Cost- and Project-Centric Plans

I did a poll on Patreon about cost issues to write about. This is a close second, with 11 votes; other people’s money won with 12, whereas neighborhood empowerment got 8 and will not be on my docket.

There are infrastructure investment programs defined around the specific projects funded: Crossrail, Second Avenue Subway, Grand Paris Express, Nya Tunnelbanan, the Toronto RER, Marmaray. Then there are programs defined around costs, where one constantly hears the project defined by its budget rather than what it produces; these are all in the United States, and include the entire slates of Los Angeles and Seattle rail extensions, and to some extent also California High-Speed Rail and Gateway. The latter appears like bad practice for cost minimization.

What’s the problem?

In isolation, I’d have expected cost-centric plans to be more prudent with the budget – there’s less room for overruns. This is related to Swiss practice, which is project-centric but also requires projects to go to referendum on the precise amount, which has disciplined cost overruns in most cases and also kept absolute costs low. However, the fact of the matter is that the only places that use cost-centric plans have high costs, having recently risen from levels that were not so bad 20 years ago. So why?

My suspicion is leakage. This is getting to be less general and more specific to the situation of California and its sales tax measures, but the way it works is, there is an amount that proponents think they can go to ballot on, and then they work the slate of projects backward. In theory, this is supposed to discipline the planners into better behavior: the amount of money is truly fixed, and if costs go up, it delays the entire program. In practice, there is no prior discipline about what infrastructure should be included, and thus the slate is decided politically on a place-based plan.

Further leakage occurs when buying off additional interest groups. Soon enough, one useful if very expensive subway line, like the Purple Line Extension in Los Angeles or the Ballard-West Seattle LRT, is bundled into a huge program alongside bus operating subsidies, road money, and low-usage lines to lower-density areas.

I can’t prove that this is the result of budget-centric planning. The comparison examples I have – all high-cost, politicized North American projects – exhibit leakage as well, but less of it. The Green Line Extension in Boston had extensive local leakage in the first iteration of the project, like the Somerville Community Path, but it wasn’t paired with less useful infrastructure elsewhere. Second Avenue Subway Phase 1 was paired with East Side Access and the Broadway subway in Vancouver is paired with a SkyTrain extension deeper into Surrey toward Langley; in both cases, the less useful projects are nonetheless more useful on a likely cost per rider basis than any of the American West Coast leakage and compete with the more useful projects. ESA is probably going to end up $60,000/rider, not much worse than GLX and probably about the same as the Purple Line Extension depending on how much transit-oriented development Los Angeles permits.

Place-based extraction

Place-based politics is a scourge and should be eradicated whenever possible. What it does wherever it is not suppressed is create political identification among local and regional power brokers not with the piece of infrastructure but its cost. The reason is that evaluating transportation needs is too technocratic for the attention span of a local politician, whereas the budget is a straightforward measure of one’s importance.

Once local actors are empowered, they make further demands for irrelevant extras (“betterments”), or construction techniques that spend too much money to avoid real or imagined negative local impact. People with a local identity don’t care about public transit much – public transit takes riders to other localities, especially city center, whereas the locally-empowered minority of people who work locally has little use for it and drives everywhere.

Local empowerment is not unique to budget-based infrastructure. It was a major drag on GLX and at least a moderate one on SAS Phase 1, neither of which is budget-based. The Central Subway and BART to San Jose projects are both place-based vanity, for Chinatown and San Jose respectively, but even these projects are smaller in scope than the Los Angeles or Seattle ST3 leakage. There’s just more surface area for it when advocates lead with a budget, because then every local hack sees an opportunity to make a claim.

The place-based politics in the Northeast is much broader and more regional: SAS, a city project championed by then-Assembly speaker Sheldon Silver (D-Lower East Side), was balanced with ESA, a suburban project serving the base of Governor George Pataki (R-Peekskill, but the state Republicans were based on Long Island). Metro Vancouver’s place-based extraction follows the same schema: if Vancouver gets a useful SkyTrain extension, Surrey must get an extension too regardless of usefulness. Massachusetts is likely to be in a similar situation with the TransitMatters Regional Rail program: RR serves the entire east of the state, and must be balanced with a Western Massachusetts project, for which we propose the still-useful East-West Rail program connecting Boston and Springfield.

