated with the effectiveness and efficiency of the project sponsor’s project implementation, the project scope, and surrounding project conditions.

6.1.1 Methodology

The PMOC’s OP40 schedule analysis output data is generated from Oracle’s Primavera Risk Analysis (PRA). The PMOC risk analysis process conforms to the software user manual and intent of the FTA OP40 as described below: There are two kinds of project risk; risk uncertainty and risk events:

Uncertainty risks are inherent variability that makes it impossible to predict exactly how long an activity will take. For instance, you can estimate how long it will take within a range of uncertainty, but you can never predict how long exactly.

Risk events are events separate from an activity that can disrupt or otherwise impact the activity.

PRA handles risk events by using a Risk Register to enter potential risk events and estimates of the probability and impact of the risks on activity duration, costs, and project quality. Once uncertainty and risk event impact estimates have been entered for all tasks within a project, PRA performs a high number of project simulations using “Monte Carlo” or “Latin Hypercube” sampling of the estimates to select random task duration and cost values for every run-through of the simulation. These simulations generate a range of outcomes that can be used to predict project duration and costs with statistical confidence. The Critical Path Method (CPM) is the traditional means for determining a project finish date. However, because CPM only determines a single date and does not consider potential risks, results are not always comprehensively reliable. Risk Analysis uses risk inputs to determine a range of project finish dates with more confidence and reliability. PRA is based on the risk management process outlines in Chapter 11 of the Project Management Institute’s “A Guide to the Project Management Body of Knowledge” and consists of the components shown below. The process is not strictly linear; there may be considerable doubling back and repetition of certain steps before moving on.


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(1) Schedule Review

The purpose of the Schedule Review “Characterization” is to check the grantee project schedule, referred to as the Current Probable Schedule (CPS) for logic errors, open-ended tasks, negative lags, start-to-finish links, and other potential problems which could compromise the risk analysis. This step ensures the integrity of the schedule and improves the chances for a meaningful analysis. If mechanical or fundamental revisions are necessary based upon the schedule characterization, the risk management team makes the necessary adjustments and creates a revised schedule file, called the Adjusted Project Schedule (APS).

(2) Pre-Analysis Check

A rudimentary analysis of the schedule is performed to identify activities that drive project duration and costs. These activities merit the closest attention during subsequent detailed risk analysis.

(3) Build a Risk Model

Estimates for duration, cost, and resource uncertainty for each project task are identified by the PMOC relying on industry statistics and experience. The estimate uncertainty duration ranges are incorporated into a copy of the project schedule called the Estimate Uncertainty Model (EUM). The PMOC then brainstorms a list of potential risk events, evaluates the risk events as to how likely they may occur, and the potential impact they may have. The list of risk events is then entered into a risk register and each risk event is assigned a probability and impact resulting in a risk degree factor which is scored by the risk modeling software. At this point, a copy of the EUM is made, and PRA then applies the uncertainty and maps the risk events to the appropriate task to build a risk model, called an Impacted Risk Model (IRM).

(4) Analyze and Review

A “Monte Carlo” or “Latin Hypercube” sampling analysis is run on the IRM. The risk analysis output can be viewed and evaluated in a wide variety of reports. The review options allow the risk management team to focus of areas of the schedule that pose the greatest risk to the overall program. This in-turn helps with the creation of an efficient and cost-effective risk mitigation plan. The IRM schedule risk analysis reports and graphics are provided in the PMOC’s OP40 report. All reports and graphics indicate probability factors which are pre-mitigated meaning, the probability factors and dates can be greatly improved by the project management team applying risk mitigation.

(5) Mitigate and Report

Based on the preliminary analysis, the risk management team reviews and evaluates alternative scenarios with varying reductions to duration, resource and cost uncertainty. Ultimately the most cost-effective risk mitigation strategy is chosen and formalized into a risk mitigation plan.


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Figure 10. Risk Assessment Process

Figure 11describes the various schedules that are created once the PMOC commences the FTA OP34 Schedule Review of the grantee’s project schedule, called the CPS. The final product is the Impacted Risk Model (IRM) which the PMOC uses for the risk analysis in PRA.

Figure 11. Risk Assessment Steps and Schedule Types

6.1.2 Schedule Risk Analysis

(1) Project Schedule Review

The format, quality, and detail contained within HARTs program schedule and Basis of Schedule Reports has improved over the past year since the program controls manager and lead scheduler were replaced on the program. The PMOC concentrated its efforts on ensuring that a mechanically and fundamentally sound schedule was used for both the risk assessment and the contingency analysis. HART and the PMOC collaboratively worked through MPIS refinements to ensure adequate detail and logic sufficiently support the PMOC risk analysis. The PMOC made a backup copy of the HART

RiskRegister

DescriptionStep

Identification

Mitigation

Qualitative Analysis

Quantitative Analysis

Tracking

Assess

men

t

Risk assessment begins by identifying potential project risk events, usually from “brainstorming” session.

Analyze the risk probability and impact, and score “rank”identified risk. Risk Degree = Probability X Impact.

Transform risk data into decision making information by assessing probability and impact on a risk register.

Develop risk mitigation plan against identified and analyzed risk factor based on risk information.

Tracking residual risks, identify new risks, and accumulate risk information throughout the project life cycle.

RiskRegister

DescriptionStep

Identification

Mitigation



Tracking

Assess

men

t






DescriptionStep

Identification

Mitigation



Tracking

Assess

men

t






Step

Identification

Mitigation



Tracking

Assess

men

t






Risk Register

CurrentProject

Schedule(CPS)

ScheduleReview

Pre-Analysis Build a Risk ModelAnalyze

and ReviewMitigation

AdjustedProject

Schedule(APS)

EstimateUncertainty

Model(EUM)

ImpactedRisk

Model(IRM)

MitigationPlan

Best Case,Most Likely,Worst Case

1. Histogram2. Tornado Graph3. Distribution

Analyzer

Risk Assessment Steps

Sc

hed

ule

Typ

es

ImpactedRisk

Model(IRM)


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MPIS (Current Project Schedule) file and renamed it “APS.xer”. A summary of the PMOC adjustments are listed below:

Remove ACT ID RSD Revenue Service Date constraint date Dissolve ACT ID PRGCTGC Program Testing Reserve (OD 377 days) ACT ID IO interim opening. Remove constraint date and add 700 days lag to Succ Remove Latent Contingency per HART Basis of Schedule:

o ACT ID DBOM-9615 “CSC Component Testing – Kapalama Sta.” – change remaining duration -7 to 23 days

o ACT ID DBOM-9260 “Full System Testing City Center” – change remaining duration -23 to 67 days

o ACT ID DBOM-9631 “Pre-Revenue Service Operations testing” – change remaining duration -18 to 52 days

o ACT ID DBOM-9265 “FINAL Demonstration Test Period” – change remaining duration -10 to 30 days

ACT ID SSC1000 delete PRED ACT ID IO Delete ACT ID ES-OCIP-00025 ”MM-951 OCIP Brokerage Services” Delete ACT ID ES-OCIP-00030 ”MM-951 OCIP Brokerage Services” Delete “Fare Collection” activities extending beyond RSD date

o ACT ID MI900-1000 “Fare Systems Contract” Dissolve ES-SSC-00020 “MM964 – Safety and Security Support Contract Incl

Procurement – future” Dissolve ES-HART-00040 “Program Management Support” in order to not disrupt the

critical path Remove constraint DBB600-2590

The PMOC adjustments to the HART MPIS (Current Project Schedule) combined with removing all patent contingency and latent contingency listed in HART’s Basis of Schedule results in a calculated RSD date of 02-MAY-25.

Table 12. CPS to APS Milestone Comparison (Data Date 27-APR-18)

Activity Description HART CPS

RSD PMOC APS

RSD RSD 25-DEC-25 02-MAY-25

The CPS and APS are specific to the RSD milestone. They do not account for a significant amount of contract closeout activities that may very well extend one year beyond the RSD.

(2) Pre-Analysis Check

The PMOC performed a pre-analysis check by applying a quick risk distribution range across all schedule activities and reviewing the confidence level range, duration sensitivity, and criticality index. Preliminary notes and observations were made for specific schedule drivers. Note that this pre-analysis check was performed as a pre-impacted risk analysis, meaning that the schedule does not have risk events “built-in” the schedule at this point of the risk analysis process.


