Eno has a new report out about mass transit project delivery, which I encourage everyone to read. It compares the American situation with 10 other countries: Canada, Mexico, Chile, Norway, Germany, Italy, South Africa, Japan, South Korea, and Australia. Project head Paul Lewis just gave a webinar about this, alongside Phil Plotch. Eno looks at high-level governance issues, trying to figure out if there’s some correlation with factors like federalism, the electoral system, and the legal system; there aren’t any. Instead of those, they try teasing out project delivery questions like the role of consultants, the contracting structure, and the concept of learning from other people.
This is an insightful report, especially on the matter of contract sizing, which they’ve learned from Chile. But it has a few other gems worth noting, regarding in-house planning capacity and, at meta level, learning from other people.
How Eno differs from us
The Transit Costs Project is a deep dive into five case studies: Boston, New York, Stockholm (and to a lesser extent other Nordic examples), Istanbul (and to a lesser extent other Turkish examples), and the cities of Italy. This does not mean we know everything there is to know about these cases; for example, I can’t speak to the issues of environmental review in the Nordic countries, since they never came up in interviews or in correspondence with people discussing the issue of the cost escalation of Nya Tunnelbanan. But it does mean knowing a lot about the particular history of particular projects.
Eno instead studies more cases in less detail. This leads to insights about places that we’ve overlooked – see below about Chile and South Korea. But it also leads to some misinterpretations of the data.
The most significant is the situation in Germany. Eno notes that Germany has very high subway construction costs but fairly low light rail costs. The explanation for the latter is that German light rail is at-grade trams, the easiest form of what counts as light rail in their database to build. American light rail construction costs are much higher partly because American costs are generally very high but also partly because US light rail tends to be more metro-like, for example the Green Line Extension in Boston.
However, in the video they were asked about why German subway costs were high and couldn’t answer. This is something that I can answer: it’s an artifact of which subway projects Germany builds. Germany tunnels so little, due to a combination of austerity (money here goes to gas subsidies, not metro investments) and urbanist preference for trams over metros, that the tunnels that are built are disproportionately the most difficult ones, where the capacity issues are the worst. The subways under discussion mostly include the U5 extension in Berlin, U4 in Hamburg, the Kombilösung in Karlsruhe, and the slow expansion of the tunneled part of the Cologne Stadtbahn. These are all city center subways, and even some of the outer extensions, like the ongoing extension of U3 in Nuremberg, are relatively close-in. The cost estimates for proposed outer extensions like U7 at both ends in Berlin or the perennially delayed U8 to Märkisches Viertel are lower, and not too different per kilometer from French levels.
This sounds like a criticism, because it mostly is. But as we’ll see below, even if they missed the ongoing changes in Nordic project delivery, what they’ve found from elsewhere points to the exact same conclusions regarding the problems of what our Sweden report calls the globalized system, and it’s interesting to see it from another perspective; it deepens our understanding of what good cost-effective practices for infrastructure are.
The issue of contract sizing in the Transit Costs Project
Part of what we call the globalized system is a preference for fewer, larger contracts over more, smaller ones. Trafikverket’s procurement strategy backs this as a way of attracting international bidders, and thus the Västlänken in Gothenburg, budgeted at 20,000 kronor in 2009 prices or around $2.8 billion in 2022 prices, comprises just six contracts. A planner in Manila, which extensively uses international contractors from all over Asia to build its metro system (which has reasonable elevated and extremely high underground costs), likewise told us that the preference for larger contracts is good, and suggested that Singapore may have high costs because it uses smaller contracts.
While our work on Sweden suggests that the globalized system is not good, the worst of it appeared to us to be about risk allocation. The aspects of the globalized system that center private-sector innovation and offload the risk to the contractor are where we see defensive design and high costs, while the state reacts by making up new regulations that raise costs and achieve little. But nothing that we saw suggested contract sizing was a problem.
And in comes Eno and brings up why smaller contracts are preferable. In Chile, where Eno appears to have done the most fieldwork, metro projects are chopped into many small contracts, and no contractor is allowed to get two adjacent segments. The economic logic for this is the opposite of Sweden’s: Santiago wishes to make its procurement open to smaller domestic firms, which are not capable of handling contracts as large as those of Västlänken.
And with this system, Santiago has lower costs than any Nordic capital. Project 63, building Metro Lines 3 and 6 at the same time, cost in 2022 PPP dollars $170 million/km; Nya Tunnelbanan is $230 million/km if costs don’t run over further, and the other Nordic subways are somewhat more expensive.
Other issues of state capacity
Eno doesn’t use the broader political term state capacity, but constantly alludes to it. The report stresses that project delivery must maintain large in-house planning capacity. Even if consultants are used, there must be in-house capacity to supervise them and make reasonable requests; clients that lack the ability to do anything themselves end up mismanaging consultants and making ridiculous demands, which point comes out repeatedly and spontaneously for our sources as well as those of Eno. While Trafikverket aims to privatize the state on the British model, it tries to retain some in-house capacity, for example picking some rail segments to maintain in-house to benchmark private contractors against; at least so far, construction costs in Stockholm are around two-fifths those of the Battersea extension in London, and one tenth those of Second Avenue Subway Phase 1.
With their broader outlook, Eno constantly stresses the need to devolve planning decisions to expert civil servants; Santiago Metro is run by a career engineer, in line with the norms in the Spanish- and Portuguese-language world that engineering is a difficult and prestigious career. American- and Canadian-style politicization of planning turns infrastructure into a black hole of money – once the purpose of a project is spending money, it’s easy to waste any budget.
Finally, Eno stresses the need to learn from others. The example it gives is from Korea, which learned the Japanese way of building subways, and has perfected it; this is something that I’ve noticed for years in my long-delayed series on how various countries build, but just at the level of a diachronic metro map it’s possible to see how Tokyo influenced Seoul. They don’t say so, but Ecuador, another low-cost Latin American country, used Madrid Metro as consultant for the Quito Metro.
A three-month experiment has just ended: the 9€ monthly, valid on all local and regional public transport in Germany. The results are sufficiently inconclusive that nobody is certain whether they want it extended or not. September monthlies are reverting to normal fares, but some states (including Berlin and Brandenburg) are talking about restoring something like it starting October, and Finance and Transport Ministers Christian Lindner and Volker Wissing (both FDP) are discussing a higher-price version on the same principle of one monthly valid nationwide.
