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Why American Construction Costs Are So High (pedestrianobservations.com)
204 points by cocoflunchy 17 days ago | hide | past | web | favorite | 158 comments



News that the Transbay Terminal is something like $300 million over budget should not come as a shock to anyone. We always knew the initial estimate was way under the real cost. Just like we never had a real cost for the Central Subway or the Bay Bridge or any other massive construction project. So get off it. In the world of civic projects, the first budget is really just a down payment. If people knew the real cost from the start, nothing would ever be approved. The idea is to get going. Start digging a hole and make it so big, there’s no alternative to coming up with the money to fill it in. - Willie Brown (former SF mayor)

I think the inability of politicians to have a real conversation about costs is a big part of high construction costs. Without this sort of difficult conversation it's hard to plan and try to mitigate things that might cause ballooning costs because you need to pretend that don't exist in the first case.


While I agree that the attitude shown in the quote is undesirable, I think it's more a symptom of the problem, not the underlying problem itself. He's essentially right. Infrastructure projects are constantly shot down because of cost concerns, yet we have crumbling infrastructure that needs to be replaced. If estimates became higher, approvals would decrease.

One other piece I haven't seen mentioned yet: large construction projects that take years to complete are incredibly hard to estimate accurately, because unpredictable economic swings can cause the cost of items to vary quite a bit between when the estimate was produced, and when the work was actually being performed and purchased.

This was one of the reasons why the Big Dig's estimates were so far off. Although there are a dozen other factors with that particular case as well.


One factor in play is that many people only have experience with household-scale budgets. An intuition about what "millions" (let alone "billions") actually represents in terms of economic power is hazy at best. Business scale budgets sound extravagant; metropolis-scale or state-scale budgets are mind-boggling.

How does such a person know what's "too much"? Absent a reasonable working model of costs involved in infrastructure projects, it's all going to sound like too much.

And past a certain point on a spectrum of temperamental tendency to attribute laziness or wastefulness to other people, the working assumption is going to be it's boondoggles all the way down.

The only way to fix this -- if it can be fixed -- is reinforcing narratives about the value of projects and measured collective values.


I think you have a great point but it’s only part of the problem. I can affirm your sentiment with anecdotal experience. At my company cost discrepancies of less than 20k are considered a rounding error.


Well, then, how is it other countries can make better estimates? I get that for various reasons our costs are higher, but why can’t we at least project costs more accurately?


Why can't the cost of materials be hedged against rising?

Costs above initial estimates should only happen when there's an unknown (e.g, digging discovered a really hard rock layer that nobody knew about). Or weather issues beyond prediction (like tornadoes or hurricanes).


> Why can't the cost of materials be hedged against rising?

How, other than by buying everything you need up-front, finding a place to store it until you need it, and hoping that it is still usable when you do?


You can buy futures on basically any commodity to hedge against price fluctuations.


Are you assuming cost increases are due to materials? labor is a huge cost, it might even exceed materials.


Thats purely corruption. I always explain to my argentinian friends, used to the petty corruption of putting friends and family in public positions, that the us does corruption at a much bigger scale: at the legal one.

The transbay terminal is one of the biggest rip-offs ever. It cost the revenue of sales taxes of the city for years. And it doesn't even work, while the "transient" station that must have cost almost nothing works perfectly fine.


Transbay was financed via the TJPA by auctioning off the rights to build very tall buildings near it. It wasn’t financed by sales taxes.


The fungibility of money pulls yet another trick.

Every single tax dollar can be raised to relieve poor sick children of their ailments.


It's not fungible if people are bidding up that land because they expect it to be worth more thanks to the station you'll be building there. Unless of course you are advocating scamming people by claiming you'll build it while already having privately decided not to do so.


Its pure trickery: the value of the land is not of the public officials, but by constructing a failed transit center they get to spend billions, while also spending billions raised on sales taxes.

In both situations, the person on the street is stuck with a broken station and paying an extra dollar for coffee everyday.


> Thats purely corruption. I always explain to my argentinian friends, used to the petty corruption of putting friends and family in public positions, that the us does corruption at a much bigger scale: at the legal one.

Oh, Willie Brown did that too. He appointed his lover to two state commissions (he was the speaker of the California Assembly at the time), then helped her become district attorney in San Francisco.


She's quite talented.


Well surely she didn't get any higher than that at least, right? /s


Sorry that temporary one worked like ass. Rainy and wet, cold, hard to navigate around, just a big parking lot and some tents.


worked? You mean works. At not 2 billion +


I hope the irony of this topic being discussed on a (mostly) software-related forum isn’t lost on anyone.


I must be a bit dense today, what irony?


Big software/systems projects being notoriously difficult to estimate and manage, cost overruns the norm, etc.


I assume he's referring to platform lock-in ala Microsoft Office, AWS, Oracle, or Apple's walled garden driving future decisions. So the first software decision is a down payment until your technical debt hole is so big you can't do anything but throw money down it.


Huh? No, I think he's referring to large scale software projects costs being high, and such projects being often late or even failing.


ha, i did not see this comment before posting mine, but the irony was not lost on me.

or rather, is it even ironic? it seems totally germane to a forum full of geeks with a wide spectrum of interests, many (most?) of whom are software devs.


It is lost on me.

What do high construction costs have to do with HN?


As ams6110 wrote above, it's ironic to have an article criticizing the high costs of construction projects on a developer website -- given that large software project costs are the same or worse.