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(3) Build a Risk Model “Impacted Risk Plan”

a. Estimate Uncertainty Model (EUM)

The Estimate Uncertainty Model (EUM) accounts for uncertainties associated with the original duration assignments to each CPM network activity. HARTs MPIS does not use resource units and production factors to mathematically calculate the original durations rather they are assigned by “best guess”, professional opinion and judgement based on experience and historical information taken from the westerly alignment contracts, and application of new HART consultant analysis and opinion as documented in their Basis of Schedule. The EUM process accounts for such duration uncertainties by applying triangular duration distribution using a three-point triangle of best case, worst case, and most likely duration assignment for each activity. The PMOC reviewed the activity original durations (OD) in the CPS and made a determination of the adequacy of each OD.

EUM Best Case – The best case durations were calculated as 20% less (.80) than the activity remaining duration (RD) amount, or (-.80 x RD).

EUM Most Likely – The most likely durations were calculated at 5% greater than the activity RD durations, or (1.05 x RD).

EUM Worst Case – The worst case durations were calculated at 35% greater than the activity RD amounts, or (1.35 x RD).

The value ranges (differences in activity durations) reflect levels of uncertainty. Based on the three-point durations, a BetaPert triangular distribution was assigned to each activity duration calculation. BetaPert is similar to triangle three-point estimation technique but more weight is given to the most likely duration resulting in a beta distribution more uniform and normal distribution. BetaPert is more forgiving to the extremes points of best case and worst case [see Figure 12].

Figure 12. BetaPert Three Point Estimation Technique

The EUM RSD milestone calculation at the P65 level is 12-DEC-25 as illustrated in the figure below.


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Figure 13. RSD - Estimate Uncertainty Model on APS

b. Impacted Risk Model (IRM)

The PMOC conducted a review and evaluation of all risks in the Main Risk Register in order to decide which risk events should be used for the schedule risk analysis. Once the risks were culled and prioritized, the PMOC summarized several similar risks into one risk event per category. Each risk in the risk register is assigned a probability and impact factor for schedule impact, not cost impact. Each risk event is logically tied to appropriate successor activities in the MPIS CPM network. HART staff provided some successor activities specific to City Center property acquisition for verification purposes. The risk register risk events (threats) have remained constant since initial FTA PMOC risk assessments were performed on the program in 2009. The risk register threat events are concentrated on the Airport alignment but primarily on the City Center Alignment.

Each risk event was scored based on a risk degree factor. The risk degree factor is calculated by the risk event probability and impact factors. The probability and impact

30-Mar-25 08-Jul-25 16-Oct-25 24-Jan-26 04-May-26 12-Aug-26


0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

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18.0

20.0

22.0H

its

0% 26-Feb-25

5% 12-May-25

10% 23-May-25

15% 13-Jun-25

20% 26-Jun-25

25% 15-Jul-25

30% 03-Aug-25

35% 20-Aug-25

40% 09-Sep-25

45% 29-Sep-25

50% 10-Oct-25

55% 30-Oct-25

60% 26-Nov-25

65% 12-Dec-25

70% 05-Jan-26

75% 20-Jan-26

80% 20-Feb-26

85% 23-Mar-26

90% 10-Apr-26

95% 23-Apr-26

100% 13-Aug-26

Cu

mu

lati

ve F

req

uen

cy

APS - .80 / 1.05 / 1.35Entire Plan : Finish Date


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factors for each risk event are objectively determined by the PMOC risk management team. The PMOC risks used in the schedule risk assessment are listed below and as shown in Figure 14:

ID 1.0 - Bid delays to achieve construction NTP (CC) ID 2.0 - Pier obstructions (AGS/CC) ID 3.0 - Utility & HART response delays (AGS & CC) ID 4.0 - Dillingham Rd. utility delays (CC) ID 5.0 - MOT/congestion disrupts production (AGS/CC) ID 6.0 - CSC, Station, Guideway interface issues (CC) ID 7.1 - ROW & permit delays (AGS) ID 7.2 - ROW & permit delays (CC)

Figure 14. IRM Risk Register

The risk event results are produced by running a schedule analysis using the impact risk model (IRM) which contains qualitative risk events within the software risk register. The true indication of how sensitive each risk event ultimately becomes is not realized until the analysis is performed. For example, a risk event with a very high score does not necessarily mean it will be highly sensitive to the schedule as it may only affect non-


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critical activities containing total float. The schedule drivers that contain the most impact potential contain a high risk degree and are on the longest critical path or near critical path. A significant amount of the APS and IRM longest critical path activities are associated with the Core Systems activities and interface with the completion of the City Center guideway and station items.

(4) Analyze and Review a. Summary Results

The final schedule risk analysis generated using the PMOC APS with application of estimate uncertainty and pre-mitigated risk register threats events result in the probability distribution histogram [see Figure 15]. The yellow arrow indicates HART’s current MPIS RSD date of December 31, 2025.


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Figure 15. Project Completion Date Confidence Level

The probability percentage points for the IRM are:

50% Confidence level completion date – June 17, 2026 65% Confidence level completion date – September 01, 2026 80% Confidence level completion date – November 20, 2026 100% Confidence level completion date – May 14, 2027

The IRM RSD P65 date of 01-SEP-26 is pre-mitigated, meaning it takes into account threat risk events in the risk register without applying the multitude of potential mitigation efforts to reduce, avoid, transfer (with costs) or eliminate such risks. Figure 16 illustrates the milestone dates generated for each schedule risk analysis step-process. The P100 (100% probability percentile) extends significantly beyond the

08-Jul-25 16-Oct-25 24-Jan-26 04-May-26 12-Aug-26 20-Nov-26 28-Feb-27


0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

Hit

s

0% 17-Jun-25

5% 20-Aug-25

10% 27-Oct-25

15% 05-Dec-25

20% 05-Jan-26

25% 18-Feb-26

30% 05-Mar-26

35% 13-Apr-26

40% 24-Apr-26

45% 20-May-26

50% 17-Jun-26

55% 14-Jul-26

60% 07-Aug-26

65% 01-Sep-26

70% 25-Sep-26

75% 23-Oct-26

80% 20-Nov-26

85% 24-Dec-26

90% 20-Jan-27

95% 03-Mar-27

100% 14-May-27

Cu

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Impact Risk ModelEntire Plan : Finish Date


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grouping of the 50, 65, and 80 percentiles due to merge bias, which is a common result from using large CPM networks with thousands of progressed activities.

Figure 16. Timeline of Schedule Risk Analysis Dates

6.2 Schedule Contingency Review

6.2.1 Adjusted Project Schedule for Risk and Contingency Analysis

The APS was used for both the schedule risk assessment and the Contingency Analysis Review. The APS is a backup copy of HARTs MPIS with minor adjustments made by the PMOC. Because the APS is pre-analysis, not containing estimate uncertainty or risk events, it is considered most optimistic and is stripped of all latent and patent time contingency.

6.2.2 Contingency Analysis

The objective of the contingency analysis, pursuant to FTA OP40 “Risk and Contingency Review” is to estimate the minimum amount of schedule contingency required to complete the project on schedule. The FTA guidance states that the contingency recommendations shall be developed using the following assumptions:

“At the Revenue Operations Date, schedule contingency requirements have been reduced to a minimum requirement or possibly eliminated; and

“At the point of 100% complete with bid, the project should have sufficient schedule contingency available to absorb a schedule delay equivalent to 20% of the duration from Entry into Final Design through Revenue Operations.”

The PMOC did not use the 20% duration calculation method to determine time contingency due to the unique circumstances associated with this project such as the hybrid nature of various contract delivery methods and the previous year and one half delay stemming from the archaeological inventory process court ruling. The PMOC noted during the risk workshop that time and effort extending beyond the project RSD date for contract closeout activities is not included within this schedule risk analysis.

N D J F M J J A S O N D J F M A M J J O N D J F M A M J J

31DEC25 CPS (Data Date 27‐APR‐18)

24DEC24 APS (Data Date 27‐APR‐18)

16DEC25 EUM: .80/1.05/1.35 Bp

17JUN26 IRM ‐ P50

01SEP26 IRM ‐ P65

20NOV26 IRM ‐ P80

14MAY27 IRM ‐ P100

RSDSchedule Risk Analysis Step

Dates

2024 2025 2026 2027

A M A S


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Delays with contract closeout beyond the RSD may adversely impact schedule and costs associated with project management and consultant staff for a period most likely greater than 12 months beyond the RSD. Closeout of completed contracts has progressed slower than initially anticipated. The PMOC has encouraged HART to re-evaluate their contract Closeout Plan as a means to better manage unwarranted schedule and cost impacts if not well planned and executed.

