More on Consultants
We’ve gotten a lot of criticism from various quarters about our analysis and conclusions at the Transit Costs Project. The focus for this post is a criticism that isn’t usually made in public but looks like the biggest one among people in power in the American federal government: the issue of consultants. Writing in Slate about our report, Henry Grabar identified consultants as the ultimate reason the United States can’t build. This should be nuanced in that consultants are one of a few primary reasons, but the broad outline of the complaint is right: the overuse of consultants is a serious problem and must be replaced with large in-house bureaucracies in explicit rejection of the privatization of the state. And yet, there’s pushback. Why, and why is it wrong?
The current situation
In the English-speaking world today, the dominant view of infrastructure is that private companies are inherently more efficient than the state. In service of this ideology, large state organizations were left to rot and then privatized. The historic sequence is generally that as efficiency levels fall, political interest in investing in organizational capacity declines, and in-house organizations take the blame.
American and British societies both believe that specialist experts are inherently suspect and must always lower their gaze in the presence of a generalist who is paid and otherwise treated as a master of the universe, and thus those organizations would receive overclass appointees (US version) or generalist civil servants (UK version) who constantly belittle them and also have little ability to reform them from the inside. It’s remarkable how non-technical the members of the American overclass Eric and I have talked to are; one of them asked us straight out why we didn’t talk to more lawyers in our report where we talked to engineers, planners, procurement experts, and other specialists.
The result of this sequence is that usually at the time of privatization – say, when New York’s MTA let go of its 1,600 strong capital construction department in the early 2000s and downsized by about an order of magnitude – what is left is a hulk, easy pickings for the privatizer. What is left of that is even more of a hulk. The upshot is that in places that rely on consultants in lieu of in-house expertise, the quality of current public-sector leadership (that is, the various state political appointees, most federal political appointees, and even some permanent staff with pure management background) is low. The consultants are individually more competent than them, and this is readily apparent to anyone who’s talked with both sets of people; even the political appointees themselves get it and think their expertise is in managing the consultants.
What the consultants know
When the state doesn’t really like itself and privatizes key functions to consultants, the consultants look more competent. One federal official – not a political appointee, to be clear – told us straight out that the consultants have experience since they work on so many projects, domestically and internationally.
The problem is that what the consultants know is how things work on projects that use consultants. This is how an experienced consultant can say something as obviously wrong as “The standard approach to construction in most of Europe outside Russia is design-build.” Is this even remotely true? No. Parts of Europe are transitioning to design-build under British influence, universally seeing cost increases as they do so, but even in the Nordic countries and France this process is in its infancy, and in nearly all of the rest of Western Europe it’s not done at all. The upshot is that the US/UK consultant sphere is an expert on how to build public transportation in the failed US/UK way, and its international experience is largely (not entirely) US/UK-style badness.
But Americans are an incurious people. Even the ones who are aware of European and rich-Asian success in infrastructure and urbanism only really interact with it as tourists. So they can’t distinguish a government-built program like the TGV or nearly every European subway system from the few that are more consultant-driven like the Copenhagen Metro (at the time of its construction, Scandinavia’s highest-cost metro – though the rest of the Nordic world is catching up in both privatization and costs).
What’s more, the American preference for generalist knowledge means that what they see of the Copenhagen Metro is much more its use of unconventional financing than its use of driverless trains at very high frequency or its standardization of station components. Thus, looking at a metro that for all its expense by its regional standards was also cheaper than anything in the US going back to the 1970s, they take notes and imitate all the bad and none of the good.
The interaction between consultants
Okay, so in theory, if consultants’ recommendations are followed exactly and a turnkey system is built, in theory it should still be possible to imitate the medium costs of Denmark.
But in practice, the hallmark of consultants is private competition. This means there are different firms, and even though they are all broadly similar, they compete and each has a slightly different way of doing things and may have different recommendations for a specific project. And then each government agency in the United States hires a different consultant and the consultants clash and there is no way to resolve the conflict.
Seattle’s cost explosion in the last 10 years, going from semi-reasonable costs for U-Link to a world record for a majority-above-ground project for Ballard-West Seattle, comes from a somewhat different place from what we’ve seen in New York and Boston. For example, New York and Boston both have ample surplus extraction by local actors, but the extraction there happened before the plans were finalized and the Full Funding Grant Agreement was made; in the Seattle suburbs, one municipal fire department has demanded changes even after the FFGA and threatened not to certify the project. The issue of consultants there is likewise a new problem: a complex project – I think the Pacific Northwest intercity rail program but I forget – requires intergovernmental coordination and the different agencies hired different consultants, leading to substantial inter-contractor contention. The argument for privatizing state planning to large design-build contracts is that they avoid this contention, but here it’s recreated by the very presence of competition.
