Ever find a diamond on a trash-laden beach? I haven't, but that's how I felt when I read this Danny Westneat column. (Those unfamiliar with the Seattle Times columnist may need an explanation for my reaction. Westneat is not the worst journalist in this area by any means, but he is closed-minded on many subjects, and limited in his range. His columns on local subjects are often worth reading; his columns on national and international affairs often make me cringe. And he is no better with numbers than the average journalist, which is to say that he is not very good.)
Somehow, Westneat managed, in a single column, to make an important generalization, apply it to a local project, and introduce me to an academic, Bent Flyvbjerg, who has been doing work that every citizen of a democratic country should know about. I have no idea how Westneat produced this gem, considering his past work, but I am deeply appreciative. (Flyvbjerg is pronounced, Westneat tells us, "flew-byair")
But enough of the build-up, let's go to the bottom line. The very inflated bottom line.
But a professor at Oxford University in England has done a compelling series of studies trying to get at why big public-works projects such as bridges, tunnels and light-rail systems almost always turn out to be far more costly than estimated.
"It cannot be explained by error," sums up one of his papers, matter-of-factly. "It is best explained by strategic misrepresentation — that is, lying."
That should be enough to get you to read the whole column, especially if you live in this area. If not, let me urge you to take a few minutes to do so.
And let me go a little farther and suggest that most of you should take the time to read this Flyvbjerg speech, where he presents some of the evidence he has gathered for his unpleasant conclusion, that over-runs on megaprojects are best explained by lying. (And I plan to go even farther and buy his book on the subject.)
It is not surprising to learn that politicians have been lying to us about the costs of these megaprojects, and it is not entirely surprising to learn that project planners have been lying to us, too. Disappointing, but not surprising.
If citizens learn how common these lies are, how almost universal they are on megaprojects, we may be able to detect more of those lies in advance, and we may be able to punish some of the politicians and planners who have lied to us.
Cross posted at Jim Miller on Politics.
(Here's Professor Flyvbjerg's web site and here's an article describing his work.)
Posted by Jim Miller at May 11, 2009 01:48 PM | Email ThisNaivete and "Let's Get It Done" bravado is not lying in the public works sense.
Not really taking into account actual costs of similar projects or minimizing potential pitfalls, or properly guessing the inflation rates are all examples of poor planning and estimating.
If these agencies had people (and believe me when I say the pols hammer the expert estimators to produce the desired result) who intentionally gave false information, then I'll go with your definition.
Or, it might be disengenuous when you estimate using today's costs and today's inflation rate when you know that the construction won't happen for five to ten years. Kind of like this year's legislators and governor misestimating the revenues coming in the door.
If they do it on purpose, then yes, it would be "lying" in my book.
Does Flyvbjerg define it as such? Or does he use the local moderators definition of "lying"?
Posted by: swatter on May 11, 2009 02:54 PMHOPE AND CHANGE!
Wait, is that a lie?
Posted by: Shanghai Dan on May 11, 2009 03:05 PM(Incidentally, Strunk and White do not make that rule absolute, saying only that "farther serves best as a distance word, further as a time or quantity word".)
Swatter - I linked to his speech so that you read his definition of lying for yourself.
Posted by: Jim MIller on May 11, 2009 03:20 PMDepends on what your definition of "is" is.
Heh heh
Posted by: Sam Adams on May 11, 2009 04:16 PMWhat are we going to do? The project is 90% complete, we want our latest toy, so we bail them out. At the end of the day it still comes down to us the taxpayer, shame on us for allowing this to continue.
So, it isn't just the estimate per se, but the level of confidence in the estimate based on what level of information is known about the project.
It seems in many public works projects, approval comes at an early phase where little has been designed so the degree of confidence in the estimate is low - and why not? The system now doesn't generally cancel projects as their costs become better known - instead the budgets are adjusted.
Sound Transit had really poor budgeting early, arguably has gotten their act together and now their budgets more closely track costs (and are of course higher to reflect that reality).
They have projects though that could outright be cancelled it costs went up too much and we'd be fine (or at least not much worse than now).
But what if, for example, the 520 floating bridge when fully designed and priced comes in 25% over budget - is it cancelled?
Better yet, what if during construction prices jump dramatically like we witnessed during the last construction boom - is the project left unfinished?
Taking what Flybjerg has found and simplifying it down to "Politicians lie" doesn't do his work justice, nor will it change anything.
Learning from his work that understanding what's known and what's not in budgeting, and what the upside range of potential overruns might be and having a plan to deal with them is the point.
Posted by: BA on May 11, 2009 06:27 PMThe promoters don't even have to be knowingly understating the costs. Remember, it's very expensive to do a thorough cost estimate, and a thorough estimate can't even be done until all the construction plans and specifications are completed.
