Our review identified several similarities between the high-speed rail project and the California Department of Transportation's (Caltrans) Toll Bridge Seismic Retrofit Program (retrofit program), another major transportation infrastructure project our office has evaluated several times. Our past audits noted that the retrofit program-which was tasked with retrofitting or replacing state-owned toll and highway bridges-had experienced cost overruns in part because of its management's failure to perform adequate risk management to quantify potential cost increases. For example, our 2004 report on the retrofit program noted that Caltrans had identified certain risks, but it had not quantified the potential dollar costs until August 2004, when it reported soaring cost estimates to the Legislature. Our current audit identified similar problems with the Authority's failure to effectively account for preconstruction risks in its cost estimates, as we note earlier in this chapter.
In response to these and other concerns with the retrofit program's costs and schedule, the Legislature required that Caltrans and the Metropolitan Transportation Commission (MTC) create an independent oversight committee to provide program direction, review costs and schedules, and approve significant change orders, which the oversight committee deemed to be those over $1 million. Our most recent audit report on the retrofit program, released in August 2018, concluded that the oversight committee's actions had resulted in $866 million in cost avoidance and savings, as well as the avoidance of seven years of potential delays. As a result, the retrofit program was completed generally on budget. We recommended in that report that the Legislature implement similar oversight committees for other large transportation projects that the State undertakes.
The Authority's efforts to deliver the eventual rail system might benefit from similar additional oversight. That said, differences between the Authority's and retrofit program's governance structures make it unclear exactly what role a high-speed rail oversight committee would play and which specific public entities should serve on it. Before the implementation of the retrofit project oversight committee, Caltrans managed the program directly. In contrast, the Authority's board, which the Legislature and the Governor appoint, governs the Authority. In 2008 the Legislature also required the Authority to create a peer review group composed of experienced individuals appointed by the state treasurer, state controller, director of finance, and secretary of transportation to review and analyze the Authority's planning, engineering, and financing, and to report its findings to the Legislature. If the Legislature appointed a high-speed rail oversight committee, it would need to determine how that committee would work with the board and peer review group, as well as which entities would serve on the committee. Not all of the members that served on the retrofit program's oversight committee-the chief executives of Caltrans, the MTC, and the California Transportation Commission-would be appropriate for the high-speed rail project. Of these entities, the California Transportation Commission could potentially provide additional guidance based on its statewide responsibility to manage transportation improvements. However, Caltrans is a current contractor on the high-speed rail system, which may limit its ability to provide objective oversight. | The Authority's efforts to deliver the eventual rail system might benefit from similar additional oversight as the retrofit program, but it is unclear exactly what role a high-speed rail oversight committee would play and which specific public entities should serve on it. |
Nonetheless, the Authority's history of cost overruns and delays suggests that additional oversight may be warranted, especially considering the impending federal deadline for the Central Valley projects and the funding challenges the Authority faces in completing the system. The Authority has previously set cost estimates and timelines that its board allowed to be revised as challenges arose; an independent oversight committee may be better positioned to push back against changes to help maintain the current schedule and budget in the Central Valley and beyond.