Nor is replacing competition with a single private consultant going to solve the situation. The private sector’s norms of how to deliver value depend on competition; all benchmarks used for how to successfully deliver to the customer are honed based on how to beat or at least match other firms that could get the contract if the firm fails. A private monopolist combines the worst aspects of the public sector (no competition) with those of the private sector (fundamentally adversarial relationship with the customer). As soon as a project is large enough that multiple agencies are involved, forcing them to all use the same consultant, even if the initial choice does feature competition between WSP, AECOM, Arup, and other such firms, means that for the duration of the project there’s such lock-in it has the same problems as a literal monopoly.
The way forward
If it’s not possible to successfully deliver infrastructure megaprojects through competition among private consultants or through a private monopoly, it follows that delivery must be done through the public sector. This means a public sector that is staffed up with thousands of permanent professional hires. Small cities can use big cities’ agencies or a federal agency as a public-sector consultant; in all cases, this must be domestic rather than international, since the social mission that makes many public monopolists good vanishes at the border and turns into predatory monopolistic behavior (for example, by SNCF toward other national railways).
Metropolitana Milanese, the infrastructure builder that also provides public-sector consulting services for the rest of Italy, has around 1,300 employees. The Anglo world can imitate that – never literally import the firm, but set up a similar construct, with advice by MM, RATP, and other public-sector engineering firms about how to do so and even some early hires. This needs to be done publicly and ostentatiously, to make it clear what’s going on for the sake of transparency and to lock in good changes. Instead of regulators who nudge, the state needs people who do; there is no alternative.
It’s fascinating we get this at the same time as we see the same folks pushing STEM education and treating the humanities with some disdain. But I suppose they don’t think that applies to them.
One other factor in US politics specifically is that you can also cut the budget for in-house planning and civil service to save on the amount of needed taxes (which is always popular here), without it having an immediate impact on projects. Municipal governments in the US love kicking the can down the road on problems if it saves money today.
The people pushing STEM education are not usually a political overclass. The push comes from tech CEOs, who are almost always technical. In American politics, the place where I see the biggest push for STEM in education is the low end, like the privatization of Newark school administration to Facebook – the growth in CS majors at Harvard is a bottom-up phenomenon, not a concerted push by any elite to have the next generation be more technical.
The tech business elite in turn is not quite the same business elite as the one that pushed for the privatization of the state in the 1970s and 80s. The most openly right-wing of them, Peter Thiel, tries to push the concept of state capacity hard, which Reagan and Thatcher would have gagged at – and even nowadays, when I went to a Canadian Tory event on state capacity, the political commissar in the room shut down the conversation by saying that people shouldn’t use the expression “state capacity” because it has negative connotations. Most of the rest aren’t especially right-wing – a lot are Democrats who end up hiring Republican political commissars in the Trump era, like Zuckerberg.
Isn’t the mere presence of someone like Thiel evidence that the idea of “state capacity” has shifted from some external thing to a toy which the private sector can use to its benefit? I’d think that it’s exactly the fact that a lot of big D Democratic actors are perfectly comfortable using big R Republican advisors shows how stilted little d democratic efforts–whether in nudge aspects like advocacy or push aspects like planning–have become in the Anglo, and especially American, context. Atrophy not merely of the state, but more significantly of the idea of the state, has always seemed to me like a long-term goal of the right-wing.
No? Powerful private actors have always exercised influence on ideology through funding, and for non-socialist spaces this always included business magnates.
The hiring of political commissars is not pan-Anglo, I don’t think – it’s a 21st-century American feature starting at earliest with the K Street Project and more plausibly in the 2010s (since the K Street Project was specific to Washington lobbying firms).
Yes, but I thought we were beginning to move away from that kind of thing in the latter half of the 20th century. That disproportionately-empowered individuals–whether through money or political power–can effect changes to their own interests as opposed to the general interests of a democratic state has always been a problem good governance has had to deal with, but there at least seemed to be a clearer understanding of this as a problem instead of just an inescapable aspect of society.
Not really – right-wing thinktanks go back to moguls in the 1960s and 70s funding anything that would spout the right anti-left platitudes like Olin and Scaife, and then the Koch network.
Since the Citizens United decision they don’t have to launder the influence through a think tank, here in the U.S. They can just write a check.