It's like having a post about how ecologically unfriendly the fast food industry is on Exxon's website.


The title itself is deficient -- this isn't an article about general construction costs, it's specifically about rail transit construction.


inability to predict the time and effort needed


besides the inherent difficulty of estimating the resources required to finish a large project that hasn't been done before...

i think what willie brown describes here is also part of the problem providing estimates for the time required to complete software projects: if we gave more honest answers as devs, bosses and people signing contracts would blanche, so instead of standing firm, we go lower, or cut corners, or both.

i think the two things compounded together (inherent difficulty of estimating large unique projects, aversion to seeing real costs) are why estimates so often skew too low when we're trying to predict how long it will take to write a thing.


In fixed priced contracts, that strategy makes employer loose money. Some projects truly should be be starter, because their price is indeed too high compared to benefits.


yeah, and i'm absolutely not trying to justify this outcome, just trying to think out loud about the unsatisfactory state of things.


The politicians can’t have a real conversation about costs because the legal and political complexity of our society has reached such high levels that it is impossible to accurately project costs multiple years into the future.


It's possible, to a degree that would be enough.

But doing a feasibility study that gives an estimate is much different from doing a full plan, which is still quite diferent from having fresh surveyed maps and ready to build blueprints, and all of that is just before doing the first strike with a backhoe.

And it's no wonder everything seems so complex, because the people who are able to cut through the bullshit are usually ignored, because people don't like to accept the fundamentals. They cling to their biased beliefs about costs, project management, design, estimation methods, etc.


> The idea is to get going. Start digging a hole and make it so big, there’s no alternative to coming up with the money to fill it in.

Robert Moses is quoted as saying the same thing. Once you start, there is no choice for the public but to push on and finish.


> In Paris, as well as Athens, Madrid, Mexico City, Caracas, Santiago, Copenhagen, Budapest, and I imagine other cities for which I can’t find this information, metro stations are built cut-and-cover... There is extensive street disruption, for about 18 months in the case of Paris, but the merchants and residents get a subway station at the end of the works.

The cost of using a more expensive method ($750M per station vs $110) of building in order to prevent disruption to car traffic is almost always attributed to the cost of public transportation. But it seems to me like it at least partially should be considered a cost of maintaining car infrastructure.


I'm actually curious: how do those businesses, particularly smaller ones, survive 18 months of highly impeded traffic?


As an example, the Los Angeles Metro actually has a "Business Interruption Fund" that they use to help small businesses in areas impacted by street-level construction (like subway station construction sites).

https://www.metro.net/projects/business-interruption-fund/


This seems like the best of both worlds. The millions in savings for using more invasive construction methods should offset the $60,000 per business they are paying.


If parent poster's numbers are even in the right ballpark, we could just directly subsidize the small businesses that are disrupted and still come out money ahead.


Some transit could pay for itself by not being built and paying the people who would ride it to stay home. There is a lack of total system optimization.


It turns out small businesses make money from customers who stop in, not people driving by in automobiles.

I had no problem walking into shops at metro station construction sites in Copenhagen or Budapest.


Also consider that people in those places don't drive everywhere. Foot traffic is hardly ever closed during construction, and most customers reach small businesses by foot. This means that the losses aren't as pronounced as you probably thought.


Many of them do not. I know the owner of a business who is really struggling for this reason.


back in college, my favorite chinese joint just two blocks from campus went out of business because their street was torn up, and then permit issues followed by bad weather meant no one could drive or park at the restaurant for something like 6 weeks.

starting a restaurant is risky enough, forgoing a month and a half of profit while staying open is just a disaster. I had a crush on one of the waitresses, and she told me she had gotten close to the family that owned and operated the place and they were heartbroken, furious but powerless.

Progress!


There's a very busy Pho' (Vietnamese) restaurant around here in Budapest that has exactly two parking places, but it's right across from the tram stop and a bus stop.

Of course it stated knowing this, so rather different from starting with a parking provided street and then seeing that change.


Van Ness in SF has been torn up for years and multiple businesses have closed as a result while most manage to stay open. I think access to roads is less important in places like SF because parking is impossible anyways - people who were going to shop there are already walking.

Plus there's a minor surplus of business provided by the construction workers who have to stand around in groups of five for 7 hours a day in between lunch breaks...


The irony of Van Ness is what they're building isn't even underground.

How does bus rapid transit take so many years to build?


Honest answer. Many don't.


At least for Madrid this is false. Not even in new development areas is Metro cut and cover, but tunneled.


The stations?


Regarding point 9 about the inability to look outside North America. I always wondered why it seems transit agencies haven't looked to bring in teams of people who have managed/built successful projects in Europe, Asia, or even closer like Mexico City.

California HSR for example went to solicit bids from foreign operators and selected Deutsche Bahn/German Railways. But AFAIK the initial design work/RFP/proposals were done by California and domestic engineers, who obviously wouldn't have much, if any, experience in designing or managing HSR construction.

Would an experienced team be able to overcome a very different regulatory and political environment to make a difference in cost and time?


NYC MTA brought in the former leader of London's underground and Toronto's public transit


Andy Byford was the CEO of the Toronto Transit Commission and the COO for RailCorp in NSW, Australia, but he was not the former leader of the Underground; he only held managerial positions there (a station manager and general manager of customer service on some lines).


Replying to myself to add- I wonder if it extends down to the construction itself (not that a project would hire the workers abroad, but maybe mixing up supervisors/foreman/leads or sending them for training).

