
U.S. Taxpayers Are Gouged on Mass Transit Costs - tokenadult
http://www.bloomberg.com/news/2012-08-26/u-s-taxpayers-are-gouged-on-mass-transit-costs.html
======
bane
Absolutely, absurdly true. The D.C. metro is adding a new line, almost all of
it will be above ground and on existing right-of-way reserved specifically for
the eventual construction of the line decades ago and operate in fairly low
density part of the system. It'll be 37km long and run $6.8 billion dollars.
It'll have 29 stations.

Compare to the new Seoul Bundang line which is 32.8km with 28 stations in some
of the most dense urban areas on the planet. It'll run a bit under $400
million to build or about 1/17th the cost.

Once open, it'll probably cost riders under a dollar for most trips, compared
to over $3 on the DC Metro.

No matter how you figure it, cost of labor, eminent domain, legal, whatever,
there's simply no way to figure the D.C. costs as making sense when a world
away a similar line, in another developed country with far more difficult
construction issues is much cheaper in every way possible.

~~~
whatusername
7 Billion for 29 stations and a full line? I wish.

[http://www.theage.com.au/victoria/south-morang-finally-
gets-...](http://www.theage.com.au/victoria/south-morang-finally-gets-its-
line-20120422-1xf4u.html) 1/2 a billion for extending the line 3km and
building 1 station. (All in the suburbs - where there used to be a train line
that was ripped up)

~~~
rosser
Just an off-hand observation: Australia also has a common-law legal system,
which TFA suggests correlates strongly positively with out-of-control prices
on such projects.

~~~
riffic
The article pointed out the common-law legal system being the cause, so what
would be the solution? Better legislation to fix bidding?

~~~
shard972
> Better legislation to fix bidding?

Ins't that the solution to every legislation problem? Do it better next time?

------
jt2190
I'm not trying to pick a fight here, but the United States strongly rejects,
on a cultural level, the notion of a professional class of government
employees. From the article:

    
    
      > A huge part of the problem is that agencies can’t keep 
      > their private contractors in check. Starved of funds and 
      > expertise for in-house planning, officials contract out 
      > the project management and early design concepts to 
      > private companies that have little incentive to keep 
      > costs down and quality up. And even when they know 
      > better, agencies are often forced by legislation, courts 
      > and politicians to make decisions that they know aren’t 
      > in the public interest.
    

All you ever hear about at election time in the U.S. is "big government
waste." My colleague from Spain tells me that in Spain everyone goes to work
for the government, and that entrepreneurship is lacking. Perhaps that means
that in order to have cost-efficient mass-transit projects in the U.S. we need
a Spanish-style government and culture.

~~~
Anechoic
_I'm not trying to pick a fight here, but the United States strongly rejects,
on a cultural level, the notion of a professional class of government
employees._

This is an excellent point. When the US Federal or a state government agency
decides they need to link point A and point B with a transportation project,
the agency typically only provides a basic outline of project requirements.
Outside contractors are used to develop the more detailed requirements, and
even the RFP for design and construction.

This creates a situation where big engineering firms try very hard (and often
succeed) in creating RFPs that _only they are qualified for_. Yes, this really
happens. In fact, whenever I read an RFP the number one question on my mind is
"is this written so that only XXX firm can win it?" The answer tends to be
"yes" in many cases and we don't bother bidding on it.

The obvious solution would be to prevent companies that write RFPs from
bidding on the project. The problem is that no one (or at least no one _good_
) would want to bid on the RFP prep work! If given the chance to win a
$250,000 RFP preparation project, or a $500 million general engineering
contract/$10 billion construction contract, the highly qualified firms will
wait to take a shot at the larger work.

~~~
danmaz74
The solution would be to have an internal technical agency that is able to
write the RFP. Especially one where the incentives (bonuses etc) are tied to
the long term success of projects.

~~~
Anechoic
In addition to adestefan's point, think about the qualifications the
"technical agency" would need to have, and now you have another large
government bureaucracy which isn't so popular these days.

For a transit project, this technical agency would need expertise in the
following areas (at a minimum):

\- vehicle procurement

\- infrastructure procurement

\- construction management

\- geology and geotechnical engineering

\- noise & vibration

\- pest control

\- air quality

\- fire safety

\- dust control

\- archeology

\- animal migration

\- water quality & watershed

And you would need enough staff in those areas to handle the workload. I would
support such an agency, but many folks would not.

~~~
danmaz74
"and now you have another large government bureaucracy which isn't so popular
these days": That is exactly my point. Of course, if being a civil servant not
only pays less (as adestefan says), but it also brings the stigma of being
"just a bureaucrat", you're not going to have very good people there.

