What Is the Cost of Building a Subway? [pdf]
pedestrianobservations.files.wordpress.com
pedestrianobservations.files.wordpress.com
This tidbit is particularly infuriating:
> In California, the problem is, in two words, Tutor-Perini. This contractor underbids and then does shoddy work requiring change orders, litigated to the maximum. Ron Tutor’s dishonesty is well-known and goes back decades: in 1992 Los Angeles’s then-mayor Tom Bradley called him the change order king. And yet, he keeps getting contracts, all of which have large cost overruns, going over the amount the state or city would have paid had it awarded the contract to the second lowest bidder. In San Francisco, cost overrun battles involving Tutor-Perini led to a 40% cost overrun. This process repeated for high-speed rail: Tutor submitted lowest but technically worst bid, got the contract as price was weighted too high, and then demanded expensive changes. It speaks to California’s poor oversight of contractors that Tutor remains a contractor in good standing and has not been prosecuted for fraud.
Edit: oh, wait, just realized this is from the same blog, so the same body of work.
Dismissing a very low bid must be dismissed, giving good arguments that the bid is not realistic is something completely else.
One of the contentions of Alon Levy [author of the blog in question] is that the primary reason for inexcusably high costs in the US is the hollowing out of agencies to the point that they can't do this sort of evaluation anymore.
My dad worked for the government doing management and oversight. It takes a lot of work to evaluate and reject bad low ball bids. Even more work to create bids that you can hold contractors to and to weed out shysters.
This reminds me of when I used to own homes. It was generally easier to just do some home-repair job myself than deal with the hassles of finding a good contractor, and then having to deal with more hassles if the contractor didn't do it right.
The kinds of work that you describe fall more under maintenance and basic repair, which most public agencies have full time employees that perform that roles. For instance the NYC subway has signaling workers for a constant stream of signal work, track workers to maintain track and sign workers for endless lifecycle replacement of signs. New construction work, like tunnels and stations is done by contractors.
I suspect that there isn't a magic set of incentives that replaces appropriate levels of funding, good faith and sufficient oversight.
The transit agency is on the hook for the agreed construction cost, and for ridership estimates and minimums. If ridership does not develop, then the contracting agency is responsible for making the operator whole.
The contractor is on the hook for the design, build and operation of the system for N years.
The worst possible way to design a large, complex system is the way most US transit agencies do it: the agency operates as the prime contractor, and it issues an initial design subcontractor, which submits an alignment and maybe a 20% design. Then the agency issues bids for each segment, and the new contractor completes the design.
> The contractor is on the hook for the design, build and operation of the system for N years.
This won't work: the contractor will just declare bankruptcy when things don't work out that great. But the owners will have bags full of money by then.
> In the early 2000s after the collapse of insurance giant HIH, NSW and Victoria abolished some classes of builders' warranty insurance. The governments said it was to try and stabilise the industry and ensure its viability. > > So if you're in a new apartment building of more than three storeys, instead of making a claim with an insurer, it's now you versus the builder. You've still got a warranty, but you may need a lawyer.
The rational was builders of that size and above would avoid being put out of business by insurance claims. It had been true up until that point. But from https://www.abc.net.au/news/8403744 :
> Then, in February this year, almost three years after the owners commenced legal action, the developer, Payce Properties, announced that it was being placed into administration. > > The parent company, Payce Consolidated, is still trading, and has plans to roll out more than 7,000 more apartments in the next five years.
Surprise, surprise, there has been a rash of shoddily built large buildings with arguments about was footing the bill every since.
For a successful example, look to the Canada Line in Vancouver.
The linked PDF seems to argue for the opposite. It suggests that "design & build" contracts tend to inflate costs, and countries with lower subway construction costs tend to separate design contracts from construction contracts.
And corruption can affect it evaluating the value too
When buyers can define some evaluation criteria like reviewing the bidder's past performance (delivery on-time vs late, cost overruns) in addition to current bid, they can better assess how smoothly this project will go, and past performance is difficult to game without lying, i.e. submitting a fraudulent bid package.
The procurement field has a number of membership organizations and certifications and these people are largely good and ethical workers who take pride in doing good for their employers. Not all, but the good ones far outnumber the lazy, incompetent, and corrupt. (I'm not one, but worked adjacent to the field for a while, and I think buyers often don't get a fair shake, because the corruption can be shocking when it's visible.)
