Some of my past posts on cost comparisons are getting play on mainstream publications including Slate, Salon, The Economist, and The Atlantic Cities, and one of the consistent points I see is that the difference between the US and most of the rest of the first world is so glaring that projects that are locally considered boondoggles suddenly look good.
A list containing multiple projects at over a billion dollars per kilometer can legitimize anything below it. Thus projects approaching half a billion per kilometer look downright reasonable. In reality, Tokyo Metro said that there will not be further subway construction, and I have read elsewhere that it repeated this promise in advance of its impending IPO. And in Amsterdam, an inquiry into the North-South Line’s factor-of-2 cost overrun concluded the project should have never been built.
It seems that there’s an Overton window analog, in which higher costs legitimize the previous decade’s work, making it look good when at the time it was criticized for poor cost control. In fact, this could explain the decades-long trend toward increasing real costs – an explanation that is usually given in terms of rising wages and worker safety rules, but in reality poor countries build subways for not much less money than non-Anglophone rich countries.
I contend that the best practice should still be to compare with the average, rather than with either the worst (London Crossrail, Amsterdam North-South Line, Munich Stammstrecke 2) or the best (most projects in Spain). Being more expensive than one city could be a fluke. Being five or more times more expensive than upward of 90% of subway projects is less excusable.
Most interesting to me in this discussion is the explanations for US/Europe cost differences. Although most people regrettably keep comparing the US to China, never mind that European and Chinese costs are similar, some stay on target and avoid explanations that assume the entire first world is like the US. One comment on The Economist follows:
Observations on the public construction process, having seen it in action relatively up close:
1. Failure to embrace technology except in the most expensive cases. We are behind in construction techniques overall. We will bring in European methods when the case is made they are necessary. These methods therefore tend to be used when the expense is higher. This means we don’t upgrade technology overall, just at the costly fringes. Examples come from the methods used to construct the new tunnels in Boston; one used a method developed mostly by the Dutch because our domestic methods weren’t up to it.
2. Our project management is not equivalent. European large scale construction projects run more just-in-time. Even really big ones require very large things to be built and then to arrive on a schedule. Our system can’t handle that so we build in lots of slack expecting stuff will come late and will need to be adjusted – sometimes substantially – to fit the need. That is very costly.
3. Our system is very bad at prioritizing. My experience with this is mostly at the state and local level. I have seen very competent people working at both levels. They exist in a morass of work that needs to be done. They don’t have the resources to do things properly. They have to put repair, snow, etc. way, way, way ahead of planning.
4. My overall comment is this: Europeans understand they exist in a high cost environment so they squeeze out the inefficiency to be competitive. They focus on value-added design and on efficiency in planning and scheduling. We don’t.