But, the consultants (and of course the political beneficiaries) of the project, having laid out some flowery language of hope and change, now wish for public acquiescence in proceeding to develop those plans and specs and to build the project. So they enter a process of hasty estimates, done on a limited preliminary budget, and of course those hasty estimates don't cover all the details of the final project. But they almost always show optimistic total costs for the project, useful in persuading the rest of us to vote 'yes'. Can we imagine why?
Well, use of those hasty estimates is a hell of a lot more likely to result in a "yes" vote than if enough resources and dollars were laid out to develop a good one. And there's an enormous conflict of interest at this point, in fact, many of them. Those who want the project to proceed (other than the fluffbrained members of the public who think that they will derive services from it that 'others' will pay for) are most likely to be legal firms, consulting engineers, environmental consultants, labor unions etc etc who will be HIRED to do enormous amounts of work on it, and will profit from it directly. And the chances that the initial estimates will turn up an evaluation of "unfeasible" (public benefits of far less than the public costs) are microscopic - since none of the above list of circling vultures would be thought very smart if they didn't go for the project WHATEVER the cost.
That pressure to proceed with the project is no less a natural law than gravity.
The President and the Pelosi Congress have just given us a superb example of this syndrome - their monster 'stimulus' bill, which no one ever had a chance to read before voting 'yes', is just an exaggerated case of the actions of political beneficiaries using a nifty 'emergency' as an excuse to vote in a monster project. Public costs exceeding public benefit? Absulutely. Who cares, as long as the Democratic half of the public get the loot, and the other half gets the shaft?
Posted by: Insufficiently Sensitive on May 11, 2009 06:37 PMIn the private enterprise world, we call that deceptive advertising and bait-and-switch, both of which can land you in jail.
Apparently our Government does not have to hold to the same standards it requires of its subjects...
Posted by: Shanghai Dan on May 11, 2009 06:40 PMBut then, he may be lying about honoring the wager.
Posted by: DoppioLover on May 11, 2009 06:42 PMNeither of which is deceptive advertising or bait and switch.
Though you might have a point anyway - because many if not most public projects rely on private sector cost estimating to develop project budgets.
So, shouldn't those firms that develop the estimates be jailed? I think that's what you're saying.
Have you ever written a budget that perfectly represented the actual costs of a complex project? Was it dead on? No changes in either scope or cost from beginning to end?
You'd be the first if you have.
Posted by: BA on May 11, 2009 06:53 PMIf I come to you, looking to sell you products or services for a price, or am looking to get you to invest in my company, I have a requirement to follow through with what I promised as best as I can.
If I tell you that I can get you a 2008 Mercedes S350 for $30,000 and you sign on the line, I can't come back and now tell you "sorry, it's $80,000 so you have to pay me another $50,000".
That is what Government does when it woefully underbids projects.
Doing it once? OK, learning mistake. Move on. Doing it time after time after time? That's a pattern of deception, and in the private enterprise world that will get you hauled into court.
Posted by: Shanghai Dan on May 11, 2009 07:03 PMYes. A 24 man-year effort with a $9 million budget that came in ahead of schedule and under budget. Of course, in my 20+ years of engineering and management I've learned to pad schedules and budgets to account for the inevitable "we didn't think of that".
Was it dead on? No changes in either scope or cost from beginning to end?
Scope changes happened. We rolled with them, re-adjusted the budgets and schedules, and when significant changes happened went back to the stakeholders and got them to buy in once again. It's what responsible, ethical business does.
Posted by: Shanghai Dan on May 11, 2009 07:08 PMAnd while I applaud Bent Flyvbjerg's work and think we should try to learn from it, it creates a paradox. If we knew the true cost of projects, we'd probably do very few of them, even though ultimately I think most citizens are glad we did projects even with their overruns. I'm not saying we should deliberately let ourselves be deceived. But if we make better estimates of cost, we also need to be sure we've correctly judged all the benefits of a project.
So, use the 520 bridge as an example.
When it goes over budget because materials increase at a rate greater than what might be anticipated from historical trends what do you do?
Go back to the stakeholder (taxpayers) and admit you "lied"?
What are your other options?
Public or private - the estimates that the government uses are generated by the private sector. The projects are built by the private sector. A delivery system that is more like design build might well be more predictable for the government and taxpayers. Whether or not it saves money is a different question and answer.