Orders of magnitude smaller in scale but in my observations, even things like urban sidewalk, sewer and road construction seem to be conducted entirely differently in Germany, for example, vs North America.

Is the difference in construction specs? Formal vocational education of trades and apprenticeships vs the US? I don't know, but the final products seem to be much higher quality than public projects in the US and I doubt they're spending multiples more.


> urban sidewalk, sewer and road construction

In many places in the US, these smaller infrastructure projects are done by city crews, not contractors. These crews employ friends and friends of friends hired by political managers, not people who know what they are doing. Where I live for example, the quality of any street paving done by the city vs. done by a private contractor is markedly inferior.


Typically repair is done by the municipality, and quality varies quite a bit for mostly opaque reasons. New construction is done by private contractors, and quality is determined mostly by the inspection agency. Whatever they let the contractor get away with, the contractor will do.


Why does this happen? I thought US was famous for favoring small government and zealous for tax dollars to be well spent.


In theory your local government has the local knowledge to allocate money and resources better than some hated bureaucrat in some far-away city.

In reality local government has almost zero transparency and people don't care about local government as much so it's a massive exercise in grift. Money disappears, contracts are given out to someone's friend at a jacked up price, a few officials can block a project completely, safety specs are ignored, etc. etc. etc.

If a project ordered at the state or federal level ever makes it into existence you can guarantee hundreds of hands have squeezed every dollar out of it for themselves or their friends long before a shovel ever broke ground.


I think you’re confused about what these projects really are. They are not construction projects they are job creation programs. Both the unions and politicians use them as such to bolster their own interests.


That's natural. Unions and politicians will always act in their best interest. And a HSR project seems to be in their best interest. Unions see it as good jobs, politicians see it as something for their constituents.

Of course this backfires when the NIMBY folks don't want anything built, and those who are okay with the idea want it done cheaper. (So the unions are not going to be happy.) So the project stalls.


There's probably a tradeoff between the potential expertise of a foreign experienced operator and the potential domestic economic stimulation.


Ok, this is worth reading for the section on “Incuriosity” alone. It’s worth quoting in its entirety but too long to paste here, so I’ll just say if you do nothing else, click through to the article and read that section.


Agreed, though I was surprised it didn't point to a cause, which I might identify as American Exceptionalism. No need to be curious about how other countries do things when you're operating under a mythology that your country is the best.


+1 to this.

As an outsider it appears to me that this "we're the best in the world!"/"our unique freedoms" propaganda is drummed into people from a young age without anyone ever questioning it. Its no wonder there is this pervasive "what could we ever learn from them? We're the best." mentality.

The other common excuse is size. "Oh no, we can't have trains like that! We just such a big state that won't work here!" Japan is roughly the size of California. EU is roughly 10x the size of California. Both are criss-crossed by high-speed rail.


That part stood out to me, too. It's a phenomenon I've been noticing for a long time when talking to Americans (even here on HN), but I think this is the first time I've seen an American recognize it.


That's because most Americans have never traveled overseas, let alone lived and worked there. The few of us who have, often notice the same thing.


One of my first jobs in IT was for a big general contractor.

We built schools, hotels, restaurants, you name it.

Whenever we had a government project, like a building for the county, a jail, new secretary of state/dmv office...we went way over budget and way over schedule. EVERY. SINGLE. TIME.

We'd have a 'groundbreaking ceremony' and then not be able to actually dig at the site for 12 more days because permits got tripped up. How can the government not approve their own permits on time?


"the government" is more a loose confederation of public agencies. They're not a monolith that has the ability to know everything about everything, especially at the local and county levels. I don't know the specifics of that case, but last minute citizen protests or protests that weren't able to be resolved quickly enough are another issue.

It's also not like this doesn't happen in the private sector. A company bough some land on the main road where I am, razed the building, graded, and then stopped for almost 2 years now because the board won't change the zoning for them. (Which is the right decision imho.)


What are they putting in, a slaughterhouse? Maybe a brothel? What horrible business can't be accepted on "the main road"?


It doesn't matter. There is always some group of citizens who will protest any new building project.


Sure. 'jimktrains2 indicated above that he is among that group. I had hoped he would take the opportunity to attempt to justify that political preference.


It's not any horrible business; the developer wants to build lower density housing than the lots are zoned for; condos vs an apartment building. Part of my position is definitely rooted in "well, you should have taken care of this before starting instead of trying to strong-arm the township later on" and not necessarily the zoning issue itself; although I'm always a fan of higher density housing.


If this is lower-density housing replacing previously-existing-at-that-site higher-density housing, I see your point. It's my understanding that zoning typically enforces the opposite preference, so I'm still suspicious of zoning in general. However, if the previous use was substantially anything other than housing (which would be my guess with it being on "the main road"), this is crazy. There is no rational set of preferences that would prefer both non-housing and dense housing to less-dense housing. At some point the meddlers have to stop second-guessing the market.

Of course, building permits are one thing and demolition permits are another. What municipality happily countenances the destruction of high-density housing without seeing the plans for what's coming next? That is even more crazy.


The lots were previously two smaller apartment buildings. I have a feeling the issue is a little more complex than _just_ the zoning, but the zoning appears to be a major issue from the news and comments in council.

> here is no rational set of preferences that would prefer both non-housing and dense housing to less-dense housing. At some point the meddlers have to stop second-guessing the market.

