While I agree with Mark Penn and Andrew Stein’s lament in an op-ed in the Wall Street Journal:
The Brooklyn Bridge cost $300 million to build in today’s money. The price tag for the Golden Gate Bridge was $750 million. Based on those numbers, the recent $1.2 trillion infrastructure package should be enough to build roughly 4,000 Brooklyn Bridges or 2,000 Golden Gates. If you believe that’s going to happen, we’ve got a bridge in Florida to sell you.
The sad reality is that the country will be lucky if any new bridges, tunnels or major roads get built. The numbers are huge: $110 billion for roads and bridges, $66 billion for Amtrak, $39 billion for public transit, $25 billion for airports. But watch where that money actually gets allocated in the next few years. So far most of it has gone entirely to renovation, not innovation. Environmental rules, endless delays, inflation, work rules and politics all play a role in ensuring that lots of pockets get lined but few new projects move forward.
On Jan. 31, President Biden visited New York to announce $300 million in federal money toward a replacement rail tunnel under the Hudson River—one phase of a larger renovation that will cost an estimated $30 billion and be completed in another 12 years. By contrast, the original Lincoln Tunnel was built in less than four years in the 1930s and cost $1.6 billion in today’s dollars.
Despite advances in engineering, building methods and computers, one rail tunnel repair now costs 20 times what a brand-new tunnel cost a century ago and takes three times as long, if it ever happens. Construction timelines are measured in decades rather than years. Had the projects of the New Deal been done this way, they would have stretched into World War II and beyond.
I don’t think their complaint about “efficiency” actually describes what’s happening. Why do we pay more per foot of road or bridge built than any other country in the world? It isn’t “efficiency”.
I suspect there are several possibilities:
- The United States has the largest number of lawyers per capita of any country in the world and lawyers are the foot soldiers of NIMBY.
- Neither the federal government nor state governments build roads or bridges. They let contracts for private companies to do them and only a very small number of companies are deemed qualified to bid. The successful bidders are rarely motivated to hire more workers or purchase more equipment to bring the projects in faster.
- Inflation is the enemy of bringing projects in at cost and on time.
just off the top of my head. BTW Boulder Dam came in on time and under cost. When was the last time you heard of a major infrastructure project doing that?
Cowen liked to a number of articles by the guy who does construction physics on why it costs more to build in some parts of the US. It covered a lot fo the literature on the topic which was pretty interesting in particular when they compared them to the costs in the rest fo the world which are much lower. The very highly socialized countries build much more cheaply than we do. Some of it appears to just be construction technique.For example in the US we dig much, much bigger holes and that excavation costs a lot. In Europe they standardize the stations. We often dont. In Europe they have a few companies that go all over Europe to build major projects so they are high experienced at these kinds of projects. In the US we tend to use local companies and workers who may do one of these major projects every ten years. Note that the ratio of supervisors to actual workers in much higher for US companies.
NIMBY is certainly an issue and the abundance of lawyers probably doesnt help, but in socialized countries with lots more rules they manage to make it work. At any rate, governance issues are a factor but it goes way beyond that.
Steve
I can’t tell you how many times I have seen projects delayed for days, weeks, or months. Just sitting idle. When I asked the reason I was told that it was either waiting for equipment or a team to become available.
In 1994 the Northridge earthquake collapsed a portion of Interstate 10, one of the busiest thoroughfares in the world. Fortunately there was a Republican governor and LA mayor in place at the time. Through their smart decision making efforts, relying more on private sector innovation and market incentives over tedious bureaucracy, the freeway repairs were completed in a mere 3 months – 74 days ahead of schedule. This was achieved by the contractor, C.C. Myers, hiring a larger crew working around the clock, 24/7, incentivized by an extra $200,000 for every day the work was completed ahead of their due date, and the cutting of bureaucratic red tape. In contrast, the Caltrans Director had estimated the repair would take 2 years – leaving the greater LA area struggling and losing business for that lengthy amount of time. It was said that Mayor Riordan voiced, following completion of the project, that this was the way government should work, rather than only in times of emergencies.
“The Brooklyn Bridge cost $300 million to build in today’s money. The price tag for the Golden Gate Bridge was $750 million. ”
No doubt NIMBY and regulations (and regulators) account for much of the cost of new construction. But remember, the Brooklyn Bridge was put up by Tammany Hall and Boss Tweed. The price deflator is a very poor indicator of current costs for old projects. Labor costs have soared very, very much more than inflation in general since then, and both bridges used materials not so common anymore. The Brooklyn Bridge towers are dressed stone. Has anyone built any large structure from stone in the last hundred years. And Golden Gate was riveted together (since replaced by nuts and bolts). I was taught rivet design in the early 60’s, but even then bolts and welds had replaced them.
I get the point, but I would not doubt that today both of the older bridges would cost much more than any current bridge of similar size.
And anyway, the main cost component of modern construction is the time delays, and the interest costs incurred.
That was a point I was trying to get across. The question is why the delays?
I think a major reason for the delays, besides litigation and compliance, is something Jan touched on: the civil bureaucracy and the contractors have few incentives to bring projects in on time. They actually benefit by delay.
I would prefer to read the actual stats rather than just convey feelings. On salaries and pay, since the EU teams are all unionized and they travel to and live at the sites where they work AND living costs are covered, they are actually more expensive than US workers. However, they are much more efficient since they do major projects all of the time. They have many fewer supervisors, perhaps because they have more experience.
One of the big costs noted in the literature was the delay in getting started in the US. It takes much longer to get everyone on board so the project can start.
Steve
Oh, Steve, you poor dear. There you go with your “studies,” which, no doubt, you read better than mere mortals. Kinda like covid stuff……
We have a company that sells materials to those guys who build roads, bridges etc. We see the real world all the time. Let there be no doubt, the legal wranglings, especially environmental, are huge drivers of cost. And legal delays mean bigger equipment rental charges, bigger worker costs etc. Idle assets are a waste. And maybe Dave meant what I am about to point out as part of NIMBY, but the lawyers know that they can just raise a ruckus – cause delays – because its cheaper to just buy them off. Get their pound of flesh. Everyone has to gets paid. Its like Mexico. Totally separate from the usual NIMBY meaning.
This problem applies broadly, not just infrastructure. If you can cause a legal problem, you can get paid off.
Any of you know Morgan and Morgan (“for the people” snicker) the largest ambulance chasers in the world? The whole business model is to find out the point at which an insurer will just settle vs bear the litigation cost. The injured people have nothing to do with it. Justice has nothing to do with it.
Dave Schuler: Where Does the Money Go?
A primary factor is that the cost of available workers is much higher today than during the 1930s. During that period, high quality workers were widely available, would work cheaply, would travel away from their families for months at a time, and would live in less than ideal conditions. Today, there are few high quality workers available and, if available, are very costly. Nor will they stay in hostels or barracks, but would require quality homes for themselves and their families. Today, quality workers design algorithms on computers. Try to hire them to weld steel on 90th floor.
Drew- They compare the costs with building in socialist Europe where costs are much, much lower. They also have lawyers, regulations, etc. The question is really how do we compare and where are we different enough to raise costs so much? Plus its not really an experiemental study with control groups and stuff so it would be easy for you to read, just straight up numbers comparisons. Well, actually it would be hard for you to read since it wouldn’t all fit with your preconceived ideas.
Steve