Fifty-two New York companies including JPMorgan Chase, McGraw-Hill and Estée Lauder are part of this year's Fortune 500.

(UPDATED) The strained relationship between Ray LaHood and House Republican leadership was on full display Tuesday morning, when the transportation secretary sparred with members of a House subcommittee at a hearing about the Department of Transportation's budget request.

"I would say that financial education is a civil right." — Alexa von Tobel, founder and CEO of LearnVest, on the inspiration behind her startup that pairs users with certified financial planners. 

Now that the NY MTA has a new chairman in Tom Prendergast, and Local Transport Workers Union 100 has a recently re-elected president in John Samuelsen, the two sides can now sit down hammer out a contract.

New York City Council speaker Christine Quinn gave voters their first detailed glimpse into what her transportation agenda would be if she's elected Mayor. It's like Bloomberg's -- but without the big, bold visions.

The success of a megaproject can come down to a single decision: choosing the right contractor.

As the Metropolitan Washington Airports Authority (MWAA) prepares to embark on Phase II of a $5.5 billion rail extension to Dulles International Airport known as the Silver Line, five pre-qualified construction consortiums are facing an April 19 deadline to submit bids to build a transportation project largely financed by toll revenues from the Dulles Toll Road.

After receiving the bids next Friday, MWAA will announce the winner in May. Preliminary work is scheduled to begin later this year with a target of 2018 for completion of the Silver Line to Dulles and beyond into Virginia's Loudoun County. Phase I of the project, which extends D.C.'s Metro to Reston -- is scheduled to open later this year.

Some of the biggest names in the construction industry are competing for the Phase II contract, including Bechtel, the firm that is building Phase I. The lowest bidder wins Phase II.

“Before you go to a low bid, you do everything possible to make sure that you have a firm that is fully capable and fully understands the scope of work of the project involved,” said Patrick Nowakowski, the executive director of the Dulles Corridor Rail Project. “We don’t want to have firms leading the effort… who’ve never undertaken a megaproject.”

Nowakowski says using the low-bid procurement procedure ensures the lowest possible price for Fairfax and Loudoun County taxpayers and the toll road users.

“It’s all about price,” Nowakowski said.

Once the contractor teams’ individual design proposals met the standards established in MWAA’s design schematics, the lowest bid became the only factor in deciding who will win the contract. Therefore, a bidding contractor with a superior design receives no advantage in the bidding process. But Nowakowski says his office has been meeting with the competing contractor teams for months to ensure all the design proposals are sound.

“That’s where the confidence level comes in, the amount of time we have spent working with them,” Nowakowski said. “[We] make sure that the designs they produce meet the minimum standards that [we’ve] established in a specifications.”

Critics say low bid invites trouble

Any number of issues can push a megaproject over budget, but the low-bid procurement process is particularly troublesome, critics say, because it entices a contractor to submit an artificially low bid with the intention of requesting change orders to drive up a project’s final cost, paid for by the project’s owner and into the contractor’s pockets. In the case of the Silver Line, the owner is MWAA.

“The procurement on Phase II is not being done in an optimal way,” said Brian Petruska, an attorney at the Laborers International Union of North America, one of the unions that supplied workers to build Phase I of the Silver Line. “For a contractor the number one goal is to get the project.”

Change orders usually occur in one of three ways: the project owner requests the change and then pays the contractor to include it; an unexpected problem arises in the construction process requiring a change for the project to proceed safely; or the contractor requests a change order from the owner. In the latter case, MWAA would have to approve any change orders that are requested by the general contractor.

“We've looked at projects such as the Wilson Bridge and the Springfield interchange where change orders were approved because the price of steel went up. You would think the contractor should factor in potential increases in the price of steel, so when they make the bid they take the risk,” said Petruska, who said MWAA should have chosen a bidding process that grades on both design and price.

MWAA insists its contract documents and oversight procedures will prevent unnecessary change orders and, therefore, stick to the Silver Line’s budget.

“I worry about change orders from the day I sign the contract to the day I end it,” Nowakowski said. “It’s not a function of the low-bid procedure. It’s a function of how well the contract documents were written and how well you manage the project from the day you start to the day you finish.”

The higher the Silver Line price, the higher the tolls on the Dulles Toll Road

Virginia’s approval of an additional $300 million in Silver Line funding lightened the burden on Dulles Toll Road users to finance the $2.7 billion Phase II extension. Before the Commonwealth approved new funding, toll revenues were scheduled to cover 75 percent of Phase II’s costs. That cost has been reduced to 64 percent, according to an MWAA spokeswoman-- as long as Fairfax and Loudoun Counties continue to fund the $400 million needed to build parking garages and a rail station at the planned Rt. 28 stop.

