What is the Anglosphere, Anyway?
As I’m putting more and more urban rail lines and their construction costs into one table, I have to notice trends. One that I’ve talked about for many years is that construction costs in the Anglosphere are higher than in the rest of the developed world, not just in world leader New York but also in other American cities as well as in Britain, Canada, Singapore, and so on. For years I identified this with common law, which I no longer do. Instead, I want to expand on this by asking what exactly the Anglosphere even means.
The features of the Anglosphere
Within the developed world, a subset of countries consists of the Anglosphere. The core is Britain, the US, Canada, Australia, and New Zealand, but Ireland has to be on the list too, as should Singapore and to varying extents Israel and Hong Kong. Which features separate them from the remainder of the first world:
- For the most part, they use English as their usual language – but Israel, Hong Kong, and Quebec do not, and Singapore only does as a public language while maintaining Chinese, Malay, and Tamil as home languages.
- They use English common law – but Quebec uses a French-derived code for civil law.
- They have extensive right to trial by jury – but Israel and Singapore have no juries.
- They use single-member districts in elections – but Singapore and Hong Kong are undemocratic, Israel and New Zealand use proportional representation, Ireland uses single transferable vote, and Australia’s single-member districts use instant runoff (cf. France’s single-member districts with runoffs).
- They have higher economic inequality than other developed countries, lower taxes and government spending, and weaker unions – but there are some exceptions (e.g. Canada and Australia are less unequal than Italy, and South Korea and Japan have lower taxes than most of the Anglosphere), and moreover the ranges within both the Anglosphere and the rest of the developed world are quite wide.
- They make extensive use of privatization and public-private partnerships for infrastructure and services – but Stockholm contracts out its urban rail whereas no major American city does, and France built one of its recent high-speed lines, the one to Bordeaux, as a PPP.
- The smaller countries see the US, the UK, or both as inspirations for what modern prosperity looks like – but Israel compares itself with both the US and Western Europe (especially Germany), Singapore’s cultural cringe extends toward both the US/UK and bigger East Asian countries, and Hong Kong is torn between Western and Chinese models.
Every distinguishing feature of the Anglosphere can be made to correlate with high construction costs, but that tells us little, because it could be that this is just a spurious relationship, the real cause being something else about the Anglosphere. When making a claim about what makes the US, UK, and Canada so expensive to build in, it’s useful to test it against special cases – that is, countries that are part of the Anglosphere in general but fail that specific criterion.
The legal system
With respect to common law, Quebec is the ideal testing ground. Montreal and Toronto share more social and economic features than do other pairs of major cities with their respective languages. A large Toronto premium over Montreal would suggest that remaining differences, such as the legal code or maybe the peculiarities of Quebec politics, matter to construction costs.
But what we see is the opposite. In the 2000s, Toronto and Montreal both built subway extensions at pretty reasonable costs. Since then, costs have risen in both cities in tandem, placing the planned Blue Line extension in Montreal and the planned Ontario Line and Scarborough replacement in Toronto among the most expensive non-New York subways. So it’s likely that common vs. civil law makes no great difference to costs.
Electoral politics
By the same token as with the use of common versus civil law, we can look at the electoral system. Israel and New Zealand use fully proportional elections, and Israel has national lists, without any local empowerment. Both countries have cheap recent electrification projects, but when it comes to tunneling, both Tel Aviv and Auckland are on the expensive side.
Conversely, France has single-member districts with runoffs; the lack of a spoiler effect weakens political parties, but they’re still stronger than in the US, and in practice independent candidates mostly run explicitly as left or right. Any reasonable mechanism for why single-member districts should raise construction costs should apply regardless of whether these districts are elected by plurality or with runoffs (and besides which, Melbourne has extreme costs and Sydney fairly high ones). And yet, French costs are decidedly average: Grand Paris Express is the median world subway by construction costs, and other Metro extensions in Paris and other French cities are somewhat cheaper.
Unions and inequality
The political factor – the Anglosphere’s socioeconomic policy is generally to the right of that of Continental European countries – has its own special cases too. The American left and center-left has in particular seized upon the importance of health care to construction costs, since the US has high health care costs and employers, especially in the public sector, are expected to pay most of the costs of workers’ health insurance. But the UK and Canada both have largely public systems that the American left uses as inspiration for its single-payer health care plans, and the UK also has very good cost control; and yet both countries have very high infrastructure construction costs. Singapore, whose health care system is private and unequal but also low-cost, has very expensive subway construction as well.
We can similarly look at inequality in general, or at union power. The correlation between inequality and national construction costs should be fairly high, if only because the Anglosphere has high inequality as well as high construction costs. However, per Branko Milanovic’s data for after-tax-and-transfers inequality, Canada, Britain, and Australia all have slightly lower inequality than Spain, and are comparable to Greece and Italy.
Unions can affect construction costs in either direction. The American center-right and right complain that the power of public-sector unions warps public incentives and forces high construction and operating costs, citing union hostility to productivity improvements that include layoffs, or such regulations as prevailing wage laws. However, the most unionized countries in the developed world are in Scandinavia, where costs are low. The OECD has union density figures by country, and the big cleave is Scandinavia versus the rest. The Anglosphere is on the weaker side.
Perhaps the correlation must then go the other way? That is, weak unions increase costs, for example by creating a siege mentality among those workers who do have stable union jobs (including rail workers, as the industry’s economic and political situation is friendly to unionization)? But the data does not support that, either. Spain’s union density is barely higher than the US’s and much lower than Britain’s, and Greece’s is comparable to Britain’s. The available data strongly suggests that union power has no effect on construction costs, positive or negative.
Could it be privatization?
Privatization and the reliance on PPPs is the least clean of the Anglosphere’s special features – that is, it is not always used throughout the countries I identify with the Anglosphere, and conversely it may be used elsewhere, even in countries with generally left-wing economic policy like Sweden. Nonetheless, among the political, legal, social, and economic factors, it is the only one I cannot rule out.
The issue is not precisely contracting out something, as Stockholm is doing with urban rail. Rather, it is more specifically privatizing the planning aspects of the state, such as engineering. Spain relies heavily on in-house engineering and design, while the US and UK, and by imitation the rest of the Anglosphere, prefer private consultants. To the extent I have cost comparisons within the same city or country with different levels of privatization, they’re suggestive that it matters: the publicly-funded LGV Est Phase 2 cost €19 million per kilometer (with a tunnel covering 4% of the route), the PPP LGV Sud-Europe-Atlantique cost €23 million per kilometer (with no tunnels), the two lines opening within a year of each other. This is not an enormous cost difference, but accounting for the tunnel makes the cost noticeable, perhaps a factor of 1.5.
Conclusion
Overrelying on a single case is not particularly robust. In light of the similarities between costs of different lines in the same city, and even those of different cities in the same country, the N for a quantitative comparison is not large – my data table currently has 38 unique countries, and even accounting for a few misses for which I haven’t included data yet, like Israel, the number is not much larger than 40. It is not responsible to use multivariable regressions or other advanced statistical techniques in such a situation.
