Case Selection

Eric and I recently sent in a list of criteria for case selection. We’re currently funded for 6 detailed case studies, of which one is the Green Line Extension in Boston due to funding from a different grant. My guess is that we need about 15-20 different cities to have near-perfect information about the institutional and geographic factors that influence infrastructure construction costs. Because different subway lines in the same city tend to cost the same to build, and even in the same country, our 500 lines in the database are more like 50 independent observations, and there are even identifiable clusters of countries.

These clusters are important, because ideally we should have 2 cases per cluster. With 6 cases in total, we’d like to have a case for at least one per cluster, even though it’s unlikely, depending on where we can find the most detailed information and the most people who will talk to us.

Clusters

1. Very low-cost countries

The first cluster is the success cases. These really come in two flavors: one is Switzerland and the Nordic countries, and the other is everywhere else with costs lower than $150 million per km, that is Spain, Portugal, Italy, Greece, Bulgaria, Turkey, and South Korea. The difference between the two flavors is that the first one consists of very high-wage countries with populations that trust their institutions, and the second consistent of countries with wages at the bottom of the first world or top of the second with populations who don’t believe me when I tell them their infrastructure construction is cheaper than in Germany. Even then, there are some important differences – for example, contracts in Turkey are lowest-bid, using the country’s high rate of construction and multitude of firms (a contract must have a minimum of 3 bids) to discipline contractors into behaving, whereas Spain instead has technical scoring for bids and only assigns 30% weight to cost.

2. Middle-range countries

This is countries close to the global average, which is around $250 million per kilometer for underground construction. China has about the same average cost as the rest of the world, and since a slight majority of our current database is Chinese, it falls in this category. France and Germany are definitely in this category; Austria, Czechia, and Romania are also in this category but have fewer distinct metro tunnels; Japan may be in this category but it’s unclear, since the few tunnels it’s building nowadays are both more expensive and more uniquely complicated, rather like regional rail. Big parts of Latin America fall into this category too, though they bleed with the high-cost category too. There’s a good case for separating China, France, Germany, and Japan into four separate categories (Austria should probably be institutionally similar to Germany), each of which gets different things right and wrong.

3. Countries with recent cost growth

This cluster consists of places that have high costs but didn’t until recently. Canada and Singapore are both competing for worst construction costs outside the United States but were not until well into the 2000s. Australia may be in this category too – it’s unclear, since Melbourne is extremely expensive to tunnel in but Sydney isn’t. New Zealand’s regional rail costs suggest it might be too – initial electrification was cheap but the regional rail tunnel is expensive. All of these countries share the characteristic of extreme cultural cringe toward Britain and the US, adopting recent British and American ideas of privatization of the state, and it would be valuable to follow up and see if this is indeed what happened with all of their infrastructure programs.

4. Rich countries with very high costs

This cluster is dominated by the US and UK. Taiwan is there too but is much smaller and likely has completely different institutional reasons – one person told me of political corruption. Hungary and Russia might be in this category too – they have very high costs (Budapest is scratching $500 million per km), but their wages are at the first/second world boundary, rather like Bulgaria or Turkey.

5. Countries on the global periphery with very high costs

This cluster consists of the high-cost world that is too poor or peripheral to be in cluster 4. This includes ex-colonies like India, Pakistan, Indonesia, Egypt, and Vietnam, but also the never- or more-or-less-never-colonized Gulf states; these two categories, the Gulf and the rest, must form two distinct flavors, but I lump them together because both seem to have extreme levels of cultural cringe and to associate bringing in European and East Asian consultants with modernity and success. (Meanwhile, parts of Europe, at least in the less self-assured East, bring in Turkish contractors.) The higher-cost Latin American countries, like Brazil and possibly Colombia, belong here too, and may form a distinct flavor. Thailand is on the edge between this cluster and cluster 2, which may befit its liminal colonial status before and during World War 2.

Where we struggle

We’ve been sending feeler messages to people in a number of places. This is far from perfect coverage – so far none of these countries is poorer than Turkey. In general, we’ve had early success in the lower-income range in cluster 1 (Italy, Spain, Korea, Turkey) and in cluster 4. Cluster 3 seems reachable too, especially since Stephen Wickens did much of the legwork for Toronto’s cost growth; we may be able to look at Sydney as well, and Singapore and Auckland seem like it shouldn’t be too difficult to find sources, nor to get people to listen if our conclusion ends up being “your government reforms in the last 15 years are terrible and should be reversed.”

Within the rich world, so far getting sources in Germany and Scandinavia has proved the hardest. I don’t know if it’s random or if it’s the fact that in countries that believe their standards of living are higher than those of the US and UK people are less likely to be forthcoming to someone who writes them in English. I’ve seen a decent amount of written material about rail capital construction projects in Germany, though not about the one I’m most interested in, that is the U5-U55 connection here in Berlin; but the rail advocates I’ve talked to are not quite in metro construction, though I have learned a lot about public transportation issues in Germany from them.

