Cost Escalation
California High-Speed Rail costs $215 million per mile to build on flat agricultural land. Spain builds comparable high-speed rail for $11-27 million per mile. France: $21-46 million. Italy, on flat terrain similar to the Central Valley: $67 million. Even after accounting for every US-specific cost factor — labor, regulation, environmental review, property acquisition — a 2-4x unexplained premium remains.
The escalation record
| Year | Estimate | Scope | Event |
|---|---|---|---|
| 2008 | $33.6B | 800 mi, SF-LA by 2020 | Voters approve Prop 1A |
| 2009 | $42.6B | Same | Converted to year-of-expenditure dollars (+27%) |
| 2011 | $65-98B | Same | Engineering reality: near-triple |
| 2012 | $68.4B | Reduced to "blended" | Cut $23B by sharing Caltrain/Metrolink track |
| 2018 | $77.3B | Further reduced | Construction already behind schedule |
| 2024 | $89-128B | 171 mi funded | Widest range ever reported |
The 2008-to-2009 jump is telling. Two months after the ARRA application used $33 billion in constant dollars, CHSRA converted to $42.6 billion in year-of-expenditure dollars — a 27% increase. The favorable constant-dollar figure went to voters and the federal government. The real number followed quietly.
International comparison
The most damning evidence is not the raw dollar figure but the comparison to what other countries achieve on similar terrain.
Flat terrain: the apples-to-apples test
| Project | Country | Terrain | Cost/Mile (2025 USD) | Ratio to CAHSR |
|---|---|---|---|---|
| Madrid-Seville | Spain | Flat (Meseta) | ~$11M | 1:20 |
| LGV Sud-Est | France | Rolling hills | ~$21M | 1:10 |
| Recent French avg | France | Mixed | ~$33M | 1:7 |
| Milan-Bologna | Italy | Flat (Po Valley) | ~$67M | 1:3 |
| CAHSR Central Valley | USA | Flat agricultural | ~$215M | 1:1 |
Italy's Milan-Bologna — the most expensive flat-terrain HSR project in Western Europe — cost roughly one-third of CAHSR per mile. And Milan-Bologna ran through a densely populated corridor, not empty farmland.
What legitimately explains higher US costs
American infrastructure costs more than European for real reasons:
- Labor: Construction wages 1.5-2x Western Europe, 5-10x China
- Environmental review: CEQA and NEPA add years and costs
- Property acquisition: US eminent domain is slow and expensive
- Prevailing wage requirements: California adds ~20-30% to labor costs
- Regulatory complexity: FRA, CPUC, and local jurisdiction requirements overlap
- Litigation: Lawsuits at every stage (Tos I, Tos II, environmental challenges)
- Buy America provisions: Mandate US-sourced materials at premium prices
Generously, these factors explain a 2-3x premium over Western European costs. They do not explain a 7-10x premium over Spain or a 3x premium over Italy.
The unexplained gap
The additional premium is attributable to factors within CHSRA's control:
Premature construction. CHSRA rushed construction to meet ARRA deadlines, breaking ground in 2015 when design was only ~15% complete. The State Auditor found this contributed to $600 million in change orders — contractors encountering conditions the incomplete designs hadn't addressed.
Contract explosions. The three construction packages bid at a combined $2.8 billion. They finished at $8.6 billion — a 200% increase through over 1,500 change orders.
The change order machine
Three packages, three stories
| Package | Original Bid | Final Cost | Growth | Change Orders | Contractor |
|---|---|---|---|---|---|
| CP1 | $1.04B | $4.05B | 290% | 701 | Tutor Perini (lowest tech score: 68.5%) |
| CP2-3 | $1.37B | $3.69B | 170% | 594 | Dragados-Flatiron ($1,234,567,890 bid) |
| CP4 | $0.45B | $0.85B | 86% | 289 | Ferrovial (722km Spanish HSR experience) |
CP2-3 merits special attention. Dragados-Flatiron bid exactly $1,234,567,890 — sequential digits — undercutting the next competitor by $506 million, with aggressive "cost-saving" proposals that systematically failed. This is the classic "buy-in/get-well" pattern: bid impossibly low to win, then recover costs through change orders. The 594 change orders and the $537 million settlement (January 2026, largest in project history) followed predictably.
CP1's contractor, Tutor Perini, had the lowest technical score of five bidders (68.5%) but won after CHSRA changed evaluation criteria mid-process to favor the lowest bid over technical competence. The rule change came 65 days after CEO Jeff Morales started — arriving from Parsons Brinckerhoff, the program manager — and reversed a Board-approved two-step selection that would have eliminated the bottom two bidders on technical score. The Board was not notified. Morales's CEO bonus was contractually tied to "getting a bid at or below estimates."
The approval chain
The CHSRA Board delegated unlimited change order authority to the CEO. No dollar cap on amendments to existing contracts — only a $25 million reporting threshold. The CEO could further sub-delegate to staff, who were often themselves consultants.
CHSRA approved amendments "based wholly on the information the contractors reported" with "little documentation demonstrating whether or how the Authority independently evaluated the validity and size of the amendments."
The result: CP2-3 grew from $1.37 billion to $3.69 billion through staff-level approvals. The Board learned about the cumulative $2 billion overrun only in March 2023 — after the money was already spent. They were ratifying fait accompli, not authorizing spending.
The electrification anomaly
Either the project faces a massive electrification cost overrun that would add billions to the total, or the budget numbers included in cost estimates and federal applications were not credible. This connects directly to the federal grant fraud case (Thread 3).
The fraud standard
The defense
The strongest innocent explanation: Every major infrastructure project overruns its initial estimate. Flyvbjerg's research on megaproject cost overruns shows this is a structural phenomenon, not specific to California or this project. The US has uniquely high construction costs due to regulatory requirements, labor markets, and litigation exposure. CHSRA started with an optimistic estimate — as all project proponents do — and reality corrected it. The comparison to Spain and China is apples-to-oranges given radically different labor markets, regulatory environments, and property acquisition processes.
The defense is strongest on the US-vs-international comparison (real cost differences exist) and weakest on the contract management (unlimited CEO change order authority with no independent review is a governance choice, not an inevitability). CP4's relatively controlled performance — same state, same project, same era — suggests the overruns were not inevitable.
What we don't know
Sources
Tier 1 (Primary documents)
- CHSRA 2024 Business Plan
- CHSRA 2008 Business Plan
- CHSRA F&A Contracts Report, January 2026
- FRA Compliance Review, June 4, 2025
- California State Auditor Report 2018-108
- OIG Supplemental PUR Review, November 2025
- CHSRA Board delegation policy HSR 11-001
Tier 2 (Government reports & research)
- GAO Report 13-304, 2013
- Peer Review Group reports, November 2010
- LAO analysis, January 2010
- Eno Center: HSR cost estimates timeline
- World Bank HSR cost benchmarking, 2019
- Transit Costs Project (NYU Marron Institute)
Tier 3 (Investigative journalism)
- Engineering News-Record: Board OKs $2B cost increase
- Railway Technology: Dragados-Flatiron wins $1.23B contract
- ABC10: $537M settlement reporting
- ConstructionOwners.com: settlement details
Tier 3.5 (Government-adjacent)
Tier 4 (Analysis)