The intent of the nine-euro ticket
The 9€ ticket was a public subsidy designed to reduce the burden of high fuel prices – along with a large three-month cut in the fuel tax, which is replaced by a more permanent cut in the VAT on fuel from 19% to 7%. Germany has 2.9% unemployment as of July and 7.9% inflation as of August, with core inflation (excluding energy and food) at 3.4%, lower but still well above the long-term target. It does not need to stimulate demand.
Moreover, with Russia living off of energy exports, Germany does not need to be subsidizing energy consumption. It needs to suppress consumption, and a few places like Hanover are already restricting heating this winter to 19 degrees and no higher. The 9€ ticket has had multiple effects: higher use of rail, more domestic tourism, and mode shift – but because Germany does not need fiscal stimulus right now and does need to suppress fuel consumption, the policy needs to be evaluated purely on the basis of mode shift. Has it done so?
The impact of the nine-euro ticket on modal split
The excellent transport blog Zukunft Mobilität aggregated some studies in late July. Not all reported results of changes in behavior. One that did comes from Munich, where, during the June-early July period, car traffic fell 3%. This is not the effect of the 9€ ticket net of the reduction in fuel taxes – market prices for fuel rose through this period, so the reduction in fuel taxes was little felt by the consumer. This is just the effect of more-or-less free mass transit. Is it worth it?
Farebox recovery and some elasticities
In 2017 and 2018, public transport in Germany had a combined annual expenditure of about 14 billion €, of which a little more than half came from fare revenue (source, table 45 on p. 36). In the long run, maintaining the 9€ ticket would thus involve spending around 7 billion € in additional annual subsidy, rising over time as ridership grows due to induced demand and not just modal shift. The question is what the alternative is – that is, what else the federal government and the Länder can spent 7 billion € on when it comes to better public transport operations.
Well, one thing they can do is increase service. That requires us to figure out how much service growth can be had for a given increase in subsidy, and what it would do to the system. This in turn requires looking at service elasticity estimates. As a note of caution, the apparent increase in public transport ridership over the three months of more or less free service has been a lot less than what one would predict from past elasticity estimates, which suggests that at least fare elasticity is capped – demand is not actually infinite at zero fares. Service elasticities are uncertain for another reason: they mostly measure frequency, and frequency too has a capped impact – ridership is not infinite if service arrives every zero minutes. Best we can do is look at different elasticity estimates for different regimes of preexisting frequency; in the highest-frequency bucket (every 10 minutes or better), which category includes most urban rail in Germany, it is around 0.4 per the review of Totten-Levinson and their own work in Minneapolis. If it’s purely proportional, then doubling the subsidy means increasing service by 60% and ridership by 20%.
The situation is more complicated than a purely proportional story, though, and this can work in favor of expanding service. Just increasing service does not mean doubling Berlin U-Bahn frequency from every 5 to every 2.5 minutes; that would achieve very little. Instead, it would bump up midday service on the few German rail services with less midday than peak frequency, upgrade hourly regional lines to half-hourly (in which case the elasticity is not 0.4 but about 1), add minor capital work to improve speed and reliability, and add minor capital work to save long-term operating costs (for example, by replacing busy buses with streetcars and automating U-Bahns).
The other issue is that short- and long-term elasticities differ – and long-term elasticities are higher for both fares (more negative) and service (more positive). In general, ridership grows more from service increase than from fare cutting in the short and long run, but it grows more in the long run in both cases.
The issue of investment
The bigger reason to end the 9€ ticket experiment and instead improve service is the interaction with investment. Higher investment levels call for more service – there’s no point in building new S-Bahn tunnels if there’s no service through them. The same effect with fares is more muted. All urban public transport agencies project ridership growth, and population growth is largely urban and transit-oriented suburban.
An extra 7 billion € a year in investment would go a long way, even if divided out with direct operating costs for service increase. It’s around 250 km of tramway, or 50 km of U-Bahn – and at least the Berlin U-Bahn (I think also the others) operationally breaks even so once built it’s free money. In Berlin a pro-rated share – 300 million €/year – would be a noticeable addition to the city’s 2035 rail plan. Investment also has the habit to stick in the long term once built, which is especially good if the point is not to suppress short-term car traffic or to provide short-term fiscal stimulus to a 3% unemployment economy but to engage in long-term economic investment.
This is the fourth in a series of five (not four) posts about the poor state of political transit advocacy in the United States, following posts about the Green Line Extension in metro Boston, free public transport proposals, and federal aid to operations, to be followed by a post about how to do better instead.
I think very highly of Yonah Freemark. His academic and popular work on public transport and urbanism ranges from good to excellent, and a lot of my early thinking (and early writing!) on regional rail and high-speed rail owes a debt to him.
But I think he’s wrong in his proposal for a Green New Deal for transportation. This is a proposal by the Climate and Community Project (not the Urban Institute as I said in previous posts – sorry) to decarbonize transport in the United States, through fleet electrification and investments in public transport. Yonah is one of several authors; I identify him with the public transit-related parts of the report, but I want to make it clear that it’s the report I’m criticizing, regardless of who wrote what.
The fundamental problem of the CCP report is what I’ve been building up to in the last three posts in this series: it tries to please everybody by throwing money everywhere and making conflicting promises. The Green Line Extension was built this way under Deval Patrick, and costs ballooned, and what passed for discipline under Charlie Baker just reinforced the same long-term loss of state capacity that led to the cost explosion.
For example, here’s its take on fleet electrification:
In other words, there is a compelling and immediate need to decarbonize this fleet within a decade. And that’s feasible: buses are replaced every 10 to 15 years on average, and commuter rail trains about every 25 years; currently, commuter trains in the United States are on average 22 years old. Publicly owned vehicles would be replaced with the electric equivalent; for privately owned contracted vehicles (the case for many school buses), and requirements for electrification would be written into contracts and tax credits given to assist the transition of buses from fossil fuels to electric. The commissioning of thousands of new transit vehicles would produce new, good-paying union jobs in manufacturing. The shift to electric transit vehicles would affect maintenance requirements, and the Department of Transportation must ensure the mechanic and operator workforce is fully prepared for the electric transition through workforce retraining assistance. This may require retraining, such as encouraging mechanics to retrain as electric vehicle charging installers.
Electrifying existing diesel railways would require overhead catenary electrical wires to be useful for electrified trains (though the trains themselves actually cost less than diesel vehicles). The cost of railway electrification infrastructure alone is between roughly $1 and $5 million per mile. There are roughly 6,600 miles of non-electrified commuter rail in the United States, plus roughly 20,800 miles of non-electrified Amtrak service (with some overlap between the two). Amtrak’s routes are mostly owned by freight rail companies, but we suggest joint electrification that includes both passenger trains and freight trains, using this program for Amtrak and another we lay out below for the freight lines. To electrify the national passenger rail network of existing lines would cost between $27 and $137 billion. In addition, new trains would have to be purchased to run on these electrified lines.