In Scandinavia things are even harder. Costs there seem pretty consistently low. A common explanation is that the rock in both Stockholm and Helsinki is gneiss, which forms a natural arch and makes tunnel boring easy, but a short tunnel in Oslo, the Løren Line, was even cheaper in softer rock. Moreover, the planned Helsinki-Turku high-speed rail is currently budgeted at €2 billion for 94 km of which 10 are in tunnel, so maybe equivalent to 140 km of at-grade line; this is noticeably below French costs, let alone German ones.

The low-income world is an entirely different situation. My suspicion is that the same cultural cringe that makes India build turnkey Shinkansen at something like 3 times its domestic cost (correcting for tunnel length) would make India eager to talk to us – if we were covered in the first-world discourse first. People in India, Nigeria, etc. know their countries are poor and are desperate to absorb the knowledge of richer places; they don’t understand the US as well as Americans do, but they understand it better than Americans understand the third world.

Cluster curiosities

The reasons I’d ideally like to have 20 case studies are that there are a lot of questions about internal differences, and that things that look like clusters from cost data may not actually be similar. There are a lot of questions that doing more cases might explain.

  • South Korea and Japan share many institutional similarities, and many of those are also shared with Taiwan. How come South Korea near-ties for lowest costs in the world, Taiwan near-ties for highest costs in the non-Anglophone first world, and Japan is somewhere in the middle?
  • What explains why different Eastern European countries with similar histories and institutions have such cost divergence?
  • Why does Italy have low metro construction costs (more in the North than in Rome and the South, but Rome is at worst average) and high costs of high-speed rail construction?
  • Why does Japan have high metro construction costs where it builds and low costs of Shinkansen tunneling?
  • Turkey seems similar in costs to Southern Europe, but it does things very differently – for one, it uses lowest-bid contracting. To what extent this is about Turkey’s very high rates of construction recently, and does this generalize elsewhere? Of note, there are extremely high construction rates all over middle-cost China, and also decently high rates in high-cost India, Singapore, and California.
  • The Netherlands is institutionally within the same range of what’s seen elsewhere in Northern Europe, and yet its construction costs are high. Is this just a matter of alluvial soil tunneling? If so, why did HSL Zuid cost so much?

44 comments

  1. michaelrjames

    I suspect you are showing that costs are infectious, like a viral epidemic! So, within low-cost countries it even affects (suppresses) otherwise higher cost projects. Unfortunately the high-cost virus appears to be winning and going pandemic. Your study is analogous to biomedical researchers with coronaviruses, trying to understand the causes before one can know how to bring it under control. Alas, there appears to be a very big behavioural, socio-political component so one wonders if it is tractable. The patient(s) will probably refuse the vaccine.

    On a related issue, the privatised UK national rail system has now officially been renationalised. It was inexorably heading in that direction but the pandemic finished the job, though I suspect the neoliberal illuminati won’t choose to see it this way. (It should have been more completely privatised with no irksome government regulation at all.) A 30+ year experiment in proving what was obvious. For example the attempt to impose “competition” on EU railways proceeds apace.

    https://www.theguardian.com/business/2020/jul/31/ons-says-uk-rail-has-effectively-been-renationalised-during-pandemic
    ONS says UK rail has effectively been renationalised during pandemic
    Change in classification, to be backdated to 1 April, prompts dispute between unions and operators
    Rob Davies, 1 Aug 2020

    The Office for National Statistics has now written to the Treasury and the Scottish government to inform them of its decision to reclassify train companies as public non-financial corporations in the light of the measures. The change, backdated to 1 April, means rail companies’ borrowing will be factored into ONS figures on public-sector borrowing and the number of state employees.
    At the same time, train companies are not allowed to make timetable changes or change staffing numbers without specific government approval.
    State support for rail firms means almost all revenue and cost risk from the companies are “borne by the government”, the ONS said.

    • Alon Levy

      I need to write something about how even spaces that are rooted in good institutions Anglicize when they go international because that’s just easier. That may or may not be what’s behind EU liberalization initiatives (but there are a bunch of competing explanations, like trying to come up with a framework for international rail travel that doesn’t EU-federalize the railroads). It’s definitely a thing you see in third culture – it’s easier to learn bad American practices than good ones from Sweden or Korea or Spain or w/e.

      • michaelrjames

        Plus, in poor countries such projects are usually tied to aid of various kinds, like loans or claimed discounts etc. Indeed in the past the enforcers of often toxic contingent conditions were the World Bank and IMF. Though Morocco is interesting in that for rail they appear to be totally tied to the French yet have maintained very low costs, so far.

        Re EU liberalisation, I see Flix is threatening to sue the Germans over the €11bn aid given to DB, and increase in debt limits etc. I am not against the notion of competition but just can’t see how it can work. If it could work one would have expected to see it in Switzerland but while it has some private lines its national network is entirely public. Also it kinda suggests that EU-federalisation is inevitable if the Swiss with their highly guarded devolution in Cantons have such a system for their rail (and road) network? In many ways Switzerland is a mini-EU.

