Executive Summary

The California High-Speed Rail proposal that was presented in 2008 by the California High-Speed Rail Authority (CHSRA) was not only inaccurate and misleading but did not fit into compliance with California statutes. The financial planning overstated the anticipated projected revenues and private financing and understated the capital requirements and subsidies needed from taxpayers to move the project forward. On top of these issues, the project relied solely on consultants at the beginning and faced miscommunication with engineers and the community. Fast forward to 2019, the project is still looked upon as a failed project with no future financial planning stabilized. This high-speed train doesn’t look like it will be moving off of the imaginative station any time soon.

 

INTRODUCTION

California is invested in building out a high-speed train that was originally approved by voters in 2008 but has seemingly gone off the rails since then, and more than doubled its projected budget of $33 billion to over $77 billion, with no secure financial plan (Swan, 2019). The idea of this high-speed train was to be able to go from Los Angeles to San Francisco to Sacramento and South Diego, reducing the time and cost it takes passengers to get across the state. But this high-speed rail project has hit significant lawsuits, engineering issues, geological obstacles, delays, increasing costs, and bureaucracy, that has made securing a financing plan for future developments and construction unstable (Swan, 2019). There are several issues for leading up to the failure of the California high-speed train project, including a lack of effective and efficient communication, not securing proper project funding, and relying on unqualified consultants.

The Current Situation: Uncertain Risks

When California began to build out this bullet train, it began with ten employees to manage and oversee the largest public construction project in the state’s history (Vartabedian, 2019). These employees consisted of consultants who assured the state of California that there was no reason to hire hundreds of engineers and knowledgeable rail experts because the consultants could hold their ground and save the state money (Vartabedian, 2019). Being a decade old project in the books, and still being pushed forward, the decision to lean heavily on consultants was proved to be the initial error in the high-speed rail project’s execution. These consultants were not only extremely expensive but have consistently underestimated the difficulty of building out these 520 miles of railroad.

Still, even today, the overpaid consultants manage every aspect of the job from everyday construction oversight and negotiations with farmers to purchase land, to estimate how many people will ride this anticipated high-speed rail (Vartabedian, 2019). Because of this reliance, substantial portions of the work have been inconsistent and mismanaged despite receiving repeated warnings from the government since 2010 about the weaknesses in the staffing structure (Vartabedian, 2019). However, the downside of hiring these consultants is that it is actually more problematic now to get rid of them because they have become to core component that is holding the project together. The office spaces are rented by consultants, the technology aspect (computers and servers) are all owned by the consultants, and the software used to manage the project belongs to the consultants. To get rid of them entirely would be too costly to begin the project over (Vartabedian, 2019).

Lack of Communication

With the mishandling of finances and unmet stakeholder expectations, communication should have played a vital role in the high-speed train project. The California High-Speed Rail Authority is the appointed party to notify the public and stakeholders about the project status, but their communication has been poor to nearly nonexistent. The project engineers have failed to work with local officials and organizations to ensure the appropriate train path. For starters, the engineers were routing the train alongside schools in Agua Dulce, which would be loud and distracting, and planned for a 75-foot high track going through the center of the city of Alhambra.

On top of this route, engineers planned to put the track through Central Valley, but failed to coordinate with farmers who use the valuable farmland near Shafter (Wood, T 2011).

Any time builders are trying to coordinate a plan for a freeway or rail project, the team should have considered that poor communication outreach to those affected would lead to an angered backlash from the community and those who would be directly affected by the construction. On top of the frustrated community, at the time of the project, the High-Speed Rail Authority put up a poorly crafted website that the state Senator at the time, Joseph Simitian, was very disappointed with. The website had no public documentation and reports living on the website, which was essentially to promote the project. Without the proper documentation in place, the public and governmental figures couldn’t follow the progress of the construction. As we’ve learned throughout this course, transparency and communication are vital to the success of a project. The consultants of the project have even stressed the importance of transparency with this project due to all of the parties involved.

Procurement Failure for Funding

 The funding for the high-speed railway has been bumpy from the beginning.

Because of its rocky start, it leaves people wondering if the failure of this project, in the richest state across the country nonetheless, means that high-speed rail will never be rolled out throughout the rest of the country. There are several issues with securing the funding for this project. When voters voted in the high-speed rail in 2008, they were told that the 800-mile system would cost $40 billion and were asked to put up $9 billion in state bonds for their share of the project costs. At the time, the bond issuance would pay about 22.5 percent of the cost of the project, but what the California High-Speed Rail Authority didn’t account for was inflation (Davis, J 2019).

That $9 billion that was secured in bonds was a fixed amount that wasn’t anticipated to increase. Since the induction of the project in 2008, the project has been slowly being built out and has 520 miles remaining at a $77 billion in year-of- expenditure dollars. The original bonds secured only raised $9 billion, which is only 12 percent of the construction cost overall (Davis, J 2019). The CHSRA still has to figure out the remaining funding to cover the system.