But things don't have necessarily to be so: Serving the common good is a very
motivating goal for many people; not everybody just goes after the biggest
paycheck. At least where money isn't the only measure for everything.

------
kevinconroy
Seems questionable to me. Yes the Second Ave Subway is expensive, but how many
cities are building new subway lines underground through incredibly dense
existing infrastructure?

Also, US taxpayers may be making up for it by paying more upfront but less per
ride (unless you live in DC or San Fran):

    
    
      City      Cost per Ride
      Mexico    $0.15
      Beijing   $0.29
      Seoul     $0.55
      Moscow    $0.69
      Tokyo     $1.68
      Barcelona $1.76
      NYC       $1.96
      Boston    $2.00
      Paris     $2.25
      Chicago   $2.25
      Toronto   $2.37
      Berlin    $2.95
      DC        $3.08
      San Fran  $3.18
      Stockholm $3.96
      London    $4.41
    

Source: [http://www.treehugger.com/cars/subway-fares-around-the-
world...](http://www.treehugger.com/cars/subway-fares-around-the-world.html)

~~~
vidarh
At least for London, that list is very wrong. The most expensive single zone
journey on Oyster is 2 GBP, or $3.20 at current exchange rates.

~~~
lifeisstillgood
Hate to be pedantic about it but the oyster is a discount card (that everyone
but tourists uses) - a single is really about 4 quid all zones

~~~
Lockyy
Indeed, £2 seemed extremely low, especially considering a return ticket along
the liverpool -> wirral line in the north is >£3.50

~~~
NickPollard
The £2 he mentioned is a single, so a return would be £4 (there are no returns
on the underground, only singles and all-day passes)

Regarding Oyster vs. paper tickets, I believe the non-Oyster prices are
deliberately inflated to coerce people into using Oyster, as it is much better
for the system if they do (especially on buses, where Oyster payments make
stops _so_ much quicker).

~~~
Ntrails
I've been writing the odd letter to ministers etc to get an Oyster style
system implemented nationally.

No ticket booking. No queueing. No hassle. Lowest/discounted prices.

But of course the government won't countenance actually organising something
that might be better for rail users, not to mention that as soon as it was
mentioned the unions said it was just a way to reduce staffing (may or may not
be a side effect) at stations and made moves to stop it.

~~~
lifeisstillgood
And that is exactly why driverless buses on driverless bus lanes will wipe out
commuter rail in 10-15 years.

Perhaps the vast infrastrucutre, subsidies and resources could be repointed at
really useful services, but some unions in some industries ( and the RMT is
one) are so reactionary it gives Lenin a good name, and some management in
some industries (and British railfranchisees are one) are so rabbit-in-
headlights dumb and hemmed in by pensions regulations and on subsidies for
life support that oh brother I throw my hands in the air and go looking for a
cab

------
scottfr
I few years back I was thinking of running for the board of AC Transit in the
bay area.

I did some research: the cost per mile to move a person on AC Transit was ~
$1.50 (total cost including subsidies, not what you pay). Compare that to a
cost to pay for a cab to take you one mile of ~ $3.00.

So if you have two people in a cab, that cab is just as economically efficient
as a bus. Literally, a car that waits for your call, comes right to your door,
and chauffeurs you around, is as economically efficient as our bus system.
This is crazy! We could replace AC Transit with a fleet of cabs.

Also, I've heard that the "Nextbus" system which makes those predictions for
when the next bus is arriving makes most of their money fixing the next bus
sensors. The reason the sensors are broken is AC Transit employees continually
sabotage them because they hate being tracked.

Truly, it is an incredibly screwed up system. Anyways, I was too busy to run
for the board of directors, but someone really need to fix AC Transit!

~~~
tokenadult
_Literally, a car that waits for your call, comes right to your door, and
chauffeurs you around, is as economically efficient as our bus system. This is
crazy!_

I recall that when San Francisco retrofitted its city buses so that all are
accessible to people using wheelchairs, an economic analysis showed it would
be cheaper for the city taxpayers simply to provide free taxi service to all
wheelchair users. The reason for putting people who use wheelchairs on city
buses seems to have been wholly political--to mainstream such persons into a
form of transportation that makes them more visible to other members of the
public (at least, the members of the public who use buses).

I have both an emotional reaction and a rational reaction to this policy
trade-off. On the one hand, my own late father was confined to a wheelchair as
a quadriplegic (after a slip-and-fall accident on an icy parking lot here in
Minnesota) for the last six years of his life. So I totally get why friends
and relatives of persons who use wheelchairs want public places, and by
extension public transportation, to be accessible to persons who use
wheelchairs. That allows many more family outings with grandparents and their
grandchildren than might otherwise be possible, for example. But my rational
reaction is still that we all have to work hard to pay our taxes, so "public"
money (money derived from taxation) should still be spent responsibly. If
devoting taxi service (and, I hope, someday a self-driving car service) with
public subsidies helps needy members of the population more than bus service,
so be it. Spend the least money to get the positive externality is generally
the way to go in public policy.