Let's just assume for a minute that all of the Progressive transit dreams come true. Even greater urban density. Viable wind and solar as a large percentage of our electric power. A new breed of electric car powered by wind and solar panels installed on every home. Greater use of bicycles, etc. None of that will lead to train ridership. If you give a Progressive that wants to feel good about saving the earth, a nice new battery powered car, they are not going to take the train. They will feel good about using that new environmentally sound car to get where they want to go.
Meanwhile, real market forces will also work against mass transit mega projects. As money is diverted away from roads, and congestion ensues, people will move closer to work. Companies will be forced to fill carbon mandates and they will further incentivize employees to live close. And when they can't, technology will make working remotely more and more feasible and acceptable.
And there are the realities of 21st century life, with a huge number of options for recreation, child activities, community involvement, commuter colleges, second and third incomes, etc. All of these will drive more auto usage, not less. And don't forget terrorism as a psychological force. Is the terrorist going to strike the loan commuter in a car, or even a stretch of roadway or a bridge, to kill a few 100, when he can instead go for a train station? And everyday folks will make that calculus and as much as they can avoid the trains, they will.
It would be one thing if we really lived in the dense urban environs of Europe. And in some of our East Coast cities, long since established mass transit does work well. But here in the Sound with multiple massive geologic barriers of water, hills, mountains, rivers, etc. it is cost prohibitive to build a large and functional train infrastructure that won't be long outmoded before it is ever complete to any truly useful degree. And this area just isn't that densely populated yet so as to require a mega transit system and have the ridership to support it at an even partially self sustaining level.
Lastly, the whole idea of transit hinges on key corridors, but the real daily transit maps of our citizenry look much more like a spiderweb, and much less like a subway map. There are plenty of people commuting between areas that won't get transit for decades.
And yet, through clever manipulation, and largely through very poorly researched and leading media stories like when Danny Westneat rode the Max down in Portland for a few hours to help push Sound Transit proposals through, we still see a false panacea that many deluded people think will become a reality. And don't forget we have not even fully funded the very first minimal phase of the system, with decades of bonds to pay off. And we are simultaneously setting up vastly increased government with many other non-transit, yet grandiose spending plans, and with tax revenue crushing controls on the ultra rich, upper middle class, and middle class, who we are counting on to foot the bill.
Posted by: Jeff B. on May 11, 2009 09:18 PMErgo, Bush/WMDs: not a lie; bureaucrats/cost overruns: either willful ignorance or lies.
Posted by: AD on May 11, 2009 09:20 PMSound transit: cost $2.2 billion to get the vote passed.
Almost as soon as it passed, costs shot up to $4 billion for fewer miles of track.
Another one: the gas tax vote.
About 1/3rd of the promised projects have been cut since the gas tax vote, foolishly supported by many here, actually passed.
Another lie: That this silly-assed tunnel will come in anywhere near the cost they're telling us.
Look up "Big Dig."
I will gladly entertain questions until the end of the class period.
Posted by: Hinton on May 11, 2009 09:42 PMSound Transit Link Light Rail: $179 million/mile
Light Rail National Average: $35 million/mile
Same thing happened with the cost of the Iraq war, but on a much bigger scale.
Posted by: Richard Pope on May 11, 2009 10:09 PMHere's one example: "Even greater urban density" is posited as a "progressive dream."
But actually "even greater urban density" is something the market is trying to accomplish, but government won't let it.
Government has laws in place against density at every turn. The most desirable sites, such as the shore of Lake WA and the Sound here in Seattle are zoned residential. Everywhere there are hieght restrictions, and thanks to neighborhood activists, builders must build parking garages if they want to build residential towers, which removes the entire cost advantage of dense living.
If the market could be set free, it would create the density to make transit profitable* (unfortunately, gov't has a stranglehold on transit management) and those two factors together would blow out the car-loving mindset us older Americans have been forced into.
And it would be the best thing that ever happened to the environment.
*and taxes could be denied roads so they were strictly funded by user-fees, thus leveling the playing field with privately-run mass transit operations.
So ok, it's dreaming, but it's not a progressive dream, it's a true-conservative dream.
Have a great night all,
New Left Conservative # 1
Posted by: new left conservative # 1 on May 11, 2009 10:16 PMI completely forgot to mention:
Thanks for the great blog Jim, 100% perfect, and the kudos to Westneat are well-deserved.
Thx,
nlc 1
Please provide a single example of this. Thanks in advance!
This state's Big Digg was the fiasco perpetuated by a cadre of power companies called WPPSS or Whoops after the costs became unmanageable. What caused these overruns? The proverbial clause stating, "acts of God", or in this case everchanging federal requirements. This coupled with WHOOPS deciding to act as Project Manager, you had the recipe for disaster.
Hopefully, in these new budgets, they don't use today's numbers (I doubt it) and use more practical numbers that will include the huge round of inflation we will be getting in 2011 and 2012 (maybe earlier, maybe later but definitely coming within the scope of this project).
