Understanding project insurance

Protecting taxpayers is a top priority as we replace the Alaskan Way Viaduct. An important tool in this effort is our design-build contract with Seattle Tunnel Partners, which places a greater share of project risk on the contractor by requiring them to design and build the tunnel.

Another protective measure is insurance, which the contract requires STP to have. Both STP and WSDOT are named on the project’s insurance policy, and both entities have the right to make insurance claims.
Recently, WSDOT filed an insurance claim to cover costs associated with the contractor’s delay in project delivery. The total estimate for state expenses associated with the contractor’s delay is approximately $78 million. Of this amount, approximately $3.2 million represents expenditures through June 2015; the remaining $75 million represents an estimate of future costs. 
Examples of these costs include staff to continue overseeing the tunnel project, real estate costs such as underground easements, and inflation on other construction projects such as viaduct demolition and building roadway connections at the tunnel’s north and south portals.
WSDOT has not yet incurred many of these costs – these are estimates developed by WSDOT staff and reviewed by industry experts. Nonetheless, it is our responsibility to protect taxpayers by alerting the insurance company that these costs may be incurred in the future. 
We recognize the public has great interest in the financial aspects of the tunneling delay, and we will continue to be transparent in discussing these matters. But we cannot speculate, nor can we comment on ongoing legal issues. Answers to many of the questions we’re hearing from the public will take time to resolve as we continue to follow the process in the design-build contract. 
At this time, we are not requesting additional funding from the Legislature. We are requesting the insurance company cover these additional costs. We have been entrusted to deliver this project while also being responsible stewards of taxpayer money. That commitment remains at the core of everything we do, and it will continue to guide our decisions as we work to replace the viaduct.