6.2.3 Findings

(1) The HART MPIS does not contain a sufficient amount of time contingency as activity total float continues to erode. Several schedule deficiencies attributable to unrealized total float depletion such as ambiguity in activity calendars is noted in the OP-34 Schedule Review Report. HART addressed the PMOC’s comments and provided a subsequent MPIS in early May 2018, which was used to conduct this final schedule risk assessment.

(2) Most risk uncertainty exists within the City Center alignment and longest critical path Core System activities.

(3) HART’s delays to procurement of the of the City Center contract may adversely impact the project critical or near critical paths if not resolved soon.

(4) The PMOC Impacted Risk Plan (IRM) distribution of P65 for RSD is 01-SEP-26. (5) Time and effort extending beyond the project RSD date for contract closeout activities

is not included within this schedule risk analysis.

6.2.4 Recommendations

The revised RSD should be no earlier than September 2026, which represents the 65% confidence level in the Schedule Risk Model utilizing an MPIS with data date of April 27, 2018.


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7.0 PROJECT COST ESTIMATE REVIEW

The PMOC reviewed the Project in accordance with FTA OP 33: Capital Cost Estimate Review, dated September 2015, to assess and evaluate HART’s current Estimate at Completion (EAC). 7.1 PMOC Assessment

The original FFGA Project Budget was $5.122 billion, including $644 million in allocated and unallocated contingency and $173 million in financing costs. HART’s current Estimate at Completion (EAC) of $9.020 billion includes $904 million in contingency and $855 million in financing cost. The capital cost is $8.165 billion (including contingency but excluding financing). HART has expended $3.125 billion through April 2018. The major documents provided to the PMOC to support the cost review include:

December 2017 Contract Packaging Plan (CPP) April 2018 SCC Spreadsheet (HART_FFGA_HRTP SCC Cost Workbook_2018.05.17) April 2018 Forecast (Summary FFGA EAC Monthly Trend_2018.04.27_Final.xlsm) April 2018 Expenditures (2018.04.27 Actuals CPP by SCC.xlsx) DB550 – CCGS ICE (DB 550 CCGS Estimate_2017.09.12.pdf) DB275 – PHPG ICE (DB 275 PHGT Estimate_2017.02.09.pdf) Staffing Plans for HART, PMSC, GEC 3, CE&I East, CE&I West, CSC Support, and

Safety & Security Support The PMOC evaluated the cost estimates for each SCC for mechanical soundness and consistency. These mechanical checks were used to determine if there are any material inaccuracies within the estimate. Components of the estimate were found essentially to be mechanically correct in the tabulation of the unit cost, application of factors, and translation to an SCC spreadsheet for most of the direct cost and soft cost contracts. However, the PMOC did identify some discrepancies with specific estimate amounts. 7.2 Estimate at Completion (EAC) Review

The PMOC utilized the April 2018 SCC Spreadsheet provided by HART that distributed the project budget into FTA SCC Categories. Contingency was stripped from the estimate as it was identified in the revised SCC distribution (HART’s Input tab). By utilizing the April 2018 Forecast as a check, the PMOC verified if any of HART’s “Not Yet Executed” outstanding Change Orders were missing from the various contracts. The potential changes are separated and updated monthly by contract into three categories: Pending, Probable, and Issues. The PMOC’s check did not identify any missing or not yet incorporated change order costs in HART’s April 2018 SCC Spreadsheet. HART has increased its budget since the 2016 Risk Refresh. The most significant increases are due to the schedule delay to obtain project funding, the result of bids for the AGS, incorporation


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of HECO-related costs, increases to the real estate budget, and the additional soft cost because of the RSD delay. A significant setback occurred with the federal/state lawsuits for most of 2013. The cost associated with these delays has been mostly captured by HART change orders or adjustments included in the EAC. In general, this delay was a factor in the erosion of the previously available project contingency. The delay also pushed back the remaining construction bids when the market was peaking. The CCGS, UTIL2, Park & Ride Lots, and PHPG are still in procurement, so there is significant uncertainty with regard to bidding market for some of the most difficult construction contracts associated with the program. Approximately two-thirds of the construction work is awarded, and the remaining work is “estimated” from various sources. Many of the potential change orders for the awarded construction are estimated at a high-level and do not yet have detailed cost estimates developed. The costs for the remaining large construction contracts (CCGS, UTIL2, and PHPG) are based on Independent Cost Estimates (ICE). Since the workshop in February 2018, HART has awarded DBB511 – City Center Utility Relocation (CCUR) contract. This utility work was separated from CCGS to control costs, potentially reduce overall time to construct, reduce contract interfaces, and leverage innovation by the contractors. HART had previously included $408 million (excluding contingency) in their forecast. HART awarded the contract with a not-to-exceed amount of $400 million (excluding contingency). This award has been incorporated into the PMOC’s risk analyses. 7.3 Findings

The following specific observations were made regarding the cost estimate review:

The total amount of contingency identified in HART’s EAC was $904.4 million. The PMOC did not identify any “latent” contingency.

Some variances had been noted between contract amounts as shown in various documents provided by HART in December 2017. These inconsistencies were discussed with HART during the February 2018 workshop. HART’s updated documents reconcile most of the PMOC’s concerns about traceability and the potential for errors or omissions in the budget. However, HART staff has noted that additional effort is required to reconcile all inconsistencies between the various documents. The PMOC does not anticipate that there are any significant discrepancies that would adversely impact the project budget.

HART’s April 2018 forecast includes all potential Change Orders and issues identified by HART.

HART expended $3.125 billion through April 2018. The expended costs are categorized by contract and segregated into FTA SCCs. The PMOC noted there are variances between expended amounts in the April 2018 Forecast and the April 2018 SCC Spreadsheet. Specifically, HART has expended costs coded to SCC line items in the April 2018 Forecast, but there is no corresponding budget associated for those line items.


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The PMOC used a pro rata approach to distribute any discrepancies for input into the cost risk model.

Some components of the cost estimate are still undergoing refinement by HART (e.g. right-of-way, CCGS, PHPG).

The individual Basis of Estimate (BoE) were updated for the Independent Cost Estimate (ICE) for the CCGS and PHPG. However, there is some lack of uniformity across the individual BoEs:

o The application of markups was inconsistent. o The application of the General Excise Tax (GET) varied. o Escalation rates varied between contracts.

The PMOC utilized the “Direct Cost” from HART’s Independent Cost Estimate for CCGS and PHPG and applied markups at percentage rates where appropriate based on our professional opinion. The PMOC recommends adjustments associated with the percentages for markups for items such as Engineering costs, GET application, Escalation, and General Conditions/Overhead. This is the same methodology that was used for the 2016 Risk Refresh.

Escalation is not separately and fully addressed in the various cost documents provided by HART such as the Basis of Estimate (BoE). It was included in the ICE for the CCGS and PHPG, but it was not consistently applied. Additionally, HART did not provide an update of the full FTA SCC Workbook. The full FTA SCC workbook would provide detail on escalation being used to develop a project estimate.

The PMOC believes HART’s April 2018 Forecast may not be fully reflective of the sequencing identified in the current MPIS. The MPIS was recently revised, but the ICE for the CCGS and PHPG were prepared prior to the schedule update. Based on these findings, the PMOC recommends adjustments to account for this potential shortfall associated with escalation.

Due to extension of the RSD, there may be some potential costs associated with maintenance of already constructed work. This scope is not specifically included in the current EAC. The PMOC did not include an adjustment for this item.

Contract closeout continues to be an issue for HART, which can add significant soft costs to a project.

7.4 PMOC Recommended Adjustments

Once all contingency was stripped and the potential change orders were added, the PMOC incorporated various adjustments into the base cost of the project prior to completing the cost risk analysis. The adjustments identified in this report were discussed with HART staff during the workshop and in a subsequent meeting.


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Table 13. Proposed Adjustments

CPP Contract Adjustment Description Amount

(M) Comment

DB550 CCGS DB General Conditions & Miscellaneous $80 Includes additional costs for mobilization/demobilization plus additional General Conditions to include the higher percentage of Subcontractors work versus self-performed work.

DB550 CCGS DB Bond/Insurance $1 Result of adjustment for additional General Conditions DB550 CCGS DB Overhead & Profit $6 Result of adjustment in Overhead & Profit for other line items DB550 CCGS DB Added Escalation $8 Based on 4% compounded annually for Construction and 1% for

Design as it will be mostly spent at the front end of the DB effort. Additional component is factor of other adjustments.

DB550 CCGS DB Engineering and Design <$28> PMOC used 9.0% compared to the approximate 11% included in HART’s estimate. Some advanced Engineering is already complete for CCGS and some design will be completed for CCUR under FD530.