~~~
DenisM
> If devoting taxi service (and, I hope, someday a self-driving car service)

I think the idea is not to make disabled people go from point A to point B,
but to integrate them into society. There is nothing worse for an
injured/disabled person than to be isolated, they will get clinically
depressed. It's not one of those "man up and tough it out, soldier" situations
- societal acceptance is crucial to mental health. Yes, we should spend money
responsibly and not spend more than needed to reach the goal, but the goal
must be stated inclusively.

A self-driving car is the exact opposite of what is needed.

~~~
Dove
I find it odd to place the priority on having people _in the car_ rather than
people _at the destination_. Wouldn't you rather socialize with people of your
choice at your party/book club/sewing group/whatever than with the weird and
awkward people who happen to be on the bus? I know I would. Especially if the
former situation is more efficient, so I get to go more places.

Put another way, the city I live in (Denver) _has_ what is essentially a taxi
service for disabled folks (<http://www3.rtd-denver.com/elbert/accessARide>).
I know a couple of folks in wheel chairs -- and they use it a lot! I've never
once heard them say they felt isolated because they weren't standard bus
routes full of people. On the contrary, not being able to go where their
friends were going is what would be isolating.

~~~
DenisM
People tend to have fewer friends and become less able as they get older, and
even incidental interaction is still vastly better than none. If we had a way
to make sure disabled people always have company and no one is left behind, I
might agree to the idea of taking them off the busses and giving the
(semi)private rides. But we shouldn't assume they all have friends to go see
just because you always had such friends.

And then, spatial mobility is also very important. For example, I felt
absolutely trapped by my relatively benign broken foot problem.

------
sutro
Consider: it took about 3 years in the heart of the Great Depression to build
both the Golden Gate Bridge and the Bay Bridge. Since the 1989 quake, a
project has been underway to rebuild the Bay Bridge's eastern span. That
project continues today, 23 years later, at a huge multiple of the inflation-
adjusted cost of the original bridge.

------
DenisM
FWIW, I spent some time researching the cost of tunnel-digging online, and off
the top of my head, the costs were $30m/mile in India, $100m/mile in US, and
$1b/mile in New York city.

The reason I dug through this was to explore possibility of building an entire
city where all motorized transportation is under ground, and surface area is
reserved for pedestrians, wheelchairs, and bicycles. IIRC, the cost of
tunneling came out comparable to the cost of housing, so it's not a completely
unreasonable idea. Imagine a 10km grid of 20-40 story residential buildings
spaced out with trees and parks and bike/walk paths among them for miles on
end? And an underground entrance every 1000 meters. No cars on the street, no
noise, no traffic lights - go/ride where you please. Now if only I had the
budget to build a brand-new city I would start now. :)

~~~
enf
Congratulations! You are Le Corbusier and you have invented midcentury
modernist city planning.

In all seriousness, if you are going to build a city with no vehicles on the
surface, Towers in a Park is not the way to do it. There are many successful
examples of medieval cities with high enclosure, and no successful examples of
modernist cities with low enclosure. People are very sensitive to distance,
and the only way they will ever walk from one of those towers to another is if
there is also something interesting or useful for them to look at every 20-30
feet along the way.

~~~
DenisM
And to be sure, I am not married to the low-enclosure idea. I did the math for
the worst-case scenario: "what if everyone wants plenty of space around?". If
people in fact prefer higher enclosure I would have no qualms about spacing
the buildings three times as closely, and maybe setting aside parts of the
real estate for greenbelts a-la central park in NYC. That would actually allow
me to achieve even higher population density, which is the goal I was shooting
for. My only concern is that such approach creates non-uniformity in
desirability of different buildings, which may in turn create population
density distortions and thus trafic abnormalities. So I would have to schedule
more busses in some areas. Too much thinking for a concept, but certainly
manageable if one were to actually build this.

~~~
ef4
Isn't non-uniformity critical? Without it, there's no reason to go anywhere.

~~~
DenisM
I think uniformity of density allows for uniformity of traffic, however that
does not require uniformity of "culture and ambiance" for lack of a better
term. If there are 10 million people in the city you can have vastly different
ambiance in different parts of the city, yet with roughly equal number of
people trying to get to any such spot at any point in time.

