The Port Authority is combining contracts and rebidding the first phase of its light-rail extension to the North Shore to try to get a better price.

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The strategy follows an $87.8 million low bid received a month ago that was 25 percent higher than engineering estimates to bore twin tunnels under the Allegheny River.

If the strategy does not succeed, and with the authority now admitting construction costs are greater than figured earlier, could the project be in jeopardy?

"I wouldn't say so at this point," Engineering-Construction Manager Henry Nutbrown said. "The project maintains a favorable rating with the Federal Transit Administration and is budgeted in the new transportation act and by Congress."

County Chief Executive Dan Onorato and members of County Council have indicated they won't give more than a 3 1/3 percent, or $12.7 million, local share based on a year-old cost estimate. But that estimate has since gone up and is about to go up again.

However, officials believe the state could slightly increase its share, or the authority board could tap bond resources, rather than lose $314.5 million in federal funds to another state.

Federal Transit Administration staffers are to visit Pittsburgh this week or next for all-day talks about the project.

The latest estimates put the cost at $393 million, based on a 3 percent annual inflation rate.

But recent calculations based on similar construction in 20 cities nationwide put the inflation rate at 7.8 percent, "so we believe the overall project budget needs to be adjusted," Nutbrown said. "I don't have a new number but, obviously, $393 million is not going to hold."

The $87.8 million low bid for the first construction contract both surprised and disappointed Nutbrown, his staff and project consultants. There were only two other bidders, and the highest bid came in at $119.8 million.

The first contract has been repackaged to cover not only the speciality job of boring twin tunnels under the Allegheny River to connect Gateway Center station with the North Shore, but to incorporate the next contract.

As a result, bids will include 1,210 linear feet of "cut-and-cover" subway, built by means of excavating from ground level, and 300 linear feet of retaining walls, where the tracks will transition between underground and the surface.

The larger contract, carrying an engineering estimate of about $110 million, is expected to attract more than the three companies that submitted bids last month.

Given the rebidding process, and new questions about project costs for the North Shore Connector and a subway spur from Steel Plaza station to the Downtown convention center, it's unlikely work could get under way this year.

Nutbrown said he has been in touch with "North Shore stakeholders" building or planning new parking garages, offices and other developments, in addition to stadiums, who have counted heavily on seeing the T cross the Allegheny River.

"We know this is important to all of them and wanted to give them a level of comfort that we're working hard to keep the project intact," he said.

The project includes four new stations and purchase of four light-rail vehicles, a number already scaled back from eight LRVs.