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Van Ness Dysfunction: Botched Planning Led to $37M in Cost Overruns and Years-Long Delays

Van Ness Dysfunction: Botched Planning Led to $37M in Cost Overruns and Years-Long Delays

The construction on Van Ness Avenue—a source of perpetual vexation and confusion by many people who use the corridor—has emerged as a case study in how not to manage a major capital project. 

That’s according to a new report by the San Francisco Civil Grand Jury, a civilian oversight body that investigates and issues reports on city government. In it, jurors traced the nearly 20-year history of the Van Ness Improvement Project—which centers around a bus lane designed to speed up transit—and found a number of missteps that triggered at least $37 million in cost overruns and dragged out construction for years. SFMTA, the agency in charge of the project, expects the project to conclude in 2022, nearly three years behind schedule. 

“From the jury’s estimation, this is the first report that really encapsulates the whole project,” said Simone Manganelli, grand juror and chairperson for the Van Ness investigation. “If the city is actually going to learn from this report, they should be doing these project post-mortems on their own. Increasing transparency would really increase trust.” 

Construction at Van Ness and Sacramento on June 30, 2021. The improvement project on the corridor is expected to finish next year, nearly three years behind schedule. | Photo by Annie Gaus

The report found that the Van Ness project, which was originally conceived in 2004 as part of a broader transit overhaul, suffered from a botched planning process that didn’t properly account for extensive underground utility work needed to see the project through. Discord between the city and a lead contractor, Walsh Construction, exacerbated the delays. 

Early on in the planning phase, SFMTA chose a center-lane design for the new bus lane, dubbed Van Ness Bus Rapid Transit (BRT), which they determined would increase transit efficiency on the corridor. Van Ness is among the most well-traveled streets in the city, and serves as a key crosstown artery as well as a conduit to U.S. Highway 101. 

According to the report, one of the most consequential early errors was that SFMTA didn’t engage a contractor until the design was nearly 70 percent complete. Industry best practices dictate that contractors for capital projects be involved much earlier, in part to better identify potential risks and complications.  

In the case of Van Ness BRT, the proposed center bus lane sat atop a line of aging underground utilities, which makes future maintenance very difficult. That rendered the initial project timeline, which didn’t account for the need to move that underground infrastructure, infeasible before construction even began. To locate the underground utilities, the city had to undertake “potholing,” or drilling into streets, and put much of that work off until construction had already begun. 

“In the 2006 feasibility study…the possibility of having to move the underground utilities to the side wasn’t even mentioned,” Manganelli added. “The possibility of unknown, underground infrastructure was one of the top risks to the project, and it was nowhere planned.” 

Cars and buses maneuver past a dig at Van Ness and McAllister streets on June 30, 2021. | Photo by Annie Gaus

Not long after construction began in 2016, the city’s relationship with Walsh—which was appointed as the general contractor for the project—appeared to break down. According to the report, Walsh needed to hire a subcontractor to perform the underground work. The city balked at a $20 million quote that the subcontractor, Synergy Project Management, provided. A subsequent rebidding process yielded only one subcontractor applicant, which charged $30 million. 

Having little choice but to accept the new, more expensive contract, Walsh’s expected profits on the project evaporated. The general contractor was incentivized to cut costs as much as possible, and the city and Walsh bickered over seemingly minor details like who would pay for “pedestrian monitors” to ensure that residents could cross the street safely. 

Collectively, the missteps set off a chain reaction of ballooning costs and long delays that confounded many residents. 

Initially, SFMTA estimated the total project cost at $309 million, a figure that included a $28 million cushion for contingency. Unanticipated construction costs, as well as funding for city personnel and other ongoing needs, pushed the latest project total to $346 million. 

The construction also took a toll on locals, particularly merchants along Van Ness

As construction debris, noise and general chaos choked the street, a number of businesses on Van Ness shuttered permanently. The extended construction was particularly hard on restaurants, with some proprietors reporting significant drops in revenue due to customers avoiding the street entirely.  

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Last year, the city began offering grants of between $5,000 and $10,000 to businesses affected by the construction, but hasn’t yet distributed any funds, according to an SFMTA spokesperson. Merchants say that while the grant offers were appreciated, they don’t make up for the significant lost business. 

“We probably fared better than a lot of merchants on the street because we have an established clientele,” said Brian Bruckner, owner of Big Swingin’ Cycles at Van Ness and Vallejo. “What I don’t know is: How many potential new customers did I lose with people saying ‘I don’t want to go down there, it’s a total mess?’”

Bruckner, who sells, repairs and rents bikes, said that his rental business in particular suffered as the construction dragged on. The city also installed a chain-link fence in front of the store early on in the construction phase, which he believes attracted break-ins and other disturbances. 

“Everyone just knows to avoid Van Ness,” Bruckner added. 

The Civil Grand Jury issued a number of recommendations to SFMTA and other city departments that were involved in the Van Ness project, including the Public Utilities Commission and the Board of Supervisors, that could help the city avoid future boondoggles. 

Those recommendations include publishing an itemized assessment of risks for all capital projects, along with specific procedures that will mitigate those risks. The city should also formally adopt industry best practices on when to engage a contractor, among other improvements. 

An earlier audit by the San Francisco Controller’s Office found other examples of mismanagement in capital projects, estimating millions in cost overruns due to poor communication and collaboration. SFMTA’s 20-year plan includes $31 billion in capital projects spanning route expansion, street safety improvements and more.

“Van Ness is not the only one—Central Subway is another example, and a lot of capital projects have these types of problems,” added Manganelli. “We hope the city can be transparent going forward.” 


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