A story that ran in The San Diego Union-Tribune on Sunday, October 30 and was subsequently covered by several broadcast media, “Tunnel Costs Rose by $298 Million Over Time,” contained errors that misrepresent the cost of one of the Water Authority’s most important water supply reliability projects, the San Vicente Pipeline.
The article mistakenly reports that the total project cost for the San Vicente Pipeline was $459 million. In fact, the total project cost was $342 million. The article makes the fundamental error of comparing a preliminary construction cost estimate for one project (leaving out its other non-construction costs that comprise its total budget) with the combined total budget of two separate projects (the $342 million pipeline project and the $117 million San Vicente Pump Station Project). This detailed information was provided to the Union-Tribune well before publication. The San Vicente Pump Station is a completely separate project – budgeted separately, bid separately, built separately and approved separately and apart from the San Vicente Pipeline project.
In addition, the article implies that the Water Authority Board of Directors was not clearly informed of the San Vicente Pipeline’s total costs when it approved the construction contract in 2005. That assertion is false. The Water Authority has a thorough budget review and project review process. The budget review process includes input from the board to management prior to the formulation of the General Manager’s recommended budget; development by management and distribution of the General Manager’s recommended budget document to the board; two days of budget workshops in which the recommended budget is reviewed and the board members ask questions and provide feedback; and final board adoption. These projects have been approved by the Board of Directors in successive Water Authority budgets dating back to 1999.
Also, the Board is kept informed about the status of capital projects through presentations at its Engineering and Operations Committee, special board and committee workshops, project site tours and, when appropriate, discussions in closed sessions.
The article questioned the cost of planning, design and construction management for the San Vicente Pipeline, but a published industry report shows those costs on this project are in line with water industry standards. The Water Authority provided the Union-Tribune with a 2005 Association for the Advancement of Cost Engineering International Project Cost Analysis paper (www.sdcwa.org/sites/default/files/files/2005-aace-international-project-cost-analysis.pdf) showing that actual construction costs for water and wastewater projects such as this typically fall within a range of 63 percent to 82 percent (see Table 3 in the report). The Water Authority’s major capital projects typically have 65 percent to 80 percent hard construction costs.
The newspaper’s story also mistakenly reported that Traylor Shea is seeking “up to $140 million” in its lawsuit with the Water Authority. In fact, the company is seeking up to $35 million. The complaint alleges four different legal reasons, or “causes of action,” for recovery of the alleged damages of $35 million, but it is the same $35 million being sought each time.
Finally, the article reports on a dispute between the Water Authority’s pipeline project contractor and one of its subcontractors, and the subcontractor’s claims that legal conflicts between the Water Authority and Traylor Shea led to the loss of his business. This allegation is untrue. In this case, the Water Authority contracted with Traylor Shea. Traylor Shea subcontracted work to the subcontractor. The subcontractor’s work was determined to be defective. Traylor Shea – as was its right under the contract – chose to correct the deficient work itself. The Water Authority has already paid all sums attributable to the work that was to be performed under the subcontract and has no legal basis for making any payments to the subcontractor. Any such payments would constitute a gift of ratepayer money that would violate the California Constitution.
The article contained these mistakes despite the Water Authority repeatedly providing much of the information listed here to the newspaper well in advance of the article’s publication. The Water Authority is seeking a correction of the record.
More information about the San Vicente Pipeline project is available at www.sdcwa.org/san-vicente-pipeline. Information about the San Vicente Pump Station and related facilities is available at www.sdcwa.org/san-vicente-pumping-facilities.