I cite this pair of paragraphs because of something they show about the study: it is not uniformly bad. The second paragraph is a decent idea (though $1m/mile is very cheap), and trying to workshop how to wire the national freight network is not necessarily a bad idea, even if the report doesn’t go into enough detail about what the business barrier to electrification is for the private carriers.
But the first quoted paragraph is awful. Here’s the key thing: “The commissioning of thousands of new transit vehicles would produce new, good-paying union jobs in manufacturing” is a giant waste of money. Bus vendors outside North America consistently produce equipment for much less than the protected North American market; the Boris Bus, at £350,000 per unit (around $500,000), is both cheaper than American buses and locally considered expensive, a prime example of Boris Johnson’s poor performance as mayor of London.
The passenger rail industry does not exist in the United States, and attempts by American governments to coerce it to build factories domestically in order to create well-paying jobs have resulted in ballooning costs. The premium for recent American rolling stock orders, behind bespoke regulations, protectionism, informal state-level protectionism, and agency heads that know less than recently-graduated interns who make one quarter of what they do (less, if those interns are European), looks like 50% over European equivalents. Nor does this do much job creation, except perhaps for sitework consultants: the premium for some recent orders has been $1 million per $20/hour 4-to-6-year job created. Those are not objectively good jobs – the wages are not much higher than present-day retail, food service, and delivery jobs – but backward-looking politicians consider them inherently moral, and the report coddles them instead of looking forward.
Then, the report has the following recommendations for how to spend money on improving public transportation:
End the use of federal infrastructure funding for new highway infrastructure, except for focused opportunities that improve equity. Provide immediate funds for a quick-start infrastructure program for walking and cycling. Vastly expand support for transit and metropolitan network planning.
Appropriate $250 billion over 10 years, or $25 billion annually, in federal funding bill to support transit operations funding throughout the United States.
Increase federal support for transit and intercity rail capital projects to $400 billion over 10 years, or $40 billion annually, providing funds for new lines, maintenance of existing infrastructure, and upgrades designed for equitable accessibility.
Require metropolitan planning organization voting systems to be proportional to resident population. Mandate adjustments to local zoning policy to enable more dense, affordable housing near transit in exchange for federal aid. Implement regional commuter benefits throughout the nation.
This, I’m sorry, is a bad program. The $40 billion/year capital investment is not bad, but the proposal explicitly includes maintenance, making it vulnerable to the state of good repair scam, in which agencies demand escalating amounts of money for infrastructure with nothing to show for it. The $25 billion/year operating aid is likely to be a waste as well.
Transit agencies can invest money prudently, but the report says nothing about how to do it, instead proposing to zero out highway funding (which is a good way to save money, but is less relevant to mode shift than American transit advocates think it is). The one concrete suggestion for what to do with the money is “One goal, for example, would be for all residents to have access to a bus or train with a short wait within at most a 15-minute walk at all times of the day.” This is a standard I can get behind in a dense place like New York; nearly everywhere else, it means overfunding coverage routes in low-density areas, often middle-class white flight suburbs, ahead of workhorse urban routes. Writing years ago about New Haven, Sandy Johnston noted that a bus reform there would cannibalize the circuitous suburban bus branches to add service on the core routes through the city and Hamden. The CCP report would do the opposite, boosting frequencies where they are least useful.
Finally, the MPO rules seem weak. I get what Yonah (and perhaps the other authors) wants to do here: he wants to incentivize more housing production near mass transit nodes. But MPO voting weights are not especially relevant. What is relevant is using state power to disempower local communities, which are dominated by NIMBYs even in places where the residents vote YIMBY at the state level, such as San Francisco. The report talks about banning single-family zoning (okay, but duplexes are not TOD), but that’s it. Then it suggests extracting developer profits through mandatory inclusionary housing, which acts as a tax on TOD and reduces housing production. The authors of the study are left-wing, but do not propose public housing, only taxes on TOD to subsidize some local housing; Yonah knows this is not how social housing works in Paris, but he still proposes this for the United States.
The theme of lack of willingness to prioritize flow throughout these recommendations. There is no discussion of how to prioritize good investments, how to increase efficiency (the report points out operating costs for all US transit combined are $50 billion/year; this is 2.5 times the German level, for similar ridership, not per capita), how to make sure that progress does not get extracted by programs for groups thought inherently moral.
It’s amazing how much good can happen when an obstacle like Andrew Cuomo is removed. In lieu of his backward air train proposal, hated by just about everyone not on his payroll, Governor Kathy Hochul is moving forward on a better set of alternatives for a mass transit connection to LaGuardia. It’s interesting to see what the process is looking at but also what it isn’t; so far this looks better than the alternatives analysis for Interborough Express (ex-Triboro).
So far I have not seen analysis, only drawings of 14 alternatives. As with the IBX study, the LGA plan distinguishes different modes of public transit – there are bus, light rail, subway, and even ferry options. But it doesn’t stop there. It looks at multiple alignments: the scope is how to connect LGA to the rest of the city the best, and this can be done from a number of different directions – even a backward train (as light rail) along an alignment similar to Cuomo’s is present, and will likely not advance further because of its circuitous route.
Among the 14 alternatives, I think the obviously best one is a subway extension (slide 12 above); another subway option, a branch following the Grand Central Parkway (slide 11), is inferior because of branching splits frequencies and ridership at the cut off Astoria-Ditmars Boulevard station is high. A subway extension promises a connection in around 30 minutes to Times Square, every 5 minutes all day, with good connections to other destinations via the transfers at Queensboro Plaza and in Midtown.
The one thing that I’m sad the analysis hasn’t looked at is intermediate stations. It’s around 4.5 km from Ditmars to the main LGA terminal along the proposed alignment, passing through redevelopable industrial land and through residential land in Astoria Heights awkwardly tucked between airport grounds and Astoria proper. The same quality of service that the airport could get, these neighborhoods could get as well, except a hair faster because they’re closer.
Extending the Astoria Line is especially useful since it is short and not especially crowded until it hits Queensboro Plaza and inherits the crowding of the 7 train and its riders. In the context of deinterlining the subway, this is especially valuable: right now 60th Street Tunnel carries the N and W from Astoria but also the R from Queens Boulevard, and under deinterlining the tunnel would carry only Astoria riders, and so to match the high demand to 60th Street it’s valuable to create as much ridership as possible on the Astoria Line past Queensboro Plaza.