In contrast, the situation in California and metropolitan Seattle is much worse – useful lines in Los Angeles are paired with many layers of leakage, as different groups make claims on the pot of money. This way, Los Angeles doesn’t build as much useful transit as New York and Boston even though its construction costs are comparable to Boston’s and much lower than those of New York, and even though it makes large amounts of money available for transportation by referendum.

Are jobs a cost or benefit?

Like place-based extraction, the use of infrastructure as a jobs program is terrible everywhere in a modern developed country where construction is not a labor-intensive zero-skill job, and should be eradicated. And like place-based extraction, I think – and am less certain than on the other points – there is more surface area for this when the program is about a budget and not a piece of infrastructure.

The mechanism is the same as before: once money becomes available, local labor groups descend on it to make claims. Promises of job creation are thus always local, including beggar-thy-neighboring-state demands for local rolling stock construction. These occur for both budget-based plans (like the Los Angeles light rail fleet) and project-based ones (like the new Red and Orange Line cars for Boston, built in Springfield due to place-based extraction). However, it’s easier to make a claim when the political discussion is about how to spend $X and not how to optimally produce a desired piece of infrastructure.

The way forward

The American West Coast’s problem of budget-based planning is, thankfully, easy to solve, because it’s been solved in other parts of the same country. The Bay Area has less of it than Southern California and the Pacific Northwest (but it’s not free of it – many of the specifics of California High-Speed Rail’s failure come from Bay Area power brokers hoping to use it as a slush fund). The Northeast doesn’t have it at all. Los Angeles is likely to be forced in that direction anyway, because it’s running out of sales tax capacity – the already-approved measures are spoken for through the 2050s.

The impact is likely not a matter of straight construction costs in dollars per kilometer. Rather, it’s about leakage. Los Angeles and Seattle do not have unusually higher per-km costs by American standards; in the 2000s Los Angeles looked like the good part of America and in the 2010s Seattle did, but since both have converged to much higher figures. The problem is that a smaller share of the Los Angeles Measures R and M spending goes to useful expansion than the capital budget in places that have project-based planning. This is what needs to be fixed through transitioning to project-based planning, costs aside.

45 comments

  1. Eric2

    Bundling in unrelated amenities is necessary to get public approval for a project whose transit component is not popular enough, no? In Europe there is more of a consensus on the value of transit so this is not necessary.

    • Herbert

      Is that actually empirically true, tho?

      Like, how many ballot measures have failed due to having “only transit”? And how many have succeeded “just because” they had enough unrelated stuff bundled in?

      By the way, the city of Tübingen just voted against a tram project (the vote took place together with the federal elections so turnout was unusually high for a transit referendum) marking yet another entry in the disturbingly long list of tram projects in Germany losing referenda…

          • Herbert

            That’s not evidence, it’s just an assertion. There isn’t even a poll asking how many people would’ve voted differently under which circumstances.

            It could just as easily have turned voters away for being too car centric…

          • Matthew Hutton

            It seems pretty safe to say a vote won by 0.5% would have lost without the highway money.

          • Herbert

            No, that’s again just an assertion. It’s equally possible that a large number of people who would’ve voted “yes” stayed home or voted “no” because of the highway money…

          • Eric2

            This is LA. I can’t imagine any significant number of transit advocates stayed home because 20% of the money went to roads. And I can imagine a large number of road users who would have voted against were it not for the 20%.

          • Matthew Hutton

            I have difficultly believing a significant number of people who support transit would refuse to do so in London, Paris, Hong Kong or Singapore because 20% of the budget was to be spent on roads.

        • Henry

          Interestingly enough, the reverse happened in Seattle.

          Roads and Transit failed 56-44. Then Sound Transit 2, the transit-only portion, passed 58-42.

        • Henry

          As a counterpoint, Roads and Transit in Seattle failed by 56-44, and then the next year the transit-only Sound Transit 2 passed 58-42.