That among many other issues is where I realized that the way competition works in this scenario simply doesn't work when the incentive is to keep yourself and your company on the government's payroll rather than write quality software.
Who gave the contract to the contractor?
The problem is the process of going for the lowest bidder, or one of the lowest.
Moreover, in this case, incredibly, going for the same low bidder with the knowledge of all the history of the bids from that contractor being unrealistic lowballs and requiring costly change requests.
Don't blame the contractor. They get the job and make their money. From their angle, they are successful. They know that the city is aiming for the bottom and so they adjust their bidding accordingly. If they didn't submit a low bid, the job would go to someone else.
True story: some decades ago. My father was bidding on a contract with the GVRD (Greater Vancouver Regional District). Something in the tens of thousands of dollars, probably. He was out-bid by $5. That was all they cared about. So he pulled out a $5 bill and plonked it on the table.
If you ever drive in Vancouver, Canada and wonder how the roads can be so shitty, remember that story.
As a homeowner I usually try to get three bids on a project and then take the middle. In my experience the lowest bidder usually doesn't understand what you want or has no idea what they're doing.
The phrase "lowest bidder" gets a lot of mileage in jokes and social commentary, but I'm pretty sure that the original idea is "the lowest bidder who fulfills the requirements of the contract." In that context it's a pretty obvious process, not something to be feared or mocked. The contract should be "build X to exactly these specifications," and of course the contract should be given to the lowest bidder who can reasonably be expected to fulfill the contract.
In this case, the contractor is clearly unable (or unwilling, or unincentivized) to fulfill the contract, and thus the contractor's bid should be irrelevant. The contractor should not even be considered. After all, if it's fine to not fulfill the terms of the contract, then I'm confident I could submit an even lower bid.
But it's unethical behavior to be a contractor who intentionally under-bids with the plan to later (repeatedly) charge exorbitant amounts for modifications and fixes.
The government isn't doing its due diligence, but I take a dim view of people who exploit and waste taxpayers' money.
If the ethical alternatives all ensure that someone else gets the contract, then that particular ethics in that situation is rather good for nothing.
Suggesting that ethics are good for nothing in this case because of that is... well, even more disappointingly cynical than I'm willing to go.
But now there exist a whole class of contractor that exist purely to provide the lowest possible level of compliance with municipal contracts. They spend more on legal defense than construction in many cases.
The underbidding contractor is at least one half of the problem because they're serial fraudulent bidders--they have it down to a science. IMO they're flat out the problem from an ethical standpoint. You don't get to cheat somebody just because you've figured out how to exploit a victim's infirmity (the infirmity in this case being the state's bidding rules). You can't shift your blame to the victim; whatever blame the victim is due is independent.
This is the marketing explanation by the contractor: https://www.yitgroup.com/en/media/why-is-the-alliance-contra...
Levy is to be lauded for his pioneering work on this issue yet isn’t it weird that a Patreon supported blogger has done the best work on comparative construction costs mostly using data from newspapers and trade publications? New York plans to spend billions on railway and subway expansion. If better research could cut construction costs by 1%, it would be worth spending tens of millions on that research. So why doesn’t the MTA embed accountants with every major project in the world and get to the bottom of this cost disease? (See previous point). Perhaps the greatest value of Levy’s work is in drawing attention to the issue so that the public gets mad enough about excess costs to get politicians to put pressure on agencies like the MTA.
[1] https://marginalrevolution.com/marginalrevolution/2019/12/wh...
Like with any organization, follow the incentives. I'm betting the performance reviews in the top half of the MTA are pegged to metrics that don't have to do with service delivered per dollar.
The construction lobby is a frequent large donor to political campaigns in New York.
"It is difficult to get a man to understand something when his salary depends upon his not understanding it."
Also, no fare gates (there are occasional ticket checks on the trains, and heavy fines for non-payers).