I hope that the alternatives analysis considers multiple stopping patterns in the future – that is, not just a nonstop route from Ditmars to the airport, but also an option with intermediate stations. (This does not mean local and express trains – either all trains should run locals, or all should run nonstop.) The cost of those stations is not high as it’s an elevated line, and the stop penalty on the subway is less than a minute since the top speed is so low (it looks like 45 seconds in practice comparing local and express trains on the same line).
I was excited about the idea of Interborough Express (IBX) as announced by New York Governor Kathy Hochul, and then last week her office released a preliminary report about the alternatives for it, and I got less excited. But it’s not that the study is bad, or that Hochul is bad. Rather, the study is a by the numbers alternatives analysis, shorter than the usual in a good way; its shortcomings are the shortcomings of all American planning.
The main rub is that the report looks at various options for the IBX route, broken down by mode. There’s a commuter rail option, which bakes in the usual bad assumption about commuter rail operations, including heavier trains (lighter trains are legal on US tracks as of 2018) and longer dwell times that are explained as a product of the heavier trains (dwell times have nothing to do with train mass). That’s par for the course – as we saw yesterday, everything that touches mainline rail in North America becomes stupid even in an otherwise understandable report.
But even excluding commuter rail, the study classifies the options by mode, focusing on bus rapid transit and light rail (and no subway, for some reason). It compares those two options and commuter rail on various measures like expected ridership and trip times. This is normal for American alternatives analyses for new corridors like IBX: they look at different modes as the main decision point.
This is also extraordinarily bad governance. There are some fundamental questions that are treated as afterthoughts, either not studied at all or mentioned briefly as 1-2 sentences:
- How far north should the line go? The IBX plan is to only go from Jackson Heights to the south, in contrast with older Triboro proposals going into the Bronx.
- What should the stop spacing be? The stops can be widely spaced, as in the current proposal, which stops mainly at intersection points with other lines, or more closely spaced, like an ordinary subway line.
- Under a light rail option, should the line be elevated where the trench is too narrow or at-grade?
- Should freight service be retained? What are the benefits of retaining freight rail service on the Bay Ridge Branch and what are the incremental costs of keeping it versus taking over the right-of-way?
- How large should the stations be?
- How frequent should the trains be? If freight service is retained, what frequencies are compatible with running freight on the same tracks for part or all of the line?
A better study must focus on these questions. Some of them, moreover, must be decided early: urban planning depends on whether the line goes into the Bronx or not; and industrial planning depends on what is done with freight service along the corridor.
Those questions, moreover, are more difficult than the modal question. A BRT option on a rail corridor without closely parallel arterial roads should be dismissed with the same ease that the study dismisses options not studied, and then the question of what kind of rail service to run is much less important than the scope of the project.
But American planning is obsessed with comparing public transit by mode rather than by corridor, scope, or any other aspect. Canadian planning has the same misfeature – the studies for the Broadway SkyTrain extension looked at various BRT and light rail options throughout, even though it was clear the answer was going to be SkyTrain, and omitted more fundamental questions regarding the cost-construction disruption tradeoff or even the scope of the project (the original studies from 2012 did not look at truncating to Arbutus, an option that had been talked about before and that would eventually happen due to cost overruns).
So overall, the IBX study is bad. But it is interestingly bad. Andrew Cuomo was a despicable governor who belongs in prison for his crimes. Less criminal and yet similarly loathsome people exist in American public transit. And yet, Hochul and her office are not like that, at all. This is not a sandbag, or a corrupt deal. It’s utterly ordinary in its failure; with all the unique failures of the Cuomo era stripped, what is left is standard American practice, written more clearly than is usual, and it just isn’t up to par as an analysis.
Hochul has been moving on this project very quickly, and good transit advocates should laud this. It should not take long to publish a report comparing alternatives on more fundamental questions than mode, such as scope, the role of freight, and the extent of civil infrastructure to be used. The costs and benefits of IBX heavily depend on the decisions made on such matters; they should not be brushed aside.
At TransitMatters, we’ve just released a report about the costs and benefits of rail electrification. It’s anchored to our proposal to electrify and modernize the commuter rail system in the Boston area, but much of the analysis is broader than that. The non-Bostonian reader may still be interested in the description of construction costs of electrification and the short case studies of Israel, Denmark, Norway, New Zealand, Britain, Canada, and the United States. The latter two, covering Toronto and the Bay Area, are unusually expensive and we go over why that came to be and how it is possible to avoid them. The section on alternatives and why they are all inferior to stringing wire and running EMUs is of general interest as well, and I hope European policymakers read over and take it as a sign they should electrify more lines (ideally, all of them, as is being done right now in South Korea, India, and China).
The Toronto problem
When we came up with the cost range of $800 million to $1.5 billion, there was a lot of skepticism. The Reddit thread‘s two most common kinds of comment are “great, this can’t happen fast enough” and “it will cost billions because of unspecified MBTA problems.” As I said in responding to one of the comments, the higher-cost comparison cases all have specific reasons for their higher costs: Britain has clearance restrictions that do not exist anywhere else in the world, and Caltrain had unusual managerial incompetence regarding the related signaling project where the MBTA is actually doing well. But Toronto still looms large.
As I said on Reddit,
I’m not too worried about Caltrain’s errors, which were truly bespoke. Toronto worries me more, because while the specifics are avoidable, the ultimate cause is reproduced: Toronto and Boston are both huge cities with heavy peak commuter rail traffic and should have electrified generations ago, so now the benefits of electrification are so high that managers can afford to be careless about costs and still have above-water benefit-cost ratios.
So it is important to be careful and avoid Toronto’s problems with cost control. This means baking cost control into the program from the start, and aggressively protecting the budget from use by other actors as OPM:
- The budget should be set at a standard level with standard contingencies. Do not aim for the ceiling; aim for average. Nor should anyone include 100% contingency as used by Toronto; if you budget money for the project it will be used, so optimize for minimizing overall cost rather than for just-in-case funding.
- Designs should be standard, and variations should be accommodated only based on cost minimization. Basically, if it’s good enough for Germany, France, Denmark, Norway, Israel, etc.,, it’s good enough for the United States.
- If NIMBYs push back, the state should fight back. They want noise walls? Nope, EMUs are a lot quieter than diesels, quality of life will improve. They want trenches? Nope, that’s too expensive.
