It should be interesting as DRIC works out the numbers for the cost of the new border crossing. We have already heard numbers in the multi-billion dollar range and that is without a tunnel.
A reader sent me this story which I found fascinating and one that I thought I should share with you, especially in light of the Michigan hearings and the desire by Windsor Council to have a huge tunnel built.
If this is really the case, then to be blunt about it, how much extra would taxpayers have to pay out over quoted numbers if Governments built a new crossing including, shudder/shudder, a tunnel!
The Next Big Dig?
There's a reason big public projects almost always overshoot their budgets.
by James Thayer
There's a reason big public projects almost always overshoot their budgets.
by James Thayer
IT'S THE UGLIEST THING north of Los Angeles and south of Juneau. Dirty, noisy, homely from every angle, and so massive it is visible from space. For 50 years it has ruined the downtown waterfront. Seattleites now have an excuse to be rid of the cursed thing, and many are desperate to do so.
It is the Alaskan Way viaduct, an elevated portion of State Route 99, and it handles 110,000 vehicles a day, the second busiest north-south corridor in the city. Northbound traffic is on the top level, southbound is on the middle tier, and at ground level are parking spaces, perpetual shadow, and puddles. The viaduct blocks the water view of scores of downtown buildings, and is a physical and psychological barrier separating downtown from the Elliott Bay shoreline.
In 2001 the viaduct was damaged by the Nisqually Earthquake, which registered 6.8 on the Richter Scale, and which was centered 50 miles south of Seattle. Repairs cost $3.5 million. No one claims the Alaskan Way viaduct will survive the Big One, which is forecast for sometime between tomorrow and the year 3,000. More precisely, engineers say that in the next 10 years there is a 1 in 20 chance that an earthquake will cause the viaduct to fail.
Seattleites are well aware of the 1989 Loma Prieta earthquake that pancaked Interstate 880's Cypress Street viaduct in Oakland, causing severe traffic disruption for the next decade. Something must be done. The Seattle mayor, the construction industry and unions, and Washington State transportation bureaucrats favor the most expensive remedy: tearing down the viaduct and building a tunnel along the waterfront. The Department of Transportation's website--helpfully available in English, Spanish, Vietnamese, Chinese, and Tagalog--says the tunnel "takes advantage of a 100-year opportunity to open up Seattle's waterfront."
HISTORY SUGGESTS that these estimates are a deception designed to gain early support for a project that will turn out to be much more expensive.
Completed in 1869, the Suez Canal cost 20 times more than early projections, and three times more than estimates compiled the year construction began. Figures for the Panama Canal are murky but the project, completed in 1914, cost somewhere between 70 percent and 200 percent more than pre-construction estimates. The Sydney Opera House was first estimated at $7 million. When it was finished in 1973 the Aussies were looking at a $102 million tab.
Boston's notorious Big Dig, which put some of Interstate 93 beneath the city, took 20 years to complete and cost about $14.6 billion, the most expensive road project in U.S. history. The original estimate: $2.6 billion. A money sinkhole, the project ruined careers, sprung intractable leaks, and has now roused federal prosecutors.
The San Francisco Bay Area has its own ongoing financial calamity, caused in part by low initial estimates. The bridge connecting San Francisco and Oakland was built in the early 1930s and today carries 280,000 vehicles a day. The Loma Prieta earthquake damaged the bridge, and most experts agreed it needed to be replaced before another substantial earthquake rattles the region. In 1997 legislation was passed funding the new span, which was expected to open by 2004 and cost $1.7 billion. Construction on a replacement for the bridge's cantilever portion began in January 2002. Oakland residents--many of whom have long thought that their city got stuck with the butt end of the original bridge--wanted a signature look, so a lovely suspension bridge was settled on. As of today, a mile of the bridge juts out into the bay, and stops. By the time it is completed in 2012, it will have cost $6.3 billion. San Francisco Mayor Gavin Newsom summed it up: "It's a fiasco."
At the Mixing Bowl in Springfield, Virginia, 400,000 vehicles a day come together on Interstates 95 and 395 and the Capital Beltway. During public hearings in January 1994 the price tag for the Mixing Bowl--a jumble of ramps, bridges and cloverleaves--was put at $220 million. Today $676 million is the latest guess at a final cost. The project might be finished next year.
Time and again promoters of big public projects use low-ball estimates to seduce a gullible public into supporting a project. How does this happen? An important study has concluded that the best explanation is "strategic misrepresentation, that is, lying."
BENT FLYVBJERG is a professor of development and planning at Aalborg University in Denmark, and is founder and director of the university's research program on transportation infrastructure planning. He has twice been a visiting Fulbright Scholar. He and his colleagues studied 258 transportation projects from different eras and different regions. Among the questions they hoped to answer: How common and how large are differences between forecasted and actual costs? Are the differences random or is there a pattern to the differences that indicates other explanations?
The study looked at several possible explanations for cost overruns. The first were technical reasons, and includes mistakes made due to inadequate data, honest errors, and inexperienced forecasters. But if technical reasons were the main cause for the disparities "we would expect a less biased distribution of errors in cost estimates." Significantly, forecasts are heavily biased toward underestimating the final costs. And there has been little or no improvement in forecasting as the decades pass. Gross underestimation today "is of the same order of magnitude as it was 10, 30, and 70 years ago"--which suggests that technical errors are not a significant cause of poor initial estimates.
