Port Project Costs Continue To Rise - FOX 10 News | myfoxphoenix.com

Port Project Costs Continue To Rise

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(FOX/CNS) Los Angeles port officials admitted today they erred by failing to inform elected officials earlier about skyrocketing costs on a major container terminal upgrade.The cost of the planned 173-acre TraPac terminal upgrade at the Port of

Los Angeles has more than doubled over the past four years. The project was approved in 2009 at a cost of $245 million, but is now estimated at $510.4 million, according to a report by Harbor Department officials.

The revised $510.4 million budget was approved by the Los Angeles Board of Harbor Commissioners at its Sept. 19 meeting, according to a report from the commission.

The City Council today ratified the revised costs and signed off on additional elements that include automating cargo-handling tasks at the port terminal. Port officials said the revamped project will transform the terminal leased by shipping company TraPac from a so-called "conventional terminal" to an "automated terminal."

But prior to the vote, City Councilman Joe Buscaino, whose district includes the Port of Los Angeles, said he was disappointed in how the cost overruns were handled by port officials."This is a lesson in what not to do," he said.

At a morning meeting of the council's Trade, Commerce and Tourism Committee, port officials said the changes to the project and escalating costs should have been brought to city leaders as early as 2011.

"It was an oversight and a mistake at the port not to bring this before you earlier," port Interim Executive Director Gary Lee Moore told the committee.

Moore took over as head of the Harbor Department Nov. 12, replacing Geraldine Knatz, who was among the department heads Mayor Eric Garcetti asked to re-apply for her job. She announced her retirement in October.

TraPac first asked the harbor department to expand the scope of the project to include automated cranes in 2010, according to the report by port officials.

Before the addition of the automated cranes, the project costs had already risen from $245 million to $312 million by February 2011. With the automated cranes, port officials estimated the costs would increase by about another $32 million to $344.5 million. In spring 2012, the costs again rose to $365 million and the Harbor Commission ordered that costs be set at that amount.

During the committee discussion, Councilman Mike Bonin characterized the situation as a "hot stinking mess," saying he was worried their ratification of the amended project could hurt the city's ability to negotiate for port workers who would be affected by the automation.

Port officials said they are preparing an "after-action" report to determine what went wrong. When questioned by Buscaino about why costs increased, they said this is the first time they have managed a port-automation project, and they "underestimated" the costs.

TraPac also obtained additional business, which contributed to the increase, port officials said.

Port officials are expected to report back to the committee in 90 days on corrective actions taken to prevent such an oversight from happening again.

The Harbor Commission, which is tasked with overseeing budgets at the port, was recently overhauled by Mayor Eric Garcetti.

Garcetti's spokesman, Jeff Millman, said "this cost overrun is unacceptable and cannot happen again."

The port's new management "will require outside experts to review future large-scale projects involving automation and new technology and better controls on budgeting for capital projects," he said. "Additionally, the mayor called on the new port commission to review all capital spending at the port."

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