In that case, looking at one or two cases provides a powerful sanity check. As far as I can tell, the Anglosphere’s tendency toward privatization and using consultants, often reinforced by different English-speaking countries learning one another’s practices, could be a serious cost raiser. However, the other special features of the Anglosphere – common law, winner-take-all elections leading to two-party systems, and weak unions and welfare states – are unlikely to have a significant effect.
What about time to construction, Alon? There’s that famous paper by Madrid’s chief subway engineer that lays out a 4? 5? year timespan from conception to completion of subway extensions. That seems almost inconceivably fast for the US at this point (though I think it’s not far off from same the time line of the first NYC Subway). The San Francisco Bay wants to take a decade just to play the next cross bay train line, and we all know how such projects as the Second Avenue Subway, and East Side Access have dragged one without end.
Forgive my typos above, but here is the article I was referencing. https://tunnelbuilder.com/metrosur/edition2pdf/page2.pdf
True. It is a feature, or a consequence, rather than ultimate cause. In the UK they typically take longer to run the (multiple) public enquiries about building infrastructure than it takes to build. Take HS1 which took 21 years–counting from 1986 when the decision was taken to build the Channel Tunnel, to 2006 when the St Pancras link opened. The tunnel and Eurostar itself took 7 years (1986 was the political decision; 1993 it was finished). HS1 was mostly political dysfunction, possibly combined with industrial reluctance; in fact it was a county, Kent, that drove HS1 because those old-school conservatives who run Kent understood what it meant for business and links to Europe.
In Australia there is popular support for HSR linking the east coast cities and again, mostly political dysfunction and timidity (and austerity mindset) that stops it. In France and Europe generally there is political bipartisanship and mostly popular support for it.
Then there’s HS2 …
London CrossRail seemed positively blessed by comparison, until it stumbled at the very last minute into the usual inexplicable and opaque cost blowouts and delays; and of course if you consider that it was first proposed in 1947. By comparison Paris RER-A and -B were proposed in the early 70s and opened in 1977.
Likewise with nuclear power. Official public inquiries about building Sizewell-B reactor were ongoing when I first lived in the UK in the early 80s; apparently they had begun in 1969. They were still going on when I returned in the mid-90s after living a decade in France who had meanwhile transformed their grid and massively reduced reliance on imported oil or gas or local dirty coal. Sizewell finally delivered power in 1995. Like most people I have lost track (and interest) in how long Hinkley-C has taken, or how mind-numbingly expensive it is. (Yes, Areva have had massive delays and cost blowouts in building the same ESR in France, but that was the first construction of a brand new design.)
HS1 is instructive. One cannot simply point one’s fingers at conservatives (Thatcher was the problem but she was sui generis) but it is notable that those Kent worthies (all Conservatives) were former titans of industry and I reckon therein lies a clue; ie. France and the non-Anglosphere tend to take more seriously their technical elites. Some even become politicians and ministers but you’d be hard pressed to name any in the Anglosphere where politics and decision making is dominated, primarily by lawyers, or Oxford-PPE graduates (Boris is even worse, a graduate in something entirely useless except to become a journalist then politician) or real-estate types. In the colonies Rhodes scholars often reach the top job (2 of the last 3 Australian PMs were Rhodies; Bob Hawke who died a few months back is one of our most famous PMs and a Rhodie-lawyer; while Clinton and a lot of his cabinet were Rhodies; a bet placed on Buttegieg mightn’t be dumb since he is one too, but maybe America really needs Andrew Yang!) and they mostly do a version of PPE during their Oxford years. And this disdain for the technical elites by the Anglosphere political class dates back to when the early industrialists bought their way out of those ‘dirty’ professions and became full-blooded capitalists, putting their money and children into ‘something in the City’, built their country estates, purchased their ennoblement and tried to disavow their origins.
The Oxford PPE degree is the modern incarnation of this philosophy. As someone who spent 6 years at Oxford, but as a low-status research scientist, I tend to think there is something to this theory:
Having studied the same subject as Boris in school I am somewhat miffed at this comment. Though classics prominence in British government used to be enormous. Apparently large portions of things like the Indian Civil Service exam used to be classics based.
Feet meet mouth:-)
Unless you think Indian governance and their provision of even the basics (clean water, sewage, education, health etc) is something to boast about. We won’t even mention clean air!
Indeed inadvertently proved my point. It may be exactly the same reason why India is so … run.
Olivier & Herbert,
I guess it was me who is accused of sneering at the classics education. Not really, as there is a useful place for everything. But the question is whether it is appropriate background for running a country. And I wouldn’t exclude such people from government though I might be tempted to have a quota on them (and lawyers & PPEs). Really the problem is not the Classics guys but the absence of all the others. But with a science PhD I am biased.
@Alon Ironically your contempt for the classics puts in the same bag as all those economics worthies.
Where did Alon express contempt for the classics?
Yeah, I didn’t view it that way at all. It is more that lack of variety. This can easily lead to an inbred environment. In the U. S. it is prep school, good SAT, private university, private law school followed by a stint at a prestigious management consulting firm (e. g. McKinsey). (By the way, this descries Buttigieg exactly). Nothing terrible about this unless everyone around you followed the same path. Then you have a lack of creative thinking, and an inability to deal with real world problems. This is often followed by attempts at “diversity” which often means hiring a black man and an Asian woman who followed the exact same path. You want real diversity — different experiences and education.
>> maybe America really needs Andrew Yang!
Or maybe someone with both a science degree (speech pathology and audiology) before getting a law degree. Maybe someone who then went on to become Harvard’s only tenured law professor who had attended law school at an American public university. Someone whose first government experience was advising the National Bankruptcy Review Commission, then was later chosen to chair the five-member Congressional Oversight Panel created to oversee the implementation of the Emergency Economic Stabilization Act (all before becoming a senator). Warren’s path to political leadership has been most unusual, quite relevant, and pretty damn impressive if you ask me. Yang’s accomplishments, in comparison, are pretty pedestrian (prep school, law school, made money, etc.) (Not that I have anything against the guy.)
Bernie Sanders worked as a carpenter when he was younger…
Hah, Bernie as a Jesus manqué! Not going to fly with the evangelicals …
I suppose one could say that Obama’s ACA prised the Overton Window open a bit wider. Bernie and Buttigieg et al. might prise it a little further but it needs to be flung wide open to admit an actual solution like Warren’s. An open contest between Dem contenders is a good thing, but the trouble on this issue is that they are playing dumb oppositionalism that will poison the subject: reinforcing the false notion that real healthcare for all is utterly unaffordable (and anything that says otherwise is some kind of con or un-American). So Bernie and Buttigieg et al. might actually slam it shut. Bloomberg is a member of the et al. so he might make it worse, given he can do that very American thing: outspend them all on political advertising.