If Phase II’s construction goes over budget, toll road users may be asked to make up the difference, according to Virginia Transportation Secretary Sean Connaughton.

Connaughton says it will be up to the Metropolitan Washington Airports Authority to make sure only legitimate change orders are approved for Phase II of the Silver Line.

“Any price escalation is passed almost directly onto the toll road users, and the toll road users are already bearing a very large brunt of the cost of this project,” Connaughton said.

Change orders and bloated project budgets

The Metropolitan Washington Airports Authority has a mixed record in keeping its projects on budget. While MWAA officials have praised the contractor and union workforce for keeping Phase I of the Silver Line on time and on budget, the Dulles Main Terminal Automated People Mover Station will receive no such praise.

The Automated People Mover Station, which provides a rail and pedestrian link between the main terminal and midfield concourses at Dulles Airport, was awarded by MWAA to the contractor Turner Construction Co.* at the low-bid price of $184 million. After 82 change orders were approved, the project finished at $388 million, an increase of $204 million from the original low bid, according to sources familiar with an internal MWAA audit.

The audit also found MWAA staff approved certain increases without documentation and without written contractual obligation to do so, sources said.

While the People Mover Station may provide an egregious example of a project’s costs soaring out of control, it serves a caution that even when government agencies sign a contract with established construction industry giants, things can go very wrong. That is why, Nowakowski said, the Silver Line’s project management team will exercise strict oversight.

“We’ve got some of the five best teams in the world competing” for the contract, he said. “The taxpayers can believe that we’ve done everything that we can to get the best possible price.”

The Springfield Interchange (Archer Western) and the Silver Spring Transit Center (Foulger Pratt) provide two widely publicized examples of projects that went well over budget despite having major construction firms serving as general contractors. Archer Western is leading one of the five construction consortiums that will bid of Phase II of the Silver Line.

In addition to Archer Western Contractors, the other construction consortiums competing to build Phase II are led by Bechtel Infrastructure Corp., Skanska USA, Clark Construction Group, and Fluor Enterprises Inc.

Construction industry warns against pointing fingers

Representatives of the construction industry say it is harder to determine what actually went wrong than to simply assign blame when megaproject encounters budget or construction problems.

“A newspaper or a radio show or anybody can spout off and say there was a problem on a job and they name the contractor or the subcontractor,” said Patrick Dean, president of the Associated Builders and Contractors of Virginia. “Typically they don’t get into the details because that news is old by the time anything is figured out.”

Dean says the idea contractors pocket huge sums off excessive change orders is “a fallacy.”

“It’s not like contractors are going to make a lot of money on change orders. A change order increases their contract but they are a hassle. You have to negotiate them, sometimes you fight over them. You may have to rework something or change your schedule,” said Dean, who said some change orders are requested not for profit but to make projects more durable to reduce future maintenance costs.

Regardless of whether MWAA or the general contractor will pay for any change orders approved during Phase II of the Silver Line, the additional costs may ultimately fall on drivers on the Dulles Toll Road.

Virginia Transportation Sec. Connaughton, a critic of MWAA’s past performance, said the agency must run this project well. “Additional costs not only delay the project but obviously cause it to spiral out of control with price,” Connaughton said.

This is the first of a two-part series on construction of Phase II of the Silver Line to Dulles.

*This post originally listed the contractor as Skidmore, Owings & Merrill. They are the architects, not the contractor. 

(New York, NY - WNYC) The Bloomberg Administration is saying it's still a good idea to extend the 7 subway train from the west side of Manhattan to a major transit hub in Secaucus, New Jersey.

Preliminary repair work is underway at Maryland' s Silver Spring Transit Center, but officials still can't say when it will actually open.

The construction and design teams have agreed for now to pay for the necessary repairs to fix the structural problems at the Silver Spring Transit Center that were detailed in a scathing county report.

David Dise, director of general services for Montgomery County, says some repair work is already underway but that the major remediation work won't take place until late summer.

"Foulger Pratt was directed on Friday to begin the replacement of the faulty pour strips on the mid-level of the transit center," Dise says. "Parsons Brinkerhoff, the engineer of record, is beginning the design of the other remediation work that has to be done, the columns, the beams, and the topping slabs on the two levels."

That's just the beginning. Those repairs will take months to complete, so Dise can't say when the facility, already two years behind schedule, will open.

