Los Angeles’ highway authority will settle a two-year-long dispute with Omaha-based contractor Kiewit over the upgrading of a section of Interstate 405, which runs through the city.
Kiewit had sought $518m in extra charges in compensation for disruption to the scheme and breach of contract by the client. Among the problems Kiewit protested were repeated changes to the project’s design and incomplete information during the bidding process.
For example, it said it had not been warned of nine miles of underground utility lines and a drainage culvert that had to be protected during construction, reports the Los Angeles Times.
The firm said in court filings that the design changes made after work began created "staggering" expenses, and that a "bureaucratic quagmire" at the Los Angeles Metropolitan Transportation Authority (Metro) forced it to double to the number of employees on the project from 150 to 300.
Metro and Kiewit submitted their dispute to nonbinding arbitration. Metro said the settlement agreed after the arbitration did not assign blame to it "so much as it is acknowledged the substantial scope changes that happened".
John Fasana, the chairman of Metro, told the Los Angeles Times: "Frankly, there were deficiencies. Metro could have continued to negotiate the settlement but we had some culpability, and it was time to move forward."
The total cost of the scheme will now be set at $1.6bn.
Image: The Interstate 405 in Los Angeles (Creative Commons)