It’s not STEM versus humanities. The reason why STEM enrolments in the Anglosphere has been in long-term decline is its displacement, not by humanities, but by the money professions like economics, accountancy, law, business, administration, even media & communications. The ne plus ultra in the UK is of course the Oxford PPE favoured by those aiming for the very top (PMs & presidents) like David Cameron, Liz Truss and Rishi Sunak, Bill Clinton (and wannabee Pete Buttigieg), Tony Abbott, Malcolm Turnbull, not to mention Rupert Murdoch. (Note, the 4 Rhodies –because PPE is what most of the scholars do in their 2 years at Oxford.) Politicians have panicked about this STEM loss but the deficit has been filled by immigration, primarily Indian and Chinese, or first generation children of Indians and Chinese immigrants.
You talk about disdain, but it’s by these money-men towards the tech-guys (never mind everyone else). The PPE-ers and their ilk, believe they know the secret to the universe and it is not the knowledge possessed by the techies. They use consultants to bridge that gap, or so they think. No accident that it is the countries where these types rise to the top (often the very top) and control everything that are the worst at building anything. Paradoxically these types were once the great builders like in the Victorian era; or Robert Moses (Oxford degree in Public Administration) though he had a similar bias against public transit as today’s version of the species. The neglect of NYC’s transit dates from Moses’ ascendance.
It stems from not raising the fare from a nickel for 44 years.
You’ll get a natural experiment soon, as the Danish railway infrastructure manager has embarked on a project to insource a lot of competences. From the executive summary (machine translated from Danish):
“Banedanmark initiates insourcing of professional employees based on specific strategies per discipline, to an extent so that Banedanmark, like the Danish Road Directorate, can build up actual design environments within key disciplines, although Banedanmark will continue to draw on the consultancy market in relation to relevant tasks where the market can achieve economies of scale across sectors.
Banedanmark will insource project managers, construction managers, contract managers, planners, etc. so that Banedanmark will only use external resources for these items in very special cases.”
I guess what confuses me — when the move to private consultants nearly always leads to increased costs — then why are those countries (even ones with strong public-sector agencies) going that way? Can it really be just blind ideology to the superiority of private expertise and the free market?
I think quite a few of the very worst decisions (such as the Stonehenge tunnel existing at all or HS2 building elaborate tunnels but no stations for Buckinghamshire) have the civil servants fingers all over them.
Because by the time the privatization happens, the public sector has been left to rot for decades. London only transitioned to design-build after the Jubilee line extension, not before. Strong public-sector agencies don’t get privatized; ones that make mistakes do, in extreme cases after just one mistake. Then as projects become harder to deliver, the sort of people who were in charge when they were finished are turned into superstars. The role of ideology is threefold:
1. It leads to a Maoist-style reaction to failure: every cost increase is evidence that the revolution hasn’t gone far enough.
2. It leads to redefinition of success based on internal metrics: the same civil servant who told us that consultants have international experience also told us American transit building can’t be all bad because costs don’t run over, never mind absolute costs.
3. It leads to underinvestment in the state, so very quickly the people on the government side of the government-consultant relationship are absolute morons like Janno Lieber or his even worse predecessor Pat Foye; this is related to the Reaganite (but not Thatcherite) system of appointing regulators who spit on the professionals at the agencies they supervise and then come to the conclusion that government doesn’t work.
Replacing Andy Byford at the NYCTA with Cuomo PR flack Sarah Feinberg was probably the ultimate example of no. 3.
In their book Why Are the Prices so Damn High? Tabarrok and Helland observe: “our analysis of the KLEMS data finds the highest price increases in low-productivity sectors that use many high-opportunity-cost (i.e., college-educated) workers.” This fits a lot of public sector jobs to a T. Because of the lack of productivity growth in education and healthcare relative to the rest of the economy, they become more expensive over time. We keep spending more and more on them though, because we deem these services sufficiently important.
The public sector is thus in a state of constant cost crisis. Treasurers must impose spending cuts somewhere. Tabarrok and Helland note further: “The case of urban infrastructure is also telling for another reason. We argued earlier that a signature of the Baumol effect is that it is consistent with rising costs and rising purchases. — In contrast, we argued that a signature of a true [Baumol] cost disease is that consumers would reduce their purchases of the good that increased in price. — Urban infrastructure seems to fit the latter story.”
Because staffing is one of the only metrics that can be directly linked to cost across industries, cost cuts are usually implemented by layoffs and hiring freezes. Work still needs to be done by someone though, so consultants are increasingly brought in to fill the gaps. This is rationalized as consultants coming in to help on a one-off project, which leads to the projectification of public transportation work.
Tabarrok and Helland’s analysis makes this sound like an unavoidable problem. It isn’t; construction costs are not growing in Germany and fell in Italy after mani pulite – and in the non-US/UK Anglosphere the increase in costs has the shape of a sharp growth in the curve since about 2000 after about 50 years of stability. The public sector here requires university degrees too and that’s fine; what we lack is the mutually abusive relationship between private consultancies and technically illiterate generalist managers.