"Much of that will depend upon the final remediation plan being developed by Parsons Brinkerhoff and the subsequent schedule developed by Foulger Pratt after they receive the design," Dise says.

So the county, as of now, will not have to pump any more money into finishing the facility.

"The contractors that have performed the work that is in error must bear the cost of its repair," Dise says.

So it appears the county and the contractors have reached a resolution that will avoid costly, time consuming litigation, at least for the time being. The contractors may fight the county in court after the work is done to recover their expenses.

BART train (photo by Keoki Seu via Flickr)

Rising ridership and sales tax revenues on San Francisco's BART system mean the agency is no longer operating at a deficit, which has triggered labor negotiations that could give union workers their first raise in four years.

BART contracts for its union workers – who make up almost 90 percent of BART’s over 3,000 employees– are set to expire on June 30th. And that has sent BART and union leaders to the negotiating table. Both sides are hoping to avoid the bitter and contentious fight that happened during the last contract negotiations in the summer of 2009.

But things were different in 2009. Ridership was declining, and the system was facing a $250 million deficit over the next four years. BART went into negotiations with the goal of cutting $100 million in labor costs through reductions in health care and pensions, and changing what they considered “wasteful” work rules, like unnecessary overtime. A last-minute deal that kept wages static, prevented a strike by the Amalgamated Transit Union Local 1555, or ATU – the union that represents the system’s approximately 900 station agents and train operators.

That deal did save BART the $100 million it wanted and laid out plans for four of the five unions and non-union employees to get a one percent raise if strict guidelines were met, including increased ridership and sales tax revenues. This week, BART announced the guidelines have been met, so most of their employees will be receiving their first raise in since 2009.

“With record ridership and an aging system, our employees are working hard to provide on-time, reliable service for our riders,” BART General Manager Grace Crunican said in a press release. “The bar was set high for our employees to receive this increase and the predefined standards were met.”

Since 2009, BART has increased its ridership – from 340,000 to over 390,000 in the latest monthly report. And it’s no longer operating on a deficit, but the system does have a $10 billion unfunded capital need for renovation and expansion projects.

“This year’s labor negotiations will be focused on bargaining a fair contract for our hard working employees as well as ensuring the long term financial health and sustainability of our system,” Crunican said.

BART says they’re looking at the same issues as last negotiation: employee health care, pensions, and work rules.

“We must pave the way for BART to continue to be the backbone of Bay Area transportation for decades to come,” Crunican said. “BART is looking to protect its future fiscal stability with measures to more effectively share the risks and costs associated with its employee benefits program.”

Antonette Bryant is the president of ATU Local 1555. She said calling last negotiation contentious was “a gross understatement.” But this time, she said, she wants to have the contract settled June 30th.

“We want them to pay a fair wage for our employees and increase safety and service for the BART patrons,” Bryant said. Meaning, they want a pay raise.

Bryant also said the one percent raise announced this week should not be considered as the transit workers’ only salary increase.

“I want to make it clear that this is not benevolent,” she said. “This is something they have to do. They owe us the money from the previous contract negotiations.”

As negotiations go on, both parties hope to have a deal by June 30th and to prevent the fighting that happened four years ago.

495, shown last year while under construction

Nearly five months after opening, the operators of the 495 Express Lanes are struggling to attract motorists to their congestion-free toll road in a region mired in some of the worst traffic congestion in the country.

Transurban, the construction conglomerate that put up $1.5 billion to build the 14-mile, EZ Pass-only corridor on the Beltway between the I-95 interchange and Dulles Toll Road, will let motorists use the highway free this weekend in a bid to win more converts.

“It takes a lot of time for drivers in the area to adapt to new driving behaviors. A lot of us are kind of stuck on autopilot on our commutes. That trend might continue for a while, too,” said Transurban spokesman Michael McGurk.

Light use of HOT lanes raises questions

McGurk says some drivers are confused about the new highway’s many entry and exit points. Opening the Express Lanes for free rides this weekend will let motorists familiarize themselves with the road, he said.

After opening in mid-November, the 495 Express Lanes lost money during its first six weeks in business. Operating costs exceeded toll revenues, but Transurban was not expecting to turn an immediate profit. In the long term, however, company officials have conceded they are not guaranteed to make money on their investment. Transurban’s next quarterly report is due at the end of April.

To opponents of the project, five months of relatively light traffic on Virginia’s new $2 billion road is enough to draw judgments. Vehicle miles traveled (VMT) has not recovered since the recession knocked millions out of work and more commuters are seeking alternatives to the automobile, according to Stewart Schwartz, the executive director of the Coalition for Smarter Growth.