        • Henry Miller

          You need to go back to 1900—1920 for examples. Maybe even before then. Which implies a lot of other things that no longer apply are factors. After that you can’t really have private competition because the government for better and worse is competing with subsidies and laws that are often to your hurt.

      • Lukas

        International Travel probably worked best with the TEE regime of cooperation between (checks notes) all the state run EU-6 state-owned railroads + SBB and ÖBB. Can we just have that back?

        In the German context, liberalisation has led to two things: DB Cargo (they rebrand every 2 years or so) has lost a lot of market share to private RR because it doesn’t do small ops better than smaller companies.
        Private companies have set up in the Regional Rail Contracting market, but often appear to win with low bids, leading to problems (esp. in the Rhein-Ruhr region) because of driver shortages. Their contracts are often written in ways that mean they run gov equipment and only really manage staffand sometimes do maintenance. Not sure this is the field with massive advanteges for private actors in innovation over Government run ops.
        In long distance travel, DB Fernverkehr has 99.9 % market share ignoring subsidised Night trains by ÖBB. HKX express works because it uses low cost second hand carriages and runs an often stop old style Long distance train. Since there is no real HSR between Hamburg and Cologne, this is competitive with DB. Similar situation between Berlin – Cologne.
        Keep allowing Private freight ops, Government run almost everything else.

    • Mikel

      When talking about liberalization, there are several different things that I think often get mixed up:
      ·1) Purely private rail: a private company runs the trains on a network owned by itself. If I’m not mistaken I think Switzerland is the only European country where this happens at significant scale, at least for passenger rail.
      ·2) Competition for the market: the best bidder is awarded a temporary monopoly on operations over a portion of a network. This is the case of some German regional rail systems and of the British franchise sh*tshow (kind of).
      ·3) Competition in the market: several operators (public and private) run trains on the same state-owned track. This has been very succesful in Italian HSR, with a clear increase in frequency and decrease in prices, and it is being extended to all intra-national long distance trips by EU directive in December 2020. It has also existed for years in international passenger trips and in freight, with mixed results — the total mode share for freight has stayed constant because sometimes the real constraint is the infrastructure and not just the incompetence of the monopolistic state operator.

      I don’t have experience with 1) and 2) tends to suck if contracts are awarded just on a cost basis, but to me 3) seems like a swift solution to problems of the “public operator is run by clueless ruling-party apparatchicks who hate the customers and don’t understand the concept of timed connections” type.

      • michaelrjames

        Yes, that is a good summary. And yes, the UK did the worst possible version by transferring a public monopoly to a private one (and then continuing to publicly fund extraordinarily poor practice, not to mention shareholder dividends and executive bonuses), just like they did with almost everything privatised in that era. The London airport monopoly was particularly egregious and utterly immoral and unjustifiable.

        However for #3, I’s say it is telling if Italy is the only case one can point to. Is it “successful” for the reason of “competition” or other reasons? Not to mention asking just how much better it really is, compared to the previous regime. And if so, one wonders why the Japanese didn’t apply that model when they notionally privatised JNR, especially the Shinkansen network? I don’t have the numbers but as I understand it in Switzerland the vast majority of pax-km is on the public national network and those private lines are mostly for the ski resorts and other seasonal special purpose. Also, if ever there was a case for model 3, it is Eurostar yet it remains an essential monopoly, presumably because despite its popularity its finances remain fragile (and also subject to ruthless exploitation by its other monopoly, the owner of the tunnel infrastructure which has always been private not public–a major error and yet another legacy of Thatcherism).

        And thus for the EU Directive it remains unproven and untested. I suppose we’ll find out, though covid-19 might feasibly make it stillborn, and which also is revealing: in times of stress and need, are we really to believe that major national infrastructure such as rail should not be subsidised, and equally why should private operators be publicly subsidised (like the outrageous British franchisees have been for decades to no point)? How is NTV going to survive covid-19? You may have confidence (based solely on Italy?) but my fears are that it will not work, and worse, it will inflict serious damage on both the actual rail operations and yet worse still, on public confidence in the network as it has in the UK.

        My view is that these notions of “efficiency” thru competition are extraordinarily narrow econometric perspectives and ignore what a public infrastructure really provides to a nation. Worse, is that the same econocrats actually believe the damage this competition would inflict on the network (ie. cherrypicking the most popular/profitable routes, ultimately destroying the weaker ones) is good! You know, good for “efficiency”. Forcing “needed” rationalisation. And to hell with Metcalfe’s Law or regional needs (let them eat cake, ie. take buses).