- Under no circumstances should passenger rail electrification money be used for corporate welfare for freight rail companies. They can pay their own way for clearance for double-stacked containers.
The importance of maximum electrification
Based on the observations that the lifecycle costs of DMUs are about twice those of EMUs, and that operating and capital costs are both driven by the peak rather than off-peak, it’s possible to establish financial rates of return on electrification. Not counting the speed and reliability benefits to passengers, the ROI is around 0.3-0.5% per US-size car per hour at the peak. Lines that run 8-car trains every 15 minutes at rush hour run 32 cars per hour and so have an ROI of 10-16%; this is why outside the US and Canada, cities that run such long trains at such frequency have long electrified their tracks.
The problem is that electrification is relatively unfamiliar in North America. It exists, but is sporadic, and there have been very few recent projects, so managers think it’s a Herculean task. In Boston I’ve seen reticence to wire more track due to institutional conservatism, even in plans that spend comparable amounts of money on things the region is more used to, like station platform upgrades and extra tracks. Worse, I’ve seen this in New Jersey, which is largely already electrified but uninterested in finishing the job.
Against such conservatism, it’s important to remember that failure to undertake a high-value investment isn’t any more moral than a large investment that goes to waste. When your ROI hits double digits, you waste public benefits by avoiding or even just delaying the project – and the above calculation comes just from savings on operating, maintenance, and capital acquisition costs, without the large benefits to passengers, the environment, etc.
Can large cities afford not to electrify? Yes. They have money for many kinds of waste, including for forgoing the benefits of commuter rail electrification. But just because they can afford to waste money and social benefits doesn’t mean they should. So, please, no talk of DMUs, or bi-modes, or pilot programs, or batteries – just wire your system already and import some high-quality EMUs.
I want to go back to the problem of early commitment as I explained it two months ago. It comes out of research done by Chantal Cantarelli and Bert van Wee about Dutch cost overruns, but the theory is more generally applicable and once I heard about it I started seeing it in play elsewhere. The short version is that politically committing to a megaproject too early leads to lock in, which leads to compromised designs and higher costs. The solution, then, is to defer commitment and keep alternatives open as much as possible.
The theory of lock in
The papers to read about it are Cantarelli-Flyvbjeerg-Molin-van Wee (2010), and Cantarelli-Oglethorpe-van Wee (2021). Both make the point that when the decision to build is undertaken, it imposes psychological constraints on the planners. They are not long or difficult papers to read and I recommend people read them in full and perhaps think of examples from their own non-Dutch experience – this problem is broader than just the Netherlands.
For example, take this, from the 2010 paper:
Decision-makers show evidence of entrapment whenever they escalate their commitment to ineffective policies, products, services or strategies in order to justify previous allocations of resources to those objectives (Brockner et al, 1986). Escalating commitment and justification are therefore important indicators of lock-in. The need for justification is derived from the theories of self-justification and the theory of dissonance which describe how individuals search for confirmation of their rational behaviour (Staw, 1981; Wilson and Zhang, 1997). This need arises due to social pressures and “face-saving” mechanisms. The involvement of interest groups and organizational pushes and pulls can also introduce pressures into the decision-making process, threatening the position of the decision-makers, who may feel pressure to continue with a (failing) project in order to avoid publicly admitting what they may see as a personal failure (McElhinney, 2005). “People try to rationalize their actions or psychologically defend themselves against an apparent error in judgment” (Whyte, 1986) (“face-saving”). When the support for the decision is sustained despite contradicting information and social pressures, the argumentation for a decision is based on the need for justification.
The focus on face-saving behavior leading to escalation is not unique to the literature on transportation. In international relations, it is called audience cost and refers to the domestic backlash a political leader suffers in case they back down from a confrontation they were involved in earlier; this way, small escalations turn into bigger ones and eventually to war, or perhaps to a forever occupation.
There are a number of consequences of lock in:
- Projects will follow designs set long ago, especially ones that were hotly contentious. For example, California High-Speed Rail has stuck with the decision to build its alignments via Palmdale and Pacheco Pass, since the possibilities of changing Palmdale to the Grapevine/Tejon alignment and Pacheco to Altamont Pass both loomed large (there was a NIMBY lawsuit trying to force a change to Altamont). However, at the same time, there are plans to potentially run the partially-built system without electrification, since that issue was never in contention and is not part o the audience cost.
- There are unlikely to be formal cancellations. California is again a good example: high-speed rail lives as a hulk, not formally canceled even when the governor said of the idea to complete it, back during the Trump administration, “let’s be real,” defending the initial construction segment between Bakersfield and Fresno as valuable in itself. Formal cancellation is embarrassing; a forever construction project is less visible a failure.
- Prioritization is warped to tie into real or imagined connections with the already-decided project. California is not as clear an example of this as of the other two points, but in New York, once the real (if not yet formal) decision to go forward with Second Avenue Subway was made in the 1990s, the Regional Plan Association tied in every proposed expansion plan to that one line.
Cantarelli-van Wee treat early commitment as a problem of bad planners, who become psychologically wedded to potentially incorrect solutions. However, it is instructive to shift the locus of moral blame to surplus extraction by political actors, such a local politicians, power brokers, and NIMBYs.
In the story of HSL Zuid, much of the extra cost should be blamed on excessive tunneling. In the flat terrain of Holland and near-coastal Brabant, no tunneling should have been needed. And yet, the line is 20% underground, partly to serve Schiphol, partly to avoid taking any farmland in the Groene Hart. The Groene Hart tunneling has to be understood in context of rural NIMBYism (since at-grade solutions to habitat loss exist in France).
In this formulation, the problem with lock in is not just at the level of planners (though they share most of the blame in California). It’s at the level of small actors demanding changes for selfish reasons, knowing that the macro decision has already been made and the stat cannot easily walk away from the project if costs rise. These selfish actors can be NIMBY, but they can equally be local power brokers wanting a local amenity like a detour to serve them or a station without commercial justification. In Germany, an extra layer of NIMBYism (albeit not on connected with lock in – we have late commitment here) is demands to include freight on high-speed lines, in order to take it off legacy lines, which design forces gratuitous tunneling on high-speed lines in order to moderate the grade.