Sanders had a number of jobs before he became mayor of Burlington. But he has always wanted to be a politician (and he has been a very successful one). He graduated from the University of Chicago with a degree in political science. His track towards the presidency seems rather pedestrian. Get involved in politics at a young age, get a degree in political science, become a small town mayor, then serve in the U. S. House (*), Senate (*) then make a run for president.
In contrast, Warren appeared to have no interest in politics until late in her career. Her accomplishments in academia as well as government oversight are very impressive. Even if she never ran for office she would generate a good Wikipedia page. Speaking of which, that is the first thing I do when I am curious about a political candidate. I don’t go to their campaign website. I don’t read what others have to say. I just look at their Wikipedia page, as it often has some surprising tidbits (like Yang being a lawyer — his parents were the ones that did the science/math thing).
* Pete Buttigieg wants to skip this part. Apparently he thinks that being mayor of a small town (and not a very good one) qualifies him to be president. Maybe he did well on his SATs. (Yes, I’m being snide.)
As far as the American election goes, it is quite common for people to play amateur pundit. The main goal for many Democrats is simply to beat Trump. As a result, you have lots of people picking a candidate because they think they have a better chance of being elected. I’m no different. I would say the big difference is that I’m realistic in my assessment. After the last election, it is obvious that it is extremely difficult to predict these things. Early in the race no one thought Trump had a chance to win the nomination, let alone the presidency. Personally I think Warren has a very good chance at winning, but I would probably have better luck picking the next NBA champion.
I agree. But OTOH if someone like me wants to see a Warren presidency, then chances are it isn’t going to happen. And I wasn’t being snide, though it was a throwaway line about Yang, since like most (Americans & others alike) I didn’t know much about him, and had assumed he had a tech background. Wrongly as you point out, as he is a corporate lawyer which really …. (but his father was a physics researcher). Curiously he is running 6th in polls after the usual top 5; ie. ahead of Amy Klobachar and most of the others who will be dropping out soon. I don’t know exactly but maybe this reflects the same issue I was getting at: despite being a corporate lawyer his message is about a more direct hands-on approach which may appeal to just enough Americans who are savvy to the fact that too many politicians are lawyers. The title of his book even is along these lines (Smart People Should Build Things) though I can’t vouch for the content. At the least he has probably secured some executive role if the Dems gain the presidency.
If I was American I’d be voting for Warren but not expecting too much (ie. chances of winning; if she wins … wow, I would have outrageous expectations and doubtless be disappointed by the works inside the sausage factory). But I don’t believe Biden or Sanders can win, and I remain sceptical of the ever-so-smooth Buttigieg (he was interviewed on PBS Newshour yesterday, very smooth operator as expected from Harvard, Rhodes-Oxford-PPE, McKinsey …). I’m not convinced of these so-called ‘moderates” ideas on healthcare as they seem to be non-solutions and pure political constructs that cannot work in the real world. The media and GOP have started the demolition job on Warren but I haven’t read or heard a coherent argument other than “it costs too much”. Yet her $21tn plan, over ten years, is a lot less than the $36tn America will spend on healthcare in those ten years (certainly more, it is about to reach 18%GDP and is going higher); twice the OECD average as %GDP and of course with worse health outcomes (alas something an American politician cannot say out loud). The notion of how single-payer works (around the world; alas American politicians are forbidden from saying that too!) and can only really work if everyone is in the same system*, needs to be sold. It is actually not that complicated but Warren herself hasn’t enumerated some of these obvious points, so far.
…………………..
*This does not preclude private health providers or even private insurance as evident in many countries; France actually has more private than public doctors & hospitals, and while it doesn’t get categorised as “single payer”, it really is, in that it is the government who sets the prices and protocols for all health services. While you can take out supplementary insurance (“mutuelle”) for charges that exceed the public insurance, the overall costs are contained in a way the American system is not. France is in fact the next costliest (almost 12% GDP) after the US but it also is often rated the world’s best healthcare; in fact the world’s best, like Germany, Switzerland etc are only a bit behind at 11%-almost 12% GDP). Warren’s cost is actually pretty much bang on France’s 12% GDP, but alas, again, not allowed to say that.
The best way to deal with political third rails is to proudly grab them and keep grabbing it in every stump speach.
If nothing else you move the Overton Window
Don’t know if you considered South Africa. It’s probably not relevant I suppose.
I didn’t, because it’s not a developed country, and it has a legacy of apartheid that makes infrastructure planning a total shitshow, so I don’t think any data from there would imply one thing or the other about the Anglosphere writ large. It’s perhaps best to say that over the 20th century, the political decisions made in South Africa moved it away from the Anglosphere.
Minor quibble – New Zealand has a mixed system for its parliament (similar to Germany’s voting system) and is not fully proportional. 71 of the 120 seats are filled by single-member plurality seats while 49 are filled though closed list PR. Not that this changes your analysis.
The German system is proportional in effect (to the extent that the one time Schleswig Holstein had a government that had more seats but less votes than the opposition, there were new elections three years later)
Are the proportional seats allocated in such a way as to eliminate the distortion effect of the fptp seats?
The system is entirely proportional in NZ. There are two boxes to tick on the ballot papers, the party vote and the electorate vote. The party vote determines the relative make-up of parliament. If National gets 40% of the party vote, then they get 40% of the ~120 seats in parliament.
The electorate seats go to the winner of each electorate, and then the parties are topped up from their lists until they reach the proportion determined by the party vote. There is a threshold to get into parliament of 5% party vote, or 1 electoral seat.
So if National is entitled to 48 seats in parliament as a result of getting 40% of the party vote, and they win 32 electorates, then they select 16 people from the list to reach the 48 seats they are entitled to.
Occasionally a small party receives more seats from electoral votes then would be given from the party vote. In this case parliament gets an extra 1 or 2 people as a result of this “overhang”.
“Similar to Germany” is the key part. So there is some local empowerment (and Germany has worse NIMBYism than France, although clearly it’s not the districts because France is 100% single-member districts, just not plurality but majority), but political parties are strong and cohesive and people who are disaffected with a party can easily defect. The mechanism I posit is,
Multiparty system -> defection is easier -> politicians are more disciplined to not be corrupt or else voters defect en masse -> politicians work for broad demographic interests (e.g. the working class, the farmers, the urban middle class) rather than narrow special ones (e.g. one politically connected contractor)
However nice this theory is, the predictions it makes about construction costs are false, precisely because defection is easy in NZ (if you don’t like Labour, you can vote Green) and Israel (where Blue and White has supplanted Labor as the main center-left vehicle).