    • Patrick Jensen

      That whiffs a bit of fundamental attribution error. Besides, why would cities/states propose projects, if nobody wants them?

      The United States does have an unusually piecemeal and hyperlocal decision-making system on top of inheriting the anglosphere style of representation through single-member districts. A common criticism of this style of decision-making is that it favours parochial concerns over broad ones.

      The United States is also unusual in the extent of rule by lawsuit. Defensive engineering is expensive, but at least it is predictable, unlike a lawsuit, that might cause massive delays.

      • Henry Miller

        It isn’t that nobody wants them. It is that the small minority that wants them is more powerful than the vast majority that doesn’t care. If a significant minority is actively against something it probably won’t happen, but most issues you get a few people who care and a lot of yawns. As such you can give a bit off pork to the small minority and they will support you, then find a different pork to give to a few other the other yawns, and still more pork for another set of yawners – pretty soon you have spent a lot of money on things only a tiny number of people want – but the total is a majority want a small part of the whole and are not willing to give up the part they want to sink the total.

        • Matthew Hutton

          Compensating people who will suffer the inconvenience of the project but won’t benefit seems completely reasonable, but it also needs to avoid massively blowing up the cost of the project.

          Reaching that middle ground should be perfectly achievable – and if people refuse to be sensible you can have a system that allows for less compensation if people don’t agree not to challenge the process. This is standard in the private sector where you buy people off to leave an organisation without any fuss.

      • Bruce Hain

        Well CAHSR is a an especially aggravated case of “special amenities” in the form of A LOT OF UNNECESSARY MILEAGE, which is extremely detrimental to both operating efficiency and construction costs. You could say the voters were hoodwinked. But “special added amenities”? I doubt that if they weren’t mentioned specifically whether anyone would be aware of them at all. So it’s a matter of PR (and of course having a reasonable, desirable and viable project at its core – and I’m not commenting on that)

    • Alon Levy

      No, not really, mot of the things that are said to be necessary are the result of poor leadership. There’s no political reason why Seattle should have more leakage than New York or Boston other than the peculiarity of the sales tax measures. And New York has a lot of leakage by European standards, but the leakage is to agency-internal waste like SOGR rather than to political pet projects.

      • Eric2

        If New York and Boston have less leakage to non-transit, the obvious explanation is that they have a larger transit ridership and constituency than other US cities.

  2. Herbert

    https://www.nordbayern.de/1.11366978 the plans to add a new high speed line to the overtaxed and slow (Nuremberg)-Fürth-Würzburg line (important for onward connections to Frankfurt, Germany’s fifth largest city, financial hub and site of the busiest airport) seem to have taken the next hurdle to get closer to being put into practice…

    The ministry is still very cagey about the route and the cost estimate is probably pretty ballpark “six billion euros”, but there are already plans for yet another tunnel between Nuremberg and Fürth (in addition to the U1 subway, which is however mostly El there and the planned freight bypass tunnel) that is to be used exclusively by long distance trains. Of note, the neighborhood of “Bislohe” which is said to be the western endpoint of the tunnel Bislohe
    https://maps.app.goo.gl/zraDRZC3ybFE9oQ6A lies to the northeast of Fürth main station and this will almost certainly “cement” Nuremberg-Frankfurt trains bypassing Fürth main station (there is a tiny chance of a new interchange point being built where the new line intersects S1, but I wouldn’t bet on it – it would also lack the connection to U1 which Fürth main station has and there’s no chance the city of Fürth would ever fund an extension of U1 so far out into farmland and woods)

    Fürth doesn’t really have long distance train service, but it is slightly bigger than Erlangen which does and litigation by the city of Fürth has substantially delayed the upgrading of the Nuremberg-Bamberg line to four tracks (necessary for direly needed service and reliability improvement on S1) so there is a distinct possibility that Fürth or Fürth based NIMBYs will try to delay or stop the project or try to extract value (mayhaps in the form of the increasingly popular beetroot stations on high speed lines served by regional trains)…