California is a good example of a non-NIMBY version of this. The state politically committed to building high-sped rail in the 2008 election, for which it showed clear maps of the trains detouring via Palmdale and going to San Francisco via Pacheco Pass. By the time further environmental design showed that the Los Angeles-Palmdale route would require tens of km more tunneling through Soledad Canyon than anticipated to avoid impact to an ecologically sensitive area, the state had already pitched Palmdale as a key high-speed commuter suburb, and Los Angeles County made housing plans accordingly. The county subsequently kept agitating for retaining Palmdale even as other alignment changes in the area were made, turning Palmdale into its pet project.
The planning literature undertheorizes and understudies problems arising from localism. In conversations with people in the European core as well as the United States, there’s an unspoken assumption that the community is good and the state is bad. If the community demands something, it must represent correction of a real negative externality, rather than antisocial behavior on behalf of self-appointed community leaders who the state can and should ignore. It doesn’t help that the part of Europe with the least community input is the Mediterranean countries, which Northern European planners look down on, believing any success there must be the result of statistical fudging.
The solution: late commitment
To reduce costs and improve projects, it’s best to delay political commitment as late as possible. This means designing uncertain projects and only making the decision to build at advanced stages of design – maybe not 100% but close enough that major revisions are not likely. The American situation in which there is no regular design budget so agencies rely on federal funding for the design of the projects they use the same federal funding for leads to bad outcomes over and over. California, which went to referendum without completing the environmental design first, takes the cake.
Late commitment is thankfully common in low- and medium-cost countries. Germany does not commit to high-speed rail lines early, and, judging by Berlin’s uncertainty over which U-Bahn extensions to even build, it doesn’t commit to subways early either. Sweden is investigating the feasibility of high-speed rail but rail planners who I talk to there make it clear that it’s not guaranteed to happen and much depends on politics and changes in economic behavior; overall, Nordic infrastructure projects are developed by the civil service beyond the concept stage and only presented for political negotiation and approval well into the process. Southern European planners com up with their own extension programs and politically commit close to the beginning of construction.
The literature on cost overruns for infrastructure projects is rich, much more so than that for absolute costs. The best-known name in this literature is Bent Flyvbjerg, who in the early 2000s collated a number of datasets from the 1980s and 90s to produce a large enough N for analysis, demonstrating consistent, large cost overruns, especially for urban rail. Subsequently, he’s written papers on the topic, focusing on underestimation and on how agencies can prospectively estimate costs better and give accurate numbers to the public for approval. This parallels an internal trend in the US, where Don Pickrell identified cost overruns in 1990 already, using 1980s data; Pickrell’s dataset was among those analyzed by Flyvbjerg, and subsequent to Pickrell’s paper, American cost overruns decreased to an average of zero for light rail lines.
But a fundamental question remains: are cost overruns really a matter of underestimation, or a true overrun? In other words, if a project, say Grand Paris Express, is estimated to cost 22.6 billion € in 2012 (p. 7) and is up to 35.6 billion € today (p. 13), does it mean the cost was 35.6b€ all along and the 2012 analysis just failed to estimate it right? Or dos it mean the cost was 22.6b€ then, and then the budget ran over due to failures of planning that could have been avoided?
Transit agencies that just want to avoid the embarrassment of media headlines saying “they said it costs X but it costs 2X” care mostly about underestimation. This is also true of both generic project managers and political appointees, two groups that do not care about the details of how to build a subway, and think of everything in abstract terms in which a subway might as well be a box of shampoo bottles.
However, the concrete examples that I have seen or heard of for cost overruns look like overruns rather than underestimation. That is, those projects could have been done at the original cost, but planning mistakes drove the budget up, or otherwise created conditions that would enable other forces to drive the budget up.
The Netherlands: early commitment
Bert van Wee is among the world’s top researchers on cost overruns, even if he’s less well-known to the public than Flyvbjerg. He spoke to me about the problems of early commitment in Dutch planning, in which politicians commit to a project before design is finalized. Once the political decision has been made, it is easy for actors to extract surplus, because the state or city cannot walk away easily, while a 20% cost overrun is much easier to explain to the public. This problem plagued 2000s investments like HSL Zuid. To deter this, after 2009 the Netherlands passed reforms that attempt to tackle this problem, aiming to defer the formal political decision to later in the process.
This factor seems to correlate with absolute costs, if not with overruns. American planning is extremely politicized; Canadian planning is fairly politicized too, with individual subway projects identifiable as the brainchildren of specific politicians or parties; Southern European and Nordic planning is highly bureaucratized, with design driven by the civil service and politicians making yes or no decisions late in the process.
Sweden: changes in rules
According to a senior planner at Nya Tunnelbanan, the project has run over from 22.506 billion kronor in 2013 to 31.813 today, both in 2016 price levels; in US dollars, this is $2.551b/19.6 km to $3.606b/19.6 km, all underground. The reasons for the escalation come largely from tighter regulations as well as litigation:
- Safety requirements have been tightened midway through the project, requiring a service tunnel in addition to the two track tunnels, raising excavation volume almost 50%
- An environmental court ruling slowed down excavation further
- Consensus with stakeholders took longer than expected
- Excavated rock was reclassified midway through the project from useful building material to waste that must be disposed of
Focusing on underestimation is not really germane to what’s happened in Stockholm. The problem isn’t that early 2010s engineers failed to anticipate regulations that were not in force at the time. It’s that regulations were changed later. The rock removal process today actually increases greenhouse gas emissions, just because of the need to freight it away, let alone the systemwide effects on climate of making it harder to build subways.
California: scope creep and change orders
California High-Speed Rail is such a big project that its cost overruns, in multiple stages, were amply discussed in the media. The original announcements in the early 2010s, for example here, were largely about scope creep. At-grade segments turned into viaducts; above-ground segments, particularly in the Bay Area, were turned into tunnels. The reasons were mostly about agency turf battles.
Only in one case was the problem more about underestimation than overrun: the Central Valley segment had originally been planned to follow railroad rights-of-way, but had to be redesigned to have more viaducts and swerve around unserved small towns. This was bad planning, at two points: first, the original designs assumed trains could go at 350 km/h through unserved towns, which they don’t anywhere; and second, once the redesign happened, it was so rushed that land acquisition was time-consuming and acrimonious. Even then, much of the overdesign as identified by a Deutsche Bahn postmortem could have been prevented.
The second stage is more recent: the Central Valley construction contracts have long busted their budgets due to change orders. Change orders are a common problem in California, and in this case, it involved not only the change order king Tutor-Perini, but also the usually reasonable Dragados. The situation here must be ascribed to overrun rather than underestimation: a transparent process for handling changes, based on itemized costs, is an emerging best practice, known since the early 2000s to people who cared to know, and more recently seen in the economics literature for general infrastructure. That California failed to follow this practice – which, again, was available already in the late 2000s – is the source of malpractice. The original bids could have held if the process were better.