While I agree that anything productive is better than vacant lots, I do think we need some more dense housing, especially since there are already a couple of other apartment buildings, transit, and high demand for housing in that area.

I also think that it's a bad precedence that a developer can just get the zoning changed by holding their breath and stamping their feet. That said, I often think that zoning laws are a bit to restrictive and could use a broad rethinking _in general_.

I would personally like to see a mixed-use building, with retail on the first floor, but that's another issue entirely.

> Of course, building permits are one thing and demolition permits are another. What municipality happily countenances the destruction of high-density housing without seeing the plans for what's coming next? That is even more crazy.

We moved in after the buildings were demolished, but my understanding was that the buildings weren't in the best condition and may have been demolished by the previous owners. However, there has been a good deal of grading and site prep work going on when we moved in, and all work has ground to a halt since then.


Who the fuck starts actual work before getting the permits for the future development!?

That makes no sense. Sure maybe they though they can pay the right people and push it through the council by then... but not this time.


> How can the government not approve their own permits on time?

I'd consider a positive to see that the government does not get to take shortcuts, but has to abide by the same rules as everyone else.


>How can the government not approve their own permits on time?

I'd wager that "internal customers" aren't buying donuts to accompany their permits and doing all the other borderline corruption type things you need to do in order to get government do work with you in a timely manner.

Edit: Having the person at the desk remember your company as "the one that brings donuts" and the mid-level manager remembering your company as "the one that sponsored my son's little league team" don't has the potential to make a massive difference. For a company that does a lot of business with government spending a few grand a year making sure the people of government see you in a positive light is well worth it.


NYC MTA is a great example of why. We need to put blame on all parties involved politicians, corporations and labor unions. Anyone who unconditionally defends labor is naive at best. NYT reports:

“Trade unions, which have closely aligned themselves with Gov. Andrew M. Cuomo and other politicians, have secured deals requiring underground construction work to be staffed by as many as four times more laborers than elsewhere in the world, documents show.”

Source: https://www.nytimes.com/2017/12/28/nyregion/new-york-subway-...


I am certainly of the left, but Labor Unions have been a huge contributor to so many problems in the United States. I'm not against people getting a living wage, ect but Labor Unions have always been about getting "theirs".

A huge reason the US doesn't have universal healthcare is Labor Unions who preferred that they got good healthcare benefits from their work.

A huge reason we have major infrastructure problems in the US is because of the absurd cost of labor. Nothing gets built in most big cities unless Labor Unions are involved and they rip everyone off. This makes public transit unworkable, cities unlivable and unaffordable, ect.


I'm not going to defend all choices made by unions but do you think the U.S. is better off after the great decline in union membership?


I also stand at the far left of political spectrum and in my experience labor unions completely abuse their positions. I think it is way past time to find another way to provide decent wages to workers.


Why are unions even permitted on public infrastructure projects? All municipal projects that I have heard about in recent years had extensive work rules, safety, "living wage" requirements, etc. as conditions of the bid.


I don't know much about unions in the US, but it seems like they are organised very differently than in Europe. We don't have these kinds of problems over here.At least not that I'm aware of.


The South Ferry repairs after Sandy was a great example. Pump it out, replace some escalators, redo the walls, put strengthened flood defenses for next time - 1/3 of a Billion dollars? WTF.

http://gothamist.com/2017/06/28/new_south_ferry_subway_stati...


Those who blame it squarely on unions, explain how Europe has strong unions and yet construction there is orders of magnitude cheaper than in the US?

It's because there isn't a proper bidding process. Politicians just give sweetheart bloated contracts to the same contractors every time, and those contractors then "donate to their campaign". If they instead used things like sealed bids and had contractors compete against eachother, it wouldn't cost $1B per mile for NYC's 2nd avenue subway, absurd.

NY Governor Cuomo surprisingly called this out recently, describing it as a "transit industrial complex": https://nypost.com/2019/01/04/mta-officials-are-fuming-over-...


There are unions, and then there are unions.

In Germany, labour unions are strong, but things like union security agreements are unheard of (and I was amazed something like that would exist when I first heard of it). The stories you read about corruption in US labour unions (admittedly subject to selection bias) are unheard of over here.

There are strong laws and customs around arbitration processes, and a culture of unions considering survival and success of the business above pushing through maximal demands. E.g. in a prolonged strike, if employers and union are unable to resolve the conflict, after some time arbitration by a generally respected elder statesman kicks in. They hear both sides, and then make a binding decision, which usually is generally accepted. It all seems a bit more balanced.

I'm not sure how much that transfers to other European countries. France famously has a different culture around strikes and unions, but doesn't seem to be representative (https://www.etui.org/Services/Strikes-Map-of-Europe).


Unions do what unions can. It's amazing that NYC MTA uses unionized labor for things that could be easily outsourced/contracted.

This strange example of market failure points to us having insufficient information to understand the real transactions. MTA must get something else too from the unions to abide by their rules. (Allegedly it's Cuomo himself who benefits, thus he pressures the MTA.)


The point about the size of the stations is very obvious in Chicago. Most of the stations were built 100 years ago, and are roughly the same size. A handful of stations have been rebuilt--at great cost. At some of the older stations, you can't barely walk 2 people side by side on the platform without feeling like you're about to fall on to the tracks. The new stations by comparison are 4 times as wide and have gigantic entrances.


The interesting question is, do we need the huge stations? If that's a the difference between a $80mil project and a $400mil project, could we build the smaller ones?


Can't wait to see how fantastically expensive the Uptown and Edgewater station reconstruction ends up being.