I don’t know what Tabarrok has said elsewhere about infrastructure, but his colleague Tyler Cowen had the beyond horrific take that costs don’t matter because the US should follow the “Silicon Valley model” (his words) and it’s all fine because people can just deurbanize to auto-oriented Sunbelt suburbs. These are not the sort of people who can explain why the US is inferior to countries that don’t speak English, because in their industry the US isn’t and pays better. Same thing with ascribing high US health care and education costs to Baumol and not to high administrative costs coming from bullshit private competition (P.S. Germany pays teachers better than the US – this isn’t about the US having high salaries, not here). GMU economists ideologically prefer low taxes to a functioning state.
No, that’s a complete misreading.
While Tabarrok and Helland do offer a hypothesis on why infrastructure costs so much, some of which I disagree with: “The cause here appears to be much more owing to unionized labor contracts that mandate inefficient employment and methods of construction…” and others I’m more inclined to believe: “…and to a legal system with many veto points than to secular increases in the price of skilled labor” neither is the point I’m trying to make.
The point is, while education and healthcare (and in the US, policing!) are labour intensive and have poor productivity growth, they are regarded as indispensable, whereas public transportation may or may not be. Which public sector functions are subjected to a slow death by a thousand cuts depends on local priorities.
In Germany, public transportation may be regarded as indispensable (which makes sense, because they have inherited so much of it, it’s an industry in its own right) while something else, like military procurement, sounds an awful lot like American subway construction: byzantine procurement rules, an overreliance on consultants, start-stop funding and mountains of technical debt and legacy costs.
(If you’re interested in a 1h 18 min. deep dive into the madness that is German military procurement, here you go: https://www.youtube.com/watch?v=8jDUVtUA7rg )
I’m myself partial to Bent Flyvbjerg’s heuristics on what makes projects successful. The most common infractions being:
– Lacking clearly defined goals
– Hiring inexperienced designers and contractors
– Building the biggest, tallest, fastest, shiniest whatever instead of sticking to known solutions and common standards
– Rushing to construction
– Lowballing costs only to end up paying through the nose later
– External conflicts
The projectification of work and high staff turnover is particularly pernicious, because it prevents learning by repetition, leading to what Flyvbjerg dubs the “Eternal Beginner Syndrome.”
Military procurement also seems to be a mess in the US, although I don’t know if that’s in exactly the same ways as civil construction.
Military procurement in the US and Europe seems broadly equally problematic, with one important exception: the US has scale, whereas we have artisanal tank production batches of 200 and Franco-German intergovernmental bullshit from hell. The one noticeably cheaper NATO-grade tank is the Merkava, which is developed in-house by IMI. But the issues with the contractors throughout NATO are horrific, complete with the implication in the debate that if you have any questions about how useful the F-35 is for its price you hate America and want both the terrorists and Xi Jinping to win.
Instead of appeals to association, how about some rigor, a proof by contradiction?
If the problem is overuse of consultants, how does Finland manage to achieve broadly Nordic costs, although the rail infrastructure managers have since at least the 90s been gutted to the extent that they must use project management consultants to oversee design consultants and contractors?
I mean, Nordic costs now are 2-3 times higher than Nordic costs 10-20 years ago; this is what happens when the state rots and institutional knowledge is lost.
True, but considering Finnish agencies have about a tenth of the staffing of agencies in other Nordic countries (I just got back from a Nordic railway course, where the low staffing of our rail agency elicited constant amazement) and rely on consultants for practically everything design related, Finnish costs should be significantly higher than the other Nordic countries, should they not?
@ Partick Jensen
I don’t think it is consultant themselves that are the problem. The right consultants are good. Nobody can know everything there is to know, and some things you will not need often enough to bother taking in house. Other things you could do in house, but someone who does it all the time is faster and cheaper.
In every city in the country there are several office buildings under construction. If you need an office you can have them to it design-build for a fraction of the cost of doing it in house. They already know what questions to ask, and have enough experience with other office buildings to bid on the project start to finish before starting everything. So long as you accept the building as they come up with it (they will allow some changes in cosmetic parts) you will have a functional building for cheap and design-build is cheaper than design-bid-build and needs little oversight to get something that in the end is cheap and acceptable.
However you cannot take that office building and apply it elsewhere. Nobody is building rails in your city, except your city. There is no experience on what it actually costs to build something as nobody has done it before. They have to guess in the bid phase what issues will come up in the design phase and build phase and put in enough contingency, and nobody has enough experience to do that.
