Bad news for Len and his mega-projects

Len Brown like spending other people’s money, buckets…no…truckloads of it, on his pet projects. He even wants the rest of New Zealand to pay for his train set…not content with picking Aucklanders pockets h also wants to pick everyone else’s.

He has a problem though…all around the world the evidence is clear. Civic mega-projects always cost way more than intended.

Last week the¬†San Francisco Chronicle¬†reported¬†that the Transbay Transit Center, a massive transportation hub calling itself the¬†“Grand Central Station of the West,”¬†will cost at least $300 million more than project officials estimated. One city official characterized the situation as unfortunate but said it wouldn’t have a “meaningful impact” on the project. The comment may have been meant as optimism, but it also reflects the fact that enormous cost overruns have become such a normal part of urban mega-projects that they barely even register as a problem.

So how did it get to the point where the only thing we can confidently expect from a big infrastructure project is that it will cost way more than expected?  

It got there because we don’t do nearly enough as citizens to hold free spending politicians to account.

One thing’s for sure: the people who predict the cost of urban mega-projects do a terrible job. Several years ago the University of Oxford scholar Bent Flyvbjerg, who’s made a career researching¬†mega-project mismanagement, analyzed 258 transportation infrastructure projects from around the world and found that nine in ten exceeded their cost estimates. The overruns were greater on rail projects than road projects but averaged 28 percent across the board.

What struck Flyvbjerg most about the problem was how very un-random it was. If people were simply very bad at estimating the costs of huge projects, then one might expect some projects to come in under budget and others over. But an under-budget mega-project is about as rare as a dodo riding a unicorn. Instead, wrote Flyvbjerg and some collaborators¬†in 2002, it’s more likely that when it comes to mega-projects, public officials engage in “strategic misrepresentation” ‚ÄĒ aka lying:

The policy implications are clear: legislators, administrators, investors, media representatives, and members of the public who value honest numbers should not trust cost estimates and cost-benefit analyses produced by project promoters and their analysts.

Un-random, in other words certain…that Len’s big projects will cost way more than planned.

  • Clever Harry

    The only way of knowing if a project is truly viable is to allow the private sector to develop, own and run such pieces of infrastructure.
    Toll roads don’t work (in Sydney PPP toll operators went bust) and it is spooky quiet on the western front.
    In short – nobody wants to do it because it doesn’t stack up.
    Interestingly lots of private ferry operators and bus operators. Appears to me the proof of viability is in the lack of private contenders for such projects.

    • philbest

      The reason toll roads “don’t work”, is that they have to compete against alternative routes that are still free of charge, and when the new capacity of the new PPP road kicks in, the alternative routes suddenly experience reduced congestion and are worth using for a lot of people. The toll road only really becomes viable once congestion has risen again back to closer to the earlier status quo. And by that time the PPP operator has gone bust.
      Still, I like the fact that the public got a cheaper road, but the PPP investors have learned and backed off, as you say.

  • jimminycricket

    what’s black and doesn’t work… manukau

  • cows4me

    “the people who predict urban mega-projects do a terrible job” , of course they do, it’s probably in their best interests to do so. It’s like sucking on the tit, who wants it to dry up quickly.

  • JohnS

    I deal with Council policy and strategy planners on a daily basis.
    Lets be blunt. They all live in a vacuum and dream loftily of utopia.
    The unfortunate thing is they believe what they believe. It’s impossible to convince them of alternatives.
    They are indoctrinated and bound to ideas and principles learned from University. The theoretical like Crystallers Central place theory which is a theory to help students understand economic geographic structure.
    In all of this is a sense that all projects work if you just believe. If you plan it will happen.
    Moronic and fantastical at an extreme level.

    • philbest

      Absolutely accurate analysis. Add to this, that bureaucrats always base their decisions and policy advice on what is good for their departmental growth, job security, promotions and perks – it is never anything to do with “working for the public” or even “for the government”.

  • Dr Knowitall

    Fantasy thinking is one characteristic of narcissism. Common throughout modern society ordinary people are scattered along this spectrum.
    We see it in Councils where the collective selfish ambitions of the people – all wanting their slice of fame and conquering – drive for such idiotic fantastical ideas.

  • peterwn

    In the old days, Ministry of Works and Development pared down estimates so projects would be accepted, but this left no room for unexpected things. There was no effective sanctions until in the early 1980′s Treasury was lobbying for more ‘user pays’ and persuaded the government that Maniatoto farmers should pay for the recently completed irrigation schemes. Final costs were assessed and charges determined accordingly and were met with howls of protests from the farmers who considered charges should be based on the initial estimates not completed costs. Warren Cooper (local MP I think) called for heads to roll, and the Works Commissioner found scapegoats. It was unfair on at least one of the victims as he was not at a particularly senior level and had to work within the parameters of his superiors. I strongly suspect that Auckland rail costs have been estimated in an excessively tight manner.

    Iain Lees Galloway (L Palmerston North) effectively asked in Parliament why the long suffering taxpayer was not paying 50% of Auckland rail costs. Caused me to wonder whether he was really representing his constituents, but I suspect he considers them too dumb to realise what is going on.

    • Louis

      LOL you do realise that about 30% of national tax revenue comes from Aucklanders as well. So Aucklanders would be paying 65% of the projects, more than twice its fair share.

      • Tom

        2 x 30% = 65% ?
        Why do the rest of the country need to pay for Auckland’s fucking transport ?

        • Louis

          50% comes from rates and other Auckland Council revenues = 50%.
          The other half is sourced from tax revenue, which Auckland contributes about 30% towards = 15%.
          50+15= 65

  • Brian of Mt Wellington

    Brown will lie his fucking eye teeth out just to get his own way. He has told that much bullshit one doesn’t know what to believe what spews out of his mouth. If his pet projects fall arse over tit in a few years he wont care as he will probably retired somehow living off the pigs belly. You just watch.

  • philbest

    The biggest tragedy seems to me that no-one who speaks unpalatable truth gets elected instead of the “strategic misrepresenters” mouthpieces like Len Brown.

    Actually, MOST Aucklanders are incredibly thick to support “a more compact city” and “sustainable public transport” without having the slightest intention of changing their own lifestyle or allowing intensification to occur in their neighbourhood. I know a lot of people who DO think that “everyone else” is going to use the train and leave the road clearer for “ME”. And presumably everybody else and everybody else’s children, are going to live in apartments, or at least live next door to them.

    The redneck bible-bashin’ gun-totin’ hicks in Southern and heartland USA who just vote for “more sprawl” in their cities are exponentially more clever. Want less congestion, don’t want apartments in your street, want decent housing at affordable prices? Let developers BUILD the freakin’ stuff beyond the existing urban fringe, DORKlanders….!!! DON’T vote for Greenie chardonnay socialist hypocrite twats like Len….!!!

  • philbest

    Really pleased you’re referencing Flyvbjerg, the guy is a gift to humanity.

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