DB275 PHPG Inflation adjustment to unbid Construction Contracts

$11.5 Based on 4% compounded annually compared to the 2.5% rate utilized by HART.

MM290 CE&I West Extended time for contract closeout $2.6 See Table 2 MM596 CE&I East 2 Extended time for contract closeout $9.5 See Table 2 MM902 PMSC 3 Extended time for contract closeout $17.1 See Table 2 MM913 GEC 3 Extended time for contract closeout $2.6 See Table 2 MM962 CSC Support Extended time for contract closeout $5.1 See Table 2 MM596 CE&I East Increase due to extension of RSD $4.7 See Table 2 MM913 GEC 3 Increase due to extension of RSD $7.8 See Table 2 ROW ROW Revaluation of ROW and Temporary

Construction Easements for CCGS $75.8 Corresponds to amount that was originally in HART’s forecast but was

moved to contingency. TOTAL $204


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Adjustment 1 below considers likely additional costs to account for extended time for contract closeout. Adjustment 2 considers likely additional costs due to extension of RSD to December 2026.

Table 14. SCC 80 Adjustments

Adjustment 1 Adjustment 2

Contract HART EAC Completion

Date

Monthly Burn Rate

(M)Months

Amount (M)

Months Amount

(M)

CEI West Mar-20 $0.87 3 $2.60 0 $0.00 CEI East Mar-26 $1.58 6 $9.50 3 $4.74 PMSC Dec-25 $1.43 12 $17.10 0 $0 GEC 3 Dec-25 $0.87 3 $2.62 9 $7.83 CSC Support Jun-26 $0.85 6 $5.07 0 $0 HART Labor & ODC Dec-27 $1.18 0 $0.00 0 $0 TOTAL $36.89 $12.57

Notes: (1) SCC 80 forecast is dated 10/27/17. (2) Proposed adjustments were based on 50% of Average Monthly Burn Rate.

Table 15 presents the 2018 Adjusted Base Cost Estimate in SCC format.


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Table 15. 2018 Adjusted Base Cost Estimate

SCC Description HART Current

Budget Allocated

Contingency Total w/o

Contingency PMOC

Adjustments Adjusted

BCE

10 Guideway & Track Elements 1,546,969 177,269 1,369,701 27,969 1,397,670

10.02 Guideway: Aerial At-Grade semi exclusive 17 - 17 - 17 10.04 Guideway: Aerial structure 1,391,010 163,752 1,227,258 24,730 1,251,988 10.08 Guideway: Retained cut or fill - - - - - 10.09 Track: Direct fixation 155,942 13,517 142,426 3,239 145,655 10.11 Track: Ballasted - - - - - 10.12 Track: Special (switches, turnouts) - - - - -

20 Stations, Stops, Terminals, Intermodals 847,496 100,447 747,048 22,961 770,009 20.01 At-grade station 13,304 25 13,279 - 13,279 20.02 Aerial station 618,592 71,891 546,701 17,540 564,241 20.04 Other stations, landings, terminals: intermodal - - - - - 20.06 Automobile parking multi-story structure 148,316 26,707 121,609 5,421 127,030 20.07 Elevators, escalators 67,283 1,825 65,459 - 65,459

30 Support Facilities: Yards, Shops, Admin. 100,807 - 100,807 - 100,807 30.02 Light Maintenance Facility 3,057 - 3,057 - 3,057 30.03 Heavy Maintenance Facility 64,480 - 64,480 - 64,480 30.04 Storage or Maintenance of Way Building 8,619 - 8,619 - 8,619 30.05 Yard and Yard Track 24,651 - 24,651 - 24,651

40 Sitework & Special Conditions 2,530,770 291108 2,239,662 18,143 2,257,805 40.01 Demolition, Clearing, Earthwork 50,577 5,158 45,418 534 45,952 40.02 Site Utilities, Utility Relocation 886,044 156,605 729,439 - 729,439 40.03 Haz. material, contaminated soil removal/mitig 17,052 1,981 15,071 - 15,071 40.04 Environmental mitigation 5,866 347 5,519 - 5,519 40.05 Site structures (retaining walls, sound walls) 30,302 4,248 26,054 - 26,054 40.06 Pedestrian / bike access, landscaping 16,247 1,561 14,686 - 14,686 40.07 Automobile, bus accessways (roads, parking) 287,243 42,340 244,903 5,297 250,200 40.08 Temporary Facilities/other indirect costs 1,237,439 78,868 1,158,572 12,313 1,170,885

50 Systems 329,479 18,347 311,132 311,132 50.01 Train control and signals 166,025 8,948 157,078 - 157,078 50.02 Traffic signals and crossing protection 3,789 617 3,172 - 3,172 50.03 Traction power supply: substations 32,728 331 32,397 - 32,397 50.04 Traction power distribution 37,245 124 37,121 - 37,121 50.05 Communications 65,990 599 65,391 - 65,391 50.06 Fare collection system and equipment 19,853 7,690 12,163 - 12,16350.07 Central Control 3,849 39 3,810 - 3,810

CONSTRUCTION SUBTOTAL (10 - 50) 5,355,521 587,171 4,768,350 69,073 4,837,423


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SCC Description HART Current

Budget Allocated

Contingency Total w/o

Contingency PMOC

Adjustments Adjusted

BCE 60 ROW, Land, Existing Improvements 346,300 106,300 240,000 75,800 315,800

60.01 Purchase or lease of real estate 247,316 75,916 171,400 54,134 225,534 60.02 Relocation of existing households/businesses 98,984 30,384 68,600 21,666 90,266

70 Vehicles 213,546 2,156 211,390 211,390 70.01 Light Rail 192,320 1,936 190,384 - 190,384 70.05 Other 137 8 129 - 129 70.06 Non-revenue vehicles 14,517 146 14,371 - 14,371 70.07 Spare parts 6,572 66 6,506 - 6,506

80 Professional Services 2,167,880 126,975 2,040,905 59,027 2,099,932 80.01 Preliminary Engineering 66,663 - 66,663 - 66,663 80.02 Final Design 618,324 51,122 567,202 9,427 576,629 80.03 Project Management for Design/Construction 715,354 31,994 683,361 27,600 710,961 80.04 Construction Administration & Management 299,681 21,041 278,640 12,642 291,282 80.05 Professional Liability/Non-Construction Insurance 102,090 4,000 98,090 - 98,090 80.06 Legal; Permits; Review Fees by other agencies 153,130 10,680 142,449 - 142,449 80.07 Surveys, Testing, Investigation, Inspection 149,186 7,499 141,687 9,358 151,044 80.08 Start up 63,452 639 62,813 62,813 SUBTOTAL (10 - 80) 8,083,247 822,602 7,260,645 203,900 7,464,545 90 Unallocated Contingency 81,807 81,807 - - - 81,807 81,807 - - - 90 Latent Contingency - - - - - SUBTOTAL (10 - 90) 8,165,054 904,409 7,260,645 203,900 7,464,545 100 Finance Charges 855,000 - 855,000 - 855,000 TOTAL PROJECT COST (10 - 100) 9,020,054 904,409 8,115,645 203,900 8,319,545All values in $1,000


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Table 16 presents the Adjusted Stripped Base Cost Estimate (BCE).

Table 16. Adjusted Stripped BCE

HART Estimate 7,260,645 Allocated Contingency (PMOC Calculation) $822,602 Unallocated Contingency $81,807 Financing $855,000

TOTAL $9,020,054 Stripped Cost $7,260,645 HART Forecast Change Orders Included PMOC Adjustments $203,900

Adjusted Stripped BCE $7,464,545 Incurred Costs (through April 2018) $3,124,705 All values in $1,000

7.5 Recommendations

(1) Prepare detailed cost estimates for all identified potential or possible contract change orders.

(2) Update CCGS estimate to allow for potential mitigation measures. (3) Refresh ROW estimate to reflect current property costs and include costs for

Temporary Construction Easements and other impacts, specifically for CCGS. (4) Update manpower charts to account for new positions and reflect current MPIS to

validate SCC 80 costs are accurate. (5) Verify budgets and any ongoing estimate refreshes include adequate funds for

escalation. (6) Revise any budgets or contracts impacted by the revised RSD as shown in the

update to the MPIS. (7) Reconcile coding of SCC line items. This effort will ensure budget, contract and

EAC forecast utilize the same “base” information and are appropriately coded to ensure accurate monthly reporting and for inclusion in Before & After Study Report.