In 2010, the Federal Railroad Administration (FRA) awarded the project $929 million to continue the construction it had already begun. But just this past May, the Trump administration canceled the funding after it said that the state had failed to comply with the agreement and failed to make reasonable progress on the project. The FRA is still looking at options on seeking the return of the $2.5 billion in federal funding that California has already received (Shepardson, 2019). California and the administration of U.S. President Donald Trump have continued to battle on issues surrounding immigration, vehicle emissions standards, and internet policy. Since California has sued previously for other reasons, officials believe it is expected that California will sue the Trump administration over canceling the rail funding. The reason the U.S. Transportation Administration is seeking for the funding back is that the originally anticipated 520-mile system (first phase) that would begin to operate in 2033, was a classic example of bait and switch. In February of this year, Governor Newsom said it would instead complete a 119-mile link between Merced and Bakersfield (Shepardson, 2019).

Suggested Improvements

The high-speed rail to nowhere at the moment is a project that has been undergoing drastic backfire from the public, governmental officials, and even the state of California since it began in 2008. As you are aware by now, the project has entailed a lot of issues from environmental and economic issues. One of the biggest things that could be done to help save this project is re-evaluating the work done by the consultants. Though it would be too costly to completely get rid of them, realigning their duties between what they should own and what the new staff should own. The rail authority had begun to hire its own employees for the project, and those employees should have more ownership and decision-making while the consultants should just be there, in essence, to consult on best practices and next steps. Hiring new employees will be a challenge in itself since the project doesn’t have a secure future financial plan.

Putting together a small union for the project with plans to have these employees support the high-speed rail even after its built will help entice people to apply.

Another improvement that can be made is making the stakeholders aware of upcoming changes to the development. Not just in the financial aspect, but the building aspect. Farmers were not made aware that their precious land would be foregone due to construction that is used to make them money. Making sure that farmers and other stakeholders are aligned would be the best way to make this project successful. Having the train tracks built in public areas that are away from things like schools and libraries and focus it more around places that are used to noise such as stadiums and office complexes.

A new project team consisting of experienced professionals who have worked on large scale construction projects should be put together to help keep things on track.

Having dedicated project managers will help the team focus on securing the financial future of the project, hiring the appropriate and right employees, overseeing the consultants, and making sure the project is meeting expectations and important deadlines in terms of construction. Not having a team in place to help with these things has led the project to fail from the beginning. Relying solely on contractors and consultants who make more money by burning through daylight than finishing the project should have been expected. A project team in place with access to the workload and what is going on day-to-day would help streamline processes and keep things moving forward.

Conclusion

The California High-Speed Rail was a great theory at first. High speed rail works wonderfully in smaller, crowded cities in areas of Europe and China. However, here in the United States, it’s a bit different due to the geographic landscape. It’s easy to theoretically come up with the need for the high-speed rail instead of relying solely on expensive airfare and long car rides to travel down the coast of California, and if it should ever come to fortition, I could see it being successful. But the project began with the full support of the taxpayers’ dollars and government funding but didn’t consider the cost of inflation over the years the train would be built. It would have been only a matter of time until the project ran out of funding. Without securing the proper personnel in place, there was no project management team to help streamline the construction efforts that are needed to make this happen. Moving forward, the State of California should make sure that the plans in place have set goals and requirements that are put into phases to make sure that the team can show the progress should they receive further governmental funding.

Biography:

Melissa is a creative marketing professional, specializing in digital strategy and execution. The path to marketing wasn’t always clear. Once majoring in Marine Biology, then Forensics, Melissa was not sure where her path would lead. After spending years dabbling in graphic design, Melissa’s creative eye and customer-focused mindset would help drive her to her career path today. When she isn’t working on communication tactics, Melissa can be found spending time with her family. Learn more about the author here: https://www.linkedin.com/in/melissathornley/

Works Cited:

Swan, R., & Alexander, K. (2019, February 17). Train to nowhere? Here’s how high- speed project went off the rails. Retrieved October 13, 2019, from https://www.sfchronicle.com/politics/article/Train-to-nowhere-Here-s-how-high-speed- project-13621347.php.

 

Wood, T. (2011, March 14). Add Poor Communication to List of High-Speed Rail Problems. Retrieved October 13, 2019, from https://voiceofoc.org/2011/03/add-poor- communication-to-list-of-high-speed-rail-problems/.

 

Shepardson, D. (2019, May 16). U.S. cancels $929 million in California high speed rail funds after appeal rejected. Retrieved October 13, 2019, from https://www.reuters.com/article/us-california-rail/u-s-cancels-929-million-in-california- high-speed-rail-funds-after-appeal-rejected-idUSKCN1SM2F9.

 

Davis, J. (2019, February 13). Why the California Bullet Train Project Failed: 7 “Worst Practices”. Retrieved October 13, 2019, from https://www.enotrans.org/article/why-the- california-bullet-train-project-failed-7-worst-practices/.

 

Vartabedian, R. (2019, April 26). How California’s faltering high-speed rail project was ‘captured’ by costly consultants. Retrieved October 15, 2019, from https://www.latimes.com/local/california/la-me-california-high-speed-rail-consultants- 20190426-story.html.