I’m about to complete the report for the Transit Costs Project about Sweden. For the most part, Sweden is a good comparison case: its construction costs for public transport are fairly low, as are those of the rest of Scandinavia, and the projects being built are sound. And yet, the Nordic countries and higher-cost countries in the rest of Northern Europe, that is Germany and the Netherlands, share a common prejudice against Southern Europe, which in the last decade or so has been the world leader in cost-effective infrastructure. (Turkey is very cheap as well but in many ways resembles Southern Europe, complete with having imported Italian expertise early on.)
This is not usually an overt prejudice. Only one person who I’ve talked to openly discounted the idea that Italy could be good at this, and they are not Nordic. But I’ve been reading a lot of material out of Nordic countries discussing future strategy, and it engages in extensive international comparisons but only within Northern Europe, including high-cost Britain, ignoring Southern Europe. The idea that Italians can be associated with good engineering is too alien to Northern Europeans.
The best way to illustrate it is with a toy model, about the concept of livable cities.
Consider the following list of the world’s most livable cities:
The list, to be clear, is completely made up. These are roughly the cities I would expect to see on such a list from half-remembering Monocle’s actual lists and some of the discourse that they generate: they should be Northern European cities or cities of the peripheral (non-US/UK) Anglosphere, and not too big (Berlin might raise eyebrows). These are the cities that urbanist discourse associates with livability.
The thing is, prejudices like “Northern Europe is just more livable” can tolerate a moderate level of heresy. If I made the above list, but put Taipei at a high place shifting all others down and bumping Vancouver, explaining this on grounds like Taipei’s housing affordability, strong mass transit system, and low corona rates (Taiwan spent most of the last two years as a corona fortress, though it’s cracked this month), it could be believed. In effect, Taipei’s status as a hidden gem could be legitimized by its inclusion on a list alongside expected candidates like Vienna and Stockholm.
But if instead the list opened with Taipei, Kaohsiung, Taichung, and Tainan, it would raise eyebrows. This isn’t even because of any real criteria, though they exist (Taiwan’s secondary cities are motorcycle- and auto-oriented, with weak metro systems). It just makes the list too Taiwanese, which is not what one expects from such a list. Ditto if the secondary Taiwanese cities were bumped for other rich Asian cities like Singapore or Seoul; Singapore is firmly in the one-heresy status – it can make such a list if every other city on the list is as expected – but people have certain prejudices of how it operates and certain words they associate with it, some right and some laughably wrong, and “livable” is not among them.
The implication for infrastructure
A single number is more objective than a multi-factor concept like livability. In the case of infrastructure, this is cost per kilometer for subways, and it’s possible to establish that the lowest-cost places for this are Southern Europe (including Turkey), South Korea, and Switzerland. The Nordic countries used to be as cheap but with last decade’s cost overruns are somewhat more expensive to dig in, though still cheaper than anywhere else in the world; Latin America runs the gamut, but some parts of it, like Chile, are Sweden-cheap.
Per the one-heresy rule, the low costs of Spain are decently acknowledged. Bent Flyvbjerg even summarized the planning style of Madrid as an exemplar of low costs recently – and he normally studies cost overruns and planning failures, not recipes for success. But it goes deeper than just this, in a number of ways.
- While Madrid most likely has the world’s lowest urban subway costs, the rest of Southern Europe achieves comparable results and so does South Korea. So it’s important to look at shared features of those places and learn, rather than just treat Spain as an odd case out while sticking with Northern European paradigms.
- Like Italy, Spain has not undergone the creeping privatization of state planning so typical in the UK and, through British soft power, other parts of Northern Europe. Design is done by in-house engineers; there’s extensive public-sector innovation, rather than an attempt to activate private-sector innovation in construction.
- Southern European planning isn’t just cheap, but also good. Metro Milano says that M5 carries 176,000 passengers per day, for a cost of 1.35b€ across both phases; in today’s money it’s around $13,000 per rider, which is fairly low and within the Nordic range. Italian driverless metros push the envelope on throughput measured in peak trains per hour, and should be considered at the frontier of the technology alongside Paris. Milan, Barcelona, and Madrid have all been fairly good at installing barrier-free access to stations, roughly on a par with Berlin; Madrid is planning to go 100% accessible by 2028.
- As a corollary of point #3, there are substantial similarities between Southern and Northern Europe. In particular, both were ravaged by austerity after the financial crisis; Northern Europe quickly recovered economically, but in both, infrastructure investment is lagging. In general, if you keep finding $10,000/rider and $15,000/rider subways to build, you should be spending more money on more subway lines. Turkey is the odd one out in that it builds aggressively, but on other infrastructure matters it should be viewed as part of the European umbrella.