      • df1982

        There are two big problems with the #3 model:
        1. if you have two independent companies competing on the same transport corridor, then you severely reduce the efficiency of the service from the customer’s point of view. Instead of a train every 15 minutes, for instance, you have two companies offering a train every 30 minutes. If you are a regular traveller or a connecting passenger from another service this is bad, since you can only stay with one of the companies.
        2. as has happened in Italy, the private operator will essentially cherry-pick the most profitable routes, eating into the revenue of the state operator, which then has less funds to cross-subsidise lower-performing routes. Either the taxpayer has to make up the difference, or these routes are cut back or closed down, depriving communities of transport access. While many of these routes may not be viable when considered in isolation, they are important to maintaining a nationwide network.

        This is why the best solution is really: get a competent public operator!

        • michaelrjames

          I agree.
          I don’t know if the UK government understood or cared about any of those things when it broke up BR and gave various companies monopolies. I think it really was more motivated by ideology to break up the public body (as a matter of principle but also to remove the cost burden from government) , and if that meant transferring a anti-public interest monopoly to private corporates then that was a cost they were willing to countenance. Especially as many of them or their social group would end up well remunerated on the boards of such companies. Though Blair inherited it and completed the job, he probably did believe in the competition shtick. Funny how the competition mantra is repeated throughout the EU Directive but was jettisoned by the Brits, possibly because the companies via the usual nod-and-wink to the government weren’t interested in competing with anyone, knowing a duopoly would be even less viable than with the BR monopoly. Oh, and of course they ended up carrying an even bigger public cost burden than with BR!

          But, fast forward decades and the EU wants to impose the same shit throughout all of Europe. A difference is that many in the industry have followed the British experience and may thwart the EU’s intentions. In fact by doing exactly what the EU econocrats warned about: trans-national virtual monopolies replacing former national monopolies, or a potential duopoly between SNCF and Deutsche Bahn in most of western Europe. In fact in the initial round of cross-border services they will begin life as co-operative ventures between the respective national carriers (or related parties) the way RENFE and SNCF will split the Paris-Barcelona route. I see that SNCF was the biggest shareholder (20%) in the entity that owned NTV until they bailed before/because of a capital raising (which is looking pretty smart today …).

          Just as the pandemic has finished off the remaining private rail companies in the UK, it may cause some kind of renationalisation of NTV. Though Italy being what it is, they may spend a lot bailing out the private company (or maybe not, the current biggest shareholder is German …).

          • H.V:

            In Austria, this already happened. Between Vienna and Salzburg, long-distance trains by both ÖBB and Westbahn were operated as open-access trains, whereas most of the other long-distance trains in Austria had been directly awarded to ÖBB. The pandemic would have destroyed the revenues of ÖBB and Westbahn between Vienna and Salzburg so much that they would have ended their train operations on that route; both operators now have emergency contracts with the ministry of transportation (aka something like a bail out).

        • Mikel

          Your first point assumes that demand is fixed, but quite often it’s not. If the incumbent monopoly is terrible at their job (as is the case in Spain and to some extent in pre-NTV Italy), the irruption of competition can have a multiplicative effect by turning out previously suppressed demand. So you don’t go from 4TPH to 2+2, but from 4 to 4+2. And that’s what happened in Italy — Trenitalia now carries more HSR passengers, in absolute numbers, than before liberalization, even if NTV also has a decent chunk of the market.

          As for the second point: in the airline market there are companies like Iberia that still fly routes from provincial airports that are unprofitable by themselves but feed passengers into their much more lucrative transatlantic operations. I can see that happening in the HSR market; if there’s a marginal route that nobody is interested in operating for-profit, the government can just slap a PSO* on the line and award it to the best bidder.

          I don’t want to sound like a religious believer in liberalization — I’m just moderately optimistic about it and agree with you about the need for competent public operators. It’d be great if one of them became so good it drove private competitors out of business!

          *in some cases that may require tweaking the European regulations, which IIRC restrict the maximum distance of PSO train trips.

          • Alon Levy

            I want to agree, but… Italian HSR ridership is well below French and German levels, even though Italy has the best geography for HSR of the big Continental countries (the UK has a better one, but it would need to actually build something first…).

          • df1982

            I’m not convinced that having a private operator suddenly unlocks a whole bunch of suppressed demand. In Italy the numbers have to be looked at in the context of opening a whole bunch of HSR lines, which would increase patronage regardless of the operator. And it’s not like a public operator can’t reproduce the marketing and pricing strategies adopted by a private operator if that was what did induce demand.

            And for point two: if it’s a private vs public operator scenario, then the private operator will leave the unprofitable sectors to the public operator. Much as FedEx and UPS take over highly profitable package deliveries, and leave rural letter deliveries to the USPS. If it’s multiple private operators competing against each other, then they will likely end up asking for taxpayer subsidies to cover the unprofitable lines or threaten to close them down, much as the US government does with rural airline routes. So it becomes publicly subsidised anyway.