Absolute costs and cost overruns
Cost overruns are not the same as absolute costs. They are not even obviously correlated: witness the way the US eliminated most overruns on surface light rail projects in the 1990s and 2000s, to the point that projects with large overruns like the Green Line Extension are exceptional, while absolute costs have skyrocketed. But if we understand the problem to be about cost overruns from an ambitious but achievable budget rather than about underestimating a final cost that could not be improved on, then the study of the two topics is inherently intertwined.
Problems that recur in postmortems of cost overruns are not just about estimation. They’re about building better and cheaper. A bureaucratized planning process in which politicians retain the right to make yes-or-no decisions on complete design reduces cost overruns by reducing leakage and surplus extraction; the overruns such a process prevents are preventable extra costs, rather than higher initial estimates. The same is true of avoiding overbuilding, of not introducing extraneous regulations, of treating environmental questions as systemic and quantitative rather than as local under a do-no-harm principle. Even the question of change orders is more transparently about reducing absolute costs in the literature, since the overruns prevented tend to be seen in higher risk to the contractor leading to higher profit margin demands.
The upshot is that this makes the study of absolute costs easier, because we can reuse some of the literature for the related problem of cost overruns. But conceptually, it means that agencies need to be more proactive and treat early budgets as standards to be adhered to, rather than just blow up the budgets preemptively so that it’s easier to stick to them.
I recently found two presentations, one from 2017, the other from earlier this week, both underscoring the importance of in-house expertise for efficient construction. This is layered on top of interviews Eric and I did for our Boston case study and a few additional interviews I did in other American and European cities. It is my professional opinion that agencies that engage in major capital projects, even if they involve rolling stock acquisition rather than the construction of new lines, ought to hire in-house, and make sure to have long-term capital programs.
Both presentations concern rolling stock. The one from 2017 is by Stadler, regarding the challenges of the American market. On slide 32, it mentions that Caltrain was a demanding customer, with all expertise outsourced and yet managers engaging in micromanagement. The micromanagement is in line with what we’ve heard from contractors for other capital expansions, like Second Avenue Subway, especially contractors with experience in both the US, where this practice is common, and Europe, where it isn’t.
Thanks to the factors mentioned by Stadler as well as the Buy America requirement to set up a new factory with a new supply chain for a midsize order, the cost is $551 million/96 cars, or $5.74 million/car; the typical cost of a KISS is 300 million €/90 cars, and the €:$ ratio is not 1.72, far from it.
The other presentation, from this week, concerns the MBTA’s slow approach to electrifying its commuter rail network. It wishes to begin with a pilot on the already-electrified Providence Line, but is running against the problem of having no in-house expertise, just as Caltrain does not. The presentation on this says, on slide 3, that it takes 6-9 months to onboard consultants, and another 6-9 to develop performance requirements for a kind of vehicle that is completely standard in high-performance regional rail networks in Europe.
Instead of hiring experienced professionals (who must come from Europe or East Asia and not the US), the MBTA plans to piggyback on either the overpriced Caltrain order, or an obsolete-technology order by New Jersey Transit. The Caltrain order, moreover, is stretched for the generous loading gauge of the Western US, but does not fit the catenary height on the East Coast, even though European KISSes would easily and are around 13 cm lower than existing MBTA rolling stock.
Prior Northeastern examples
This combination of political and managerial micromanagement with outsourcing of technical expertise to consultants is common enough in the United States. In the Boston report on the Green Line Extension, we were told by multiple sources that the MBTA only has 5-6 engineers doing design review. Thus, they have the capacity to handle small projects but not large ones.
Small-scale projects like building a new infill station or taking an existing low-platform commuter rail station and converting it to an accessible high-platform one usually have limited cost premium: in Berlin, infill stations are 10 million € outside the Ring, whereas in Boston, infill stations and high-platforming projects (which are very similar in scope) are around $20-25 million – and Boston platforms are longer. This is also the case in Philadelphia, where headline costs are lower because the stations are smaller, but overall the unit costs are comparable to those of Boston.
But large projects are beyond the ability of a 6-person team. The required permanent staffing level is likely in the teens for a team whose job is just to score design and construction contracts. This choked the original Green Line Extension, leading to bottlenecks in design and contributing to the project’s extreme cost. The restarted version is still extremely expensive – it’s getting some good press this week for running slightly under a $2.3 billion/6.3 km budget, but said budget, $360 million/km, is well above the international norm for a subway, let alone trenched light rail. The current project has sunk costs from the previous ones, and a combination of in-house and consultant design about whose efficacy we’ve heard conflicting reports, but the team is much larger now.
In areas that don’t even have the skeletal design review staff of Boston, costs are high even for small projects. Connecticut deserves especial demerit: its department of transportation relies exclusively on consultants for rail design (perhaps also road design but I do not know), and infill stations cost not $20-25 million but $50+ million. The Hartford Line, compromised from the start, even displays this state-by-state difference: the one Massachusetts project, a single high platform in Springfield, cost $10 million/100 meters, a fraction of comparable projects in Connecticut. Larger Connecticut stations, such as those for Metro-North, have seen extreme scope creep, amounting to a $106 million total cost.
Consultants and design
American agencies speak of design-bid-build contracts, in which design and construction are separate, and design-build ones, where they are combined into a single contract. Design-bid-build is superior. But really, contracts in low-cost countries are often neither of those, but just build contracts, with design done mostly in-house. A procurement official in Stockholm explained to me that Swedish contracts tend to be build contracts; design-bid-build can sometimes be used with supplemental consultants helping with design, but it’s not the norm. Moreover, in Oslo, the use of design consultants instead of in-house design has not been good: consultants tend to engage in defensive design because of how Norway structures risk allocation, leading to overbuilding.
In Spain and (I believe) Italy, contracts are design-bid-build. But there’s so much in-house involvement in design that it’s more accurate to call these build contracts. The in-house design teams are not huge but they’re enough to work with private design firms and score proposals for technical merit. In Istanbul, the system is somewhat different: preliminary design at the 60% level is contracted out separately from the combination of final design and construction, which may possibly be called des-bid-ign-build, but the design part is extensively scored on technical merit, at 60-80% of the total weight. The construction contracts in Istanbul are lowest-bid, but contractors can be disqualified, and since Turkey has so much infrastructure construction, contractors know that they need to behave well to get future work.