Psychological reasons were also examined. Flyvbjerg writes, "Politicians may have a 'monument complex,' engineers like to build things, and local transportation officials sometimes have the mentality of empire builders." "But given the fact that the human psyche is distinguished by a significant ability to learn from experience," Flyvbjerg notes, "it seems unlikely that promoters and forecasters would continue to make the same mistakes decade after decade instead of learning from their actions."
A more credible explanation for the disparities between forecasted and actual costs are economic motives, both public and private.
TRANSIT PROJECTS compete for funding from the federal government. A low forecast makes a project more attractive and less likely to be overlooked in favor of another city's project. Leonard Merewitz of the University of California-Berkeley, has concluded that "keeping costs low is more important than estimating costs correctly."
And on a private level, promoters and investors may benefit by shading forecasts so the projects will more likely be built. Flyvbjerg says, "Having costs underestimated and benefits overestimated would be economically rational for such stakeholders because it could increase the likelihood of revenues and profits."
Is lying too strong a word? Not according to Martin Wachs, director of the Institute for Transportation planning at the University of California-Berkeley, who in a study in the Business and Professional Ethics Journal showed that "officials on a variety of transportation projects lied to ensure that the projects get built," according to a summary in the Boston Globe. Dozens of officials on a number of projects admitted to lying. "They owned up to the fact that these practices were common," Wachs told the Globe's Raphael Lewis. "But they all said they were common among other companies."
FLYVBJERG CONCLUDES that costs are underestimated in 90 percent of transportation infrastructure projects. For tunnels and bridges, actual costs are on average 34 percent higher than forecast costs, and for road projects the disparity on average is 20 percent. "We conclude that the cost estimates . . . are highly, systematically and significantly deceptive."
And what do these deceptive numbers mean? "[T]hose . . . who value honest numbers should not trust the cost estimates presented by infrastructure promoters and forecasters," Flyvbjerg says. "[S]eemingly rational forecasts that underestimate costs and overestimate benefits have long been an established formula for project approval."
BACK IN SEATTLE, an alternative to the waterfront tunnel exists: replacing the existing viaduct, a project estimated to cost $2.5 billion to $2.9 billion.
Perhaps the local politicians understand that the tunnel's estimated cost of $4.1 billion is a pie-in-the-sky number. The state legislature adjourned its latest session after refusing to make a tough decision on the project. Instead, the legislators voted to let the Seattle city council either make the decision itself or (in a rare double punt) allow city voters to choose between the tunnel or the replacement viaduct.
The mayor and a number of council members support letting Seattle voters decide. No state or local politician wants to be tarred in some future race with "He voted for Seattle's Big Dig."
It is the Alaskan Way viaduct, an elevated portion of State Route 99, and it handles 110,000 vehicles a day, the second busiest north-south corridor in the city. Northbound traffic is on the top level, southbound is on the middle tier, and at ground level are parking spaces, perpetual shadow, and puddles. The viaduct blocks the water view of scores of downtown buildings, and is a physical and psychological barrier separating downtown from the Elliott Bay shoreline.
In 2001 the viaduct was damaged by the Nisqually Earthquake, which registered 6.8 on the Richter Scale, and which was centered 50 miles south of Seattle. Repairs cost $3.5 million. No one claims the Alaskan Way viaduct will survive the Big One, which is forecast for sometime between tomorrow and the year 3,000. More precisely, engineers say that in the next 10 years there is a 1 in 20 chance that an earthquake will cause the viaduct to fail.
Seattleites are well aware of the 1989 Loma Prieta earthquake that pancaked Interstate 880's Cypress Street viaduct in Oakland, causing severe traffic disruption for the next decade. Something must be done. The Seattle mayor, the construction industry and unions, and Washington State transportation bureaucrats favor the most expensive remedy: tearing down the viaduct and building a tunnel along the waterfront. The Department of Transportation's website--helpfully available in English, Spanish, Vietnamese, Chinese, and Tagalog--says the tunnel "takes advantage of a 100-year opportunity to open up Seattle's waterfront."
HISTORY SUGGESTS that these estimates are a deception designed to gain early support for a project that will turn out to be much more expensive.
Completed in 1869, the Suez Canal cost 20 times more than early projections, and three times more than estimates compiled the year construction began. Figures for the Panama Canal are murky but the project, completed in 1914, cost somewhere between 70 percent and 200 percent more than pre-construction estimates. The Sydney Opera House was first estimated at $7 million. When it was finished in 1973 the Aussies were looking at a $102 million tab.
Boston's notorious Big Dig, which put some of Interstate 93 beneath the city, took 20 years to complete and cost about $14.6 billion, the most expensive road project in U.S. history. The original estimate: $2.6 billion. A money sinkhole, the project ruined careers, sprung intractable leaks, and has now roused federal prosecutors.