A road is an inbetween. The road part itself is just a narrow parking lot (or a parking lot is a really wide road), and so done enough to design-build. However roads often have bridges which are not done often enough (in part because a bridge implies over water in many cases and water making the design 10x harder). It can work as deisgn-build, but the government is building so many of them they probably can/should have more in-house expertise anyway as the typical road is too large a project for the people who design-build a parking lot, and in turn this means they don’t have the experience to design-build a road. (break your road into 1km sections and they could – but people don’t like roads that are under construction for many years)
Note that design-build also fails because most transit projects are mega projects. This adds another level of problems with them. Most cities do not build basic office buildings, instead they want to build landmarks, and this then goes from things you can design-build cheaply to an unusual project that nobody has any clue how to bid.
That is my current thinking on it anyway. Some of it cannot be proven, other parts seem to fit the evidence I have seen.
How do you get the good consultants though, isn’t that the question? Alon posted a while ago about running government like a business, so let’s take that thought and expand on it.
Business literature commonly uses a 2×2 matrix to depict outsourcing choices. On one axis you have impact on operations and on the other axis you have strategic impact. This yields four combinations:
Tasks that have a high impact on operations and strategy i.e. core tasks.
This includes things like hiring and strategy. You should never outsource these.
Tasks that have a high impact on operations but low impact on strategy
This includes tasks such as janitorial services. They can be outsourced with ease.
Tasks that have low impact on operations and strategy
Tasks that have little impact on anything should be stopped.
Tasks that have a operationally low impact but strategically high impact such as design is the most tricky one. You can do these tasks yourself if you have the means to, but you could also outsource them if you can form a strategic partnership. E.g. most companies have outsourced their basic employee training to an institute of higher education rather than training high schoolers themselves.
Similarly you can outsource design, provided you can set up a relationship where your and your consultant’s incentives are aligned and risks are shared. This is much easier said than done.
The other question is can you find someone you can trust to do it? There are a lot of things in the should outsource category that you have to do in house because the only ones you can outsource to don’t do a good job. Often this means they are not aligned with your strategy.
A janitor that isn’t aligned with your strategy can charge your for “extra cleaning” every time someone drips a little (and station someone inside to monitor for this). Or they can save a lot of money by running a vacuum down the middle and flushing the toilets – done in a minutes but the room isn’t clean. In theory this should be a low strategic impact, but because either of the above extremes is so misaligned they end up with a high impact on your strategy.
In the case of janitors society has mostly figured out how to handle this and so you can outsource it trusting thee contract will give you the right service. However other maintenance cannot be outsourced just because we haven’t figured out what the right level of service is and so they end up miss aligned.
Likewise with design, some things you can safely outsource with little though. A generic office building can be done this way. (but not a mega project office building). sometimes you can outsource a road as well, but not always.
Does it? The agency is still in charge, so obviously its incompetence on behalf of the agency to allow a more extensive design to be issued…… this idea that consultants produce more expensive designs is complete bullshit. Design codes are the same no matter who does the design, its what is being designed that may be the issue and often that’s in the agencies hands……
SNCF did an exemplary job in Morocco. What would it take to replicate this in other places?
– Have the people at SNCF think “actually this is France, even if on paper it currently isn’t”.
– Be sufficiently geographically separated from France to not trigger a turf war.
– Be obviously not a peer of SNCF, thus not trigger a turf war.
– Feel enough cultural cringe (trust?) toward France that local politics handles most of the negative-sum interference, rather than themselves being a source of it.
– Something completely different?
I think it’s permanence. French engineering firms, public and private, have a longstanding presence in the Maghreb, giving them time to familiarize themselves with the local economy and pick appropriate techniques. This contrasts with Japan and China, which move from developing country to developing country and always propose turnkey solutions that work great at home but export poorly (e.g. the Addis Ababa light rail doesn’t have independent power supply, which is fine in an even middle-income country but not in one with Ethiopia’s power outages; early-20c American streetcar companies had their own power supply to deal with that problem).
The American issue is somewhat different – the underlying economic and social conditions are identical to those of Europe and rich Asia, but the Americans feel superior to the foreign consultants and micromanage them to hell and therefore the consultants treat them the way they do equally stupid, equally rich Gulf state clients. The Doha Metro stations look overbuilt as in the US and have similar costs.
“If it’s not possible to successfully deliver infrastructure megaprojects through competition among private consultants or through a private monopoly, it follows that delivery must be done through the public sector. This means a public sector that is staffed up with thousands of permanent professional hires.”
Does the US of A still have thousands of transit professional ready for hire? Even if it does, most of them will still be close-minded Americans who have few knowledge of actual success of transit around the world.
Yes? The early-career civil servants are fine, they’re just being mentored by people who treat the Wire as an operating manual, and I don’t mean Colvin or Daniels but Rawls and Burrell.
It does not take a long time to stand up something new and good, or find the staff to fill it in.