Maybe Israel’s construction cost issues (whichever they are) are an artifact of their railways saying largely to the last twenty years and Israel Katz in particular being a guy who campaigns on highway interchanges maybe not the best guy to have in charge of rail…
I mean the less than ideal station locations “could” be excused by then being built a century later than most other train stations if we’re charitable…
So privatization of the engineering and planning functions leads to higher costs. Do you mean higher design and planning costs or higher overall costs of the projects? If its higher design and planning costs then your simply not taking into account all of the costs in many of these countries. Typically when a consultant bids for such work they are forced into accepting salary caps, profit caps (5 to 8% is common) and a markup that covers the cost of employing someone, usually audited by the agency that is hiring them. Typically that equates to a multiplier in the three range, so salary cost x 3 = what it costs for a private company to employ someone on a project and make a normal profit to enable them to stay in business. No consultant makes huge profits on transportation agency work. Now compare that to an agency employee. Sure they probably get a lower salary but the benefits are tremendous. Index linked pensions, health insurance for them and their family’s for life, subsidized travel etc. I recall an exercise we did with the MTA in NY and the conclusion was that the multiplier for agency staff would be in the 5 to 7 range compared to the 3 range for consultants meaning they were significantly more expensive to use than consultants due to these costs, but as they were in the future and not tied to the particular project they were not taken into account. But I assume you take all of that into account when coming up with your conclusions.
One item missed on your list appears to be procurement model for construction. This can and does have a major bearing especially on underground work. There is simply no comparison between the method of reimbursement for underground work between many of these countries. And guess what the country with the largest number of lawyers and the least sophisticated contract methods, the US, tends to be the highest in terms of construction costs. I wonder why that is.
This constant use of Madrid as an example is interesting. Within the underground industry its is not considered that great an example, the quality sucks, liability was glossed over, and all the contractors involved probably got nice juicy contracts afterwards to compensate them for the money they lost.
Also not sure whet your ultimate goal is here, some kind of standardization of costs? Its never going to happen. For example I work for a UK based company in the US as an engineer. My salary is considerably higher in terms of PPP than if I worked in the UK. Do you expect people like myself are going to say, i acknowledge that I’m earning too much, let me get paid much less, live in a box while being held to the same professional standards as a doctor or a lawyer…..get real, that’s not happening. For the US, there are simple fixes that can help bring the overall costs down, change the procurement methiods (get rid of low price lump sum contracts with adversarial term), drop the ridiculous separation between designer and construction management that effectievly duplicates effort etc. get rid of 100% bonding.
I’m currently working on two of the largest design build projects in the country. The clients are both only prepared to pay for the design when its approved, a bit like paying nothing for construction until its finished. Guess what that does, forces me to add a bunch of money to my costs to cover the financing charges to pay for the staff developing those designs so that I can cover payroll until the client begrudgingly pays for the work performed, and that’s on the advice of their reviewer who is a competitor to us. Fair, no, cost increasing yes.
Having ridden Madrid metro quite recently, which “quality” does it lack compared e.g. to New York City subway?
Se would gladly take whatever quality Madrid got that gave them 98 km in 8 years from the beginning of the planning process until the final segment opened.
I mean New York City subway has random breakdowns, fires, dirt everywhere and whatnot.
Madrid subway has temporarily shut down Gran Via station for renovations…
https://en.m.wikipedia.org/wiki/Gran_V%C3%ADa_(Madrid_Metro)
Washington DC, a much newer system is a maintenance nightmare. It’s pretty crazy this guy badmouths Madrid in light of all that.
I mean maybe he HAS a legitimate point of criticism, but he’s not being concrete about it, so he’s not convincing anybody
It’s been a few years since I was in Madrid, but I remember the subway stations being very short, and the frequencies low, which led to overcrowding despite the density of the network.
The top frequency of Madrid subway is one train every two minutes…
I definitely remember at least one line where the trains came every 10-15 minutes, and they were short, and packed.
The top frequency is entirely fictional because there are neither enough drivers nor trains to fulfill the schedules. For example, even if the nominal morning peak frequency on line 6, the busiest one, is 17-24 tph, riders usually report headways as long as 6 minutes. Off-peak frequencies can also be quite disappointing, especially in summer, Sundays and late evenings, and in the suburban sections (7B/9B/10B)
Re:Tunnelvision’s comment about quality, there have indeed been some serious issues: line 9B has been repeteadly closed for structural repairs, and line 12 had to undergo an important renovation of the track platform last year. Still, infrastructure maintenance is reasonably good, and several old lines have recently been upgraded to rigid catenary, with L4 following soon.
Not having enough drivers of course is an entirely different problem than the system’s infrastructure being crap. Madrid should have invested more in driverless trains when it did its big expansion in the late 90s/early 2000s! I’d heard in particular there had been problems with the construction quality of line 12, but the fact Madrid felt like it could build a line that would be considered useless in the rest of the world must mean the cost was relatively low.
Anyway, a shortage of drivers or trains should be easy to fix, compared to the work of building new tunnels.
Operator shortage seems to be a problem way beyond Spain. Railways in Germany are reporting shortages, the municipal bus service in Erlangen recently had to cancel a few routes on a few days due to acute bus driver shortages…
There have been delays at Nuremberg airport caused by bus driver shortages…
Nuremberg metro wisely automated its line two and three…
Yes, that happens throughout the country, in
all mediocre-to-bad-managedmany operators. There are several completely unforseeable reasons that caught everybody by surprise:• “pension wave” of the baby boomer generation
• new EU rules on driver qualification and health checkups (directive 2003/59/EC is always named as the culprit) that took even more older people off the job market
• lower birth rates (Pillenknick) hitting the job market in the past decade(s)
• end of conscription, and therefore loss of everybody who would have gotten a truck/bus driver’s license during the military service (beginning with severe shortening of the service time after the end of the Cold War)
• race to the bottom with the wages, which isn’t useful to get people on a now ‘competitive’ job market (better run transit authorities in Germany are already ditching their inhouse extra-cheap tariff agreements for not-so-cheap statewide ones)
Finding out which of these points could have been predicted and/or apply to any given company is left as an exercise for the reader.
There are several completely unforseeable reasons that caught everybody by surprise:
It’s trivial to get your payroll/human resources system to spit out a report with projected retirements. You could do it with card sorting machines. And statistics on how many people are going to quit, get fired or die. And the government statistical bureaus have had computers for decades. That do things like project birth rates so things like schools can be planned. And how much housing. It was all foreseeable. And the people who had the statistics likely said so. And all other things you can extract from census data and payroll records. And maintenance records. NJTransit is having a “meltdown” because buses weren’t replaced when they should have been. And staff wasn’t hired.
The issues you point out may be contributing to higher costs, but are they specific to the US or can they explain higher costs across the Anglosphere?
You suggest a multiplier of 7 or 8 for in-house staff from the MTA exercise, but perhaps that’s a consequence of the union politics in the US making the overall cost of an agency employee much higher (whether those engineers and planners are or are not unionized, per se) as compared to a similar agency employee in, say, Paris or Munich. However, if a US agency COULD rely on in-house staff for planning, engineering, and construction management, that would remove the issue of staff not getting paid until completion.
In my experience having a bunch of mid level clerks who permanently work for the city in charge of e.g. Bike lanes is cheaper than hiring Mikael Colville Andersen…
Exactly. Yet that runs counter to conventional thinking in the U. S. There is a widespread belief that if only the government can operate like a business, costs will be lower. Quite often it is the opposite.