The San Francisco Bay Area has its own ongoing financial calamity, caused in part by low initial estimates. The bridge connecting San Francisco and Oakland was built in the early 1930s and today carries 280,000 vehicles a day. The Loma Prieta earthquake damaged the bridge, and most experts agreed it needed to be replaced before another substantial earthquake rattles the region. In 1997 legislation was passed funding the new span, which was expected to open by 2004 and cost $1.7 billion. Construction on a replacement for the bridge's cantilever portion began in January 2002. Oakland residents--many of whom have long thought that their city got stuck with the butt end of the original bridge--wanted a signature look, so a lovely suspension bridge was settled on. As of today, a mile of the bridge juts out into the bay, and stops. By the time it is completed in 2012, it will have cost $6.3 billion. San Francisco Mayor Gavin Newsom summed it up: "It's a fiasco."
At the Mixing Bowl in Springfield, Virginia, 400,000 vehicles a day come together on Interstates 95 and 395 and the Capital Beltway. During public hearings in January 1994 the price tag for the Mixing Bowl--a jumble of ramps, bridges and cloverleaves--was put at $220 million. Today $676 million is the latest guess at a final cost. The project might be finished next year.
Time and again promoters of big public projects use low-ball estimates to seduce a gullible public into supporting a project. How does this happen? An important study has concluded that the best explanation is "strategic misrepresentation, that is, lying."
BENT FLYVBJERG is a professor of development and planning at Aalborg University in Denmark, and is founder and director of the university's research program on transportation infrastructure planning. He has twice been a visiting Fulbright Scholar. He and his colleagues studied 258 transportation projects from different eras and different regions. Among the questions they hoped to answer: How common and how large are differences between forecasted and actual costs? Are the differences random or is there a pattern to the differences that indicates other explanations?
The study looked at several possible explanations for cost overruns. The first were technical reasons, and includes mistakes made due to inadequate data, honest errors, and inexperienced forecasters. But if technical reasons were the main cause for the disparities "we would expect a less biased distribution of errors in cost estimates." Significantly, forecasts are heavily biased toward underestimating the final costs. And there has been little or no improvement in forecasting as the decades pass. Gross underestimation today "is of the same order of magnitude as it was 10, 30, and 70 years ago"--which suggests that technical errors are not a significant cause of poor initial estimates.
Psychological reasons were also examined. Flyvbjerg writes, "Politicians may have a 'monument complex,' engineers like to build things, and local transportation officials sometimes have the mentality of empire builders." "But given the fact that the human psyche is distinguished by a significant ability to learn from experience," Flyvbjerg notes, "it seems unlikely that promoters and forecasters would continue to make the same mistakes decade after decade instead of learning from their actions."
A more credible explanation for the disparities between forecasted and actual costs are economic motives, both public and private.
TRANSIT PROJECTS compete for funding from the federal government. A low forecast makes a project more attractive and less likely to be overlooked in favor of another city's project. Leonard Merewitz of the University of California-Berkeley, has concluded that "keeping costs low is more important than estimating costs correctly."
And on a private level, promoters and investors may benefit by shading forecasts so the projects will more likely be built. Flyvbjerg says, "Having costs underestimated and benefits overestimated would be economically rational for such stakeholders because it could increase the likelihood of revenues and profits."
Is lying too strong a word? Not according to Martin Wachs, director of the Institute for Transportation planning at the University of California-Berkeley, who in a study in the Business and Professional Ethics Journal showed that "officials on a variety of transportation projects lied to ensure that the projects get built," according to a summary in the Boston Globe. Dozens of officials on a number of projects admitted to lying. "They owned up to the fact that these practices were common," Wachs told the Globe's Raphael Lewis. "But they all said they were common among other companies."
FLYVBJERG CONCLUDES that costs are underestimated in 90 percent of transportation infrastructure projects. For tunnels and bridges, actual costs are on average 34 percent higher than forecast costs, and for road projects the disparity on average is 20 percent. "We conclude that the cost estimates . . . are highly, systematically and significantly deceptive."
And what do these deceptive numbers mean? "[T]hose . . . who value honest numbers should not trust the cost estimates presented by infrastructure promoters and forecasters," Flyvbjerg says. "[S]eemingly rational forecasts that underestimate costs and overestimate benefits have long been an established formula for project approval."
BACK IN SEATTLE, an alternative to the waterfront tunnel exists: replacing the existing viaduct, a project estimated to cost $2.5 billion to $2.9 billion.
Perhaps the local politicians understand that the tunnel's estimated cost of $4.1 billion is a pie-in-the-sky number. The state legislature adjourned its latest session after refusing to make a tough decision on the project. Instead, the legislators voted to let the Seattle city council either make the decision itself or (in a rare double punt) allow city voters to choose between the tunnel or the replacement viaduct.
The mayor and a number of council members support letting Seattle voters decide. No state or local politician wants to be tarred in some future race with "He voted for Seattle's Big Dig."
1 comment:
A reader writes:
For a Canadian perspective when we're talking billions in infrastructure spending.
Confederation Bridge - 12.9 km, $1 billion in 95-97 dollars. Population 2004 - 137,900
Whatever the solution, Windsor deserves the best money can buy.
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