          • df1982

            Italy has good geography on one level: all of its major cities are in a straight line within good HSR distances of each other. But on another level it is diabolical, since the entire country is basically a big mountain range. The Florence-Bologna line is something like 90% tunnel for this reason, and this surely make the cost-benefit ratio of new lines a lot dicier. The UK really doesn’t have any excuse since it is essentially flat.

          • Mikel

            I want to agree, but… Italian HSR ridership is well below French and German levels,

            France and Germany count all TGV and ICE passengers as high speed riders, regardless of whether they actually ride on the HSL or not (e.g. a Hendaye-Bordeaux trip counts as high-speed if it’s taken on the TGV but not if it’s on a TER, which makes 6 more stops but takes just 5′ more). Perhaps Italy counts differently? Some people in Spain only count AVE passengers and deliberately leave out Alvia, Altaria, Avant, AV City and Intercity riders, so as to make the HSR ridership look even lower than it really is.

            I’m not convinced that having a private operator suddenly unlocks a whole bunch of suppressed demand.

            Then why is Madrid-Barcelona still the busiest route at both airports, and why does flying typically cost ~half as much as taking the train?

            In Italy the numbers have to be looked at in the context of opening a whole bunch of HSR lines, which would increase patronage regardless of the operator.

            I think what I read was specifically about Milan-Rome frequency and ridership, but I don’t remember the source so yeah, the data might be skewed by other factors.

          • Alon Levy

            AVE + Avant = 18.6 million passengers in the first half of 2019 (link)

            I can’t find FS long-distance ridership figures, but for what it’s worth, p-km in Italy are around half the figure of France or Germany.

        • H.V.

          Austria had problem number 1 until some months ago, when there was an ÖBB and a Westbahn train essentially at the same time. Austria tried to implement a Taktfahrplan and there were some problems because a connecting regional train could not be timed to connect to the long-distance trains of both operators in both directions.

  2. SB

    If the budget can’t be fully funded, not all cases could be discussed at full length and there maybe tough decisions on what to leave out.
    I would skip Gulf states cluster. They have high costs because they have the money (until the oil money runs out) and don’t care about high costs.
    The differences within middle cost countries are interesting but could be glossed over in no more additional funds scenario.
    IMO if there is only funding for six cases, it should be 2 low cost, 1 middle cost, 1 rising cost, 2 high cost (1 rich, 1 poor).

    “South Korea and Japan share many institutional similarities, and many of those are also shared with Taiwan”
    Is this true? These three countries have some cultural similarities and possibly learn from one another about works in transit but their institution appears to be different. Looking at top level differences:
    Japan has parliamentary system and constitution remains unchanged since it was written in 1947.
    Taiwan has semi-presidential system and had major amendments to its constitution 1990s.
    SK has presidential system and its constitution rewritten many times with most recent version written in 1987.

    • Alon Levy

      The 6 cases are more likely to be decided on the “where we find people who actually talk to us” principle. The big reason it’s easiest in the lower-income flavor of cluster 1 is that we have people like Elif Ensari and Marco Chitti to work with us on this; it could be a coincidence, but we didn’t get any application from a German or a Scandinavian and I suspect it’s because nobody in those countries is itching to move to the Anglosphere.

      Re South Korea and Japan: I don’t think the parliamentary vs. presidential thing matters very much. You don’t really detect French presidentialism anywhere in construction cost data or even in the French way of building public transit, which goes back to the Third Republic and which gets transplanted everywhere people look up to Paris. What I think does matter is,

      – An extremely dirigist right – there’s a lot of privatization of operations but no Anglo-style privatization of planning.
      – Interest group corporatism (also shared with Continental Europe, but with weaker unions).
      – Domination by big business (whereas Taiwan is the opposite), and cultures that view startups with hostility.
      – Historically high corruption, with a fascist and fascist-lite view that big business is an extension of the state, but recent improvement to the point that corruption levels are in the “clearly better than Italy, clearly worse than Scandinavia” basket.
      – YIMBYism, allowing the capital to keep growing and accreting more rail-oriented suburbs.
      – Highly unitary governance. There are regional identities and they matter (Jeolla!), but local autonomy is limited.
      – Romanticism and subsidization for farmers, but nothing like (say) the American or British or French romanticism for peripheral cities.

  3. Tonami Playman

    For the cost disparity between Japan’s metro construction cost and Shinkansen tunneling, one possible explanation could be the cost of getting materials to the site and spoil evacuation.

    Shinkansen tunnels are usually in less populated areas with ample room for construction site preparations for both material delivery and spoil removal. Whereas metro tunnels have to deal with limited space and navigating through existing dense underground infrastructure.

    I remember reading somewhere that the platform extension works of the Tsukuba Express from 6 to 8 cars will take 10yrs to complete the remaining 19 stations out of the 20. Minami Nagareyama has already been extended. The explanation given was the constraints on transporting material to the site.

    • Eric2

      Perhaps also, they have more Shinkansen than metro construction going in the last couple decades?