(They should have thrown in another billion to rebuild the Sheridan stop. Now that's a narrow platform.)


Funny that the article doesn't once mention unions as a factor that drives up cost. It's almost as if attacks on unions for making public works slow and expensive are disingenuous.


Indeed, the author even wrote another article explicitly refuting the anti-union argument.

https://pedestrianobservations.com/2019/01/08/meme-weeding-u...


It's an interesting refutation. The author explicitly claims the following:

1. Construction unions in New York, specifically, cause horrific and unjustifiable cost increases.

2. But unions in most of the country aren't in New York, and don't have the same power that NY unions do.

3. The problem is that New York is responsible for a lot of construction, and more sensible areas unthinkingly copy New York's awful, union-driven policies -- those other areas don't need to do things New York's way, but they don't have enough construction experience to know better.

The author goes on to say that union-busting politics as they exist in the US won't solve the problem, but obviously believes that unions are responsible for significant parts of it. (And in fact says in so many words that in the absence of particularized US politics, union-busting would be somewhere from neutral to productive.)

An immediate implication is that if you're worried about getting things built in New York, you should be trying to break up the unions there.


That post has a few problems:

- His line about the DART Orange Line is mixing three different projects (the actual Orange Line, the Trinity River Expressway, and the Dulles (VA) Metro extension)

- He is mixing actual project costs with projected costs, as if the comparison is equivalent

- The biggest problem, though, is that he is using "Right to Work" to mean "no unions", which is ridiculous. He even doubled down on that in the comments with the asinine statement "But in places with zero union density, like Texas".

Those are just the problems I saw from ~10 minutes of research on the subject. Considering that, I don't put a lot of faith in his arguments.


I noted similar issues as well. Particularly for the Silver Line (which he later calls the Orange Line) the guy neglects the fact that this is a government job, despite being in a Right to Work state, and is a federally/publicly funded project and so falls under Davis Bacon Act provisions which are strongly driven by union rates within the region. Especially for Silver Line, union rates in MD/DC have a large impact on the greater DMV area, including the Silver Line.


While union can be a factor compared with Asian countries, aren't our costs higher than European countries that have stricter labor laws ?


Granted, I only know Horror-Stories about US-Unions, but it seems that the Europeans are much ... saner.

With some hyperbole, I once read this story about how for a simple job someone had to get three different unionized workers, because each one only can do certain work. At our company we are currently building an automated machine to do quality control on a manufacturing line - we had to deliberately design it in a way that doesn't actually reduce the number of people needed for the job.

In i.e. Germany this doesn't seem to be so weird. Here, the unions are way more involved in running the company, it's way more about partnership, doing good for the company, then in making sure to keep privileges.

Obviously it's also not perfect, there are other problems for sure.


They're saner by the fact that their media speech laws only extend so far. The US, you can call yourself unbiased news, lie on-air, and then if confronted on it just declare it free speech. There, inventing or grossly embellishing stories will get you sued and fined.


Free speech only pertains to citizens when the govt is trying to shut it down.

News outlets calling themselves unbiased is not invoking free speech at all. Anyone can declare themselves anything - it's called lying.


In my limited semi-personal experience, (some) European countries have stronger labor laws but a much less adversarial model of union & management collaboration, which can include creative ways of reducing costs (so long as the benefit of same is distributed equitably).


> Politicians in the United States do not have an incentives to control costs.

Do any other politicians have systemic incentive to control costs? If so, how?


Let’s take the UK for example. Grayling, the transport minister, is currently getting pressure from all sides and definitely from the public to quit his post because of his poor decision making that led to a 33m pound out of court settlement.

Theresa May, the Prime Minister, is facing questions and tremendous public pressure on a daily basis for her austerity led decisions to cut the police budget (something that would be unheard of in the US).

They have tremendous incentives to cut costs. In fact, the UK, which was also booming (growth which has slowed since the Brexit vote, however) over the past 5-6 years, continues to be engaged in austerity measures.

Clearly something there is incentivizing UK politicians to pay attention to costs. I think part of the reason is that in the UK you have (a) a populace that believes that government should be providing services where it is effective, and as a result, considers reductions in services a major negative against the government, and (b) you have actual ministers who ar directly responsible for specific areas, such as transport, who can be held accountable by the public. Not being able to control costs means not being able to provide services effectively, which in turn leads to the government failing in elections.

In the US, there isn’t a transport minister to point to when the California HSR fails, which means responsibility and blame is diffused. Maybe that’s where the difference lies.

Also, contrary to what some believe, most people who believe in government providing certain services don’t believe in the government being inefficient in doing so, and will hold that inefficiency against the government since it means they get less, or substandard services.


It'll be useful if the title could clarify that this is about metro/subway construction costs in large cities, rather than all construction costs in America.


Indeed, residential/commercial construction costs are actually relatively low historically speaking.

(The land that you build it on is another matter.)


https://www.buildzoom.com/blog/whats-up-with-construction-co...

Real construction costs are 50% higher than they were in the 1950s, according to our analysis.


Off topic, what led you to snag "the_economist" for BuildZoom?


This is not a company account.


That is attributed entirely to increased labor costs and almost all of that in increasingly large urban centers (which also have a lot of construction).

So basically.... Apples to apples it hasn't gone up. It's simply that people are buying more construction in urban areas.


yes, that's probably about right (based on my remembrance leading product for cost estimators widely used in appraisal & assessment). construction costs tended to beat inflation by a bit, enough to compound to 50%-ish over 60-70 years.