Does it make sense? I am trying to avoid a situation where some parts of the
city are much more popular that others for people at large, and I think that
does not contradict that some part of the city would be more attractive to a
subset of people.

------
rickmb
Seems to me like the author is very selectively shopping in non-US examples in
order to just go on an anti public-transport rant.

In most places in Europe costs of mass transit projects are notorious for
spiraling out of control, and unlike the Madrid example other Western
countries tend to do exactly the opposite and usually spend a lot more money
on prestigious design and architecture of public works than is common in the
US.

And that's okay, because besides the notoriously crappy and corrupt management
of these projects by government officials, the results are worth it.

~~~
Symmetry
Yes, but they spiral from 1/3 of what a typical US bid would be to 1/3 of what
the final US price tag would be. It isn't more than an order of magnitue like
with Spain, but France, Germany, etc all still end up paying much less than
the US for comparable rail systems.

------
rayiner
American construction projects suffer from tremendous over-engineering. Here
in Chicago we have the El and the Metra, which were built a hundred years or
so ago. The El runs through the city mostly on elevated tracks above the
existing roadways. The elevated tracks are supported by simple steel
frameworks above the roadway. There's not a lot of room for stations, so they
are simple platforms hovering over the intersections with stairs leading up to
them. The floors are wood plank and there are some metal railings. The Metra
is similarly simple. Metra tracks run on embankments across the city. They're
simple dirt embankments with a retaining wall. Simple metal bridges cross the
roadways, without a huge amount of clearance. The stations are mostly just
wood and metal platforms with wooden railings, with wooden stairs leading up
from street level. This all works really well--Metra is the busiest commuter
rail system outside of NYC, shuttling 300,000 people into the downtown core
every day.

Now, compare this to the new Silver line in DC. It's monstrously over-
engineered, even though it runs on a dedicated right of way. Instead of
running the train on a simple embankment in the middle of the road or on a
simple raised platform, it runs on a huge elevated concrete platform:
[http://transportationnation.org/wp-
content/uploads/2012/09/0...](http://transportationnation.org/wp-
content/uploads/2012/09/07.03.12news-cooper-silver-line-edit.jpg)

And this is in a low-density suburban area!

Compare this to the El: [http://marcel-marchon.com/img--117945132--Chicago-El-
train--...](http://marcel-marchon.com/img--117945132--Chicago-El-train--m.jpg)

Transit does not need to cost a billion dollars per mile. Just build elevated
metal-framework tracks above the existing roadways. It's cheap, durable, and
actually much more pleasant for riders than going to a stifling underground
subway station.

------
mcphilip
The recent article in Esquire about rebuilding the world trade center sheds a
lot of light into the particularly inept NY & NJ Port Authority mentioned in
this bloomberg piece.

[http://www.esquire.com/print-this/world-trade-center-
rebuild...](http://www.esquire.com/print-this/world-trade-center-
rebuilding-0912?page=all)

~~~
tnuc
I wonder why Bloomberg has such a problem with the NY & NJ Port Authority?

Oh that's right, Bloomberg is the Mayor and would rather give the contract to
someone more _cough_ _deserving_.

------
robomartin
This article is one-sided. The problem is that it is aimed at the wrong side.

Yes, government purchasing and management of projects is a disaster. I have
first hand experience in this realm. As a taxpayer you almost want to cry when
you see it happen. I won't get into the nitty-gritty of the details. I saw, as
an example, a government agency pay DOUBLE what they would have paid for a
commodity computer accessory. They had bids (mine, among others, I am sure)
that cut their costs in half. Yet, they went with the bid that doubled their
costs. Why? Because those doing the buying were so incompetent and insecure
that they wanted one supplier to provide all the components rather than
allowing the best suppliers to come in and provide them with competitive
pricing. It was "cover my ass" at it's best.

Let's not even mention the ridiculous rules that make it nearly impossible for
small businesses to participate and expensive for others to do so.

To make matters worst, this particular contract was awarded to a foreign
supplier. The funds came from Obama's "American Reinvestment and Recovery
Act". Money that was supposed to create jobs in the US went out of the
country. When confronted with this reality they came back saying that the
company in question had sales offices in the US and that they had formed a
corporation in the US and that this qualified them as a US entity. Holy crap!

I firmly believe that we'd do far better if government wasn't involved in most
of this stuff. I'm not sure how that can happen, but the idea is appealing to
me.

I said that the article is one-sided because it completely ignores on of the
real reasons why these construction projects are so expensive and take so
long: unionized workers. To put it plainly, their purpose in life is to rape
the US taxpayer for as much as they can get and, in the process, provide
themselves with as much pay, benefits, vacation and short work days as
possible. And we keep paying for them once they retire in the form of
ridiculous lifetime pensions. The real cost of that tunnel is probably far
greater once you take into account having to pay those workers' pensions for
life.