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8.0 COST RISK ANALYSIS

8.1 Purpose

Per FTA OP 40, the PMOC has performed “an evaluation of the reliability of the project sponsor’s project scope, cost estimate, and schedule, with special focus on the elements of uncertainty associated with the effectiveness and efficiency of the project sponsor’s project implementation and within the context of the surrounding project conditions.” Through the process of risk and contingency review, the PMOC attempts to aid the project sponsor in its efforts to better define the project’s risks and to provide avenues for recovery should those risks become reality. The purpose of this report is to provide a refresh of recommendations for adjustments to scope, cost, schedule, and project delivery options and to consider risk identification and risk mitigation options and alternatives, particularly regarding contingencies, in order to respond to established project risks. This report is produced to establish the Project’s ability to complete on time and within the identified budget. This report is based on information provided by HART in May 2018. 8.2 Methodology

This section describes the review and evaluation methodology utilized by the PMOC with regards to HART’s identification of project risk and its plans for mitigating and managing these risks, including the use of schedule and cost contingencies. The PMOC is required to synthesize available project information, explore and analyze uncertainties and risks, and provide a qualitative and quantitative assessment of ranges of forecasted cost and schedule. The PMOC reviewed risk mitigation options and alternatives, including use of cost and schedule contingencies. The risk refresh requires an evaluation of the reliability of HART’s project scope, cost estimate, and schedule, with specific focus on the elements of uncertainty normally associated with the implementation of the project. The PMOC reviewed scope, cost, and schedule documents and presented these reviews in separate sections within this report. The objective of this refresh is to assess changes in the project risks and uncertainties associated with project conditions and the effectiveness and efficiency of project implementation in identifying and mitigating risks in regard to scope, cost and schedule. This report provides a qualitative and quantitative assessment of the ranges of forecasted cost and schedule and project management planning in order to respond to project risk. The PMOC’s refresh is understood to be a critical input to FTA’s decision regarding project advancement and funding. In February 2018, the PMOC participated in a risk refresh workshop with HART, the purpose of which was to discuss HART’s progress in its risk management efforts and PMOC’s observations and reflections from its initial review of HART’s updated scope, cost, schedule, and risk information. The PMOC has subsequently performed regular monitoring visits to the project and has refreshed its earlier risk assessment based upon an updated understanding of project risks and updated schedule and cost information provided by HART.


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During and subsequent to the February 2018 risk workshop, information was provided indicating that HART was aware of additional costs or deduction that should be included, which the PMOC incorporated along with its own independent estimate adjustments. The PMOC has prepared this risk refresh based upon additional information provided by HART through May 2018. For the purposes of its risk refresh, the PMOC considered the project in four separate elements, which are termed here as “risk profiles”:

Risk Profile 1 is associated with direct work contracts that are 90% or more complete. Risk Profile 2 is associated with contracted and in progress direct cost work less than

90% complete. Risk Profile 3 is associated with yet-to-be-contracted direct cost work. Risk Profile 4 is associated with “soft costs.”

8.3 Risk Identification

The PMOC has reviewed HART’s updated risk register and has found that HART has represented risk directly related to the work. The risk register includes magnitude and likelihood estimates that are based on much improved risk management techniques since the prior 2016 PMOC review. The HART Risk and Contingency Management Plan (RCMP) has been updated to provide an improved description of risk management policies that if fully implemented should act as a safeguard to proactively determine whether current and future risk threatens the project. Full implementation of this effort will require strong management priority to prevent concerns over budget increases from influencing the candid exposure of project risk that may threaten the current project budget. In regard to this, HART responds that “HART leadership has instituted an improved approach of managing to budget and schedule, including incorporation of mitigation measures, value engineering, and other actions that support effective project and construction management.”; and “HART recognizes the challenges ahead and is therefore vigorously employing actions to contain and/or mitigate costs, avoid “scope creep,” and make a robust commitment to schedule adherence in order to deliver the project as stipulated with a Revenue Service Date of December 2025 and within the established budget of $8.165 billion.” Significant project risks include:

Management Capacity and Capability: o Frequently changing administrative influence on the project management process

due to funding or other concerns o Staff instability and lack of availability of replacement staff with technical

experience o Concerns regarding effective management, contract administration,

empowerment, and training o Contract close-out backlog threatens staffing efficiency o Potential for reduction of active, independent risk management as the project

moves forward Uncertainties surrounding final negotiations with HECO about scope and timing for

utility relocations.


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Uncertain construction bidding market conditions, especially as the project moves toward the highly-urbanized environment of downtown Honolulu and multiple project delivery systems are simultaneously considered for this work.

Potential delays may occur during the CCUR Contract due to continued right-of-way easements and acquisitions and efforts to finalize design.

Cost increases due to final project acquisition negotiations. Interferences with City Center construction process due to maintenance of traffic,

business disruption, or unexpected utilities. Interferences by the alignment and stations contractors with the Core Systems Contractor,

or systems construction progress delays. Contractors seeking currently unaccounted additional compensation for change orders

and claims. 8.4 Cost Risk Assessment

This section includes the PMOC refresh of the cost risk of the project, based on the PMOC’s review of HART’s EAC. This section also describes the risk-based Beta Range Factor (BRF) assignments and adjustments for the SCC Risk Assessment utilized in the FTA Risk and Contingency Review Workbook. Such adjustments are the result of investigation of project-specific information and are the result of information across many aspects of the project, including those described in the various sections of this report. Below, the cost risk evaluation is described, and the results are reported. 8.4.1 Methodology

Cost risk evaluation is a combination of the PMOC’s professional judgment and objective cost data to summarize and adjust HART’s cost estimate. This is in addition to a rational and empirical application of a risk model analysis used to simulate the magnitude of project risk and establish the potential responses to manage the risk. In the context of the project risk evaluation, quantitative risk assessment is utilized in the analysis of risk exposure and the corresponding management of uncertainty. The PMOC utilized the following steps for the cost risk analysis of the project:

(1) Categorized the current HART project estimate (outlined in Section 7) into the four risk profiles noted above in appropriate SCC breakdowns. Included in these breakdowns were the expenditure amounts through May 2018

(2) Removed all patent HART allocated and unallocated contingency; no latent contingency was discovered in the estimate, resulting in a stripped estimate for each profile

(3) Adjusted each stripped estimate by adding in those cost adjustments noted in Section 7.0, resulting in an adjusted estimate

(4) Loaded each profile with risk range values (“Beta values”) appropriate to the stage of completion of each risk profile, as described below

(5) Added further global and specific risk range adjustments based upon specific extraordinary risks noted on the project, also as detailed below.


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8.4.2 SCC Adjustments

The PMOC used its professional judgment as well as an evaluation of objective data to develop its assessment of the Project costs and to develop the indicated adjustments. Adjustments noted below include changes proposed by the PMOC as well as changes proposed by HART, largely as a result of investigation of the project during this risk review cycle and including information provided related to the February 2018 Risk Refresh Workshop and information provided subsequent to that workshop. See Table 17 for a summary of PMOC/HART adjusted project costs by major SCC. The Adjusted Estimate represents the stripped project cost in Year of Expenditure dollars ($YOE). The first $YOE column represents HART’s EAC with contingency removed and adjusted by the PMOC for known, unexecuted changes; the second column represents further PMOC adjustments; the final column represents the PMOC-adjusted project EAC, stripped of contingencies. The PMOC recommends an adjustment to the base cost estimate in the amount of $203.9 million. Details of the adjustments are discussed in Section 7 of this report. The final (Adjusted Estimate) column forms the Lower Bound basis for the risk assessment. Note that Finance Costs are not included in this risk assessment.


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Table 17. PMOC Adjustments to HART Estimate $YOE

All values in $1,000 8.4.3 Baseline Beta Values

For each risk profile, the starting point for the Beta values in this risk assessment was based on the Beta values appropriate to the level of development for each risk profile and is shown by major SCC category in the tables below. These values are developed from FTA standards, adjusted in consideration of advancements in the stage of project, and in consideration of the current level of estimate. Table 18 through Table 21 indicates the starting Beta values.