This is refreshingly low level and candid. I would welcome this kind of analysis in more places. Please emulate this document!


The part about mezzanines struck me. BART has huge barren mezzanines. There is not one shop in the entire station. The other subways I've visited in the US (Boston, DC, NYC) also don't have any shops except in some of the largest like Grand Central or Penn station.

Compare this with subways and train stations in Japan which often have shops in the mezzanines and sometimes at the platform. There are always at least vending machines at the platform. I don't think this is unique to Japan, I recall there being shops in the station in Korea, Taiwan, and London too.

Why do the stations in our supposed capitalistic society not have any shops?


> The part about mezzanines struck me. BART has huge barren mezzanines. There is not one shop in the entire station.

I found that odd about BART, too - initially I thought this was due to crime (BART seems pretty sketchy, and opening up a shop there would be an invitation to robbers and thieves), but then I realized "safer" metros don't have them either.


In fact the safest thing you can do for a public area is have small businesses lining it. See Jane Jacobs' "eyes on the street".


I think part of it has to do with how the lines are financed and built. In Japan and Korea for example, individual companies own the lines and stations and basically use them to funnel customers to shopping areas where they actually make their money.

In the U.S. they are built as public works projects and owned in the end by some local municipal authority. Since they are public property, there's no incentive/ability to conduct commerce there. It would be like having a McDonalds inside of a library.


As far as I know, stations in Western EU are also mostly public works, and they do have shops. As an example, Brussels-Central has multiple coffeeshops (including a Starbucks), a waffle kiosk, a fast-food joint, a newsstand, and even a small supermarket.

And funny you should mention libraries; my local public library has a private café inside (not in the reading area, of course).


Ha! I stand corrected!

In the U.S. at least it's pretty rare to see shops of any kind inside of subway stations or libraries. There's a few news stands in some NYC subway stations, but not many. I've been throughout much of Europe and don't recall seeing many stores in most of the subway systems -- but maybe I wasn't paying attention.

But there will be some kind of place to get a bite in many train and even bus stations.


That’s a good question. I wonder if it comes down to traffic volumes. I think US transit systems carry a lot fewer people compared to international ones, but I don’t know how they compare on a station by station basis. Is there enough traffic to “feed” retail on the mezzanine?


At some subway stations in Shanghai (notably People's Square and Xujiahui) there's more space devoted to shops than to the subway proper. (Those are outside the area you have to pay to enter. Inside, there are also shops, but not very many.)


Perhaps because other local interests don't want competition?


Americans not wanting to learn from other countries is just so puzzling to me. If I ever get an answer to why it's often "the US is much bigger than Sweden, it wouldn't work here" to which I reply "then why don't your states look at the European countries? Germany and France have way more people than any US state" to which I get some defeatist drivel about that too.

Meanwhile in Brazil, China and India curiosity reigns.


I actually have a reasonably large amount of knowledge on this topic. I took a break after the dot com bubble burst through structural / construction engineering[0] before returning and my brother has been and continues to be in charge of some mega projects for EllisDon.

It is certainly worse in America, but it's not great in Canada either. The issue is this: There is no incentive alignment at multiple levels of these projects.

For example, I've worked with a couple great unions[1] but overall unions slow things down. There have been times where I've been reprimanded for lending a utility knife to open a pallet to a unionized worker.

It's too adversarial here and it really does slow things down. I've seen countless work-arounds to the rules just so employers can pay people that work harder more. For example, only valued employees are offered snow plowing work in the winter when construction is slow, but these tactics don't scale.

Then, on the other side, we do not pay our public servants enough and nor do we have high enough standards for their work. There are good public servants, to be true, but that's essentially random chance. It isn't because we've intentionally created a culture of achievement or excellence in our public works departments.

In both cases firing someone is too difficult. I'm not saying it should be easy, but I've known people that show up for work at 10:30am and leave, no joke, at 2:00pm. It's completely ridiculous.

Then there is the issue of building for the first time versus expanding or maintaining. First time construction is much easier. Standards are lower, there is less stuff in the way, everyone in the city is excited for the new thing so people make sacrifices. A new subway or sports stadium brings in business to the surrounding area, so part of the cost can be pushed on to local property owners in the area. Thirty years later when the soffit is cracked because subsurface water wasn't as expected there is none of that stuff. Just some angry commuters and shop owners wondering why it is taking so long.

I'm starting to think that capital projects, especially subterranean ones, are inherently worse than smaller alternatives. They're so expensive to maintain and once they're in there is no going back. I'd rather have lots of bike lanes or streetcars than subways. We could build a lot of bike lanes for the same cost of a subway, and even have them covered so snow and rain wouldn't be annoyances.

[0] I worked on lots of stuff for the TTC, including subway stations, and some stuff for the City of Toronto.

[1] Electrical worker union IBEW Local 353 was especially great because they pushed their employees to work hard. In exchange, they were able to negotiate default conditions like nine-hour, four-day work weeks. It fostered a sense of pride in their trade and work.


Interesting about the stations. My Ontario city is close to starting an LRT system and the station costs for just those seem kind of high.

We recently added a new station for the GO regional railway transit system that currently has two trains a day and I think it was something like $50 million Canadian. I can understand needing an elevator for disability, but it could have started as something simple besides that.


I found this article really fascinating.

https://www.nytimes.com/2017/12/28/nyregion/new-york-subway-...