In Germany, fare evasion can in theory carry up to one year in jail. (In DC, max is 10 days, and we’re getting rid of even that.)
you seem to say this as if it's a bad thing. it's silly to think fare evasion is worth jailing someone, nevermind paying the administrative and enforcement costs of doing so. even holding someone for an hour is more than enough punishment (which is typically what happens anyway due to bureaucracy involved).
but for the sake of argument, an hour lost would mean being late to work, to an appointment, or to another likely time-sensitive activity. additionally, there's the embarassment of being caught evading the fare (why is everyone staring? how do you explain your tardiness to family/friends/coworkers?). most people would avoid these penalties in and of themselves.
regardless, the penalty isn't what deters most fare evasion (or shoplifting) except at the margins. mostly, adherence (that is, paying fares) is due to social cohesion, self-image, and social responsibility.
that's why berlin, LA, and other transit systems have open transit gates. the cost of enforcement at the margins isn't worth it.
no need to punish such folks more with jail time because they're already being punished by circumstance. being detained and fined is more than enough additional punishment here.
Next time you’re in the store in a less than perfectly clean and safe area, look at what kind of stuff is specially protected against shoplifting. In my experience, it’s usually washing liquid, shaving razors and hair products. Hardly the domain for the most desperate.
You have quite a pollyanish view on society, where there are no wrongdoers: shoplifters never do this for profit, they are just desperate people forced by circumstance. This doesn’t match my experience.
Fare evasion was 5%, or about $4m per year on the pre-existing ungated rail-portion of the system.
And certainly fare evasion didn't go to zero after the install.
Not a great ROI.
Because Germany.
There's no need to evade when many/most employers give their staff free/discounted passes, the aged get discounted passes, students get discounted passes and the disadvantaged get free/discounted passes.
There's heavy motivation for employers since it's not a taxable benefit.
The economist in me doesn't like unlimited passes for transit, but if it doesn't bog down their system, then it's hard to argue against them.
Some nice pictures about this: https://de.wikipedia.org/wiki/Unterpflasterbahn
Note that not all U trains in Berlin are like that, some are deeper (with a mezzazine) and some are partly on elevated tracks or outside the city they go overground just like normal trains.
A lot of this has to do with construction techniques. If you cut and cover, this is manageable.
But when you tunnel, you need to go as deep as you need to get tunnelable ground conditions.
If you're building on marsh (and I think Berlin largely is?), tunnelling may be totally impractical.
Yep:
The name Berlin has its roots in the language of West Slavic inhabitants of the area of today's Berlin, and may be related to the Old Polabian stem berl-/birl- ("swamp").
[1] https://en.m.wikipedia.org/wiki/Westlake_station_(Sound_Tran...
The ironwork, old stone bridges and stationhouses and such are very nice, but are thanks to the Boston and Albany RR in the late 1800s/early 1900s.
It was bought by the government and converted over to a light rail line in the late 1950s.
The seemingly crazy street layouts and orientations (especially in the Downtown/North End areas) make much more "sense" when you realize how the original landmass was shaped, which was a peninsula only connected to the mainland by a single very narrow road out to the south/southwest.
You can find more detail and scope elsewhere, but here's a quick image that illustrates most of it: http://i.imgur.com/dWSGEjQ.jpg
If so, it seems to have been at least somewhat succesful. That Wikipedia article: "the station's mezzanine became sought as an events venue”
California is not uniquely bad within the US. NYC is utterly infamous for their ridiculous construction costs, caused by a huge amount of graft, terrible unions that require 4x as many workers as necessary, etc.
Hmm. Perhaps Pat Foye should compare this map:
https://nycmap360.com/carte/pdf/en/nyc-rail-map.pdf
To this one:
https://www.nationalrail.co.uk/London_South_East_expanded-09...
Dunno if that's true, but the theory works out.
Toronto is finally considering making more and more roads transit-only instead of mixing streetcars and buses with general traffic. If London did/does that, it wouldn't/doesn't improve speeds as much.
Though I like how London runs different lines/routes into stations so you can get to your destination without transferring by getting on the right train in the first place.
On macOS you can open it using Preview.app and then select View -> Slideshow.
https://www.boringcompany.com/lvcc
Interesting comparisons could probably be made to:
For an example, see the Bosphorus tunnel in Istanbul (https://www.theguardian.com/world/2006/jan/25/turkey.iantray..., https://en.wikipedia.org/wiki/Marmaray#Delays)
A huge find, unfortunately on the location where a terminal was planned.
This isn't a complexity problem; it's a cultural problem.