Unfortunately, American consultants believe the opposite: they believe in the superiority of design-build and are not even aware of pure build, only design-bid-build. Sources from that world that I generally think highly of have told me that directly. But that is because the sort of projects that they are most likely to be involved in are ones that use consultants, which definitionally are not build contracts. The ongoing expansion projects in Stockholm, Madrid, Barcelona, Milan, Rome, and Berlin have no use for international consultants, so international consultants are not familiar with them, and end up knowing only about high-cost examples like London or the occasional medium-cost one like Paris. In effect, to rely on consultants is to ascertain one largely learns worst industry practices, not best ones.
The alternative to paying consultants is to obtain public-sector expertise. Agencies are obligated to hire sufficient-size teams, and pay them competitively. Engineers in Italy and Spain have a lot of social prestige, much as in France and Germany; even in medium- rather than low-cost countries in Europe, like France, we were told by UITP planners that the people planning metro systems are hired from the engineering elite (in France, this would be Grandes Ecoles graduates), and paid appropriately.
In the US, there is no such prestige. Humanities professors speak of STEM privilege routinely, but by Continental and East Asian standards, the US and UK have no STEM privilege: the elites are generalist and are not expected to know the specific industrial fields they oversee. The public sector thus treats the planner and the engineer as a servant to the political appointee. Senior management routinely ignores the advice of younger planners who are more familiar with present-day research.
The pay, too, is deficient. In absolute numbers, planners at American transit agencies get paid better than their European counterparts – but American white-collar wages are generally higher than European ones. The MBTA pays project managers $106,000 a year as of a few years ago, which is a nice wage, but the Boston private sector pays $140,000 in transportation and more in other fields. The public sector, through budget-cutting officials, sends a clear price signal: we do not want you to work for us.
There is another way, but it requires letting go of the idea that private consultants are better than long-term in-house experts. It is obligatory to hire in-house at competitive wages to grow the design review teams, and listen to them when they say something is desirable, difficult, or impossible. Instead of onboarding consultants, agencies should immediately staff up in-house with plans for long-term investments. Moreover, senior management should back the planners and engineers when they engage in value engineering, even if it annoys politicians and local activists. The role of elected politicians is to review those in-house plans and decide whether there is room in the budget for the megaprojects they recommend, and not to micromanage. This way, and only this way, can the United States shrink its procurement costs to typical Continental European levels.
There’s a report just released by the Grattan Institute called Megabang for Megabucks, talking about high construction costs in Australia. Our transit costs project is quoted as an international comparison, pointing out that Australia is near the global high end. I encourage people to read the report itself, which says interesting things about problems with Australian construction and procurement. I am especially happy to see that the recommendations for the most part accord with what we are learning from other cases – of course, our Boston case is out and the report authors have likely read it, but the recommendations are in line with things we see from yet-unpublished cases, so this is not just me looking at a mirror.
The issue of competition
Australian megaproject contracts have insufficient competition. Only three firms are Tier One, the largest infrastructure contractors in Australia; those get most contracts for the largest infrastructure projects, and when mid-tier firms bid, it’s often in partnership with a Tier One company. Moreover, in the largest size category, higher than $1 billion, even the Tier One firms often partner with one another, leading to monopoly.
International firms do access the Australian market, but it is inconsistent. Australia overweights the importance of local experience, and has some unusual rules, such as requiring firms to engage in more prior design than is typical.
This is consistent with what I’ve seen in Israel. In short, the electrification contract in Israel was won by Spanish contractor SEMI, which had extensive European experience but none in Israel. This was criticized domestically, and some people blamed it for the schedule slips on the electrification project, but such blame is unfair. The bulk of the delays are not the fault of SEMI but come from a lawsuit launched by Alstom, which competed for the contract and lost out on price; Alston employed industrial espionage to create FUD about the bid, and the lawsuit delayed works by three years. Despite this, the costs have not run over much, and the absolute per-km costs remain on the low side, net of extras like Haifa’s demand for a trench. Thus, even in a situation of extensive domestic complaints about the winning bidder’s lack of local experience, said lack did not materially create problems.
This is also consistent with lessons from Turkey. In Turkey, there must be a minimum of three bidders. If there are only one or two, the state or municipal government must rebid. Absolute costs in Turkey are low and so are cost overruns; the extensive competition helps discipline the contractors, as does the political consensus in favor of rapid infrastructure construction, credibly promising firms that there will be more work in the future and if they behave they will get some of it.
The study discusses different contracting regimes. It does not talk about the design-build issue; I do not know whether it is as prevalent in Australia as in Canada, and regrettably there is no cost history, thus no way for me to confirm my suspicion that Australia resembles Canada and Singapore in only having had a cost explosion in the last 20 years. However, it does talk about change orders.
Change orders are a notable problem in California. Low bids followed by renegotiation are common there; Tutor Perini is notorious for this behavior. The study goes over strategies to deal with this issue, though it does not talk explicitly about itemization as in Spain and Italy, where the unit prices are public and then if more is needed (e.g. more labor due to slower progress) then the change is already pre-agreed, avoiding litigation. Sweden avoids litigation as well.
Finally, the study talks about rushing. This was an issue in Boston, so this may be me learning from a mirror, but, in brief, American funding for infrastructure encourages agencies to rush the preliminary design to apply for federal funding early. This leads to compromised designs and premature commitment, since there is no ongoing funding for long-term design.
Learning from good examples
I think the one drawback of the study is the list of comparisons. Sourced partly to us and partly to Read-Efron, they say,
The empirical evidence is incomplete, but what there is shows that rail construction costs in Australia are in the top quarter of 27 OECD countries studied. They are higher than in numerous other rich countries: 26 per cent higher than in Canada, 29 per cent higher than in Japan, and more than three times as high as in Spain (Figure 1.2 on the following page). And road and rail tunnels cost more in Australia than elsewhere in the world, according to an international study.
The comparison with Canada has a problem: the Canadian costs in our database go back 15-20 years, and back then, costs were much lower than today. The latest costs do not show an Australian premium over Canada – Toronto is more expensive to build in than Sydney and almost as much as Melbourne. It is critical to understand that high costs are really a pan-Anglosphere phenomenon, and thus Australia should learn from Continental European and East Asian examples (except very high-cost Hong Kong), and not from countries that in the last 10 years have had the same problems as Australia or worse. Spain is always good, as are common features to low-cost Spain, Italy, Turkey, South Korea, and the Nordic countries, and even common features to those and medium-cost countries like France, Germany, China, and Japan.