Strong institutions and staff capacity are essential to ensure projects are delivered on-time and on-budget.
Over the last several decades, LA Metro and the independent construction authorities (which have delivered some of the lowest cost projects) invested in capable staff and institutional capacity to deliver major projects. This is largely a result of the steady pipeline of capital projects and the region’s voter-approved financial resources for transit. Since 1980, Los Angeles County voters approved four different ½-cent transportation sales tax measures.323 Measure M passed in 2018 and is expected to raise $120 billion over 40 years, dwarfing all other transit capital expansion programs in the United States. State contributions constitute less than 10 percent of the agency’s capital funding, and Los Angeles has been adept at securing federal transit grants due to its local contributions.324
The significant stream of revenue is beneficial for the timely delivery of projects, as many regions start planning for transit then use the planning process to help make the case for federal and local resources. With ample revenue streams, Los Angeles is able to continue planning for multiple lines knowing the resources will be available.
LA Metro also attracted new talent and built its internal staff thanks to its long-term capital program and the steady stream of major construction projects. In its early days, the agency retained a small in-house team and relied heavily on outsourced consultants for project planning and management. While LA Metro still relies on external experts for many elements of project delivery, its core group of senior and deputy project management staff bring significant institutional knowledge as well as private sector experience. Building an in-house team is not only less expensive than hiring consultants, but often also leads to better project outcomes since staff can better assess risk for the agency and the project budget when making major decisions.
In the past, the independent construction authorities delivered the lowest cost projects in the region. This is partially a result of simpler alignments in existing right-of-way (particularly for the Gold Line), though robust community support and more flexible procurement through the construction authorities contributed to lower costs. The two projects delivered by the GLCA – opened in 2003 and 2016 – were completed on-time and under-budget using the design-build delivery method.325 The authority is currently building Phase 2B and has retained its lean and flat structure, relying on a small core group of less than a dozen senior, in-house management and executive staff. This staff is augmented by external consultants that operate in close coordination with the authority and are treated as in-house staff. The GLCA is also responsible for coordinating and securing buy-in from the numerous jurisdictions and stakeholders along the alignment of the Gold Line. The authority minimized scope changes by discussing ideas and preferences early in the planning process, and by managing the scoping phase tightly.
Another independent construction authority was used to deliver the Expo Line. It had trouble with the first phase of the project, which was delayed and completed $300 million over-budget due to contracting and project management issues (adding about $35 million per mile to that line).326 In response, LA Metro commissioned an audit to identify key problems, lessons learned, and document steps the authority was taking to mitigate the risk of overruns on the second phase. The construction authority ultimately delivered Phase 2 on time and within budget (see below).
Despite their relative successes, LA Metro is moving away from construction authorities and, with the exception of Phase 2B of the Gold Line, is building all of its current and future projects (many of which are tunneled) in-house. This is in part because the agency has built up institutional capacity learned from challenges on early subway projects. The Purple line extensions, Regional Connector, and Crenshaw Line currently under construction are managed by LA Metro staff.
Staff capacity is also a critical element for properly managing project delivery and various procurement methods. Many of Metro’s early projects during the 1990s were built under a traditional design-bid-build procurement, which is generally associated with higher costs and overruns due to the difficulties in managing project scopes and change orders. Since the initial segment of the Gold Line, which was the region’s first DB project and delivered on-time and under budget, LA Metro and the construction authorities have utilized design-build for all major projects. However, the DB delivery method can result in delays and cost increases if not executed properly and requires project owners to be disciplined when developing project scopes, design criteria, and performance specifications for the design-builder.
This inexperience with the delivery model and the use of a “negotiated design-build” procurement on Phase I of the Expo Line contributed to significant cost overruns and delays. In lieu of establishing a lump sum, fixed price for the project when awarding the DB contract, the Expo Line Construction Authority negotiated the fixed price for each of its 19 work-packages once they neared final design. This was intended to avoid building risk and uncertainty over incomplete design into the bid.327 However, the authority found that costs quickly outstripped the initial estimate once it began negotiating the work packages given the need for additional design and engineering work. This approach ultimately led to the authority requesting an additional $145 million from LA Metro.328 A more traditional DB procurement was used on Phase II of the Expo Line, which was delivered on-time and on-budget. The authority also hired two firms to develop preliminary design work before selecting one firm to move forward, allowing the authority to own both designs and incorporate features from each into the final product.
It is important to note that neither LA Metro nor the construction authorities physically build the infrastructure with in-house staff. As with other major projects, the design, engineering, and construction is always contracted out to private companies. In Los Angeles, the building trades are employees of private sector companies and unionized, negotiating directly with their private employer. No interviewee suggested that union wages, benefits, or work rules were a major factor in driving the costs or timelines of projects.