Examples of ridiculous union behavior abound. If you've ever had to work with
or within a unionized system you've probably experienced the state of
disbelief most rational people experience when they realize what's going on.

Take, as an example, doing a trade-show in NYC. I have dozens of examples of
union bullshit, but I'll just mention one. We did a show where we needed to
have a light turned off above our booth. That's it. The request was that
simple: Please turn off the light above our booth. Of course, a union
electrician had to do this. The fee? $368. Three hundred and sixty eight
dollars for the guy to go over to the breaker panel and flip a switch.

OK, here's another. You are not allowed to plug in your devices into the
electrical system. You know, what you do at home and at the office all the
time. Nope, a union electrician has the necessary expertise to install an
extension cord and plug in your computer into the AC outlet. I forget what the
fee was for that, but it was ridiculous.

Our solution? We did all of our booth setup work at night. The union workers
in the night shift are lazier than shit. They don't want to work. So, they let
you do almost whatever you want as long as you let them sleep on the job.
Sometimes you'd have to slip someone a hundred dollar bill to be left alone.
Far better than dealing with their bullshit.

I have not had to work with unionized construction crews. I can only imagine
how much worst the whole thing must be.

The best thing that could happen to this country is if unions were outlawed.
Of course, that will never happen. I'd sure be nice though. Imagine, people
actually having to work for a living. And, produce, behave, be responsible, be
capable, compete, etc. What a concept.

Dont' get me started about the planned California high-speed rail. It's a $68
billion money grab designed to feed unions and keep politicians who favor them
in power. The money will never be recovered. The line makes no sense
whatsoever. Sick.

~~~
danmaz74
The facts cited in the article show that in "socialist" Europe, where unions
are much stronger and governments bigger, mass transit is less expensive to
build and more efficient to operate. How do you explain that?

~~~
robomartin
You can't make that argument. The environments are very different.

It's like trying to build a Silicon Valley somewhere outside of Silicon
Valley. The environment is different. Some have tried, but it is hard or
nearly impossible.

Unions in the US are a cancer that is killing this country. I don't know what
the solutions is. I, for one, avoid buying any products that come from
unionized work forces whenever I can. Sometimes there are no choices. I have
to drive on the roads as they exist, for example, but, as much as it hurts me,
you will not find me buying an American car.

~~~
ktizo
Union membership in the US is very very low and accounts for ~7% of the
private workforce and only ~11% overall. Finland, for comparison, has ~70%
union membership, and also tops the rankings for education, among other
things.

Convincing low waged people that the unions are in some way anti-american is
just pure evil genius and took an amazing amount of chutzpa by the politicians
who claim to represent them.

~~~
andyakb
Yes, but what percent of workers in the public sector are unionized? The
answer is 37%, and I would guess that their hourly pay [all compensation
included] is significantly higher than their non union counterparts, and the
quality of work is much lower. That is the argument being made.

~~~
ktizo
There are apparently ~120 million people employed in the US and under 8
million of them are both unionised and in the public sector. So they are doing
pretty well if they are causing so much trouble, considering there really
isn't all that many of them.

One of the groups with the highest union membership in the public sector in
the US, is the fire department. So if the argument about union members is
right, then presumably the fire departments are full of some of the laziest
low quality workers around, and you should be able to map union membership by
the length of time that the cities are just left to burn.

------
ChrisNorstrom
I'm trying my best to see things from both side's point of view.

Maybe it has to do with Supply and Demand? Because Europe and Asia invest
substantially more in their public transit networks, there's more of a market,
more companies that build the networks, more competition, more experience, and
more tried and true cheaper methods. While in the USA, we've got less public
transit, less experience building it, a smaller market for building it, less
companies that construct networks, and less competition between them, thus the
cost is higher due to it being a specialty that few companies understand.

~~~
JumpCrisscross
The hypothesised condition could be easily aleviated by hiring those non-US
contractors who are performing so well overseas. Bombardier's bid for the
high-speed Amtrak line between New York and Washington, D.C. being messed up
by U.S. regulators [1], however, points to political factors.

[1] [http://www.economist.com/blogs/gulliver/2012/07/amtraks-
high...](http://www.economist.com/blogs/gulliver/2012/07/amtraks-high-speed-
ambitions)

------
rdl
I wonder how much of the "libertarian" bias in the US overall is a result of
the particular inefficiency of government projects in the US (obviously purely
private projects are more efficient than US government funded projects), and
how much is a cause (by forcing use of contractors/consultants).

