$25.7-Million Subway Station Overrun OKd : Transit: Board approves payment to settle dispute with contractor who said RTD underestimated work required. A second matter is pending.

In an action that underscores emerging problems with cost predictions, transportation officials have quietly approved a $25.7-million cost overrun for the Metro Rail subway station at 5th and Hill streets in downtown Los Angeles.

The overrun has pushed the price of the station to $69.5 million--80% more than it was supposed to cost when work began in 1987. Earlier overruns had added $5.2 million to the tab for the station, which was to have cost $38.7 million.

The extra money will go to the Guy F. Atkinson Co., a San Francisco construction firm, to settle a long-running dispute in which the firm charged that the Southern California Rapid Transit District grossly underestimated the amount of work needed to complete the station. The firm argued that it based its $38.7-million bid for the job on inaccurate and incomplete information and plans supplied by the RTD.

Similar allegations have been made by another construction firm regarding the Metro Rail station at 7th and Flower streets. In that case, the Granite Construction Co. of Watsonville has filed a claim for $27 million in overruns for a project that was to have cost $42 million. The matter is pending.

Both firms charged that during the excavation they encountered numerous buried obstacles, such as utility and sewer lines, that did not appear on maps and charts they were given when they drew up their bids for the projects.

Atkinson workers discovered toxic materials, abandoned fuel tanks and underground vaults that had to be removed to complete the station, according to the RTD.

The firm originally sought an extra $41 million, but settled for $25.7 million in the agreement, which was mediated by retired California Supreme Court Justice David Eagleson.

“I believe they (Atkinson) bid honestly,” said Carl Raggio, chairman of the RTD board’s legal committee. “They--and we--didn’t understand or know what the whole package of problems were.” Many of the underground obstacles, some buried more than 100 years ago, were never recorded on official documents, Raggio said. “They didn’t maintain change control as they do today and people’s memories aren’t that long.”

Raggio said planners of the region’s vast new rapid transit system have learned lessons from the Atkinson experience that will apply over the coming decades as construction continues.

“I think that we’re probably going to look at unknowns with a greater degree of precision,” Raggio said. “This is a new project and a difficult project for us. Some things out there are unknowns.”

The settlement agreement was approved by the RTD board during a closed session last December. The action has been criticized by Ray Grabinski, who was chairman of the Los Angeles County Transportation Commission, which took over responsibility for construction of the Metro Rail system in July, 1990.

Grabinski refused to discuss the matter, but in a letter to LACTC members he complained that the settlement may have been too high and that the RTD undermined negotiations that could have lowered the cost to taxpayers.

Raggio rejected the criticism, saying that negotiators had worked out the best possible settlement and had avoided an expensive trial.

The station at 5th and Hill streets will serve the Metro Red Line subway, which will run from downtown to the Mid-Wilshire area and is scheduled to open in 1993.