“That said, having spent the last nine years looking at topline costs and a few itemized breakdowns does let me reach some initial conclusions, ones that I believe are robust to new data.“

So... a hypothesis?


The Big Dig in Boston was originally estimated to cost $8 billion. People were upset about this.

There were multiple problems along the way. It ultimately ended up costing $22 billion. People were also upset about this.

At the end of the day? It was an awesome project. They completely buried a highway that cut through the city, and added a ton of green space downtown (The Greenway).

The city is better for it. Taxpayers would never have allowed it if they had their way.

We need a similar program to revitalize the MBTA. It should be done regardless of the cost. I will happily pay more real estate taxes and highway tolls for the rest of my life to support it.


>At the end of the day? It was an awesome project.

That's not the problem people complained about though -- the project's eventual quality/utility.

The problem people complained about is the cost of the project -- and especially for overpaying for something that could be done for less.

And that (overpaying) is a big problem for several reasons:

1) The money could go to other projects to better the city.

2) The money could be spend on future maintenance of the Big Dig itself.

3) The past history of such costly projects (fat margins and corruption-driven extras) nips the public appeal and political will to build new infrastructure in the bud.

If the Big Dig could be had at 4B, or 8B as promised, or, heck, even 10-15, and ended up costing $22 billion, that's a huge problem -- regardless if it was cool once completed.

Especially if the completed project is only $8B cool, and not $22B cool, and the extra money went not in improving it, but in delays, corruption, and other BS.

Otherwise what you're saying is:

"If a project can be built the same for N, it doesn't matter if we pay 2xN or 3xN due to over-charging/corruption, as long as the project is useful".

As if the extra money don't come with lost project opportunities of their own...


Sure, I absolutely think better accountability needs to be in place — but people didn't want the project at $8bn either.

People complained before ground was even broken. Looking at the scope of the project in retrospect, as well as the known unknowns, I'm surprised anyone thought it would cost $8bn ($22bn seems too high, but I'm just an interested layman).


It is a great project and allowed the city to expand into places that were very inaccessible (south boston). Having a second tunnel to the airport is actually the best part in my opinion.

People here are VERY untrusting of any government projects because of this project. See the Olympic bid that was supposed to have all sorts of public sector improvements rejected (well who rejected who is another story)

But traffic on 93 (the tunneled highway) is back or worse than pre-upgrade levels (some of the worst traffic in the country here in Boston), the public transit promised as part of the project is finally being worked on (green line extension) but it all seems like its not enough. Housing prices in the Boston area are at SanFran/NYC levels.

We need more infrasturure in boston. We have good proposals (North-South rail link, south shore rail) but lack a governor /politicians who will be honest and tell people they need to pay for this stuff.

Public transit is so bad here that a running club raced one of the green line trolleys (I'll let you guess who wins)

https://www.bostonglobe.com/metro/2017/01/04/race-pits-runne...


less constructively: taxpayers who complain about bad infrastructure but who don't want to pay taxes to fund better infrastructure can shut the fuck up.

please, <municipality>, take my money. build me a decent public transit system and provide high quality services.


How much money though?

It's impossible to pay for everything. The way you talk you want unlimited funds spent on public transportation - but then what happens to all the other expenses? Just don't fund them?

> but who don't want to pay taxes to fund better infrastructure can shut the fuck up.

Or maybe, they want limited funds spent. There is nothing at all wrong with that.


Can't speak for everyone, but the consensus here in Massachusetts feels like "I don't use the MBTA so I don't want to pay for it in taxes/tolls." (Surprise, we also have a massive congestion problem because our population increases 300% during the workweek).

It's the I got mine and fuck the rest mentality. People always ignore that infrastructure benefits everyone (and in this case public transit improvements are MASSIVE for the lower classes).


But is it $22 billion better?


Profoundly, yes. Downtown Boston was a dismal place when I was a kid. It was dark. The overheads sucked so, so hard.

I've worked downtown for years now and it's a pleasant place to be.


https://www.rosekennedygreenway.org/files/1515/2691/1827/ban...

Yes. Everything green here was once under a highway. It completelpely changed a major portion of the city and opened up routes for other parts of the city to become more developed.


  The Big Dig in Boston was originally estimated to cost $8 billion. 
No, $6 billion in 2006 dollars ($2.8 billion in 1982) per Wikipedia.

  It ultimately ended up costing $22 billion
$24 billion, according to the Boston Globe (10 July 2012), yielding a nice, round 300% in overruns.

  At the end of the day? It was an awesome project. 
Seriously! It's so nice when your "$6 billion" project gets $8.55 million in Federal funds that the locals don't even have to pay for.

The Big Dig cost almost triple what the entire Panama Canal project did (adjusted for inflation). There's nothing to be proud of there.


The difference between the $8.5M in Federal funds, and the $24B that the locals had to pay, is about $24B.


s/$8.55 million/$8.55 billion/


If you want to put the Panama Canal through Boston it's going to cost astronomically more than $24bn — the logistics (not to mention the requirements and processes of the time period) are entirely different.


How is that at all relevant?


The grandparent poster compared the cost of the big dig to the cost of the panama canal to in an attempt to show that the big dig was overly expensive.

This parent poster is pointing out the fallacy by hypothesizing that the Panama canal in Boston would be way more expensive than the Panama canal in Panama, thereby showing the error in the grandparent post's reasoning.


