As shown in table 1, this increase was the result of construction problems, new construction requirements, and enhancements of the project. The project’s cost could increase beyond the $5.9 billion estimate. Pending lawsuits could also increase costs. However, about $380 million in financing commitments may not be realized. Therefore, to cover current and future funding shortfalls, the Authority may have to make difficult decisions, such as reducing the funding or scope of other rail capital projects; deferring or cancelling planned transit projects; or extending the schedule for completing the Red Line, which could further increase the project’s cost. Financing the Project’s Current Estimated Cost

The Authority plans to fund $3.1 billion of the project’s $5.9 billion total cost with federal funds and the remainder from state and local funding sources. FTA’s Oversight of the Project’s Quality Control and Quality Assurance Practices

In November 1994, the Authority and FTA agreed to a plan to improve the overall management of construction of the Red Line project. Agency Comments and Our Evaluation

We provided copies of a draft of this report to FTA and Los Angeles County Metropolitan Transportation Authority officials for their review and comment.
Why GAO Did This Study

Pursuant to a congressional request, GAO reviewed the Los Angeles County Metropolitan Transportation Authority's Red Line subway project, focusing on the: (1) project's estimated cost; (2) Authority's financing plans; and (3) Federal Transit Administration's (FTA) oversight of the project's quality control and assurance practices.

What GAO Found

GAO found that: (1) as of February 1996, the project's estimated total cost was $5.9 billion; (2) project costs have increased due to construction problems, new construction requirements, and project enhancements; (3) additional design problems and pending lawsuits may further increase project costs; (4) the Authority plans to use $3.1 billion in federal funds and $2.8 billion in state and local funds to finance the project, but it may not realize about $380 million of the total; (5) the Authority may have to reduce the funding or scope of other rail projects, defer or cancel planned projects, or extend the project's construction schedule to cover current or future funding shortfalls, but extending the project's construction schedule could also increase costs; (6) in response to FTA actions, the Authority is reorganizing its quality control and assurance programs and increasing program staff; and (7) FTA has increased the number of on-site oversight personnel to improve project monitoring.