I have to agree with part of Joel Fox’s commentary on the High-Speed Rail Program, in the wake of yet another over-the-top, totally inaccurate report from the LA Times. The title of his piece was “Enough Already!” That’s just how I feel. Enough already of the bogus reporting, false issues, apples-to-oranges comparisons and abject failure to understand the fundamentals of how the program is managed. Enough with quoting people out of context or selectively – or ignoring their statements entirely. Enough with trying to politicize an important infrastructure investment for the State, one that is making good progress despite a handful of people throwing obstacles in the way.
Mr. Fox said our response to the LA Times report was weak. Well, let me try it this way: Both we and our federal funding partners categorically reject the characterization that there is a multi-billion dollar overrun in the project. We reject the notion that the High-Speed Rail Authority will fall short of spending the federal American Recovery and Reinvestment Act (ARRA) stimulus funds by the statutory deadline and while there may well be some changes to the ambitious schedule for environmental review (anyone want us to cut corners?) they are nowhere near the free-fall suggested by the Times article.
In short, the LA Times article was bunk.
First of all, we’ve been through this drill before. Last year, the same media source reported on another “confidential report,” which like this “confidential report” turned out to be a powerpoint document created for a deliberative discussion. Overstating the nature and import of the source material should be your first tip off that the narrative may be a wee bit skewed. Last year, the great revelation was that the cost for the southern section of the project had increased 39%!! Well, it turned out that the media source derived that number on its own, mistakenly comparing two segments without realizing that the second one had added a scope 14 miles of urban track. There was no such overrun and our 2016 Business Plan showed a $6 billion reduction in estimated costs of the program. We’re been waiting with bated breath for a correction.
For the current article, the key point is the LA Times story is fundamentally flawed; it wrongly conflates a risk analysis with a cost forecast. A risk analysis tells you what could happen; it is not a forecast of what will happen. When you back your car into a parking spot and the radar unit starts beeping, it does not mean that you are smashing the car behind you. It’s a signal that you need to take action to mitigate a possible fender bender. Most folks manage that risk rather routinely.
We deal with schedule and cost risks every day. We and our partners at the federal Department of Transportation each run highly sophisticated “what if” models, often with thousands of scenarios. The results give us detailed insights into risks that could occur and then we take action. A year ago, our risk models would have shown the possibility that we’d underspend the stimulus monies by hundreds of millions if not a billion dollars. Today, we’re on track to spend all the federal ARRA dollars within the deadline. Having an early assessment of risks allowed us to manage them, which we’ve done very effectively.
It is fundamentally wrong and unfair to the program to describe those numbers as cost overruns. They are not. And what if they were? Yesterday I was in one meeting at the Authority where we discussed the possibility that costs of third party agreements required to move utility lines and provide separation from railroads could be significantly over budget (this problem has plagued many infrastructure projects including in Los Angeles). It’s putting upward pressure on project costs. Yet earlier in the day, we adopted a preferred alignment in the Central Valley that is estimated to cost $200 million less than the costs carried in our 2016 Business Plan. For every item putting upward cost pressure on the project, we work hard to mitigate with offsetting savings. Overall, we’re pretty well on target with the numbers in our last plan.
Having an early assessment of what could happen gives us the tools to manage those risks. The LA Times continually sensationalizes any individual element they find and never, ever gives their readers the full picture. However, you can get that by attending our monthly Finance & Audit Committee meetings, which is open to the public, where all of these issues are discussed, or access their reports on our website.
Regardless of whether you support or oppose High-Speed Rail, we have an excellent team, a strong governance structure and we’re making great progress. Enough already with the false narratives, hyperventilating dramas and predictable political spitballs. We’re building something Californians will be proud of for generations to come and we’re doing it the right way.