If they aren't using inflationary numbers, and with what we know now, I can say the Staters are "lying" in the strict sense of the word.
Posted by: swatter on May 12, 2009 07:48 AMGovernment does have laws protecting property rights. Are you suggesting that residential areas be arbitrarily rezoned by fiat so that high rises can be built? This is what caused all the uproar in New England vs. Kelo. Because invariably it's either government looking for more tax revenue, or some lobbyist developer looking for a sweet deal to build. Both are wrong, private property is private property.
Also, Seattle makes every effort to foster permitting and building of the condo/ dense urban buildings we see going up everywhere. So I don't see how you can say that government is not very much working towards that goal. And often, any parking for such building is quite limited, which has been a big problem in attracting buyers, but definitely working towards the goals you envision.
It's not a car loving vision that most have. It's simply a getting from point A to B in the quickest and most convenient manner loving vision. You can't put the cart before the horse. When one wants to get to say, Redmond from Puyallup, the vast majority will choose their cars. And that will be the case for decades as transit focuses on the I-5 and I-90 corridors first.
The simple reality is that it is the geography and vastness of the West, and the density of the West as it grew with respect to current technologies that created the auto boom.
And I predict that it will be a new technology that will ultimately change the game again as well.
Posted by: Jeff B. on May 12, 2009 09:06 AMHere's what I learned.
The Renton Sewage Treatment facility operates at an average daily rate of 100 million gallons. Its peak is around 160 million in heavy weather, but it has a whopping unused potential capacity of up to 280 million gallons of sewage a day, or 120 million gallons not currently being used.
So what are we getting by Ron Sims' forcing Brightwater on us at a cost of a billion, oh no, $2 billion dollars?
Unbelievably, Brightwater is designed to run at only about 35 million gallons a day. And its peak capacity is about 55 million gallons a day, or less than half the unused capacity in Renton!
So Renton has an untapped capacity of 120 million gallons of treatment a day, but we're wasting $2 billion that could be used to improve the overall system, like replacing 100 year old wooden pipes throughout the Puget Sound, so that builders can avoid higher connection costs in north King and south Snohomish counties?
Maggi Fimia fought single handed to expose the lie of Brightwater's desperate need and lost. Sims ultimately got what his builder buddies wanted, and we're going to pay for it long after Sims is done screwing up Hud.
Posted by: Reality on May 12, 2009 09:23 AMA group of Danish researchers led by Bent Flyvbjerg found that U.S. rail transit projects cost an average 41 percent more 10 and attracted fewer than half the riders than originally projected. In contrast, U.S. road projects went only 8 percent over budget and actually underestimated use. Rail cost "underestimation cannot be explained by error," says Flyvbjerg, "and is best explained by strategic misrepresentation, that is, lying." "Undoubtedly, most project proponents believe their projects will benefit society and that they are thus justified in cooking costs and benefits to get projects built," Flyvbjerg adds. "The ends justify the means, or so the players reason." Even after cooking the books, planners analyses nearly always show that rail is the least cost-effective transportation solution. Yet cities and transit agencies usually propose to build new rail lines anyway.
Posted by: xabi on May 12, 2009 09:41 AMWrong, wrong, wrong. The people (see Constitution, US) have property rights, which governments are working as diligently as possible to erode and diminish and in some cases, remove.
Aided and abetted by unelected planners (whose political philosophy accepts as an axiom that far-seeing and wise planners are ever so much more qualified to dispose of property than its mere owners), there's a never-ending stream of proposed legislation toward that erosion.
The only legislation 'protecting' property is that in which a politically powerful entity enters a pact with an owner, in which said owner forever gives up her rights to alter or improve the property, in order to convert it to perpetual scenery for the benefit of others. If anything, it's a protection racket, not a protection of property rights.
Worse, there's a never-ending stream of government 'regulations' that seize and distort and diminish the tattered remnants of the rights of owners over their own property.
If progressives really believed in civil rights, they'd be out in the streets rioting to protect the free use and exchange of property between consenting adults. But the best the progressives can muster for consenting adults is the free exchange of sexual activities, which indicates how dwarfed their conception of a free citizenry has become.
Posted by: Insufficiently Sensitive on May 12, 2009 10:53 AMHow is that done when a vote first is required to even start the project?
I'm not saying you're wrong in principle - just that our system of funding needs to change to allow for this.
Posted by: BA on May 12, 2009 03:44 PMPS: They included a bike lane too!! (In addition to the eight lanes of vehicle traffic)
Posted by: Sparkules on May 12, 2009 04:59 PM