Maybe this explains the difference between the US and Asia/Europe rationally,
rather than as some major difference in philosophy given the same facts in
each place.

------
mmphosis
[https://en.wikipedia.org/wiki/General_Motors_streetcar_consp...](https://en.wikipedia.org/wiki/General_Motors_streetcar_conspiracy)

~~~
mturmon
Not a downvoter, but this theory gets tossed around in bars and over dinner in
LA sometimes (LA was one of several cities where this scenario played out).

Short summary, it's not clear, in LA at least, if the GM/Goodyear "intentional
destruction" scenario really did the Red Line in. The ridership had been
decreasing for several years before the purchase of the Red Line. Long-time
residents say predictable things -- autos were more convenient and faster than
streetcars.

Short of doing your thesis on this, it will be hard to separate the truth from
the legend on this story.

(Not a public transit hater.)

------
ianb
How do private companies arrange infrastructure-sized projects? Oil companies
seem to have substantial arrangements like these. Railroads maintain a lot of
infrastructure privately. I'm guessing these companies don't get gouged like
the government, but they really have all the same issues, like internal
corruption, the bid process, change orders, competing interests in the
company, etc.

------
mleonhard
"The California High-Speed Rail Authority’s new CEO, Jeff Morales, arrived at
the agency after a stint as senior vice present at Parsons Brinckerhoff."

This is how corruption works here in USA. Cheaters move between government
management positions and overpaid contractor positions. This happens all
throughout the country, from local governments up to the vice president.

------
ericdykstra
Whoa wait, this article is saying that [some significant subsection] of
government projects is something like an order of magnitude inefficient? Hard
to believe, I bet next we'll see articles saying that [some other significant
subsection of government] is inefficient, too!

------
aswanson
What's even worse is that they overcharge on the same properties they gouge
taxpayers on, that the taxpayer supposedly _owns_. Crossing the GW bridge?
$12. Going up the turnpike from DE to NY? $13. Going from Jersey to Philly?
$5.

------
devs1010
I spend probably $350 a month commuting in the SF Bay Area on public transit,
its ridiculous but its my only option since traffic is bad and parking
expensive enough to make public transit the better option by far

------
xbryanx
Seems like some of the comparisons being made here should be divided by
average wage for skilled workers on these projects.

------
leeoniya
havent read it yet, too in love with appropriate mobius rail graphic

------
SODaniel
This I believe is NOT news.

------
001sky
Hollywood. Accounting.

~~~
001sky
_A huge part of the problem is that agencies can’t keep their private
contractors in check. Starved of funds and expertise for in-house planning,
officials contract out the project management and early design concepts to
private companies that have little incentive to keep costs down and quality
up._

\--Citation from the article.

------
michaelochurch
Misleading title (in the current political environment) because the gouging is
done by contractors who've figured out how to exploit an antiquated (lowest-
bidder wins) system. The article is not suggesting that we have "too much"
mass transit, but that we pay too much for what we get, and this is undeniably
true.

The gouging doesn't stop once the infrastructure is built. U.S. transit is
also expensive when delivered (it costs over $100 per person round-trip to go
from New York to Harrisburg, PA; for two people, it's cheaper to _drive_ ).
Finally, we pay again through exorbitant real estate prices _because_ our
transport infrastructure, in this country, is so poor.

~~~
Anechoic
_the gouging is done by contractors who've figured out how to exploit an
antiquated (lowest-bidder wins) system._

As someone who works on transportation projects, I find this to be incredibly
unfair. Yes, there are a few shady contractors out there, but there are a lot
of things that can happen during design and construction that can increase
costs through no fault of our own. For example: change orders. A project gets
designed and approved, the contractor gets his contract and starts digging.
Two weeks into excavation, the project engineer tells the contractor "oh, that
tunnel needs to be built 20 feet deeper and moved 15 feet to the south." Why?
It could be for any number of reasons, maybe construction uncovered a gas line
that couldn't be moved, maybe some politician wanted the line moved further
(or closer) to a friend's business, etc. There are also the inevitable
lawsuits, environmental issues and so on.

One of my big beefs, and one of the factors that IME increases costs for
architectural/engineering consultants like me are the hoops we have to jump
through to demonstrate that we're not ripping off taxpayers. There are all
sorts of audit requirements (including the dreaded DCAA audit), insurance
requirements and so on that increase our costs and so we have pass on those
costs to the taxpayers. Recently we had an issue when negotiating a contract
for transit design project - my firm's is relatively new, and we don't have a
revenue history with which to develop audited rates, so we intentionally set
out rates low in an attempt to convince accountants that our lack of audited
rates wouldn't be a problem. We spent a munch arguing with the prime's
accountants who wanted our audited rates to we could demonstrate that our
profit on the job wouldn't exceed 10% (they were _obsessed_ with the 10%
profit number), depsite the fact that our rates were 40-50% lower than other
similar contractors. We had to get someone from the Federal government to step
in and tell the prime that our rates were fine as-is.

Insurance requirements are the other big issue. General liability isn't so
bad, but E&O can be costly for big engineering projects, even if you're
exposure is low. However many projects have a "one size fits all" with respect
to insurance requirements and require everyone to carry $10+ million in
general liability and $5+ million in E&O. If you're the general contractor
responsible for digging up streets which can have all sorts or negative
effects, that's probably reasonable. If you're the graphic designer
responsible for creating the signs for the project, that's probably a little
excessive.