Agreed on the MBTA. However rather than build new lines (e.g. Green line extn) let's put in overhead electrification on the commuter rail and let Green line style trolleys go out to the all of the 'burbs inside 128.

Also, we have tolls on the tunnels & bridges around Boston for the locals, but those who live in southern NH (presumably avoiding MA taxes) and are pounding up and down 25 miles of I-93 every day don't pay anything. They probably don't even buy their gas in MA.

Put electronic tolling on I-93 & Route 3 just south of the NH line. That would raise funds for the MBTA and spread the cost to those actually using the roads.


I don't disagree. We should have a lot more streetcars and (everyone has their own priorities). Reducing traffic from the suburbs would be massive.

There's also a huge amount of inequality in Boston proper due to the removal of the elevated Orange Line (which is inadequately serviced by the Silver Line and other busses). The most used bus routes (which mostly serve Roxbury and Dorchester) should be converted.

Agree on the NH front too. I don't envy the people who commute from NH to Boston every day, but they should absolutely be tolled.

I think more radical traffic easing will need to happen eventually. Do we really need hundreds of thousands of people commuting in to sit in some cubicle downtown from 9-5? Shit no. I'm not sure what needs to happen there... reducing property taxes on business that shift their working hours or let their employees work from home X amount of days per week? I hate reducing corporate costs, but what else would convince them?


I think streetcars are the solution, they can co-exist on downtown streets with cars then have their own lines when there's space. Did you know there used to be a streetcar that ran from Medford Sq. to Stoneham Sq. through the fells?

There's little to be gained by politicians saber-rattling and telling people to not use cars when there are no practical alternatives. If you don't live within the inner 1-2 city ring around Boston and you're not on the commuter rail, you have no choice but to drive.


> If you don't live within the inner 1-2 city ring around Boston and you're not on the commuter rail, you have no choice but to drive.

Right, but how many people are driving who live within that ring? Just eliminating those commuters would likely solve the congestion issues...


I don't think that many are. Most people I know who live within ~3 miles use the T, bike, walk, bus or even rollerblade! (parking is expensive in the city). It's the middle to outer 'burbs that have to drive (unless you live on the commuter rail).

Interestingly, plenty of people who live in towns on the commuter rail do use it, but they all complain about packed trains, crappy service when it snows and of course if you miss one, you're waiting another hour for the next.


I'm super happy that you are happy.

I'm less than sanguine about the fact that you and your people compel others to bear the burden of your personal value choices.

As well as paying for the burden of the corruption involved in Bostonian construction projects that (at least) doubled the cost of what it should have gone for.


>As well as paying for the burden of the corruption involved in Bostonian construction projects that (at least) doubled the cost of what it should have gone for

Is there evidence of this? Everyone says it but it always seems extreme (Seriously? $11bn to corruption?). I think there's credence to the fact that these projects often go to the lowest bidders, and in this instance there was a lot of rework done to compensate for cheap materials and poor workmanship.

>you and your people compel others to bear the burden of your personal value choices

New Hampshire is an hour away if you don't want a tax-supported public infrastructure.


Regulation.


Yeah, wanting building not to fall down really slows down construction.


Government. I didn't read it, but that's the reason.


And you are wrong, so go read the article.


I haven’t had time to read through the entire article in detail but my skimming indicates that the article fails to identify what I believe is the true reason for tunneling increases in the USA: third parties and their ability to sue projects.

This increases costs due to risk of lawsuits/challenges and excessive amounts of money put towards mitigating this risk. This continues from procurement through design and through construction. Environmental concerns have ironically been coopted into this category by NIMBY folks.


This is addressed in section 8, "Institutions part 2: political incentives":

> the political system favors NIMBYs and really anyone who complains. Infrastructure construction takes a long time and the politician who gets credit for it is rarely the one who started it, whereas complaints happen early. This can lead to many of the above-named problems, especially overbuilding, such as tunneling where elevated segments would be fine or letting agency turf battles and irrelevant demands dictate project scope.


My point is related but not exactly the same as his section 8. Litigation in America is what has driven defensive design and construction because we are ALWAYS positioning for claims, especially from third parties. The author is zeroing in on politicians and their lack of a need to take a project from "cradle to grave" and/or answer for cost overruns. This is a symptom of the problem, in my opinion.


Also just as a point on High Speed Rail: this job was put out to bid and awarded before the owner had secured property access for the contractor (Tutor) and Tutor sought damages for this legitimate delay. Shame on Tutor for being good at playing the game that California has set up I guess?


> the article fails to identify what I believe is the true reason for tunneling increases in the USA: third parties and their ability to sue projects

Why do you believe that's the true reason? I have no idea if it is or if it isn't, I'm just wondering where you got that from.


I have worked in the tunneling industry for nearly a decade designing, building, and procuring these jobs. Tunnels are generally the last option chosen when third parties are the concern. They are the most expensive option, by far, unless other factors (environmental, public impact, political perception, etc.) are considered. Therefore, once you arrive at the decision to use a tunnel, it becomes clear that third party impacts are a driver.

From that point it becomes a battle of easement/property acquisition during procurement and with each easement or third party agreement comes promises that must be made to that third party. This translates into design mandates which need to be held and designed around which translates into additional design costs and then additional construction costs. If we don't hold to these agreements then litigation ensues, and so we would rather overdesign to reduce the risk profile and position the project better for the inevitable lawsuit.

Other countries do not have similar litigation risks. Or at least, that's what my European contemporaries tell me when they come to work in America.




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