A real business hires people to take care of core competencies, and outsources things they need to do once in a while but are not core. The exceptions are things that you cannot find someone competent to outsource to so you are forced to make them core despite not wanting to.
Note that finance and HR are the most important things to get right, and so they should never be outsourced. Though you can outsource some side projects in each (ie an audit just to make sure your finance people are doing their job)
If bike lanes are a core competency of the city there should be dedicated people planning and running them. If not hire someone external when you feel like it.
I would assume that its the same issue in every agency although the extent to which it distorts the cost of employing someone will vary depending on how the society is organised. IN the US its likely as high as that because of the shear costs of providing Medical coverage for an employee and his family post retirement. IN countries with some form of state provided medical care this will obviously not be as significant a cost. My point is simply that agency staff costs are not always simple to understand as many costs can be hidden..
NYT found that only ten percent of the Parisian-NYC cost differential could be explained by medical costs.
Seriously unless you can point out how the average rider is negatively affected or will in the future be negatively affected by whatever you say went “wrong” with Madrid metro, I claim the right to remain skeptic
Construction quality may not always impact the riding public in any meaningful way. Take the first portion of the Docklands Light rail in London for example, the ring build quality was so poor that the segments had to be milled to provide clearance for the trains to physically pass through them. In the long term scheme of things this may not compromise the 120 year design life of the segments, but it was an issue when getting the project finished. Similarly on Channel Tunnel, in order to get the tunnels constructed on time, tolerances were relaxed meaning ring builds were faster and hence advance rates increased, as it happened the alignment and ring build tolerance achieved allowed high speed trains to be run…….if they had not then the train speeds would have been reduced….. but again the end user may never be aware of these issues. Just because your not aware of impacts does not mean everything was plain sailing during construction and commissioning.
The Channel tunnel thing is exactly something that impacts the riding public decreased speed! Do you have any evidence that Madrid has engaged in an unusually high amount of maintenance of the tunnels since their construction that would wipe out the cost savings?
Dockland Light Rail is a very poor example to cite. It wasn’t so much the miserliness of its construction (a toy railway to do a serious job) but that it was built at all. Instead of an actual extension of the real Metro (London Underground) from the core of the transit system (say, near the City, most of DLR’s customers), say in the way that Paris extended M1 and built RER-A (in 1977!) to La Defense. Today La Defense is Europe’s biggest business district. And I don’t mean the Jubilee Line which was very expensive but also a very, very long route crossing the river 4 times; hardly the two stops and ten minutes of RER-A from the old to the new Paris business districts. Still waiting, 43 years later, for the London equivalent of RER-A.
All this happened because of Thatcher and her implacable and irrational opposition to spending any government money on anything. Michael Heseltine had to use all his skills and wiles to get Canary Wharf and some kind of transport (DLR) up and running, to jump start his vision of east London redevelopment. It was only partly successful after the usual Thatcherite route failed (private funding; of course they went bankrupt pretty early, bunch of Toronto property spivs IIRC).
As to Eurotunnel, that was trivial. It was always planned for trains to run at only 160km/h instead of the 300km/h that Eurostar achieves in the few minutes after emerging on the French side. It was a consequence of running freight on the same lines (and some safety issues re fire). Very generous clearance was built in, and I believe they can in fact run TGVs at full speed if other factors are eliminated (I think they might have done that for the special train from London to Cannes loaded with celebs like Tom Hanks and AudreyT for the Davinci Code premiere.) Also, IIRC, the second-gen trains, the Velaro e320 are 300mm wider (than TGVs including original Eurostars) so as to have 2+3 seating, and thus higher capacity (per m of car as Alon would put it). In fact, the tunnel profile was designed around the biggest truck (44 tonne monsters) on a flatbed (not sunken well) railcar, plus double-stacked cars. These require 5.6m vertical clearance (for the catenary).
Privatization of planning and design means the public agency has no in house expertise at telling *when they are being ripped off*. Consequences are obvious.
I think you confuse union density with union weakness. When 70% of the labor force is unionized, there is less resistance to things like layoffs. It’s easy to get a new union job. When unions are only 10% of jobs, unions fight tooth and nail for to retain every member.
Another rare aspect of unions in the Anglosphere is political alignment. The center-right (and even far right) of most OECD countries isn’t particularly anti-union, which conversely means the left and center-left isn’t particularly pro-union. This really started in the Anglosphere in the 1970s, which coincides with the explosion in construction costs.
Remember that New York’s high construction costs go back to the 1930s, though…
And in Sweden the biggest working-class union is officially affiliated with the Social Democrats. In Denmark this was the case as well until recently, when the union voted to dissociate itself from the party.
Frank Bsirske (who was a high ranking union guy until recently) is a member of the Greens.
But the union representing doctors is said to be in favor of the fdp, certainly Mr. Montgomery is…
Mafia behavior is the problem.
Tweed Courthouse, for example.
Boston proved it. They fired and blacklisted the Green Line extension contractor, documenting the corruption which led to the blacklist. On rebidding, the honest companies came out of the woodwork. They did not bid the first times because they figured that the fix was in.
Boston did a bunch of other things, though: it realized it had no in-house capacity for such a large project and put an external project manager on retainer, and it scaled down a lot of the stations (e.g. making people cross the tracks at-grade to get to the other platform).
Putting the project manager on retainer was key. It meant proper oversight of the contractor: a signal that graft would not be tolerated. The station cutbacks were done with the old contractor. A bunch of the stations have been scaled back UP due to cost savings from the honest contractor…
I really doubt it is that kind of old-school corruption. Probably a big part is consultancies with huge hourly charging rates and excess complication and re-working, then re-working the re-worked stuff, and any time the slightest modification is requested, it is notionally all done again.
With big transit projects a favourite is “unexpected” complications that happen in the last third of the project (too late to cancel). London CrossRail has added up to to £3bn for another up to 2 years work beyond the scheduled finish, and for things that have never been disclosed. And that’s the other thing, opacity via “commercial in confidence” clauses. (Which should simply be outlawed for public-funded works.)
Today the NSW government came clean on the final blowout of the Sydney lightrail project, representing about US$164m/km for the 12km surface line.
It’s still not clear what caused this but it has earlier been reported:
…..hollowing out of technical know-how in the public service….
That’s a feature not a bug. Free market zealots don’t like it when those awful civil servants can point out where the stalwart private contractors are spending too much. Get rid of the public expertise there won’t be anyone to point it out. Works other places the free market zealots have gotten rid of the regulators/auditors/inspectors too.
There is a bit more detail in an article today (BTW, it is 12.8km not 12km so that makes it ≈US $154/km).
Glad that was cleared up. Not.
Good to see the old contingency fees in there (on top of the original contingency fees … it never stops.) This is quite a bit like London CrossRail in that it only happened right towards completion of the project, and it has happened without any clear reason. I mean, read the above statement again and see if you can really nail down anything that makes sense.
Adirondacker is correct in his last post. Without that changing it is impossible to alter this cost explosion. The depletion of the civil service is the common factor linking the Anglosphere. I don’t think (but don’t know) this is the case for Singapore or Hong Kong, but of course there can be other factors.