- Italian corruption levels in infrastructure are very low, and from a greater distance this also appears true of Spain. Italy’s governance problems are elsewhere – the institutional problems with tax avoidance drag down the private sector, which has too many family-scale businesses that can’t grow and too few large corporations, and not the public sector.
I’m not going to make a list of the cities with the best urban rail networks in the world, even in jest; people might take this list as authoritative in ways they wouldn’t take a list I made up about livability. But in the same way that there are prejudices that militate in favor of associating livability with Northern Europe and the peripheral Anglosphere, there are prejudices that militate in favor of associating good public transport with Northern and Central Europe and the megacities of rich Asia. All of those places indeed have excellent public transportation, but this is equally true of the largest Southern European cities; Istanbul is lagging but it’s implementing two large metro networks, one for Europe and one for Asia, and already has Marmaray connecting them under the Bosporus.
And what’s more, just as Southern Europe has things to learn from Northern Europe, Northern Europe has things to learn from the South. But it doesn’t come naturally to Germans or Nordics. It’s expected that every list of the best places in Europe on every metric should show a north-south gradient, with France anywhere in between. If something shows the opposite, it must in this schema be unimportant, or even fraudulent. Northerners know that Southerners are lazy and corrupt – when they vacation in Alicante they don’t see anyone work outside the hospitality industry, so they come away with the conclusion that there is no high-skill professional work in the entire country.
But at a time when Germany is building necessary green infrastructure at glacial rates and France and Scandinavia have seen real costs go up maybe 50% in 20 years, it’s necessary to look beyond the prejudice. Madrid, Barcelona, Rome, Milan, Istanbul, Lisbon, and most likely also Athens have to be treated as part of the European core when it comes to urban rail infrastructure, with as much to teach Stockholm as the reverse and more to teach Berlin than the reverse.
So far, in this series on institutional factors behind differences in the quality and cost of public transportation infrastructure, I’ve gone over procurement, public-sector oversight, and transparency. These three posts can be read together as a series: procurement is the keystone, and to get it right it is critical to have high-quality in-house supervision of the work, and to get that right in turn it’s important to cultivate transparency.
Today I’m going to turn the camera 90 degrees and talk about another relevant issue: that of proactive versus reactive state regulation and supervision. This is related to the issue of oversight, in that proactive regulation requires deeper in-house expertise and detachment from politics, so that the state can effectively make changes as necessary based on changes in travel and social patterns and advances in knowledge by scientists and practitioners.
Nudging and doing
One of the distinctions I’ve noticed regarding different regulatory traditions is whether the regulators do things or merely nudge. This is related to the issue of oversight, in that strong engineering bureaucracies that do design and planning in-house also come up with their own sets of clear rules.
The Italian civil service does rather than nudges: there are clear proactive rules by the Ministry of Culture about the protection of historical monuments, limiting the permitted building settlement in sensitive areas to 3 mm. Such proactive clear rules lead to a more predictable legal situation since it’s easy to measure what is and what is not legal, reducing risk. Long-term standards that impose real costs on business also soon sprout innovation for how to follow them while minimizing costs, as is the case for Japanese and Chinese zoning standards for light; ad hoc rules instead impose new costs every time, since the investment in trying to adapt to them would be spread across just one project rather than many.
The American regulatory apparatus has a mixture of doing and nudging. Environmental protection is almost entirely adversarial: the National Environmental Protection Act requires agencies to prepare environmental impact statements (EISes) before every project, but those are not judged by regulators but instead subject to lawsuit, and soon the nudge turns into red tape with hundreds of pages in an EIS aiming to anticipate every possible legal objection. Labor law is largely adversarial, but some states have passed triple damages statutes, in which the penalty for violation is specified at three times the missed wage and therefore workers do not have to litigate against much better-resourced employers.
The disability rights regime in the United States is a mix but include a significant amount of doing. There are clear standards for elevator accessibility, longest path of travel for people in wheelchairs, and maximum permitted gaps between the platform and the train; more recently, the FRA has wanted to mandate automatic gap fillers on mainline rail in order to permit passengers in wheelchairs to board unaided even across small gaps.
This is related to the issue of adversarial legalism, but is not exactly the same. There is plenty of adversarial legalism in the American disability rights regime, in which agencies refuse to follow the law and dare advocates to sue them.