    There is also the question of routing, which – again – the ministry has left wide open. The standard in the last decade or so has been that DB involves the general public early on and does very detailed public consultation including about routing. There is also the tradition to “bundle” new high speed lines near existing infrastructure, preferably highways, which in that case would be A3 (which deviates more from the most direct route than the existing rail line but would offer the possibility of putting a regional train station near Höchstadt which is both a lower level regional center for places to its North and a suburb of Erlangen with non-negligible commuting between the two – and one of the most populous places in Franconia without rail service). So this is all pretty early yet, but cutting travel times to half an hour would not only allow nice nodes, it would also be a game changer for people in central and eastern Franconia who wish to fly out of FRA as it would probably be within 90 minutes of Nuremberg main station…

    There are also plans (hampered by the capacity crunch on the existing line) to increase regional train frequency to half hourly and to introduce either a pseudo S-Bahn (regional trains with a new name but very similar schedules, stopping patterns and rolling stock) or an actual S-Bahn (including infill stops) between Nuremberg and Würzburg. A side aspect in case the S-Bahn happens is that Würzburg has its own Verkehrsverbund http://www.vvm-info.de and thus far the http://www.vgn.de has usually expanded when the S-Bahn network grew…

    Anyway, this post is long enough as is.

    • Alon Levy

      I should write about the plans – I made a video just before the election. There’s a lot of leakage there but it’s not cost-based, it’s project-based. The costs per km here are just really high because of bullshit like flat grades.

      • Herbert

        Those flat grades are in part a product of the benefit cost quotient which bizarrely “wants” freight on the high speed lines… Despite the fact that that is obviously terrible for capacity…

        • Alon Levy

          Yeah, German BCAs are so weird like that. British ones, same thing. I want to say it’s better to do things the French way and compute financial and social ROIs, but then Nordic infrastructure planning is done with BCRs like here and the results are decent, modulo the billions of euros spent on urban motorways because the Alliance likes cars. (Granted, Berlin is expanding motorways because SPD likes cars too; no car ever called Mayor-Elect Giffey a plagiarist…)

          • Herbert

            Well it’s not as important what you call the system as which parameters go into it and how they are calculated…

  3. SB

    Aren’t you assuming that voters care about good cost effective transit but most voter have other priorities such as parking, property values, spending OPMs (viewed as free money), etc?

    • Mario T.

      Can you give specific examples of leakage in LA transit projects, or in larger planning? It’s hard to know what to do better if there’s not much specific.

  4. Tiercelet

    I think I may be missing a nuance in what you mean by “place-based” plans. Ultimately all infrastructure that gets built, gets built *somewhere*, so it must have a “place.” And the Second Avenue Subway has a place baked right into the name–one that’s only 6.5 miles long, no less!–but it seems like it’s not an example of a “place-based” project.

    So I am inferring that it means something subject to the influence of/veto by local political forces/power brokers/interest groups–with “local” meaning something like “small [= lesser order of magnitude?] in geographic or population terms relative to the entire system.” Is that correct? That what you mean is “subject to minority/local community veto”?

    This is a particularly toxic part of American political culture–so many veto points, and no polity is ever willing to accept changes where the (local) costs exceed the (generally severely under-estimated local) benefits, however great the systemic benefits may be. But how many projects have such obvious & widely distributed benefits that even the most vocal reactionaries in every community can’t deny them?

    That said, while bribing local communities with unrelated giveaways is detrimental to a rational and affordable transit system, the US also has a long history of ignoring local impacts on communities which didn’t have enough political pull to counter them. The long racist history of “urban renewal,” intentionally segregating & destroying Black neighborhoods for highway projects, & designing zoning programs that systemically enforce racial & economic inequity & environmental idiocy–plus probably a lot more decisions that I’m not even aware of–are a pretty good illustration of what happens when community interest is completely ignored.

    Obviously, the planners who used I-94 to displace 1/7th of the Black population of St Paul are no justification for the NIMBYism of rich old entitled White people on 14th St today. But as appealing as it might be to imagine transit planners with a truly free hand, that assumes a benevolence on the planners’ part that has historically not been in evidence–quite the opposite.