The hard part is getting all the momentum moving in the right direction long enough that it will keep doing well after the initial “founders” leave the project. It’s like how a large number of companies fall apart after the founders die, or lose part of their edge, because whatever singular driving force was behind the culture leaves. In an effort likely lead by a political appointee, your time to make that culture happen could be as short as one 2-4 year election cycle unless you have a whole lot of people across the political class throwing their weight behind the proposed ‘right’ path.
Are those early career/new to the industry/whatever people going to make mistakes early in the process? Absolutely. But, to do it right you would have to stick through the hardship and promote the ideas that produce positive change until you get where you need to be. SpaceX (for all that Elon is the most divorced man on the planet, and a terrible boss) has stood up the most competent design and test staff through sole virtue of locking in on a goal (make rocket cheap) a high tempo for decision making (test until it doesn’t explode) and overarching philosophy (question every engineering principle on a design).
You can apply that same concept to infrastructure! Hire a bunch of people. Young, hungry ones. A smattering of experts from places you respect. Put them on a bunch of different projects. Let them iterate! Tell them the goal is to deliver fast and efficient, and find ways to make that rewarding. Punish people who undermine the process. Fire them, point and laugh, take away a bonus, whatever works. The answers all these people need are out there, so push them to go and learn! Send all new staff on 3 month rotations to different Italian and Spanish firms. Make them to do case studies about what they think does/does not work abroad.
The trick is to get the ball rolling, and then have someone trust you enough to let it keep rolling even when it hits bumps along the way. That’s the part I have no idea how to do.
The problem is the rules are setup so that you can’t do that. You have to deal with federal rules.
If NYC could build for a reasonable price the plan makes sense. They could probably build SAS all on their own with no state/federal contribution at all if they ran your plan and then didn’t have to worry about federal rules.
The answer is no, plus that comment is garbage.
Clever title, ‘more on’ consultants indeed.
My main critique, as I raise here from time to time, is: what are the political mechanisms for the change you want to see? Because unfortunately, no matter the technical merits of your ideas, they will go nowhere without political strategy to make them happen. Right does not make might.
There is a clearly motivated and well-funded constituency for the destruction of public sector capacity, namely, the consultants themselves, not to mention the usual right-wingers. And all they have to do is tear things apart, which is much easier than putting them together. So it seems rather easy to fall in the lobbyists’ trap (or perhaps as you called it, the Maoist style, though it seems to aptly fit hypercapitalist privatisation-mad politics just as well).
Who is motivated to lobby for nurturing state capacity to plan, design and build infrastructure projects? The benefits are dispersed, and the ‘people at large’ don’t care, mostly (they have their own problems to worry about, after all). I’m sure if you asked people specifically about this then yes they would say they find it important, but I’m also sure that when those same people go into the voting booth they really do have other things in mind (except for oddballs like myself & probably a few others here who love to read comments on blogs about infrastructure).
Presumably a party like Labour in the UK would be just the sort of vehicle for this, but they seem no better in this regard than any others, in my experience. And speaking of the UK, a country that has over-privatised virtually almost everything public sector might provide, the NHS has perhaps escaped most privatisation efforts up until now (although the Tories continue to slowly chip away at it), but one of the major reasons for that is that it has an enormously supportive constituency. The nature of a medical system is such that a lot of attention paid to it by virtually every voter, and especially older people who are even more likely to vote.
One could argue that the entire US/UK way of working with these things is wrong, and I would agree. But I don’t know how these countries can escape the privatisation trap they’ve cleverly created and fallen into it, and therein lies the challenge. Any budding political movement to try and fix these problems is going to have to contend with well-funded and insidious enemies who would be seeking to undermine it before it could get going. What’s the strategy to create a movement for nurturing public sector capacity that can not only defend itself (even better yet, emerge stronger after weathering such attacks) but also perpetuate itself?
The pun in the title is unintended. I started writing the post as Quick Note: Consultants, and as it got longer, I changed the title last-minute. I try to time posts based on WordPress time, which is set up as GMT-5 because that’s where I was when I registered this blog in March 2011, which is how you see so many posts that are posted at 23:59 GMT-5; the upshot is that sometimes titles get rushed.
Re the issue of political constituency: the consultants themselves prefer an informed client. They’re not quite lobbying for the destruction of state capacity – they enjoy some early design-build systems but feel constantly abused by American agencies, and even warn other contractors that they should be aware of the poor state of American oversight. The privatizers are a different group from the people the work is privatized to, even if some of the former get sinecures at the latter; the private sector can be efficient (and is, in the US) but the privatizers are a public-sector operation with public-sector productivity, which can be reasonable (Scandinavia) or a joke (US).
