Quick Note: Kathy Hochul and Eric Adams Want New York to Be Worse at Building Infrastructure
Progressive design-build just passed. This project delivery system brings New York in full into the globalized system of procurement, which has led to extreme cost increases in the United Kingdom, Canada, and other English-speaking countries, making them unable to build any urban transit megaprojects. Previously, New York had most of the misfeatures of this system, largely through convergent evolution, but due to slowness in adapting outside ideas, the state took until now, with extensive push from Adams’ orbit, for which Adams is now taking credit, to align. Any progress in cost control through controlling project scope will now be wasted on the procurement problems caused by this delivery method.
What is progressive design-build?
Progressive design-build is a variant on design-build. There is some divergence between New York terminology and rest-of-world terminology; for people who know the latter, progressive design-build is approximately what the rest of the world calls design-build.
To give more detail, designing and constructing a piece of infrastructure, say a single subway station, are two different tasks. In the traditional system of procurement, the public client contracts the design with one firm, and then bids it out to a different firm for construction; this is called design-bid-build. All low-construction cost subway systems that we are aware of use a variant of design-bid-build, but two key features are required to make it work: sufficient in-house supervision capacity since the agency needs to oversee both the design and the build contracts, and flexibility to permit the build contractors to make small changes to the design based on spot prices of materials and labor or meter-scale geological discoveries. The exact details of both in-house capacity and flexibility differ by country; for example, Turkey codifies the latter by having the design contract only cover 60% design, and bundling going from 60% to 100% design with the build contract. Despite the success of the system in low-construction cost environments, it is unpopular among the global, especially English-speaking, firms, because it is essentially client-centric, relying on high competence levels in the public sector to work.
To deal with the facts that large global firms think they are better than the public sector, and that the English-speaking world prefers its public sector to be drowned in a bathtub, there are alternative, contractor-centric systems of project delivery. The standard one in the globalized system is called design-build or design-and-build, and simply means that the same contractor does both. This means less public-facing friction between designers and builders, and more friction that’s hidden from public view. Less in-house capacity is required, and the contracts grow larger, an independent feature of the globalized system. As the Swedish case explains in the section on the traditional and globalized systems, globalized Swedish contracts go up to $300-500 million per contract (and Swedish costs, once extremely low, are these days only medium-low); in New York, contracts for Second Avenue Subway Phase 2 are already in the $1-2 billion range.
In New York, the system is somewhat complicated by the text of legacy rules on competitive bidding, which outright forbid a company from portraying itself as doing both design and construction. It took recent changes to legalize the Turkish system of bundling the two contracts differently; this changed system is what is called design-build in New York and is used for Second Avenue Subway Phase 2, even though there are still separate design and construction contracts, and is even called design-build in Turkey.
Unfortunately, New York did not stop at this, let’s call it, des-bid-ign-build system. Adams and Hochul want to be sure to wreck state capacity. Thus, they’ve pushed for progressive design-build, which is close to what the rest of the world calls design-build. More precisely, the design contractor makes a build bid at the end of the design phase, and is presumed to become the build contractor, but if the price is too high, there’s an escape clause and then it becomes essentially design-bid-build.
The globalized system that led to a cost explosion in the UK and Canada in the 1990s and 2000s from reasonable to strong candidates for second worst in the world (after the US) is now coming to New York, which already has a head start in high construction costs due to other problems. It’s a win-win for political appointees and cronies, and they clearly matter more than the people of the city and state of New York.
Pedestrian Observations 
This is what they say. But the spending shares of GDP and the level of regulatory expansion say otherwise. That’s because Anglo-Boomer conservative voters want their share of state’s largesse (pensions) they aren’t plutocrat-libertarians or Market-Leninists. This is particularly obvious in the British variety. Reaganism and Thatcherism (the latter is more influential) are libertarian in rhetoric, but social conservative at core. Both for different reasons see the state as evil and tainted, yet dependent on it as their means of social coercion.
In the absence of an authoritarian option you can’t sustainably lock your hated social group/social change out of a role in government, so you ruin the government as a scorched-earth strategy. Pointedly as they abandon democracy their statism starts to reemerge.
For Reaganism its about the breakdown of the Jim Crow racial order, the decline and fall of American Christianity (gender relates to that). For Thatcherism, its more about the collapse of the British nationality experiment in the 1970’s with the emergence of Celtic separatism and the intense disappointments of the Postwar era. Immigration and the EU added extra issues for them to rage about. They blame the state for failing the project rather than the project failing the state. GREAT BRITAIN has proven impossible. And the electoral system has curdled into competitive polarised minority rule rather competitive big-tent plurality rule.
N/B The Left in the US or the UK is also often similarly anti-statist, they haven’t forgiven their societies for betraying their various grand old causes (this is particularly true for UK Labour which hates having to be multi-cultural England’s social democratic party rather than Great Britain’s Holy Nation party).