“They miscalculated peoples' time value of money. They overestimated the potential demand for this road,” said Schwartz, who said the light use of the 495 Express Lanes should serve as a warning.

“We should not have rushed into signing a deal for hot lanes for the 95 corridor, and we certainly shouldn’t rush into any deal on I-66,” he said.

Transurban is counseling patience.

“We’re still in a ramp-up period. You’ve probably heard us say that since the beginning, too, but with a facility like this it’s a minimum six months to two years until the region falls into a regular pattern on how they’re going to use this facility,” McGurk said.

In its first six weeks of operations toll revenues climbed on the 495 Express Lanes from daily averages of $12,000 in the first week to $24,000 in the week prior to Christmas. Traffic in the same period increased from an average of 15,000 daily trips to 24,000, according to company records. Despite the increases, operating expenses still outstripped revenues.

It is possible that traffic is not bad enough outside of the morning and afternoon rush hours to push motorists over to the EZ Pass lanes on 495.

“It may also show that it takes only a minor intervention to remove enough cars from the main lanes to let them flow better,” said Schwartz, who said the 14-mile corridor is simply pushing the bottleneck further up the road.

Even Transurban’s McGurk says many customers who have been surveyed complain that once they reach the Express Lanes’ northern terminus at Rt. 267 (Dulles Toll Road), the same terrible traffic awaits them approaching the American Legion Bridge.

Express Lanes a litmus test for larger issues

The success or failure of the 495 Express Lanes will raise one of the region’s most pressing questions as it looks to a future of job and population growth: how best to move people and goods efficiently. Skeptics of highway expansions, even new facilities that charge tolls as a form of congestion pricing, say expanding transit is cheaper and more effective.

“An approach that gives people more options and reduces driving demand through transit and transit-oriented development may be the better long-term solution. But we’ve never had these DOTs give us a fair comparison between a transit-oriented investment future for our region and one where they create this massive network of HOT lanes,” said Schartz, who said a 2010 study by the Metropolitan Washington Council of Governments pegged the cost of a tolled network of 1,650-lane miles of regional highways at $50 billion.

Transportation experts say a form of congestion pricing, either tolled lanes or a vehicle miles traveled tax, may be part of a regional solution to congestion. The public, however, needs to be explained why.

“As long as the majority of system remains non-tolled and congested then you are not going to solve the problem,” said Joshua Schank, the president of the Eno Center for Transportation, a D.C.-based think tank.

“Highways in this region are drastically underpriced. People are not paying enough to maintain them and they certainly are not paying enough to pay for the cost of congestion. The American people have been sold a bill of goods because they have been told that roads are free. Roads cost money,” he added.

The 495 Express Lanes are dynamically-priced, meaning the tolls increase with demand for the lanes. The average toll per trip in the highway’s first six weeks of operations was $1.07, according to Transurban records. As motorists enter the lanes they see signs displaying how much it will cost to travel to certain exits, but no travel time estimates are displayed. “It is important to be very clear to drivers about the benefit of taking those new lanes, and I am not sure that has happened so far,” said Schank, who said it is too early to conclude if the Express Lanes are working as designed.

“It’s hard to know if it works by looking whether the lanes are making money. I don’t know if that is the right metric. It’s the right metric for Transurban, but it’s not necessarily the right metric from a public sector perspective,” he said. “The real metric is to what extent does it improve economic development and regional accessibility, and that’s a much harder analysis that takes some real research and time.”

Follow @MartinDiCaro on Twitter.

(photo by mrjasonweaver via flickr)

Virginia lawmakers approved bipartisan legislation that makes texting while driving a primary offense, and significantly raises the fines.

State legislators passed amendments to the bill that were proposed by Gov. Bob McDonnell, including one increasing the fine for texting while driving from $20 to $125 dollars for a first offense and $250 dollars for every subsequent violation.

That's less than the original legislation, which pegged those fines twice as high.

Delegate Rich Anderson (R-Prince William Co.) says it puts texting on the same level as other impaired forms of driving.

"That aligns driving while intoxicated and driving while texting pretty closely," says Anderson.

Sen. George Barker (D-Alexandria) says he has been trying to get a bill passed on this topic for a number of years, after students from Centreville High School brought the issue to his attention.

"I’m very pleased, because this is an extraordinarily dangerous activity," Barker says. "The accident rate is 23 times the rate for people that are texting compared to people that aren’t, which is a phenomenal differential. It clearly will save lives."

