After years of planning for a fully dedicated high-speed rail system, mounting costs led the Authority to decide instead to use existing infrastructure wherever possible-a cost control technique known as blending. Blending requires lower train speeds and imposes other service limitations, but the Authority will not know the full effect of these limitations until service planning and operations begin. Although blending has resulted in significant projected savings, those savings have only partially offset cost overruns. Further, potential time savings from reduced construction needs will be at least partially offset by the years that the Authority spent studying the dedicated options rather than pursuing blended options. The Authority has now exhausted every major opportunity available to share infrastructure with existing rail systems; thus, sharing infrastructure no longer represents a source of future cost savings.
The Authority's decision to begin construction despite not having sufficiently accounted for known risks contributed to its significant cost overruns. The Authority told us it decided to proceed with construction because it was concerned about deadlines for using $2.6 billion in federal grant funds. However, the risks in question-not having acquired the land to build on, a lack of agreements with existing utility systems, and uncertainty about the requirements that external stakeholders might impose-manifested in changes to its construction contracts that have thus far increased the three current construction projects' costs by more than $600 million. Further, the Authority estimates that it will need an additional $1.6 billion in contract changes to finish these three projects, pushing its total cost overruns above $2 billion.
The contract changes have also resulted in significant time delays, and consequently the Authority has had to continually extend the projects' expected completion dates, pushing them back from 2018 to March 2022. Even with the extended schedules, construction will need to proceed much faster than it has to date for the Authority to meet the federal government's construction completion deadline of December 2022. If the Authority misses this deadline, the federal government could require it to repay the grant funds it received; therefore, it is vital that the Authority do all it can to ensure its time and cost projections are accurate so that it can detect and address any further risks. Moreover, as it moves forward with the construction of the rest of the system, the Authority must take steps to ensure that it does not repeat the types of decisions that led to its significant cost and time overruns to date.