    How do you build a political system that can require local communities to make sacrifices for the greater good, but that also ensures that those sacrifices are shared evenly by all communities & that the greater good, actually is?

    • Alon Levy

      How do you build a political system that can require local communities to make sacrifices for the greater good, but that also ensures that those sacrifices are shared evenly by all communities & that the greater good, actually is?

      In all cases, you disempower the local. What you’re missing in that historical description of American cities is that place is used as a way to ghettoize rather than to integrate. Black New York is a large bloc that can make citywide demands; individual neighborhoods were weaker and easier to bribe with things that would benefit local leaders at the expense of the general public.

      The entire slate of American regulations tying the hands of the state ostensibly for environmental protection or civil rights is a failure. Judges will never stop a committed racist like Larry Hogan; they will only stop a civil servant who has ideas about fare payment systems that weren’t vetted by a technically ignorant political commissar. Likewise, on environmental matters, a state that makes something a priority always wins – witness the way the obviously skewed LGA AirTrain reports made it through, just because Cuomo wanted.

      And what’s more, the racists know this. The racists loathe the administrative state. They complain about court rulings all the time but their real hate is for a civil service staffed by professionals who are empowered to act swiftly and who are subject to control by subject matter experts and not by politicized courts. The reason the US has such a weak administrative state is that the Dixiecrats were happy to join with the proto-New Right in the 1950s and tie the hands of the state, knowing they were about to lose politically and the electoral majority of the public wanted racial equality and were quite happy to see the state enforce desegregation.

      • adirondacker12800

        Airtrain to WIllets Point got filed away with JFK express from Wall Street, JFK express from Midtown, Astoria line to LGA, etc, all the way back to at least to the Second System. It’s next to the bookcase of studies for high speed rail for Upstate.

      • Matthew Hutton

        In Britain where we have a super centralised state (in fact much too centralised in general) local people are still able to block proposed infrastructure as most recently happened with the Oxford-Cambridge expressway.

        All disempowering local people from the process formally does is to mean that local people who can put pressure on informally get more influence. And that benefits the establishment figures more than anything.

        • Alon Levy

          Britain does not have as-of-right zoning. All development requires special approvals, and in London, Prince Charles has opinions about tall buildings, vaccines, etc. The distinction is that in Japan there is a national zoning law, and if you’re compliant with it, members of the imperial family aren’t going to randomly complain you’ve built too tall.

          • Matthew Hutton

            I think if the imperial family of Japan wanted to block development you wouldn’t hear about it in the press. It would Just all happen untransparently behind the scenes. The same with the rich and powerful blocking or influencing development.

      • Eric2

        “In all cases, you disempower the local”
        “Black New York is a large bloc that can make citywide demands”

        But by disempowering the local, Black New York becomes powerless because all decisions are made by a white governor in Albany for whom black NYCers are a relatively unimportant constituency. This is how all the racist planning decisions of the past were made to begin with…

        “They complain about court rulings all the time but their real hate is for a civil service staffed by professionals who are empowered to act swiftly and who are subject to control by subject matter experts and not by politicized courts”

        By “professional” you seem to mean “agreeing with all the things I/we agree with”. Which is great, except that plenty of “professionals” are in favor of building roads rather than transit. How do we make sure our experts are the ones in charge and not the other side’s? Alternatively, maybe we have no hope to win that battle so we should try to achieve a mutually respectful detente where we manage transit our way and they manage roads their way? This is also related to the more general “crisis of expertise” in society. In short these issues need a lot more unpacking.

        • Eric2

          I recently saw the thought-provoking following quote in an article by David Foster Wallace reviewing a new dictionary. What exactly have we good-transit advocates done to establish our authority on transit and urban planning? What more could we do?

          ===========

          Garner recognizes something that neither of the dogmatic camps appears to get: Given 40 years’ of the Usage Wars, “authority” is no longer something a lexicographer can just presume ex officio. *In fact, a large part of the project of any contemporary usage dictionary will consist in establishing this authority.* If that seems rather obvious, be apprised that nobody before Garner seems to have figured it out – that the lexicographer’s challenge now is to be not just accurate and comprehensive but *credible*.

