Sound Transit staff will inform the agency’s board today that the Federal Way Link extension’s official cost estimate will increase from $2.088 billion to $2.549 billion. The notice comes a year after the agency announced similar budgeting problems for the Lynnwood Link extension.

According to Sound Transit spokesperson Scott Thompson, the Federal Way cost increase is driven by the same issues that drove up Lynnwood’s budget. The Puget Sound region’s gobsmacking real estate market has increased the price of land acquisition. Right of way, stations, and parking garages are all much more expensive than the agency’s 2015-16 cost estimates predicted.

Construction is similarly pricey, as the development boom has created a hypercompetitive contracting bid market, especially for technically sophisticated projects like light rail. According to construction firm RLB, the U.S. average for construction costs increased from 2017 to 2018. Seattle had one of the highest local cost increases, trailing only Portland, San Francisco, and Los Angeles among major markets.

Cost reduction and mitigation

Fortunately, ST was able to reduce the Lynnwood cost increases by $200 million to $500 million. Cost cutting measures included removing down escalators, changing the concrete used to build stations and guideways, and shrinking platforms. Similar mitigation could presumably happen for the Federal Way project.

ST will also introduce a new cost cutting method: combining the design and build contracts for Federal Way into a single bid. According to Thompson, ST is confident that the new bid method will reduce costs, but said it was too premature to say how much money the new bidding process will save.

If current real estate and construction trends continue, more cost increase announcements are likely to follow.

Correction: The Lynnwood project’s cost increase was decreased by $200 million, not to $200 million.