The spending shares are mostly welfare, which has very low administrative overheads and requires low state capacity. Refugee camps have surprisingly good basic welfare; prewar Gaza and the Cox Bazar Rohingya refugee camps both have surprisingly good health outcomes for how extremely poor and gang-ridden they are.
Oh I agree, welfare is relatively easy (though the UK system makes it hard unless you are a pensioner). But it does matter if its rising as a share of total resources which it has pretty much everywhere. A definitely many OECD states have raided their infrastructure budgets, defense budgets while pocketing low interest rates over the last generation in order to avoid harder choices on tax versus welfare.
Again major differences across the UK and US varieties anti-state conservatism, although massive unfunded mandate creep, process explosion, lawfare processes, parasitical consultant sphere etc these aren’t the shrinking of government so much as its perversion. This is the practice, and its nothing like what you would get reading Friedman or Hayek let alone the Leftist Jeremiahs of “Neoliberalism”.
There are real comparisons to be made with classic 20th century socialism both democratic (which found itself entrenching “capitalism”) or Marxist-Leninist (create a state that resembled Marx’s description of capitalism more than any “capitalist” country).
I would not be surprised that Adams and Hochul would push a system that ultimately benefited their pals more than the residents of NY state, but could you please clarify how you know this to be true? Specifics? Or could you link to a previous post where you have explained?
A lot of this is in our construction costs report – the post links to Sweden, which decided to adopt design-build and larger contracts thinking it was more modern and globalized and ended up with higher costs than before. Here you can also see the New York case (which isn’t exactly about this) and the executive summary (which has a section on project delivery for this).
It’s not exactly a matter of soft corruption, just bad decisionmaking and centralization in the wrong people – bigger contracts empower higher-level managers always, and the American system is that the highest-level officials at agencies are political appointess with at best little knowledge of the field and at worst negative knowledge.
It is not in anyone’s individual financial interest to reduce costs or increase capacity of any public infrastructure in the US. The failure is systemic, not individual. Until there are particular interests that can profit directly and financially from increasing capacity or reducing costs in the US, neither will happen.
Taxpayers financially benefit from lower infrastructure costs. The “systematic failure” is that taxpayers have no advocate at the negotiation table. [BTW: In New York, I believe that before any “design-build” occurs, there is a meeting between the government and the unions which sets the pay rates and staffing levels that are built-in as contract requirements. ]
Exactly. Americans have lost any sense of identification with citizenship and have come to see themselves purely as consumers. The lost art of exerting political pressure in an atomized society has allowed infrastructure and other civic areas to be filled by ‘special interests.’ That’s why private for-profit capital has to be involved in passenger rail in the US to make it work. It brings others back into the process as ‘consumers’ who may then come to see that their role as citizens does offer a way to affect transportation and other aspects of the society in which they live. People will become more involved in the civic realm when it offers them meaningful choices.
If it’s the valiant private interests doing all the wonderment how does that get people more involved in the civics? If the omniscience of the market and private industry is solving all problems why do they have to be involved?
In what way is American society more atomized than French or German or Swedish society?
If that isn’t blindingly obvious to you, I don’t think I could explain it to you here.
I think it’s not about the big cities – it’s about the smaller places.
There is more sprawl in America, tough to e.g. go to the local pub/cafe and drink alcohol in sprawl than a relatively dense village/small town.
If it’s blindly obvious it should be easy to explain.
If US society is exactly like Germany or Sweden, that should easy to show.
Who said anything is like anything?
Has anywhere gotten rid of design-build before?
I think Sweden is making moves to claw back the privatization of the state, but I can’t tell to what extent it’s happening as opposed to pushed for by some advocates and civil servants.
But also, bear in mind that, as I just said on Bluesky, what I call the traditional system of procurement is not the same as how things were built in the 1960s and 70s, before neoliberalism. It has its own set of innovations – Italian itemized price transparency is an anti-corruption law from the 1990s. Contractor selection by technical score rather than price is also fairly recent – Madrid treated it as exceptional in the 1990s – and the big engineering firms actively prefer it because they prefer to race one another to the top rather than to the bottom; this, in turn, requires more in-house review capacity than the American and British implementations of the globalized system allows. In New Left terms, it’s like a set of anti-corruption laws, just ones based on a late-20th century and early-21st century understanding of corruption rather than legacy New York laws based on early-20th century understanding.
Design build isn’t all bad. Design build is bad when there are no experts building that things all the time. If it is something built all the time experts can quickly and accurately estimate the costs, and even give you a list of common extras with costs that you might or might not want to add. Because they build so much they can even take a loss once in a while when something doesn’t go according to plan since they know about how often that happens and so overcharge everyone by the odds of it (call this insurance!)
The world doesn’t typically build enough transit systems to build up those experts though and so when you design build a transit system the people who hire don’t know what they are doing any more than you do, but often they know better than you how to work the system (since they contract for several other government agencies and so know laws you would have to loop up)