HSR Construction Plans Progress, But Forecast Unaffected


BMI View : The Californian high-speed rail project remains left out of our growth forecasts for the rail infrastructure industry in the US. Although the second phase of construction is now accepting prequalification bids, litigation is still ongoing with regards to the project's funding, which if successful could see the whole project scrapped, or at least delayed further. Considering the need for the whole project to be built in order for it to be realised, even though parts of the line have been awarded we will not be pricing the billion dollar project into our forecast until legal approval for the project is confirmed.

After the first phase of the 210km Initial Operating Section (IOS) of California's planned high-speed rail project was awarded in June, the requests for qualification to bid on the second section are now being welcomed. The second construction package covers the 96km section south from Fresno to a point 1.6km north of the Tulare-Kern County line near Bakersfield, with an estimated cost of US$1.5bn to US$2bn. Companies have until December 6 to submit a statement of qualifications. The California High Speed Rail Authority (CHSRA) will then produce a shortlist based on factors including experience, technical competency and ability to perform, and shortlisted firms would be invited to submit formal design-build proposals in 2014.

However, bids for the first section of the IOS were judged on both a price and technical basis, but were heavily weighted in favour of price. As such, a joint venture comprising Tutor Perini, Parsons and Zachary, which submitted the lowest price bid for the initial 47km stretch, at US$985mn, were selected. We expect that similarly price-focused parameters will be used in the selection process for second phase of the IOS as price is the overriding factor driving the substantial opposition to California's high-speed rail development.

Legal Disputes, Financing and Opposition Keep HSR Out Of Forecasts
US Railways Infrastructure Industry Value (US$bn) and Real Growth (% Change year-on-year)

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This article is tagged to:
Sector: Infrastructure
Geography: United States

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