I think the formula is simple: parasitic corporate culture (prioritising short-term profits over longer-term and wider social benefits) + dysfunctional political culture (triggered by the rise of a radicalised right since Thatcher/Reagan) = increasingly exorbitant costs for public infrastructure construction.
Maybe you have some more information, but I don’t see the same disparity between the Anglosphere and other developed countries when it comes to private construction, e.g. residential/commercial developments, even though these are usually controlled by the same trade unions. So I don’t think union culture has much to do with it.
Housing construction costs exhibit a North American premium over France and Germany too, but I’m told that it’s because Americans can’t build out of masonry for shit, and within height ranges in which wood is feasible, woodframe construction in the US doesn’t cost more than in Europe.
I would like to pipe up again with another minor nitpick: Scotland is also a civil law jurisdiction.
Scots Law is its own beast
Plus, Louisiana partially follows the Code Napoleon
So what, exactly, is responsible for higher costs? I can think of a few possibilities. One is that the planners are paid more. This seems unlikely. Another is that the planners just aren’t as good. Another is that planning and construction go together, which could cause problems. It is unlikely that there would be very many companies like that, and they would probably have high profits and be susceptible to corruption (similar to Halliburton’s activities with the U. S. government).
My guess is it the second problem (poor planning) but I don’t know how often planning is separate from construction.
As a general rule, it costs more to have “experts” flown in from across the continent than to have an office in city hall where people who intimately know the city are tasked with finding the best public transit solutions… I think every major city should have a staff dedicated to planning expansions of their public transit network…
It’s also true that Anglosphere countries rarely do much holistic planning of their city’s transportation and tend only to take the next project (or two) into account, which are usually the pet projects of whoever happens to be in office at a given point in time (and hence are liable to be changed at the dropped of a hat).
Whereas German agencies, for instance, tend to have long-term plans that can be implemented on a piecemeal basis (and hence Bauvorleistungen can significantly lessen the expense of these later projects).
Even where the original “grand master plan” doesn’t date to the Kaiserreich like in Nuremberg, pesky real world considerations like not shutting the trams down after all and stuff have made Nuremberg U-Bahn look a lot different from the plan back in 1972. Two out of the four planned interchange stations (Friedrich Ebert Platz & Aufseßplatz) will likely stay tram/subway interchanges, not subway/subway interchanges
And then there’s the bungled extension to Stein people are still waiting for…
They make plans. Everybody then sits around and whines that the richest countries in the world don’t have no munney, it might inconvenience someone somewhere and why doesn’t everybody just drive or fly?
https://en.wikipedia.org/wiki/High_Speed_Ground_Transportation_Act_of_1965
https://en.wikipedia.org/wiki/Second_Avenue_Subway
https://projects.sfchronicle.com/2016/bart-timeline/
…………..
Imagine where we could be if there had been a Soviet / American race to build the fastest trains…
OK then, there are lots of plans made. But very little action on them. And then the plans change with the political winds. This is particularly a problem in nations where one half of the political order is largely averse to any kind of public transport infrastructure spending (or in some cases, public spending full stop).
Unless you wrap it in the flag and call it military…
How about the “national defense Apple Pie, fight communism freedom & choice railway act of 2020”?
We more or less owned all of the railroad in the Northeast and Midwest. The free market zealots made us sell it off.
Yeah, but no one answered my question. How are these projects typically built? I was hoping someone would answer, so I can’t comment on various possibilities. Since no one has, I’ll go ahead at try and break it down. To make the English simpler, I’ll use the word “designer”, even though many in a firm would bristle at the term (“I’m an engineer, not a designer”). Here are some reasons why it would be too expensive:
1) The designers are getting paid too much.
2) The designers come up with plans that are expensive to implement.
3) You have a design and build firm that does everything. The firm charges too much.
It is pretty easy to see how the third situation would lead to high costs. Only a handful of firms would even be qualified to do the work, which means high profits for those private companies, along with corruption (Halliburton’s involvement in Iraq is a fine example of this phenomenon).
Yet I don’t think most work is done that way. I think the design firm is independent of the construction. I also think that the designers get paid a relatively small amount of money compared to the overall cost. Even things like additional environmental documentation only costs money because they delay the project (i. e. delay construction) not because it is super expensive to write another environmental impact statement.
No, I think the problem is just design that leads to high construction costs. One possibility is just poor design. Make a mistake (such as the aforementioned EIS error) and you are bound to have higher costs later.
But there is a more subtle problem that can occur. Just the other day, I was talking to someone who works at Boeing. He has worked there for years. We talked about the 787, and he said that Boeing had been outsourcing for years prior to that aircraft. They had great success outsourcing little pieces, instead of doing it themselves. But with the 787, they decided to essentially outsource the whole plane. The final assembly would be done in Puget Sound, but each part (wings, fuselage, etc.) was going to be built somewhere else. This was a dramatic change, and it failed miserably. Delays occurred mostly because of miscommunication. As a result, the 787 (a very good plane) will never make money for Boeing.
I can easily see how that could happen with subway projects. A firm comes in, and designs something. It looks good, so it gets approved. Now there is a bid for the work, and some company wins the bid. They begin building, but don’t quite understand what the designers have in mind. Or problems (that the designers might anticipate) occur, and they don’t deal with them the way that the designers assumed. There is no real cooperation between builder and designer, and the result are problems, delays and extra costs. The designer has long since left, working on some other project. They aren’t seen as the problem (after all, they didn’t built it).
In contrast, in other countries you have the same designers. They know what people can build, and what they can’t. They design it so that it can be built affordably, and when they fail, they try and do better next time.
Anyway, that’s my theory.
No designer gets paid too much. And in any case with the professional liability they have to take, especially in the US where even the estate of a dead designer who signed and sealed drawings can be pursued, why should they work for a cut price, would you hire a cut price lawyer or doctor?
It’s the third problem, corruption.
With no in house expertise, Anglosphere agencies often cannot even spot corruption. When they do have in house employees, the revolving door may mean that they are corrupt, though this is less common.
I like your analysis and I think it’s correct. The cost difference is certainly a result of many factors, not one, and the big question is what the ratios are. One thing to note is that Spain is a poorer country than France which is poorer than UK. That fact alone explains some difference. Everything is more expensive in rich countries https://en.wikipedia.org/wiki/Penn_effect
The extreme propensity for litigation and extreme views on liability that seem to be a feature of US and UK cultures must be a part of the explanation. One case in point is the story of how hard and expensive it is to replace signalling on NY subways (not sure which line, NYT had a good article about it a while back). I’m European and I remember the incredulity I felt reading it. It’s so hard/expensive that it borders on impossible. Now, given that no new tunnelling is involved, it’s clear to me that liability is the problem. Whichever way you disturb the status quo, whichever way you move, you’re bound to make mistakes and end up sued. I see the high cost as a byproduct of operating in a very adversarial environment where everyone covering their butt adds up to be expensive. Hiring expensive outside consultants is a time-tested approach to making sure you’re not liable for screw-ups.
