Friday, February 22, 2019

"How not to build high-speed rail"

FILE- In this Nov. 13, 2018 file photo California Gov.-elect Gavin Newsom, right, and Gov. Jerry Brown talk with reporters after their meeting at the Capitol, Tuesday, Nov. 13, 2018, in Sacramento, Calif. Newsom will be sworn in to office Jan. 7, 2019, concluding the 80-year-old Brown's four terms.
Associated Press

I've cited this book (Megaprojects and Risk: An Anatomy of Ambition) a number of times over the years. Bent Flyvbjerg and co-authors analyze hundreds of big projects around the world. The book didn't include our local and state boondoggles, but he's beginning to take a closer look at those. 

Below is from a 2014 paper by Flyvbjerg wherein he discusses the Central Subway project:

The following is a recent and particularly candid articulation of the nothing-would-ever-get-built argument by former California State Assembly speaker and [former]Mayor of San Francisco, Willie Brown, discussing a large cost overrun on the San Francisco Transbay Terminal megaproject in his San Francisco Chronicle column (July 28, 2013): 

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. 

Rarely has the tactical use by project advocates of cost underestimation, sunk costs, and lock-in to get projects started been expressed by an insider more plainly, if somewhat cynically. It is easy to obtain such statements off the record, but few are willing to officially lend their name to them, for legal and ethical reasons to which we will return. 

Nevertheless, the nothing-would-ever-get-built argument has been influential with both practitioners and academics in megaproject management. The argument is deeply flawed, however, and thus deserves a degree of attention and critique...
(page 13, What You Should Know about Megaprojects and Why: An Overview).

Flyvbjerg is quoted in the Los Angeles Times on the high-speed rail project:

“If I was going to teach my students how not to build a high-speed rail, the California system would be the lesson,” said Bent Flyvbjerg, a University of Oxford professor who has studied bullet trains around the world and is widely considered one of the top experts on mega-project risk. “It is a long shot to be highly successful.”

The problems, to be sure, do not preclude finishing the system, Flyvbjerg said. Experts close to the project estimate future costs could be covered roughly by a 20-cent-a-gallon gas tax or a half-cent sales tax or a 6% state income tax surcharge — though any of those would be a huge lift for Newsom and other Democrats focused on other progressive issues.

The California High-Speed Rail Authority has enough money to keep going for two to four years before it could exhaust its cash stockpile, depending on the flow of state funding and whether costs continue to increase. But time is the project’s enemy, as inflation adds $1 billion to $2 billion to the project’s cost for every year of delay...

Quentin Kopp, the former chairman of the state rail authority and now one of its critics, does not believe the project can be completed as structured and that the only hope is another ballot measure. Voters should decide whether to modify the bond proposal so that any remaining funds can be spent on regional transportation projects that may one day be connected in a statewide system. “I think Newsom will run out of money,” Kopp said...

“I call it the tragedy of Jerry Brown,” said Elizabeth Alexis, a co-founder of a Bay Area watchdog group that has warned of problems for years. “He had every possible political lever. He took political ownership of the project but never managerial ownership of it. Details matter.”

The entire project needs an outside evaluation and cost estimate, construction industry executives say privately. Flyvbjerg agrees that an outside panel of experts could be useful, but only if the state’s political leadership accepted and followed the recommendations...

Troubled projects are often finished, though they often become financial drains on governments, Flyvbjerg said, pointing to bankrupt or unprofitable systems such as the London-to-Paris bullet train through the English Channel tunnel or airport systems in Stockholm and Oslo.

“You reach a point of no return,” he said. “It means throwing good money after bad. It is very common in mega-projects.” 

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