    • Alon Levy

      Okay, but Japanese cities are not uniquely dense. Seoul is denser than Tokyo. Paris is also denser than any Tokyo ward. Is it just a matter of Japanese property rights protections making it harder to tunnel under private property than in Korea or France?

  4. fjod

    The Dutch soil is not just an issue for tunnelling. It also means that any cuttings are more expensive (they need to be sealed and have high-capacity pumps), and that concrete-slab track is a must to avoid ballast settling. Also regarding institutions: for all the talk of Rhine capitalism etc, Dutch commercial and financial culture is probably the most Anglosphere-y of continental Europe. This is the country that invented short-termist shareholder capitalism. So you mention HSL-Zuid for example: this was built under public-private partnership.

  5. Rico

    It would be great to have Vancouver as a case study the older Skytrain lines were cheap but the Broadway line recently awarded is very expensive

    • Alon Levy

      I tried speaking with TransLink before the cost overrun was announced, trying to talk to them about how come their costs were so low by Anglo standards… and then it turned out they weren’t.

      • Fbfree

        For Vancouver, there’s a few interesting differences between previous lines and the new Broadway extension.

        The original Skytrain was a technology demonstration. In effect, the contractors were trying to gain market, and didn’t price in some of the overhead costs for that technology that the province of Ontario was saddled with. By the time the Surrey extension was being constructed, the same contractor was short of work and glad for the contract.

        For the Millenium line, the politics at the time had the province managing the delivery of the line, deciding on the technology and the route to maximize cost/benefit over local interests. They were likely laying the groundwork with contractors to understand the cost before letting any contracts, and thus received cost competitive bids.

        Similarly for the Canada Line, it was a provincial decision over the opposition of the city who wanted to build the Broadway line. There was significant interest in showcasing this first PPP as a cost effective contract, and the route, tunnelling method, and technology choice were all value engineered.

        For the Evergreen line, costs started to rise, but the contractor, SNC-Lavalin, had experience with the Canada line, local contractor resources, and legwork on planning the extension dated back to the original Millenium Line. This line included one long and difficult bored tunnel for which there were numerous safety issues in its construction.

        The Broadway extension is using a new Europeen contractor (SNC-Lavalin pulled out due to inability to take the risk of a fixed price contract, plus other financial pressures on the company), a new method of construction for Vancouver (bored urban tunnel), and strong constraints on the design and routing. Given that the province had already passed up on building this line twice previously, it’s not particularly surprising that the cost is suddenly out of line with the lower hanging fruit above.

  6. krschultz

    Have you read Edward Merrow’s “Industrial Megaprojects”? That’s more focused on projects like oil refineries and airports, but it made a pretty compelling argument for the drivers of cost / poor project performance in those areas. I definitely recommend it, I wonder how many of their lessons also apply to the area you are studying.

  7. Mikel

    5. Countries on the global periphery with very high costs

    This cluster consists of the high-cost world that is too poor or peripheral to be in cluster 4. This includes ex-colonies like India, Pakistan, Indonesia, Egypt, and Vietnam, but also the never- or more-or-less-never-colonized Gulf states;

    Does the Philippines go in this basket? IIRC their costs are very high. It was technically a Spanish colony for centuries, but we were pretty bad at imperialism there — at least compared to Latin America, we didn’t really bother to extract wealth, let alone forcing much cultural assimilation on the local population. So I’d say their institutions don’t really have much left over from the colonial period, and neither country cares the least bit about the other: Filipinos still use Spanish names and Spaniards still drink San Miguel beer, and that’s it.

    • Alon Levy

      Yes, 100%. It doesn’t really matter who the colonizer was (except maybe in the not-fully-decolonized Maghreb), and these countries nowadays buy from China and Japan much more than from their former colonizer.

      • michaelrjames

        Their most recent colonizer is the US, so nothing to buy anyway, transit-wise.

        • Alon Levy

          Yeah, but Vietnam for example is buying overpriced Chinese and Japanese tech and not overpriced French tech, and Indonesia is buying overpriced Japanese tech.

          • michaelrjames

            Yeah, but maybe China promised not to invade them for, say, a hundred or more years … (except of course within the 8-dash line, maritime speaking).
            And Vietnam should ask Morocco just how overpriced that French tech was/is. Oh, and there’s a lot of French tech in that “Chinese” tech too …

            Actually I presume China is offering all kinds of deals, such as loans to complete the Hanoi to Kunming train. The historic French railway, the Yunnan–Haiphong railway, the section Lào Cai (Hekou is on the Chinese side) to Kunming was one of the world’s spectacular railroads running thru wild mountainous terrain and some of the few extensive wild forests in China. About a decade ago the 1m gauge line was closed and the only passenger route was by bus on the new highway they built, but Wiki tells me “The Mengzi–Hekou section was opened in December 2014, and regular passenger service started between Hekou North railway station and Kunming, with some trains continuing to Dali.” That’s the last missing link so great news because I had always planned to include it in an overland trip to Europe (originally trying to avoid flying from Oz but sailing is just too expensive and not part of the ethos on a cruise ship!). It seems the Chinese have prioritised–as part of BRI–the route Kunming to SEAsia via Laos. The French plan was to create a 1m-gauge link Kunming to Singapore but Cambodia remained a gap, now it seems the Chinese must be close to it (in standard gauge).

