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Friday, January 18, 2019
City Auditor: HART Cost Overruns Will Continue
By News Release @ 6:18 PM :: 2184 Views :: Ethics, Rail

Follow-Up Audit of the Honolulu Authority for Rapid Transportation, Resolution 17-199, CD1

Honolulu Auditor’s Report No. 19-01, January 2019

Dear Chair Kobayashi and Councilmembers:   Jan 18, 2019

City Council Resolution 17-199, CD1, requested that the City Auditor Conduct a follow-up audit of the Honolulu Authority for Rapid Transportation. The audit objectives were to determine whether

(1) HART's contractors fulfilled their obligations in an economical, effective and efficient manner;

(2) expenditures charged to HART by the contractors were valid and accurate;

(3) HART has implemented the project management and contract administration controls over the contractors needed to prevent cost overruns for the rail project; and

(4) HART addressed the concerns raised and followed the recommendations made in our prior HART audit.


In 2010, voters approved a charter amendment to establish a semi-autonomous, government agency responsible for building and operating a fixed guideway system. The Honolulu Rapid Transit Authority (HART) was established in 2011 . Its mission was to plan, design, construct, operate, and maintain Honolulu's high-capacity, fixed guideway, rapid transit system. In 2016, city charter amendments modified the HART powers, duties and functions.

The $9.020 billion Honolulu Rail Transit Project (rail project) is the largest, most expensive public works project in the State of Hawai'i's history. The project is intended to mitigate traffic congestion between O'ahu' s east to west transportation corridors, and will consist of 21 stations that will connect the East Kapolei station to the Ala Moana Center station. As of October 2018, HART has spent just over $3.4 billion.

The City Auditor restricted its audit to the period from the inception of the rail project to June 2016. The audit work was coordinated with the Hawai'i State Auditor to minimize overlap between Act 1, First Special Session 2017, requirements and City Council Resolution 17-199, CD1 requests.

The State Auditor was to conduct an audit of HART's financial records and an analysis of financial management. Audit work between the Hawai'i State Auditor and the City Auditor was coordinated throughout CY 2017 and CY 2018.

Audit Results

Although HART has made many improvements and is in the process of implementing many of the recommendations made in prior audit reports, the Federal Transit Authority (FTA) and its Project Management Oversight Consultant (PMOC), much more needs to be done to control project costs and to ensure more schedule delays do not occur.

Based on our review, cost overruns and schedule delays resulted from inexperienced HART managers and contractors who initiated and approved a plethora of change orders and amendments that increased project costs and contributed to schedule delays. We found insufficient justifications and documentation for many contract change orders and amendments.

HART lacked internal controls to minimize costs and prevent schedule delays; and ignored or only partially addressed repeated PMOC warnings about Internal controls and schedule impacts.

HART managers did not disagree with the audit findings, but did state they have addressed and completed most of the audit recommendations made in the prior audit report. Based on our audit work, we disagreed with their assessments. Since July 2016, HART has made improvements and are in the process of implementing many audit recommendations. Unfortunately, current HART operations, practices, staffing and succession planning remains incomplete and does not adequately prepare for the project's future. In our opinion, HART policies and practices are inadequate to prevent cost overruns and schedule delays from recurring. Our attached audit report contains several recommendations for improving HART operations.

We express our appreciation for the cooperation and assistance provided us by HART managers, staff and its consultants, the Hawai'i State Auditor's Office, the FT A Project Management Oversight Consultant (PMOC), and the many others who provided inputs for this review. We are available to meet with you and your staff to discuss the review results and to provide more information….


Edwin S W Young

City Auditor

pg 25: “A more thorough examination of potential fraud, waste, and abuse has been deferred to the Hawai`i State Auditor’s Office.”

read … Full Report

Big Q:  Will the recent hard-hitting audits on the rail project’s management flaws improve operations?

Flashback 2017: City rail audit won’t look for fraud?

State Audits:



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