~~~
deveac
You cite change orders in your defense:

 _> For example: change orders. A project gets designed and approved, the
contractor gets his contract and starts digging. Two weeks into excavation,
the project engineer tells the contractor "oh, that tunnel needs to be built
20 feet deeper and moved 15 feet to the south." _

But I think it's worth pointing out that change orders are probably THE
primary mechanism of gouging used by contractors in 'lowest-bid-wins'
scenarios, as you should know.

What often happens is that contractors lowball, knowing that they will make up
the margin on the change orders which are not competitively bid. A well
designed RFP can mitigate this somewhat by requiring menu pricing on
add/deducts for the most common in-field changes, but it can't account for
everything, and bidding contractors look for open ended RFPs and exploit them.

There may only be a few 'shady contractors' out there as you say, but a)low-
bid systems bring them to the top of the short list, and b)I'd wager almost
every 'reputable' contractor's change order margins are higher than for the
exact same work that was competed in a public RFP.

Just my thoughts on that. Raised an eyebrow since change orders are the
primary mechanism for inflating post-award margins.

Edit:

Also want to point out that my use of the word 'gouging' is kind of a loaded
term:

 _> But I think it's worth pointing out that change orders are probably THE
primary mechanism of gouging used by contractors in 'lowest-bid-wins'
scenarios_

Are these contractors gouging? They are not doing anything illegal, but it can
fall into questionably ethical territory. But from many contractor's point of
view, they are stuck bidding on a system that is designed somewhat
unethically. From a systems standpoint, when the only factor in winning a bid
is lowest cost on the delivery of a product that will unquestionably have
change orders, you get a scenario where the following is actually happening.

1)Firms provide goods and service for margin 'a+b' which is averaged over the
life of the project

2)Only margin 'a' is competed

3)Margin 'b' is projected but undefined and can be adjusted by the Firm after
the award based on margin 'a'

Is it ethical to even ask a Firm to submit a bid based on margin 'a' set equal
to margin 'b' knowing that the system is designed to produce competing bids
distributing the total product margin unevenly between the two variables,
weighting 'b' much more heavily and minimizing 'a' in order to win the bid and
work at all?

I don't think so, and what happens is you get a system that is almost
explicitly designed to inject increased total project costs and increased
variability.

I think that under this system, it's an incredibly gray area on the how
ethical increased post-award margins on change orders are. Just the fact that
an increase occurs does not strike me as unethical, but there is absolutely
zero doubt that some of the margin increases are absolutely unethical and
drive the total product margin up well past what it would have been if bid
under a possibly more efficient system (throw out high and low bids for
example).

If gouging is going to happen, it's going to happen on a change order, but
it's not so black and white.

~~~
Anechoic
_Raised an eyebrow since change orders are the primary mechanism for inflating
post-award margins._

This comes down to how well the contract is written. The Big Dig was getting
screwed pretty early on by contractors doing exactly what you described, but
learned from the experience and started tightening up those contract terms. As
a result, some contractors continued to try to play that game, and when they
couldn't make up for lowball bids using change orders, they went out of
business. Other contractors learned their lesson and started pricing things
more realistically.

~~~
btilly
And there you fall into one of the traps. Contracts that are long because they
explicitly protect against every way that the agency has been screwed in the
past.

It would be _much_ more effective to have the response to being screwed be,
"We have the option of saying you are not allowed to submit bids on public
projects in the future." Then you don't have to legislate every last detail of
when that happens.