SCC CategoryHART stripped

estimateYOE PMOC Adjustments Adjusted estimate

SCC 10 Guideway 1,369,701 27,969 1,397,67010.02 Guideway: At-grade semi-exclusive (allows cross-traffic) 17 0 1710.04 Guideway: Aerial structure 1,227,258 24,730 1,251,98810.09 Track: Direct fixation 142,426 3,239 145,665

SCC 20 Stations, Stops, Terminals, Intermodals 747,048 22,961 770,00920.01 At-grade station, stop, shelter, mall, terminal, platform 13,279 0 13,27920.02 Aerial station, stop, shelter, mall, terminal, platform 546,701 17,540 564,24120.04 Other stations, landings, terminals: Intermodal, ferry, trolley, etc. 121,609 5,421 127,03020.07 Elevators, escalators 65,459 0 65,459

SCC 30 Support Facilities: Yards, Shops and Admin Bldgs 100,807 0 100,80730.02 Light Maintenance Facility 3,057 0 3,05730.03 Heavy Maintenance Facility 64,480 0 64,48030.04 Storage or Maintenance of Way Building 8,619 0 8,61930.05 Yard and Yard Track 24,651 0 24,651

SCC 40 Sitework and Special Conditions 2,239,662 18,143 2,257,80540.01 Demolition, Clearing, Earthwork 45,419 534 45,95240.02 Site Utilities, Utility Relocation 729,439 0 729,43940.03 Haz. mat'l, contam'd soil removal/mitigation, ground water treatments 15,071 0 15,07140.04 Environmental mitigation, e.g. wetlands, historic/archeologic, parks 5,519 0 5,51940.05 Site structures including retaining walls, sound walls 26,054 0 26,05440.06 Pedestrian / bike access and accommodation, landscaping 14,686 0 14,68640.07 Automobile, bus, van accessways including roads, parking lots 244,903 5,297 250,20040.08 Temporary Facilities and other indirect costs during construction 1,158,572 12,313 1,170,885

SCC 50 Systems 311,132 0 311,13250.01 Train control and signals 157,078 0 157,07850.02 Traffic signals and crossing protection 3,172 0 3,17250.03 Traction power supply: substations 32,397 0 32,39750.04 Traction power distribution: catenary and third rail 37,121 0 37,12150.05 Communications 65,391 0 65,39150.06 Fare collection system and equipment 12,163 0 12,16350.07 Central Control 3,810 0 3,810

SCC 60 ROW, Land and existing improvements 240,000 75,800 315,80060.01 Purchase or lease of real estate 171,400 54,134 225,53460.02 Relocation of existing households and businesses 68,600 21,666 90,266

SCC 70 Vehicles 211,390 0 211,39070.01 Light Rail 190,384 0 190,38470.05 Other 129 0 12970.06 Non-revenue vehicles 14,371 0 14,37170.07 Spare parts 6,506 0 6,506

SCC 80 Professional services and Agency costs 2,040,905 59,027 2,099,93280.01 Project Development 66,663 0 66,66380.02 Engineering 567,202 9,427 576,62980.03 Project Management for Design and Construction 683,361 27,600 710,96180.04 Construction Administration & Management 278,640 12,642 291,28280.05 Professional Liability and other Non-Construction Insurance 98,090 0 98,09080.06 Legal; Permits; Review Fees by other agencies, cities, etc. 142,449 0 142,44980.07 Surveys, Testing, Investigation, Inspection 141,687 9,358 151,04580.08 Start up 62,813 0 62,813

SCC 10-80 total 7,260,645 203,900 7,464,545

YOE Dollars

Calculate YOE adjusted estimateStandard SCC codes


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In the following tables:

R represents requirements risk D represents Design risk M represents market risk C resents construction risk

Note that each Total Beta includes the standard 0.05 increment for post-construction risk and that the Total Beta is the sum of the individual Beta increments, plus the value of 1.

Table 18. Imported Beta Values for Risk Profile 1

SCC R D M C Total Beta

SCC 10, 30-50 0.00 0.00 0.10 0.45 1.60 SCC 20 Not applicable SCC 60 Not applicable SCC 70 0.00 0.00 0.10 0.25 1.40 SCC 80 Not applicable R = Requirements Risk D = Design Risk M = Market Risk C = Construction Risk Total Beta = 1 + (R + D + M + C+.05) Above SCC 10-50 values reduced by percent complete by SCC



SCC 10, 20, 40, 50

0.00 0.00 0.10 0.45 1.60

SCC 30 Not applicable SCC 60 0.00 0.25 0.50 0.25 2.05 SCC 70 0.00 0.05 0.15 0.25 1.50 SCC 80 Not applicable R = Requirements Risk D = Design Risk M = Market Risk C = Construction Risk Total Beta = 1 + (R + D + M + C+.05) Above SCC 10-50 values reduced by percent complete by SCC



SCC 10, 20, 40, 50

0.00 0.25 0.25 0.45 2.00

SCC 30 Not applicable SCC 60 Not applicable SCC 70 Not applicable SCC 80 Not applicable R = Requirements Risk D = Design Risk M = Market Risk C = Construction Risk Total Beta = 1 + (R + D + M + C+.05)


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SCC 10-50 Not applicable SCC 70 Not applicable SCC 80.01 SCC 80.02 SCC 80.03 SCC 80.04 SCC 80.05 SCC 80.06 SCC 80.07 SCC 80.08

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

0.00 0.13 0.20 0.23 0.03 0.13 0.15 0.40

0.00 0.13 0.13 0.23 0.03 0.08 0.15 0.25

0.00 0.10 0.20 0.35 0.15 0.15 0.30 0.60

1.05 1.40 1.58 1.85 1.25 1.40 1.65 2.30

R = Requirements Risk D = Design Risk M = Market Risk C = Construction Risk Total Beta = 1 + (R + D + M + C+.05)

Beta values for the current project were developed based on a refreshed view of the Scope, Cost, and Schedule risks identified in the project, informed by regular PMOC site visits and project reviews. The Beta values were adjusted by the PMOC team as indicated below. Note that the Beta value adjustments occurred independently for each Risk Profile as applicable. These Beta values were assigned as outlined in FTA OP 40, and generally fall within ranges expected for this character of project. Beta values were applied at the second level SCC structure. Table 22 indicates the final Beta values included in this assessment. Detail for the SCC adjustments follows Table 22.


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Table 22. Beta Values Risk Refresh

SCC Description Risk

Profile 1 Risk

Profile 2 Risk

Profile 3 Risk

Profile 4 10 Guideway& Track Elements (Route Miles) 10.02 Guideway: Semi-exclusive 1.05 - - - 10.04 Guideway: Aerial structure 1.07 1.65 2.49 - 10.08 Guideway: Retained cut or fill - - - - 10.09 Track: Direct fixation 1.06 1.64 2.49 - 10.11 Track: Ballasted - - - - 10.12 Track: Special (switches, turnouts) - - - - 20 Stations, Stops, Terminals, Intermodals 20.01 At-grade station, stop, shelter, mall, terminal, platform - 1.52 - - 20.02 Aerial station, stop, shelter, mall, terminal, platform - 1.58 2.49 -

20.04 Other stations, landings, terminals: Intermodal, ferry, trolley, etc. - - 2.49 - 20.07 Elevators, escalators - 1.60 - - 30 Support Facilities: Yards, Shops, Admin. Bldgs. 30.02 Light Maintenance Facility 1.05 - - - 30.03 Heavy Maintenance Facility 1.05 - - - 30.04 Storage or Maintenance of Way Building 1.05 - - - 30.05 Yard and Yard Track 1.05 - - - 40 Sitework& Special Conditions 40.01 Demolition, Clearing, Earthwork 1.06 1.37 2.49 - 40.02 Site Utilities, Utility Relocation 1.07 1.65 2.49 - 40.03 Haz. mat'l, contam'd soil removal/mitigation, ground water treatments 1.12 1.75 - - 40.04 Environmental mitigation, e.g. wetlands, historic/archeological, parks 1.09 1.58 - - 40.05 Site structures including retaining walls, sound walls 1.07 1.73 2.49 - 40.06 Pedestrian / bike access and accommodation, landscaping 1.06 1.74 - - 40.07 Automobile, bus, van accessways including roads, parking lots 1.07 1.54 2.49 - 40.08 Temporary Facilities and other indirect costs during construction 1.06 1.37 2.49 - 50 Systems 50.01 Train control and signals 1.05 1.76 2.49 - 50.02 Traffic signals and crossing protection 1.09 2.10 - - 50.03 Traction power supply: substations 1.06 1.74 - - 50.04 Traction power distribution: catenary and third rail 1.05 1.57 - - 50.05 Communications 1.05 1.64 - - 50.06 Fare collection system and equipment - 1.51 - - 50.07 Central Control - 1.28 - - 60 ROW, Land, Existing Improvements 60.01 Purchase or lease of real estate - 2.30 - - 60.02 Relocation of existing households and businesses - 2.30 - - 70 Vehicles 70.01 - - 1.40 - - 70.05 Other 1.40 - - 70.06 Non-revenue vehicles - 1.50 - - 70.07 Spare parts - 1.40 - - 80 Professional Services 80.01 Preliminary Engineering - - - 1.05 80.02 Final Design - - - 1.45 80.03 Project Management for Design and Construction - - - 1.63 80.04 Construction Administration & Management - - - 1.90 80.05 Professional Liability and other Non-Construction Insurance - - - 1.25 80.06 Legal; Permits; Review Fees by other agencies, cities, etc. - - - 1.40 80.07 Surveys, Testing, Investigation, Inspection - - - 1.65 80.08 Start up - - - 2.30