  8. yuuka

    I think I’ve said this before, but a big part of recent cost drivers in Singapore might be to do with overconservative contingency budget funding that already must be allocated to the respective projects from day one (and thus counting against project cost). However, I’m not sure that’s going to be such an issue from this year onwards, since the Transport Ministry moved everything under a single “rail expansion” line in the national budget and I don’t expect them to provide a breakdown.

    That might pretty much be it in terms of institutional reasons though. Another factor of high costs may be attempts to copy the Soviet/Montreal style of station design with unique architecture for every stop (not new, this started with the NEL), along with having to harden structures for civil defense purposes. Alon’s favourite $500 million Orchard station structure also includes the technical complexity of having to integrate into an existing station – under a shopping mall – so the work has to be planned to both deal with the station and the mall. From what I see, newer stations are also being developed with a considerable amount of underground exits instead of surface covered walkways.

    The Circle Line stages 4 and 5 may be the outlier here, since they were delivered in three major work packages, with largely standardized design and materials even for the major interchange stations. Stages one and two had plenty of showpiece stations requiring special work, which I suspect increased cost on their end. Stage three was also relatively cheap even though each station was a separate civil contract, but the stage three stations all look mostly alike except for Bishan, which takes on the design language of stage two with some tweaks.

    https://www.railway-technology.com/projects/circle-line-ccl/

  9. Herbert

    The U5 U55 connection is plagued with virtually all the cost drivers it could be plagued with – it is built in sand, in the 800 year old part of town (in fact there had to be extensive archeological digs), under water, in a place with high groundwater, with the eyes of the country on it (and laughter about every delay, how ever tiny) and for Museumsinsel they explicitly demanded a “fancy” station due to the representative location. In addition to that it was built in an era when Berlin wasn’t building much in terms of subways (and Berlin represents far more than 25% of German sbways) Heck the tail end even ran into virtually the only phase in which Munich was not actively building new subways. Oh and they had to move the station of the crossing U6 from Französische Straße to Unter den Linden. And the “Already built station” turned out to be much smaller than thought… – or was that an issue plaguing S21?

    I know all of those are “excuses”, but this is part of the problem of a small sample size. If the most recent U-Bahn in Berlin had been an aboveground extension of U7 or some such and costs were the same, there’d be reason to decry incompetence. But U5 had a lot on its plate and considering all that, they did quite well…

    • Reedman Bassoon

      For a USA benchmark, don’t forget the soon-to-open Central Subway in San Francisco. (~$1 billion/mile for 1.5 miles)

      • Nathanael

        The Central Stubway in SF is an example of pyramid-building: a special interest group wanting a monument to slap their name on and not worrying about whether it will be remotely useful. Cuomo’s idiot backwards LaGuardia AirTrain is in the same category, though I suspect it will not get built after consultants have gorged on report-writing, because NY is actually pretty good at killing that sort of project entirely.

        The unique level of institutional ignorance and disregard for expertise and disregard for public opinion which leads San Francisco to build something like the Central Stubway while *not* building the Geary Subway (which would have been more useful) — it happens often in the US (particularly in cities with zero experience building transit lines, while trying to build their first line), sometimes in Toronto and Montreal, and not very often in Europe or South America. I think it has happened in some other countries which were new to building transit lines, but I can’t think of examples. It doesn’t seem to happen even in the UK for cities which are experienced with transit lines. It doesn’t even happen in the US for cities with existing transit very often *except in San Francisco* where I can think of several other examples, and I don’t know why it happens in Toronto or Montreal, either.

        It’s something special when the consensus among transit riders & experts is that the projects chosen are simply a mistake from day one. This is a whole different problem than elevated costs.

    • Alon Levy

      Yeah, and costs elsewhere in Germany support the same picture: easy suburban extensions (e.g. U8 to Märkisches Viertel) are €120m/km, lolfests like the Kombilösung are €300m/km (and the Kombilösung is 3.4 km rail, 1.4 km road, and road tunnels generally cost more per km than rail tunnels), other extensions are in between. The less said about the cost of the second Munich S-Bahn tunnel, the better – IIRC it was that project that led activists to invent the term “Organisation vor Elektronik vor Beton.”

  10. Onux

    Thoughts on your questions:

    Df1982 mentioned it already, but high Italian HSR cost is almost certainly due to terrain which requires most intercity links to go through mountains. You should analyze Italian costs in terms of not just percent of line that is tunneled, but percent on viaducts, bridges or on cut/fill, all of which are more expensive than at-grade construction.