More broadly, there is some understanding in the US and UK that they can’t build. The question is, how much e.g. Biden is willing to do to make sure his signature priority, NEC high-speed rail, is completed on the budget that is set in stone, $30 billion.
I think Tony Blair cared more about getting projects built than he did about cost. And given that probably felt the consultants would help with that.
You’d also expect the consultants to be better at tackling vested interests which can add hugely to costs – especially when the civil servants are scared of their own shadows.
Clearly though that was a mistake by Blair era Labour and costs have also gone from being a little high to being absolutely ridiculous. And delivery speeds with HS2 and other recent projects have also been extremely slow.
I think you have to see whether Starmer and his team do better, I am personally hopeful!
Blair didn’t really care much at all about public transport and neither did Gordon Brown. If your coalition is based Northern and Celtic constituencies you will fundamentally underrate non-car transport (and house building too). You want NHS money for the elderly and museums nobody will visit. That’s what they got.
Actual stuff that would change socio-economic geography goes against the very foundations of Outer Britain’s conservative political culture where rotting post-industrial towns and middling suburbs are meant to be inaccessible to each other. Its only changed because central Manchester and Leeds imported a new class of urban professionals and immigrants who don’t have the same reactionary politics. DLR and Thameslink were just extensions of Tory era projects, while HS2, Great Western Electrification and Crossrail only got off the ground because Adonis was relatively good at his job.
Thats all fair I think.
That said I think if you care about levelling up the red wall towns I don’t think a car only strategy works. I think you need trains really so people can get to work for 9am without any fuss.
I also think to be honest that in the touristy areas unless they put in massive ugly car parks that ruin the charm you need more people to go to them by public transport.
And public transport has the other advantage that it is less controversial along the way and can do a faster average speed than 100km/h.
Trains are a good idea for levelling up. I met a Manchester guy who used to work at TFL, he seemed quite professional although resentful when I brought up Alon’s research (at this public event I also encountered a Scot who works for “Great British railways” and bragged about how Scotland did it all better, and she then stormed off when I asked why Great British railways will only apply to England).
I resent that all plans for Northern and Celtic “levelling-up” mean everybody I know has to live in penury so they can fail again on somebody else’s sweat. West Virginia without the religious bigotry.
Alon’s research is a challenge for those in the rail industry who liked the previous status quo where they didn’t get pushed on cost too much.
It’s also possible some of the senior politicians have found out about what Alon has been up to and that will be a little uncomfortable for the rail industry I’m sure. This is especially true given HS2’s recent issues.
Personally I think it should strengthen the rail industry in the medium term.
“As soon as a project is large enough that multiple agencies are involved, forcing them to all use the same consultant, even if the initial choice does feature competition between WSP, AECOM, Arup, and other such firms, means that for the duration of the project there’s such lock-in it has the same problems as a literal monopoly.”
Is this what’s going on with the Eglinton Crosstown delays in Toronto? The thing seems basically finished but they’ve been stuck in limbo because they’ve identified a bunch of quality control issues and they can’t get a timeline out of Crosslinx because Crosslinx isn’t playing ball and there’s nothing anyone can do at this point besides not paying Crosslinx but there’s still no crosstown line.
It might be? Eglinton also has the issue of high-level politicization leading to multiple modal changes. Why plan and design once when you can plan and design three times?
Do other countries use qualifications-based selection (Brooks Act) to restrict price-based competition for these services?
Usually the contracts for infrastructure design and construction in the low-cost world are let mostly by technical scoring, not by price.
I was referring to the engineering services specifically rather than for construction. One issue in my area is that there is nothing to stop an engineering firm from poaching productive staff from an agency that may attempt to staff up, and then the agency is faced with paying for the private staff whatever the billing rate is, as there is no obvious mechanism to tell a firm that its 20% raise to the poached staff is not acceptable.
Generally expertise is thin enough that there aren’t lots of other productive staff in railway-specific disciplines that are local to the area.
The engineering services here compete on quality and not price, too. And low US public-sector salaries is a very different problem from competition law.
Ultimately the agency could get a European or Asian contractor to do the work if there was a price spiral in local private sector wages when they were trying to recruit more staff.
Or you compete with the private sector on conditions not just pay.
It sounds to me like Jon is describing a case in which the main job responsibility is “be a commodity hoarded by a would-be monopolist.” If that’s so, it’s hard to imagine how the public sector could compete on conditions. After all, the private firm can’t exactly go laying people off & piling work on the survivors; that’d undermine their own price-setting power. And if the public sector were to somehow hire some of them and bring the project in-house, that’d be effectively assigning all the work to a fraction of the workforce, so the workload at least would likely be a lot worse.
(Note I’ve no opinion about whether this actually happens–I’m just trying to work within the scenario I think was being laid out.)