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8.4.4 Beta Value Adjustments

Significant issues noted in the scope, cost, and schedule reviews are reflected in the risk assessment model by means of adjustments to the risk Beta factors () applied to each SCC sub-category. These adjustments result in forecasts of ranges of cost for the project. Standard FTA Beta values incorporate an expectation of common risks that occur across transit projects; Beta adjustments below reflect those increases or decreases in risk that differ from risks occurring within standard Beta values. The following sections present detail regarding the basis for global and specific adjustments that yield the final total Beta values, reflected previously in Table 22. SCC Wide Beta Value Changes System-wide Beta adjustments were made to several Risk Profiles:

Risk Profile 1 (contracts >90% complete): o All partial Beta values were reduced to reflect the completion status of each SCC

sub-line item. o Requirements risk increased by 0.15 to reflect risk related to risks due to

management capacity and capability as noted above. Risk Profile 2 (contracts <90% complete):

o All partial Beta values were reduced to reflect the completion status of the SCC sub-line item.

o Requirements risk increased by 0.15 to reflect risk related to risks due to management capacity and capability as noted above.

Risk Profile 3 (uncontracted work): o Requirements risk increased by 0.19 to reflect risk related to risks due to

management capacity and capability as noted above. o Design risk reduced by 0.05 to reflect design status. o Market risk increased by 0.35 to reflect increased sense of bidder risk due to

oncoming work in highly urbanized environment and nationally escalating environment.

Risk Profile 4 (professional services): o No global Beta adjustments applied.

SCC-Specific Beta Value Changes The following issues determined the final resulting Beta values for the SCC sub-categories, which are the Beta values that reflect risk across all four categories of Requirements, Design, Market, and Construction risk, including the general Beta value increases previously noted in the section above. Noted below are only those conditions where exceptional changes to the standard Betas were noted. “Normal” risks associated with similar construction are accounted for in the base risk model. Risk Profile 1:

SCC-10 – 70 o No Specific Beta Value Changes.


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Risk Profile 2: SCC-10 – 40

o No Specific Beta Value Changes. SCC-50 – Systems

o Construction Risk, SCC 50.01 through 50.05 increase by 0.35 to reflect strong risk of future changes resulting from interference of other contracts.

SCC-70 – Vehicles (Risk Profile 1) o Market Risk, SCC 70.01 & 70.07 decrease by 0.10 to reflect status that vehicles

have recently started delivery, but yet remain untested. Risk Profile 3:

SCC-10 – 60 o No Specific Beta Value Changes.

Risk Profile 4:

SCC-80 – Soft costs o Construction Risk, SCC 80.02 through 80.04 increase by 0.05 to reflect strong

risk of multiple staffing changes and inefficiencies as noted earlier. Several concerning risks were noted, but not used as a basis for Beta value adjustments. It is expected that—in addition to the risks noted for which cost-risk Beta adjustments were made—these risks will receive significant risk management and mitigation focus. These risks include the following:

Uncertainties surrounding negotiations with HECO about scope and timing for utility relocations

Contractors seeking unaccounted additional compensation for current change orders and claims

Failure to significantly reduce these risks may cause project cost increases above those modeled in this report.

8.4.5 Cost Risk Analysis

This section presents the PMOC’s analysis of the model-based Project Cost Risk Assessment based on the FTA Risk and Contingency Review Workbook (version 4.0), utilizing the project-adjusted BRFs. This workbook is based on the summary organizational structure of the FTA SCC 10 through 80 for the capital cost elements of a project. SCC 90 (contingency) is specifically excluded as a duplicate measure of risk. Risk for SCC 100 (finance charges) is not covered in the standard FTA risk range factors. Project-level risk is an aggregated amount of the risk associated with all of the SCC Ranges. Using the Beta values in Table 22, a simulation project risk model was developed; Table 23 presents the corresponding numeric data results from the risk model.


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Table 23. Risk Model Data

All values in $1,000; excludes finance costs.

This analysis indicates a recommended budget of $8.299 billion (excluding finance) to maintain a project protect level at p50, compared to the current HART EAC of $8.165 billion (excluding finance), which falls at p42. Further analysis of these amounts is provided in sections below. Figure 17 shows these values graphically.

Part 2

Mostly complete >90%

In construction <90% Not bid Soft costs

Sponsor total estimate (SCC 10-90) (42%ile) 8,165,054 1,321,868 3,268,891 1,388,045 2,186,250Sponsor exposed contingency 904,409 46,414 465,598 247,052 145,345

Sponsor stripped estimate (SCC 10-80) 7,260,645 1,275,454 2,803,293 1,140,993 2,040,905Latent Contingency 0 0 0 0 0

EAC stripped estimate 7,260,645 1,275,454 2,803,293 1,140,993 2,040,905

Secondary mitigation 0

Inflation Adjustment 0 0 0 0 0Adjustments 203,900 0 75,800 69,073 59,027Adjusted estimate 7,464,545 1,275,454 2,879,093 1,210,066 2,099,932

Percent complete 98% 26% 0% 54%

Funding value (50%ile) 8,298,555 1,291,726 3,266,924 1,568,601 2,344,654Base Funded Contingency amount 834,010 16,272 387,831 358,534 244,722

Contingency % 11% 1% 13% 30% 12%Secondary Mtigation Level (65%ile) 8,575,587 1,297,130 3,395,750 1,687,694 2,425,943

Secondary mitigation target amount 277,032 5,405 128,825 119,094 81,289Secondary mitigation % 4% 0% 4% 10% 4%

Secondary mitigation provided 0

Lower report range value (40%ile) 8,138,317 1,288,599 3,192,410 1,499,716 2,297,635Median value (50%ile) 8,298,555 1,291,726 3,266,924 1,568,601 2,344,654Upper mid value (65%ile) 8,575,587 1,297,130 3,395,750 1,687,694 2,425,943Upper range reporting amount (80%ile) 8,944,814 1,304,334 3,567,447 1,846,422 2,534,284

Risk analysis

YOE PMOC values

Funding value @ (50%ile) & Secondary Mtigation Level (65%ile)

YOE Sponsor values

Overall

Part 1 Part 3 Part 4


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Figure 17. Cost Risk Model Results

8.4.6 Cost Contingency

In its latest EAC, HART identified YOE $904 million in allocated and unallocated contingency included within its total EAC of $8.165 billion (excluding finance), indicating a HART stripped estimate of $7.261 billion. The PMOC found no additional latent contingency. The PMOC made $204 million in adjustments to the HART stripped estimate, indicating a stripped and adjusted estimate of $7.465 billion. This amount is reflected in Table 23. The PMOC prepared a risk assessment by Risk Profile as previously described. At this risk refresh, the PMOC recommends a funded contingency at p50 of approximately 11%, or $834 million, be added to the stripped and adjusted estimate of $7.465 billion equating to an overall recommended budget of $8.299 billion (excluding finance). Project contingency has faced significant challenges, and historically the drawdown of contingency has not been effectively tracked by the project; often in the past it has been ignored. As of the date of this report, HART has committed to develop an effective contingency drawdown control curve and has committed to tracking remaining contingency against that control curve. A conference call was held on April 25, 2018 to discuss contingency drawdown curves. The outcome of the call was positive in that HART intends to move forward with a robust method for developing and tracking contingency drawdown (both cost and schedule). It is strongly recommended that this system be fully implemented as soon as feasible.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

7,000.00 8,000.00 9,000.00 10,000.00 11,000.00 12,000.00

Millions

Probability distrbution

HART EAC p42

Modeled p50


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8.5 Risk Mitigation

8.5.1 Primary Mitigation

HART has developed a robust risk register that includes identification of project risks and has in recent times been updated with reasonable regularity. Development of a formal Risk and Contingency Management Plan (RCMP) as an integral part of HART’s PMP is expected, including establishment within HART’s organization of authority to ensure that the RCMP is well-managed. HART has provided updated versions of its RCMP including updates to its procedures and in response to suggestions provided by the PMOC. HART has pointed to several instances where recent pro-active risk management has led to strategies designed to reduce risk, including the commendable early contracting for resolving utility interferences ahead of the contracting for the City Center Guideway and Stations contract. It is recommended that a continued emphasis be maintained to manage and track additional actions needed to pro-actively resolve future risks once they are identified. Historically, this project has required significant infusions of local funding to resolve frequent underfunding conditions. The result has been strain that bears pressure upon the project administration and staffing to restrain cost increases. Independent reporting of project cost risk and remaining contingency levels should remain at a management level. 8.5.2 Secondary Mitigation