Moreover, federal regulations in the United States remain a matter of nudging more than doing whenever there is any interaction with state and local authorities; instead of coordinating different authorities from a position of being able to engage in planning things itself, a federal agency will often try to nudge through offering incentives.
Two examples of equity
There’s a sense in much of the planning world in both the United States and Europe that it is necessary to proactively plan cities and transportation for the benefit of disadvantaged groups, or else even well-meaning planners would make unquestioned assumptions that harm such groups. It’s worthwhile examining the differences between the approaches to such planning, because one is proactive and the other reactive.
Before going on, I would like to point out a huge difference that is not about proactive planning: in the United States, the Title VI process for egalitarian planning (currently in revision, for which I’m very likely to submit comments make this and other points) centers racial equity, as a legacy of the civil rights movement that it came out of. In Europe, planners persistently ignore the problem of racism, and people of color are severely underrepresented in the civil services that I’ve seen, which issue is so glaring it makes Americans discount any European experience. However, European planners do look at class equity (for example, in Paris) and gender equity (for example, in Sweden), and there, they aim for proactive changes to reduce barriers to access.
The Swedish system is accessible to the English speaker, because feminist writers in English have occasionally looked to the Nordic world for inspiration, and outlets like Streetsblog have examined gender-based planning in Sweden. In 2015, Stockholm examined travel patterns by gender and found that women walk and take public transportation more and drive less than men, and as a result, it changed its snowplowing patterns to prioritize sidewalks over roads.
I was similarly told that when Swedish cities do surface construction, such as the cut-and-cover stations of Västlänken in Gothenburg or the cut-and-cover entry halls into the deep mined stations of the Stockholm T-bana extensions, by regulation the contractors must preserve sufficient sidewalk space on the street for pedestrians. If they need to open up most of the street, they can take car traffic lanes. The reasoning isn’t corrective discrimination, but rather that past planners, who prioritized keeping roads open over sidewalks, had erred because of conscious or unconscious discounting of the experience of women. The change in snowplowing practices led to a fall in injuries, since three times as many people in Sweden were injured walking in icy conditions as driving.
The Swedish system is proactive: the municipality or the state comes up with actionable, concrete changes based on its understanding of travel pattern. Researchers working for the city, perhaps in partnership with activists, notice a discriminatory practice, and come up with an alternative.
Now consider the American system. Title VI does not offer a clear set of practices for anti-racist transportation planning. It instead requires agencies to engage in review of their practices whenever they propose a change, leading first to status quo bias and second to arbitrary enforcement of rules. Much of the enforcement is not done top-down by regulators who are apolitical subject matter experts, but bottom-up from lawsuit or the threat thereof with supervision by judges trained in law but not in the specifics of transportation.
Status quo and reactivity
The worst aspect of reactive planning is that it leads to status quo bias. American regulations for civil rights and environmental protection require review of changes, but not of the status quo. The process can stop an agency from implementing a change or delay implementation until mitigations are done, but it cannot compel an agency to take an action it does not wish to take.
To nuance this somewhat, a judge can put an agency under a consent decree. But that already assumes an adversarial relationship between the state and itself. The process can imposing fines and constraints on an agency that does not want to do something, such as following ADA law and installing elevators at every subway station (something Berlin, an older system than New York, is about to complete systemwide). But it cannot literally build elevators there itself. It’s akin to the Jewish concept of a get, in which a rabbinical court can impose arbitrary fines on a husband who refuses to grant his wife a divorce, where what is needed is to permit women to initiate divorce without their husband’s permission.
A more proactive and less reactive regulatory culture can break out of the status quo trap. The first thing it must do is create a system that does not privilege the status quo: if a change is subject to review on such grounds as accessibility, racial equality, and environmental protection, then current practice must be as well. If it turns out that current practice falls short or is discriminatory, as Sweden’s snowplowing priorities were a decade ago, the agency must change its ways based on clear, concrete standards.
More proactive regulations are more obtrusive and visible, but they reduce costs and improve service quality. They are more sensitive to the current economic and social conditions and to the state of present-day knowledge than to the conditions and knowledge of a generation ago. They are more legible to the public and to contractors, who can then come up with ways to follow them without gambling on favorable judicial or political rulings. And they are less likely to surprise agencies deep into the process with a sudden imposition.
A state that acts as a helping hand rather than a grabbing hand helps more by governing more. Making it easier to ditch a status quo that worked for the world of yesterday but doesn’t for that of today or tomorrow, or one that never worked but was falsely believed to work, allows it to govern more efficiently. It’s necessary then to ensure that the highest-level civil servants who regulate transportation be empowered to make concrete decisions and coordinate lower-level agencies rather than just nudging in the right direction.
