Mobility Authority issues default notice against MoPac contractor

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Following months of delays, the Central Texas Regional Mobility Authority issued a notice of default Dec. 17 against MoPac contractor CH2M Inc. for schedule delays.

The Mobility Authority issued the noticed because of the uncertainty of the project’s schedule and the contractor has failed to increase the speed of construction. Issuing the notice gives CH2M 60 days to respond with a plan that outlines how it will complete construction in a timely manner.

“This is part of our contractual discussions, and construction is expected to continue during this process,” Mobility Authority Executive Director Mike Heiligenstein said in a news release. “We will continue to work to deliver the MoPac Improvement Project as soon as possible so that we can provide reliable travel times in this heavily congested corridor.”

Project delays

MoPac sound walls

Crews install sound walls on Newfield Lane in early December as part of the MoPac Improvement Project. (via )

The MoPac project will build one express lane in either direction on MoPac between Parmer Lane and Cesar Chavez Street. The cost for variable-priced toll, or express, lanes will increase as traffic flows increase and vice versa.

The project broke ground in October 2013 and was supposed to be substantially complete by Dec. 27. However, CH2M faced several challenges that delayed the schedule, Craig Martell, executive director of special projects for CH2M, previously told Community Impact Newspaper. These delays include lack of labor, inclement weather, unknown underground utilities and discovery of hard rock, the latter of which the Mobility Authority disputes.

The contractor did hire additional workers in an effort to catch up, but Steve Pustelnyk, director of community relations for the MoPac project, said that surge in workforce was not sustained. At its peak, the project had between 350 to 400 workers onsite, and that number is down to the 200 range, Pustelnyk said.

Pustelnyk said the goal of the notice of default is to get the project completed in a reasonable amount of time with the original contractor. The reasonable amount of time is based on the amount of work left to complete and how long that work would take with a reasonable pace and workforce. He said there is about nine to 12 months of work left

“We are still hopeful the entire project might be completed between Labor Day and the end of the year,” he said.

In a statement, CH2M said it was broadsided by the notice of default and only found out about it through the media. The statement said the company is still committed to completing the project in a timely manner.

“Given the fact that we have had crews working continuously on this project, while engaging frequently with CTRMA leaders—three times this week alone, including our attendance at yesterday’s CTRMA board meeting—we received no advance indication of this unproductive stance. We look forward to issuing a more thorough response to CTRMA’s misguided notification. Our goal has been, and remains, to deliver our best product for the people of Central Texas,” according to the statement.

Ongoing issues

Before starting the project CH2M was required to purchase what is known as a surety bond that protects the Mobility Authority against default, and the bonding agency will be engaged in discussions to remedy the default.

The Mobility Authority has assessed more than $1 million in damages from CH2M closing travel lanes without authorization. The contractor could be assessed additional contractual damages up to $20 million for failing to complete the project on time.

In a Dec. 17 three-page letter written by Heiligenstein to Frank Gross, CH2M’s global alternative project delivery director, the Mobility Authority began expressing concern about the project six months after construction began.

“Over time, it became clear that the project was falling behind schedule and that CH2M would need to take affirmative action to get the project back on schedule,” Heiligenstein wrote.

Other issues the Mobility Authority noted were that CH2M removed miles of wooden fence separating MoPac from adjacent residents. However, sound walls were not built early in the project timeline as promised, according to the letter.

Heiligenstein wrote that the most high profile reason for falling behind schedule was CH2M’s decision to build underpasses for the express lanes to connect to Fifth and Cesar Chavez streets because it would cost less than overpasses. The contractor claimed it found hard rock, making it difficult for excavation.

“CH2M’s subsequent claim seeking significant financial compensation and additional time to complete the project was thoroughly reviewed by the [Mobility] Authority,” Heiligenstein wrote. “The [Mobility] Authority’s investigation determined that the type of rock CH2M encountered is commonly found in Central Texas and that use of proper methods and equipment could have prevented the delay.”

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Amy Denney

Amy has been reporting in community journalism since 2007. She worked in the Chicago suburbs for three years before migrating south and joined Community Impact Newspaper in September 2010. Amy has been editor of the Northwest Austin publication since August 2012 and she is also the transportation beat reporter for the Austin area. As senior editor, she is the point person for the company's partnership with Fox7 Austin.

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