The US state of Hawaii has awarded a $482.9m contract to Kiewit Pacific for the first phase of the Honolulu rail transit project.

The company will design and build a 6.5-mile section stretching from East Kapolei to Pearl Highlands. Ground breaking is scheduled for December and construction work for the initial phase is expected to finish within three years.

The section’s cost, earlier estimated to be nearly $570m, has come down due to economic slowdown resulting in lower project costs as well.

The project’s second phase, an estimated $350m 3.9-mile section from Pearl City to Aloha Stadium, is expected to be put to tender in mid-November.

The nearly $5bn Honolulu rail transit project involves building a 20-mile elevated rail line to link West Oahu with downtown Honolulu and Ala Moana Centre.

Part of the system is expected to enter service in 2012 with full service expected in 2019.