    For Japan, I would think the Shinkansen tunnel vs metro cost probably related to the fact that Japan doesn’t tunnel the Shinkansen in cities, only out in the countryside. The Shinkansen in Tokyo is elevated and in Osaka even misses the CBD to follow the easy elevated through-route. As a result no urban tunneling issues and no underground stations.

    Also, as mentioned some months back in regards to statistical value of life, Japan tends towards two track tunnels instead of the dual bores. A tunnel wide enough for two tracks is cheaper than two single track tunnels.

    • yuuka

      The shinkansen platforms at Ueno are 30m underground; Ueno to Tokyo is one long climb. Also, the initial plans for the Joetsu Shinkansen called for underground platforms at Shinjuku.

      Even for two track tunnels, Japanese two track tunnels are smaller than European two track tunnels. The tracks also are closer together, hence the need for obscenely long nose designs on the E5 series and associated high speed test trains to permit higher speed running thanks to pressure wave issues and such, which can’t be dissipated elsewhere in the tunnel due to the smaller diameter.

    • Alon Levy

      Yeah, I’m not complaining that Florence-Bologna is expensive, I’m complaining that Milan-Turin and Milan-Bologna are.

      And I suspect that as you mention, Japan has ways of tunneling Shinkansen more cheaply than Europe does. In the cities this is less relevant, and the difficulty of acquiring property in Japanese law gets more relevant.

  11. Basil Marte

    “What explains why different Eastern European countries with similar histories and institutions have such cost divergence?”
    Sampling error due to tiny samples, due to tiny countries?
    As for Hungary, an acquaintance of mine worked as an engineer on the M6 motorway and told some anecdata.

    First off, the reason the motorway was built had little to do with traffic (traffic is extremely low even today, especially on its southern section, just as modelling predicted in advance). This is both because Pécs and its region isn’t that populous, and because the motorway (M6+M60) makes a detour around the Mecsek mountain range, unlike the old road (6) which goes over it. (https://www.google.com/maps/@46.1876196,18.5271189,10.75z) However, Pécs is populous enough that, in essence, MSZP politicians decided they would build a motorway there to get their votes. (Pécs also won “cultural capital of Europe” for 2010, to give an alternative explanation.)

    Most of the way between Budapest and Szekszárd runs on the alluvial plains of the Danube, and my acquaintance complains that the planned route had to be altered multiple times because environmentalist groups complained about bird habitats and stuff. More damningly, there are a few tunnels on the motorway in an area of rolling hills around the Mecsek. The default solution would have been cut&fill. However, he told me, the embankments wouldn’t settle fast enough for the motorway to be ready by the election, and consequently bridges would have to be used instead. With the excavated earth nowhere to go, some cuts were replaced with tunnels. (The motorway was indeed opened on 2010 March 31., with the election taking place on April 11.)

    Tunnel construction ran into incompetence. Cave-ins occurred (with zero fatalities; 2008 July 24 a 100-120 m section of both tunnel “bores” (not bored, but built with NATM), causing at least one secondary cave-in during August), his cursory explanation being that the permanent tunnel wall was constructed in two phases behind the excavation, upper half leading lower half, and apparently mismanagement allowed construction of the lower half to lag far behind. (Popular press reports claim that “only the temporary reinforcement collapsed”, which given the ~100 m length supports his story; another article mentioned a further 60-80 m “unsafe” section, and 350 m “safe”.) Popular press accounts claim other forms of incompetence: 1) geological exploratory/sample drills have not been filled in properly, and channeled rainwater into the soft soil (loess). 2) Excavation stages were deeper than normal. 3) After each stage, the temporary reinforcement (shotcrete) was not given time to set before the next stage was excavated, putting more stress on the reinforcement. 4) The contractor had no previous experience with loess (being an Austrian company (probably Strabag) with extensive experience with limestone).
    Sources: https://index.hu/gazdasag/magyar/oml080821/ and https://www.origo.hu/itthon/20080814-m6-autopalya-omlasveszely-tovabb-roskadt-az-alagut.html

    A cave-in-related related article also linked to this one, describing waste and theft: https://index.hu/gazdasag/magyar/m6v080725/
    – drivers selling fuel from their vehicles (I understand the phrasing to refer to siphoning) and/or inviting outsiders to the commercial gas stations when fueling their own;
    – drivers of concrete mixers selling concrete. The article mentions two methods: planning uncertainties (the quantity required for deep-drilled piling is inexactly predictable), thus often several cubic meters of surplus are left in a mixer, and “the driver can sell it” (“a sofőr […] eladhatja”). The article claims that in Germany, such surplus is poured into blocks and later broken into rubble. The other is to bribe the goods receiving officer (áruátvevő) to sign off on a mixer unloading while it doesn’t.
    – “Anything movable” is the title of the last section, where it is implied that bulk cement by the truckload as well as “anything not set in concrete” are sold to the black market, and this is common knowledge.

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