I think the case of Berlin’s Brandenburg Airport is a good confirmation of this hypothesis. Germany’s construction costs are generally lower than UKs. But BER’s cost has skyrocketed, as well as timelines. Why? Because it was so badly built initially? I beg to differ. Sure, mistakes were made. But the intense media attention and scrutiny in their wake created an anglosphere-like paralysis where all the usual technocrat actors, who’d have sorted it long time ago if it were out of the public view, are too afraid to take action. So there are no quick fixes, everything has to be done by the book, by expensive consultants, etc.
I mean some recent BER inspection found 2000 problems. Come on? It’s clear just from the number that most must be non-critical. But who would now sign the go-ahead until all 2000 are sorted, and risk being crucified if something goes wrong?
(Rescued from spamfilter, sorry it took so long.)
First, look at the database I just put up here. The short version: once you control for the fact that developing countries build more els and fewer subways, there is no correlation between GDP per capita and construction costs. Spain is somewhat poorer than France and the UK and also cheaper to build in, but Russia is somewhat poorer than Spain and has really high construction costs, probably similar to London’s if you adjust for underground proportion and line centrality.
Second, sure, BER is highly-scrutinized and expensive, but lots of infrastructure projects are highly-scrutinized. The U5-U55 connector in Berlin is very visible – the tunneling is done in city center, on the street where all the federal government offices are – but the costs are okay, somewhat higher than the global average but the soil isn’t great for tunneling. It isn’t attracting as much media controversy, but, well, it’s on-time and on-budget, so why would it attract controversy in the first place?
The Russia example makes it more likely that corruption is the key factor. Corruption is huge in Russia.
Sure, but it’s also huge in low-cost Italy and Turkey and to a substantial extent South Korea, Spain, and Greece. Non-railfans in Spain don’t believe me when I tell them their construction costs are low, and the Korean media castigated the extravagance of the Seoul Metro, comparing it negatively with the Washington Metro’s brutalist design, never mind that Seoul builds subways for half the cost of a mostly at-grade Washington Metro extension.
Maybe it is a specific type of corruption. “Corruption” is too vague. Diversion of funds away from actual project completion to such an extent that it causes the project to not complete, be cut back, or be delayed. Whatever corruption they have in Spain simply is not like that.
I mean, I don’t care if all the contracts go to the politician’s brother if he does a good job. That is the OK sort of corruption. It is when the Tweed Courthouse is five times over budget and unfinished that people get mad.
It’s specifically corruption in which the civil service rots away. Italy has a lot of private-sector corruption: there’s rampant tax avoidance, so companies only hire within extended kinship and friend networks since a stranger may rat out the boss for doing what every boss in the country does.
Greece is to a large extent the same, with an added layer of clientelism, i.e. most of the civil service are political appointees, to the point that the big difference between Pasok and New Democracy was not policy (there weren’t enough big employers for workers vs. bosses politics) but who got civil service jobs, and that’s continued with Syriza becoming the new Pasok. It’s possible that the politicization of the civil service in Greece doesn’t touch subways; I’m not sure. I don’t think the Athens Metro has had the same politicized route realignments as (say) the Toronto rail network or SkyTrain.
If I didn’t have Switzerland and the Nordic countries with very low costs, I’d even theorize that Mediterranean Europe is cheap because it’s the opposite of the US – the civil service is competent, most of the private sector isn’t, so you get high-quality work for low prices (determined by private-sector market wages), the opposite of what America does. But by that theory Switzerland shouldn’t be building regional rail lines for $120 million per kilometer, and yet it is doing exactly that. Also by that theory we shouldn’t see substantially the same construction costs in basically functional places like Madrid, Barcelona, and Bilbao as in unemployment-racked Seville and Málaga.
Corruption is too vague. It is specifically corruption which threatens project completion which is the problem. If all the contracts go to the politician’s brother and pay kickbacks, but the work gets done competently, on time, and on budget, nobody cares.
So new theory. The question is whether the corrupt construction contractors care whether the project gets done and works right, or whether they do not care. E.g. will they use it themselves once it is built.
Ron Tutor doesn’t care.
Russia is supporting evidence that corruption is the key problem.
Here’s an observation from yesterday’s newspaper on the latest on London CrossRail:
To me this “explanation” only deepens the mystery. I mean, was it absence of planning that led to a sixfold increase after construction had started? And was this due to real lack of planning competence or was it partly political (knowingly attempting to keep the price tag low to get the project off the ground), and how much of this planning was by government or outsourced to contractors; I’m guessing the latter. And whichever way it occurred why would the government be held responsible? What do they bother with contracts at all, if that is the case?
Then there is the small matter of exactly what changes led to a sixfold explosion in costs? Solid gold fittings in the bathrooms (no, it wouldn’t result in such high costs!).
I read on one of the links on this site (London Reconnections, I think) that at least one of the changes involved fire safety materials that were added post-Grenfell. Several wall panels were installed, un-installed, and re-installed so often workers had taken to calling Crossrail the “Hokey Pokey Line” (though they misspelled “Pokey”).
Yeah, but who believes a word of it? They may well have replaced wall panels but it had nothing whatsoever to do with Grenfell. That’s just another in a long line of nebulous excuses, like “wrong type of snow” or “leaves on the line”; the latest excuse to explain the summer train cancellations during this past season is that in the UK steel rail only has to meet a temperature test of 28°C or something absurdly low. Again, the susceptibility of the network to “extreme” summer heat has been known for a century or more but nothing done about it (if it is, in fact, a genuine thing; the Ghan runs several thousand kilometres thru the most punishing Australian deserts and not only gets absurdly hot but, being desert also gets very cold at night; technically I have no idea how welded track can cope but it does.).
Of course UK failure is nothing other than failure to invest in regular maintenance.
No, there is no real discernible, credible explanation for a sixfold increase in cost.
I don’t think the Crossrail woes are worse than the Berlin airport woes. It’s not an Anglosphere thing.
Berlin airport is sui generis
Agreed, though it may be a secondary infection of Germans by the AngloSaxon disease.
In any case CrossRail has actually been a rare well-run transit project in the UK. Only at the very end, as the winning tape was in sight, did they falter. Well, the reality probably is that it was always going to be late and that this particular self-harm was due to political pressure along with upper-management connivance (all the 6 or 8 Chairmen and CEOs are Knights, CBEs and OBEs–except the current one who will be expecting his soonish–all hoping to be upgraded to a Life Peerage; for you plebs that’s a seat for life in the House of Lords). If they had come clean a few years back when apparently it was clear that they wouldn’t meet the deadline, it wouldn’t have been such a fuss. Of course they still haven’t come clean about what is so wrong that it delays the almost-completed project to between 2 to 3 years. Signalling software? Surely it’s almost off-the-shelf for this kind of thing these days? That excuse sounds right up there with “wrong kind of snow”.