This is what happens in the private sector. I do not have to do business with
you if I don't want to, and I don't want to do business with you if you've
screwed me in the past. If you're not planning on screwing me, this is not a
problem. If you are, it is only a problem for me..once. And a problem for you
going forward.

~~~
yourapostasy
> _This is what happens in the private sector. I do not have to do business
> with you if I don't want to, and I don't want to do business with you if
> you've screwed me in the past._

That goes in both directions in the IT services world. I run into plenty of
procurement departments that are _far_ less ethical than many contractors I've
worked with. I have caught procurement officers flat out lying to me on what
they have as competitive offers, playing incredibly puerile alpha dominance
games, pulling bait and switch by tacking on a new deliverable as an
afterthought in an email without prior discussion after a verbal agreement at
the end of exhaustive negotiations, acting rude and imperious as if that was
their sole strategy to browbeat me instead of negotiating like a professional
business person...the list of eye-popping, unprofessional behavior would have
been unbelievable to me when I started in business.

These customers go onto our blacklist that we graciously introduce to our
less-capable competitors.

~~~
deveac
_> These customers go onto our blacklist that we graciously introduce to our
less-capable competitors._

Why not keep them? Doesn't sound like anything that can't be addressed. Insert
language defining scope as only in contract with verbal, email, and other
communications besides formal change orders not binding.

Rude? Imperious? Browbeating? Fine with me. As long as I can lock you down on
paper I'm fine with it. You can corral most customers like that and shrug of
the distasteful personalities...as long as they are paying their bills. That's
the deal breaker right there. Even lying on what they have for competitive
offers. It doesn't matter what they say as long as you know your margins and
make your decisions based on that. Psychologically it can be painful to know
that you took money off the table for what turned out to be non-existent
competition, but it won't bite you as long as you are negotiating with a solid
grasp of your costs and profit potential. This type of behavior is so standard
that it doesn't even bother me. Really, they wouldn't be doing their job if
they didn't do this in a lot of cases from one point of view.

If you suspect your customer is lying about competing bids and you feel your
margins are dipping close to below acceptable levels, try a large increase in
margins on a smaller sized order or project to test the waters every once in a
while. It really gives good feedback that you can use to make decisions when
confronted by that behavior in the future. I have a couple clients who like
clockwork, ALWAYS try and talk the price of a quote down after submission. I
look at my margins and decide if I'm willing to do it based on that alone, but
every once in a while when we're really busy and I get a quote request from
them for a medium or small sized job, I will increase the margin to 20% past
my ideal rate to see if they bite. They usually do. So now when they try and
talk me down on a larger project I just 'see if my distributor can move at all
on the pricing'. Turns out he can't. Sorry. I tried.

Most of those games are rare though. Our firm is often subcontracted out, and
I openly discuss my margins and those of my customer that is requesting a
quote. Being open, honest, and transparent really goes a long way. I'll often
send a quote along and follow up with a phone call that goes something like
this: "Hey xxxx, I just sent that number in. Take a look at it. I've got about
20 points on it, -how much were you planning on marking my number up, -is that
going to leave you enough margin?" 9 times out of 10 they say yeah, and
appreciate me asking if they are set on their margin. When they ask for a
price reduction, it's usually with the sense that we're both in it together,
and they aren't looking at me as an adversary, and they are more honest about
what number from me is the HIGHEST they are comfortable with. That information
is golden, because I am usually bidding against other firms (at least to
start). I've had many contractors stop competing my bids just because of this
type of communication (as well as the execution of our firm as well).

~~~
yourapostasy
> Our firm is often subcontracted out...

This might be the difference between our experiences and responses. Most of my
work is direct, corp-to-corp, B2B. We're steadily climbing up the value chain
each year, and find that we have to directly interact with procurement
departments more often.

For me, it is not a matter of what we can negotiate and lock them into terms
we can live with; I've done that before, but fortunately now we aren't in the
cash position to _have to_ do that. It really comes down to the unavoidable
reality that these customers' procurement methods cost us a ton of sales time
that we could more profitably spend elsewhere on customers that more
appreciate our value props. As for transparency on margins and per hour rates,
we avoid that because we price on business value: if your business benefits by
$X+N from spending $X with me, we both win. I've concluded from experience
that sharing this information simply opens you up for piecemeal negotiation
and commoditization in the future, which doesn't currently fit into my
company's business model, but certainly YMMV.

------
angdis
A bunch of right-wing baloney. The transportation systems in NYC are what make
that city even possible. It is very easy for an uncreative bean-counter to
look at the price tag of public transportation systems and then not be able
"add up" all the long term benefits of having a city where people and
businesses can thrive and get around and that are enjoyable and aesthetic.

If you really want to talk about "gouging" the taxpayer, instead look at
highway funding and regulations that practically enforce sprawl by requiring
parking spaces, and multi-lane streets through urban cores.

~~~
notJim
It doesn't sound like you read the article. The article doesn't say the US
shouldn't spend money on transit (the point you refuted), it says that other
countries pay less for transit because they mange projects better.