Del. Scott Surovell (D-Fairfax) says the law addresses more than just texting at the wheel.

"You can be convicted not only if you are texting, but also if you are reading a text message, if you are sending an email or if you are reading an email," Surovell says.

The bill does not address other potential distractions, like voice-controlled messaging. There also remains some ambiguity about other activites not expressly banned in the legislation, like the use of GPS on a smartphone.

"Depending on how things work, there may need to be tweaks in the future," Barker says. "I think what we’ve done is adopted a very clear policy here, and if we need to fix the language to clarify that, we can obviously do that in the future."

The amended bill now heads to the governor's desk for his signature. He is expected to sign it.

Maryland's Montgomery County Council approved an additional $7 million to pay for construction work already completed at Silver Spring Transit Center, which is already two years behind schedule and about $80 million over budget.

The $7 million approved by county lawmakers has nothing to do with major design and construction problems detailed in a county report released two weeks ago.When it comes to who will pay to repair those problems, county officials say it will likely be determined in litigation with the project’s contractors.

“We will move expeditiously to make sure that we make the necessary repairs and that the taxpayers of Montgomery County will not have to pay for the flaws of the contractor,” says County Executive Ike Leggett, who has threatened to cancel the county’s contract with Foulger Pratt and other contractors and sue to recover any funds paid to fix the transit center’s construction issues, like inadequately thick concrete.

“Whatever we spend we will get back because we are going to pursue to the ultimate degree of the law and the legal process to make sure the county is reimbursed for anything we may have to put out in advance,” says Leggett.

Council President Nancy Navarro echoed Leggett’s vow to go to court, if necessary, to protect taxpayers but left open the possibility the county is also responsible for the mess at the transit center.

“I have not said at any moment that the county could not have some responsibility in this. It is possible,” says Navarro, who says the transit center could open to the public while any litigation proceeds. 

No lawsuits have been filed yet.

Contractor Foulger Pratt has said the county’s design plan was flawed from the start. Company executive Bryant Foulger has said any safety issues concerning concrete and reinforcing steel bars are the county’s responsibility.

The shoot-for-the-moon, Level D plan: a second Northeast Corridor "spine," Long Island-to-New England service, and 220-mph rail (image via NEC FUTURE)

Over a dozen plans for improving rail in the Northeast Corridor are under consideration by the federal government, ranging from minor improvements to a future with 220-mile-per-hour bullet trains between Washington and Boston -- not to mention new service between Long Island and New England.

These various options are detailed in a new report released Tuesday by the Federal Railroad Administration. NEC FUTURE sketches out 15 alternatives representing different levels of investment through the year 2040 in the 457-mile corridor.

Related: Amtrak Updates High-Speed Rail Vision, What’s Changed

The options, in turn, have been grouped into four separate categories which grow progressively more ambitious: while those in Level A focus on achieving a state of good repair, Level D would build a separate high-speed rail line between Boston and D.C. and bring new service in the region, primarily in Long Island, New England and the Delmarva peninsula.

The report aims to jump-start public debate about how rail capacity should be shaped in the region. "It is intended to be the foundation for future investments in the Northeast Corridor, a 150 year-old alignment that has guided the growth of what is now one of the most densely populated transportation corridors in the world,” said Rebecca Reyes-Alicea, NEC FUTURE program manager for the Federal Railroad Administration.  “(It) will further the dialogue about the rail network in the Northeast and how it can best serve us over for the years ahead.”

Over the next year, these 15 options will be winnowed down. The federal government wants to have a single alternative in place by 2015.

Because it's conceptual, no cost estimates are included in the report. But existing documents provide a baseline. In 2010, Amtrak identified $9 billion alone in state of good repair projects for the NEC, with an additional $43 billion in investment just to meet projected 2030 ridership levels for the current system. Meanwhile, another Amtrak report estimated the cost of bringing high-speed rail to the NEC at $151 billion.

Related: Amtrak’s 220mph Vision for the Future

Dan Schned, a senior transportation planner at the Regional Plan Association, said "what’s possible and what Congress has the stomach to spend are two different things."

But he said that funding need not come solely from Congress. "Successful high-speed rail projects around the world have private sector participation," Schned pointed out, adding that "the arrangement of public and private financing and project delivery issues will be the most challenging" aspects of overhauling the NEC.

The Federal Railroad Administration is holding workshops in New Haven, Newark and Washington D.C. next week to present the plan to the public. For more information, go here.  Read the full report below.

NEC Future: A Rail Investment Plan for the Northeast Corridor