Nigel Farage claimed the Tories offered him a Life Peerage last Friday. Yesterday he announced his Brexit Party would not stand candidates in 317 Tory-held constituencies, thus almost guaranteeing a win for Boris. Not quite, because the Tories need to win a lot more seats than they currently hold and if Farage is running candidates in those contests it isn’t going to be a cakewalk.
But anyway, once again the detestable utter corrupt class system comes to the rescue of the Tories.
Still this means Brexit is now much more likely, and 5 years of a hard-right Boris government steered by the likes of Rees-Mogg (whose father is, of course a life peer). HS2 is probably dead.
Until they start chopping off royal and noble heads, Britain is a lost cause…
You said it, Herbert.
Actually I think I’ve implied it many times on this blog. I even suggested The Mall, or adjoining Pall Mall, is the perfect place for Dr Guillotine’s device, in the very centre of power midway between Buck House and Parl House, both of which need a thorough cleansing. In the interest of not getting Alon’s blog served with a D-notice, I’ll have to leave it at that.
Anyone willing to take a bet about Nigel Farage getting his Life Peerage? In the next parliamentary term. He certainly earned it, with the Brexit Party failing to dent the Tories vote where it counted. As usual, Farage’s party didn’t win a single seat. But he still might get his Hard Brexit–by the end of next year.
Why would anyone wonder why things don’t work so well in the UK?
They argue about who is going to pay for it and how. Someone’s paying for it now. Along with excessive administrative costs and upper management at umpteen different health care companies. And profits for their shareholders.
Exactly but even Warren nor Sanders is saying that. Why?
Could the issue be simple supply and demand? If there are not enough contractors to bid for a transit project (and/or not enough subcontractors to allow the contractors to offer a low bid), then the bids will inevitably come in very high. One leading US contractor, repeatedly chosen for expensive transit projects despite their unprofessional history, says outright they don’t have much competition for their bids. In general many sectors of the US economy no longer have much competition. I don’t know in detail what causes this lack of competition in the US, and I don’t know how relevant it is for other countries with consistently high transit costs. But isn’t this a line of inquiry worth pursuing?
YES.
It’s not something I can see in the data, but 1-2 sources told me that ages ago, and Brian’s NYT piece confirms this: New York has a huge problem with red tape in procurement, scaring away any contractor who’s good enough to get private-sector work. This leads to one-bid contracts, inflating the price. The origin of this problem as I understand it is that the specs are overexacting, because contracts are awarded to the lowest bidder and the agencies want to make sure not to get stiffed by someone doing shoddy work. So the California change order racket doesn’t really happen, but costs are even higher because the RFP tells contractors what materials to use.
That said, while NYC may have a unique issue with its red tape, pretty much anywhere in the US has an inflated cost relative to the rest of the world. So a lot of it must be some factor that’s common across the US.
I was trying to think of what areas, besides the US, would be likely to lack competition. My first thought was small countries. However, small European countries mostly no longer count as small because the EU is a single market. Also I don’t really see a relation between country size and costs.
While the “You have to open bids EU wide” thing is sometimes a bit ridiculous, it does have its advantages…
Let me revise my last comment.
The cost/km of many of the fully underground lines here is: $1400M (NYC), $600M (Singapore), $586M (Hong Kong), $358M (Budapest), $310M (Cairo), $223M (Sao Paulo), $151M (Lucerne), $135M (Thessaloniki), $87M (Seoul), $66M (Helsinki), $43M (Seoul).
So the two most expensive lines, by far, are in city-states which presumably have limited markets for infrastructure construction.
Admittedly not only the US, but also London (dating at least back to 1999) and now Canada have excess costs. But overall this idea seems possibly as predictive as the “Anglosphere” idea.
“So the two most expensive lines, by far,”
…outside NYC of course.
I wish Helsinki were $66m, it’s $114m after cost overruns (1.186 billion euros/13.5 km).
Singapore and Hong Kong are really expensive, yeah, but South Korea is really cheap, and Israel is not thaaaaaat expensive (the Red Line is $190 million/km for 43% underground construction). And Singapore’s high costs are recent – in the early 2000s it was building the Circle Line pretty cheaply, and only subsequently have costs exploded, just as in Toronto and Montreal.
Many will claim that the cost estimate for the Helsinki West Metro was always unrealistic. There was a local political requirement for a 30 % state contribution, but the state would only offer a certain amount of euros. So the cost estimate was conveniently set at less than (state euros available / 0,3).
But $114 million / km isn’t too bad. It also includes at least one station more than was originally included in the project. And stations are the most expensive parts. The project was also run with extremely limited client resources.
As one of the contributors to Brian’s piece in the NY times, I don’t recall all the Red Tape that you mention. Anyway one of the issues that raises costs in NY and the US in general is the DBE/MBE/WBE scheme that forces goals such as 40% onto Contractors. These increase management costs and quite honestly you also have to carry the cost of rework. These categories of sub contractors/consultant are required to be employed but there are caps on how much they can earn in a year and still be compliant with their disadvantaged status. So if your awarded a $1bn contract you are forced to hand over $400m to subs that have no skin in the game, as they were non exclusive and know that the work will come to them no matter which Prime wins the work, and may or may not be able to support you depending on what else they have on their books. With the size of company you are dealing with you may end up with three different subs installing say the Traction Power system. So there’s three times the paperwork, three times the management and interface coordination required……so of its that kind of red tape then yes it exists and it adds to the cost. Also when hiring specialty subs you still get lumbered with Union labor. So for example you hire a specialty sub for shotcrete work, they may be able to bring their own labor but then you also have to pay for a couple of sandhogs to be there to be trained, Buy America also ups prices and restricts choice…….from a design perspective most of the systems around the world are designed to very similar design codes, obviously operational requirements may be different depending on the philosophy of the operator but how you design reinforced concrete does not change very much. Fire Life safety systems may vary but most are based on some variation of NFPA130, maybe the fire load is different…what does make a difference are liability and risk issues, if you want foist unlimited liability on a designer or contractor then you’d better expect their price to be high……
My experience would suggest that privatization is not a problem per se, but balcanization of public sector expertise is. If the client is unable to set technical specifications or even explain in detail what they want, even the best engineering consultancies and construction companies will have a hard time making the project a success. Project duration is also a major cost driver and delays are inevitable if the client is unable to answer questions promptly along the way.
There are also certain things that are hard to outsource. If we send our consultants to talk to the fire department, the requirements will be a lot tougher than if we as a public sector organisation take part in the discussions. This even applies to my own organization: in many cases I can negotiate with my colleagues to agree an acceptable compromise, but our consulting engineers will have a hard time doing the same. Only the standard solution will be accepted from outsiders. This isn’t generally bad faith. Resources are limited and reviewing deviations from standard practice takes considerable effort.
Contract models and construction management are also important, although I’m not an expert in this field. Project alliances are currently fashionable in Finland and I’m working in one right now. https://www.leanconstruction.org/media/docs/ktll-add-read/Project_Alliancing_A_Relational_Contracting_Mechanism_For_Dynamic_Projects.pdf