Secondary mitigation consists of pre-planned potential scope or process changes that may be triggered when risk events occur that cause overruns that cannot be resolved by available project contingency. It is noted that Secondary Mitigation is not to be confused with a value engineering exercise. Value engineering is a formal, systematic, multi-disciplined process designed to optimize the value of each dollar spent. Secondary mitigation is difficult to cost-effectively obtain at this stage where major portions of the project are already contracted for construction and design is largely complete. However, the upcoming major City Center work provides a significant opportunity for Secondary Mitigation items that may be priced at market levels. In order to preserve these opportunities, the items must be defined before the procurement and identified as potential future deductive alternates. A preliminary list of potential Secondary Mitigation items was presented by HART during a workshop in May 2018. The proposed list of measures included the following information: title (description); cost reduction potential and general estimating assumption; review team comments (e.g. impacts to environmental, operations, schedule, FFGA, etc.); and a target decision date. However, this list has not been fully vetted by executive management and is subject to revision. Additionally, several of target decision dates are listed as occurring between May and July 2018. This means that these measures may be expired options if not triggered in the near term, becoming unavailable to any future event that may require a replenishment of contingency. Upon review and approval of the preliminary list from executive management, HART must develop detailed scope, schedule impacts, and cost estimates for any secondary mitigation


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measure that is deemed viable. This is critical to ensure HART has the capacity to complete the project if there is a drawdown of contingency greater than planned per the Risk and Contingency Management Plan. A potential level of Secondary Mitigation protection is the p65 level, is suggested in Table 23; should this level be desired, the amount of Secondary Mitigation to be developed would be $277 million. 8.6 Conclusion

During the February 2018 risk workshop, it became clear that HART had begun to advance it’s cost and risk tracking procedures to become more aware of the cost implications and to begin to develop a more robust system to respond to and resolve known risks. In the prior major FTA/PMOC risk review, these measures were severely lacking. These improved efforts are a positive development toward project cost-risk protection. The project has experienced and is expected to experience significant challenges as it moves toward the next phase of completion. Continuation of integration of visible and independent risk management into the project is an important safeguard. The PMOC separated the project into four distinct risk profiles to better model the effect of risk upon the project. The cost risk assessment recognized general reductions in risk due to advancement of construction and design. However, concerns that relate to historically experienced issues of management capability and capacity, market conditions, and construction complexities—especially as the project proceeds toward downtown Honolulu—are expected to continue and are factored into the risk analysis. It is recognized that efforts have been made to recover contingency levels through cost reduction measures, value engineering, and revised project delivery strategies. However, these types of changes are increasingly less likely and less effective. The risk analysis indicates a recommended budget of $8.299 billion (excluding finance) to maintain a project protect level at p50, compared to the current HART EAC of $8.165 billion (excluding finance), which falls at p42. With $855 million in finance costs the total project cost would be $9.154 billion. However, this report does not analyze any potential changes to finance costs based on the higher capital costs. HART’s current EAC falls short of the p50 predicted FTA model outcome by $134 million. Secondary mitigation is difficult to cost-effectively obtain at this stage where major portions of the project are already contracted for construction and design is largely complete. However, the upcoming major City Center work provides a significant opportunity for Secondary Mitigation items that may be priced at market levels. It is recognized that Secondary Mitigation opportunities have been proposed, but of many items have not been fully vetted by executive management and many indicate target decision dates that are immediately upcoming or past. In order to preserve these opportunities, the items must be defined before the procurement and identified as potential future deductive alternates. A potential level of Secondary Mitigation protection is the p65 level, as indicated in Table 23; should this level be desired, the amount of Secondary Mitigation to be developed would be $277 million, assumed the project is funded to


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the p50 level indicated. 8.7 Recommendations

(1) At this risk refresh, the PMOC recommends a funded contingency at p50 of approximately 11%, or $834 million, be added to the stripped and adjusted estimate of $7.465 billion equating to an overall recommended budget of $8.299 billion (excluding finance).

(2) HART has committed to develop an effective contingency drawdown control curve and has committed to tracking remaining contingency against that control curve. It is strongly recommended that this system be fully implemented as soon as feasible.

(3) The recommended amount of budget increase reflects the condition of no viable Secondary Mitigation being presented. However, the upcoming major City Center work provides a significant opportunity for Secondary Mitigation items that may be priced at market levels. In order to preserve these opportunities, the items must be defined before the procurement and identified as potential future deductive alternates. A potential level of Secondary Mitigation protection is the p65 level; should this level be desired, the amount of Secondary Mitigation to be developed would be $277 million.

(4) The HART Risk and Contingency Management Plan (RCMP) has been updated to provide an improved description of risk management policies that if fully implemented should act as a safeguard to proactively determine whether current and future risk threatens the project. Full implementation of this effort will require strong management priority, especially to prevent concerns over budget increases from influencing the candid exposure of project risk.

(5) It is recommended that continued emphasis be maintained to manage and track the actions needed to proactively assess and resolve risks once they are identified.


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9.0 LIST OF ACRONYMNS

AD/OD ▪ Actual Duration/Original Duration AGS ▪ Airport Guideway and Stations AHJV ▪ Ansaldo Honolulu Joint Venture AIS ▪ Archaeological Inventory Survey APS ▪ Adjusted Project Schedule BCE ▪ Base Cost Estimate BoE ▪ Basis of Estimate BoS ▪ Basis of Schedule BRF ▪ Beta Range Factor CCGS ▪ City Center Guideway and Stations CCO ▪ Contract Change Orders CCUR ▪ City Center Utilities and Roadway CE&I ▪ Construction Engineering & Inspection CMP ▪ Construction Management Plan CMS ▪ Contract Management System CPM ▪ Critical Path Method CPP ▪ Contract Packaging Plan CPS ▪ Current Project Schedule CSC ▪ Core Systems Contract DB ▪ Design-Build DBB ▪ Design-Bid-Build DBFOM ▪ Design-Build-Finance-Operate and Maintain DBOM ▪ Design-Build-Operate-Maintain DTS ▪ Department of Transportation Services EAC ▪ Estimate at Completion EUM ▪ Estimate Uncertainty Model FF ▪ Finish-to-Finish FFGA ▪ Full Funding Grant Agreement FHSG ▪ Farrington Highway Station Group FTA ▪ Federal Transit Administration FY ▪ Fiscal Year GEC ▪ General Engineering Consultant GET ▪ General Excise Tax HART ▪ Honolulu Authority for Rapid Transportation HDOT ▪ Hawaii Department of Transportation HECO ▪ Hawaiian Electric Company ICE ▪ Independent Cost Estimate ID ▪ Identification IFB ▪ Invitation to Bid IRM ▪ Impacted Risk Model IRM ▪ Impacted Risk Model KH ▪ Kamehameha Highway LRV ▪ Light Rail Vehicle MCC ▪ Management Capacity and Capability MPIS ▪ Master Project Integrated Schedule MSF ▪ Maintenance & Storage Facility NTI ▪ National Transit Institute OCIP ▪ Owner Controlled Insurance Program OD ▪ Original Duration OP ▪ Oversight Procedure P3 ▪ Public-Private Partnership PHPG ▪ Pearl Highlands Parking Garage PMOC ▪ Project Management Oversight Contractor PMP ▪ Project Management Plan


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PMSC ▪ Program Management Support Consultant PPP ▪ Public Private Partnership PRA ▪ Primavera Risk Analysis RCMP ▪ Risk and Contingency Management Plan RD ▪ remaining duration RFP ▪ Request for Proposals ROD ▪ Record of Decision ROW ▪ Right-of-Way RSD ▪ Revenue Service Date SBS ▪ Schedule Breakdown Structure SCC ▪ Standard Cost Category SOA ▪ State Oversight Agency SS ▪ Start-to-Start TAT ▪ Transient Accommodations Tax TSR ▪ Technical Schedule Review WBS ▪ Work Breakdown Structure WOFH ▪ West Oahu/Farrington Highway YOE ▪ Year of Expenditure