If there is a small enough market in the expertise that a private contractor-company can corner the market (implying that there are few other uses for it), then a public organization intent on going on a building spree (both locally, and contracting with other governments in the general area) will want to train more experts of that type. That “want” is almost “need”; it’s the bottleneck. And if they do that (which is probably the correct decision), they also get the option of saying no to someone who tries to corner the market. If they don’t get to do contract work for the public org because the org says no, then either:
– they have no use for the specialists (who can be welcomed back to the public org), in which case the problem goes away very quickly;
– or if it is the case that they do have a full use for those specialists on work despite not getting contracts from the public org, then there was simply a shortage of that kind of expertise, you did a great service to the public by training the experts, and probably you should go on training more.
There are many projects in the US that use a two envelope approach. Technical scoring first and then the best qualified team(s) gets their cost envelope opened. That’s not restricted to low cost construction countries.
What do you actually mean by consultants, are you talking about specialist designers or are you talking about planning type consultants. Its really not clear who you are complaining about. Since the Northern and City Line was envisaged designers/consultants have been an integral part of many transit projects, if you care to do your research. And today its not the agencies that are driving machine learning and AI in design to speed up and streamline the design process….. to develop the most efficient designs for the specific project. I mean look at WMATA whose standard specs are rooted in the 1970’s, concrete strength is limited to 4000psi and no deviations are allowed, so the designers who could make the designs massively more efficient using higher grade rebar and high strength concrete are not allowed to do so leading to more expensive construction. But yeah, blame the consultants…….
I have no idea which consultants you have actually talked to and how much of the project development and design process they have been involved with and actually understand. The example you give about procurement models is laughable, any consultant that makes that statement is a moron. But then again, many agncies in the US are clueless and ignorant also, staffed with people looking for long term health benefits and pension benefits all of which cost the tax payer way more than hiring consultants does.
Interesting theory, but around here (San Francisco, California) the consultants are in total control of every phase, and actively rewrite “standards” in order to increase costs. The come up with the project, they cherry-pick infeasible straw-man “alternatives” to eliminate, they do the alternatives “analysis”, they do the 10%, 35%, 100% “design”, the write the “bid” documents, they “win” the “bidding process”.
Seriously, it’s self-dealing self-serving rent-seeking graft from top to bottom. The public interest never gets even the slightest look in at any phase, ever
https://caltrain-hsr.blogspot.com/2021/05/the-exploding-cost-of-grade-separations.html has some examples — and since then the self-serving consultant scum have rewritten Caltrain’s “engineering specifications” to make vertical and horizontal track alignments even more outrageously expensive, because, you know, it’s a transcontinental freight railroad for iron ore mine to port shipping, and you can never be too conservative. Oh no, you certainly can’t. “Caltrain” the public agency simply doesn’t exist — it’s just one mass of bid-rigging permanent incompetent self-dealing self-selecting ignorant arrogant stupid malicious consultant assholes from top to bottom.
“. And today its not the agencies that are driving machine learning and AI in design to speed up and streamline the design process….”
Funny you talk about innovations that are supposed to streamline the design process, when in nearly every country costs are rising in real terms (often dramatically so) rather than falling. Maybe we’d be better off without these supposed innovations.
I’m really puzzled as to how pattern matching “AI” can really help you do something like this.
Especially as digital “satellite” mapping looks to be super helpful.
I suppose there’s a role for a sort of “context-aware fill” for CAD for structural/civil engineering broadly. But I also thought the whole thing with transit-project construction is that the existing data sets are not huge and the local soil conditions are highly variable, so it’s going to be very difficult to come up with an appropriate training (let alone validation) set.
But set that aside–the point is machine learning just generalizes from the training set. And Alon is always saying how so many current transit projects are massively overbuilt for stupid reasons. So it seems to me at this point like the best-case outcome of applying ML to transit-project engineering is that it starts churning out reproductions of the existing overbuilt designs…
Now I don’t work in transit construction so I could easily be wrong, but this seems seriously nontrivial.
ML is one of many buzzwards that keeps coming up and then applied where it doesn’t belong at very high costs. AI has done this all the time – not the fault of AI itself, there is a lot of great things that AI has developed, but people often get caught up in the fad of this new tool and start applying it where it doesn’t belong.
I’ve driven nails with a screwdriver before when I didn’t have a hammer. Likewise you can use ML (or other AI buzzwords) for many tasks, but they are often the wrong tool. That doesn’t mean screwdrivers or ML are bad tools though, just that they get applied where they should not.
In the case of designing a transit system, ML will never replace CAD + soil samples. Maybe ML can tell you where you need to get a soil sample, but any civil engineer should already know that.