        • Matthew Hutton

          The thing is that while local people might not always like a transit project they are pretty likely to prefer transit to new roads as transit has smaller negative externalities.

  5. Bruce Hain

    I think you’ve struck a nerve. I’m going to have to read this carefully. Concerning Leakage, I see the protagonists using a line I used to use on my parents: “But it’ll be cheaper this way.” One or the other of the entities always seems to have foreknowledge of the actual outcome, in both scenarios. In the case of me and my parents it wasn’t me, which may serve as defending the agency-engineering combine. If you could cite statistics among your sizeable collection you might be doing transportation a great service. I’d like to be able cite them too, along with the article, if you do.

  6. adirondacker12800

    Second Avenue Subway Phase 1 was paired with East Side Access
    Since Nelson Rockefeller was governor. Why are you shocked that it was?

    • Alon Levy

      I’m not shocked! To the contrary, through the Bloomberg-era congestion pricing debate I brought up this history as a way of rehabilitating Silver: in the late 90s-early 2000s budgeting debate, he pushed SAS Phase 1 figuring the entire 4-phase thing would be done in his political lifetime (the plan was full opening by 2020) and Pataki pushed ESA. Two of the three men in the room wanted something, and got it funded.

      • adirondacker12800

        John Lindsay, who was mayor back when Nelson Rockefeller was governor, proposed tolling the free bridges into Manhattan which would be a crude form of congestion pricing.

        • Alon Levy

          Sure, and it won’t surprise me if the 1960s-70s planning paired urban SAS and 63rd Street Line with suburban LIRR tunneling across the East River; city vs. suburb conflict in the region goes back to the 1940s. But SAS was famously canceled and only restarted in the 1990s after 20 years of fix-it-first, and the late 1990s-early 2000s effort paired urban/D SAS with suburban/R ESA.

          • adirondacker12800

            Building the tunnels for both of them under the East River, at the same time, did take some planning.

  7. Frederick

    What is leakage? Leakage is when money flows to somewhere unintended.

    In the US, there is no leakage; it is intentional when money flows into the hands of consultants, politicians, and construction companies; it is intentional when money flows into surplus-extractors like lawyers and landlords; and it is also intentional when money flows into local pork-barrel projects and local jobs, because that’s what the voters care. You see, the bourgeoisie, the petite bourgeoisie, and the proles all benefit in such project.

    And that’s why most projects in the US are cost-centric: the price tag is the main point. Who cares about the efficiency of transit? It’s not like many people use public transit in the US, no?

  8. Matthew Hutton

    The better way to solve this problem would be for the public sector to hire commercial buyers and commercial negotiators who would be able to work out how to satisfy communities along the route of the new infrastructure without spending vast sums of money.

    Maybe it’s different in other countries but in Britain our parish (village) councils collect property taxes of at most maybe €200/house/year and more typically it is around €60/house/year. And I’m not sure how much local community groups might raise but they usually have tiny budgets so it’s probably €50/house/year at most.

    And if you want to knock down my house to build a railway and will give me €50,000 on top of the purchase price and make sure you cover the moving costs I’d take that.

    All in all you should be able to offer local communities stuff to mitigate the inconvenience of construction without breaking the bank.

    • Matthew Hutton

      And I know people whose parents used to work as salesmen. And when they sold to the public sector they’d stick a zero on the cost of everything because no one would ever challenge it.

  9. Reedman Bassoon

    FYI —
    https://www.latimes.com/california/story/2021-10-08/california-high-speed-rail-faces-new-cost-overruns

    Cost overruns hit California bullet train again amid a new financial crunch
    BY RALPH VARTABEDIAN
    OCT. 8, 2021 5 AM PT

    The California bullet train is facing at least another billion dollars of proposed cost increases from its contractors …..

    Tutor Perini, which leads a team that is building about 31 miles of rail structures around Fresno, has submitted paperwork seeking about $600 million in additional payments ….

    Dragados, the Spanish construction firm that is leading a team for 65 miles of work around Kings County, has submitted new delay claims and change orders of more than a half-billion dollars ….

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