Continuing my series on institutional issues concerning infrastructure costs and quality, after the issue of procurement, I’d like to discuss the issue of the quality of public-sector oversight. It is critical to have extensive in-house expertise inside an apolitical civil service empowered to make technical decisions. The role of the political layer is to set up broad rules, not to micromanage. Conversely, while the top people should avoid micromanagement, they should be expert enough to be capable of making specific decisions.
Civil service and oversight
The importance of civil service to oversight is that it’s the professional layer that has to supervise planners, engineers, architects, and construction teams. There are too many small decisions for a single elected political layer, say a minister and a policy team the minister directly appoints and supervises.
In my procurement post, I was basing my recommendations on common threads I’d seen or read about in low- and medium-cost European countries, and to some extent practice in South Korea, a low-cost country on a par with Southern Europe. All of these make use of professional civil servants to make any of the following decisions:
- In-house planning. The macro-level decisions on funding levels are political (and never devolved to the agency through dedicated slush funds, unlike for US highways), but the decisions at the level just below, such as what programs to ask the politicians to fund, are made by professional agencies. High-speed rail was invented this way in Japan and then reinvented in France, while upgraded legacy rail was so invented in Germany and perfected in Switzerland.
- Design and engineering. Those can be done in-house or outsourced to consultants, or more likely some mixture of the two, but even if the design is contracted out, it’s the agency that owns the product and is responsible for it.
- Contractor selection. It is irresponsible to award a megaproject design contract based on the lowest bid. A technical score is used nearly universally in the low- and medium-cost examples we have looked at, and this means someone needs to come up with sound criteria for scoring and then evaluate each proposal. This has to be done more intelligently than just by rubric. A British source told us of a problem with British technical scoring: every large project is parceled out between different consultants, and thus all consultants can claim experience on the same project, making it impossible at that level to tell which companies do better work than others, even as industry insiders know who does bad work. The same source, when I asked about French comparisons, said that France has extensive in-house expertise and therefore doesn’t hire their consultancy.
- Contract supervision. Change orders are inevitable, especially for underground projects. Not coincidentally, in Eno’s database the American premium for subways is higher than for at-grade light rail, which is technically more predictable. It’s on the client agency to decide whether to accept or reject changes coming from unpredictable factors, and this requires extensive knowledge of the field.
In my procurement post, I spoke of flexibility. No client can have flexibility without oversight – flexibility without oversight is an anything-goes game in which the contractor abuses the client, the client abuses the contractor, or, most likely, both. And this oversight is necessarily detailed enough that it requires civil service.
An example from Sweden
I spoke to an experienced Swedish project manager earlier this year. The project manager talked to me about the major issues with the construction of Citybanan, the regional rail tunnel Stockholm opened 4 years ago, shortly after I left the country. This included issues of construction techniques (but for further engineering question my source referred me to an engineer) but also competition policy, negotiation, change orders, etc.
At one point in the interview, I asked about something a previous Swedish source told me about, called functional procurement. In functional procurement, the agency maximizes flexibility by specifying only the function of the project, such as the required capacity and schedule, and letting the contractors make suggestions as to how to fulfill it; this is similar to the military concept of mission command, stressing flexibility and training intermediate officers in how to use it in a hierarchical organization.
The project manager said of this growing trend in Swedish procurement: “I can’t say it makes it easier.” The manager then explained the constraints involved – railways have technical specs that make a functional contract not too different from a conventional one, where the design is already figured out and the contractors have to build to it with only minor modifications.
Let’s unpack what happened in that interview. A Swedish manager who does not know me, who I have never met, first of all talked to me in technically adept language, and second of all was willing to go on the record criticizing a trend in infrastructure construction procurement, a trend that the person who put us in contact had mentioned to me as a positive.
I have never heard this kind of internal criticism from American sources, unless they knew me well enough and were trying to get me to publish their internal problems in the media. And quite often, the criticism I would hear from the US was much more pungent, complaining about politics or a bad manager. “We have been trying this trend but I don’t think it’s working,” in exactly the tone you can imagine emerge from the style of quotation, is not a line I recall hearing from an American. The civil servants who criticize something are far more frantic, far more afraid. Sweden will trust its civil servants to literal death. The US (and UK) will not trust them to do anything but follow orders.
Is Sweden unique?
No. Strong traditions of professional civil service exist everywhere we’ve looked outside the US. Even the UK has a semblance of it; the problem there is that the topmost layer of civil servants – the Sir Humphreys – consists of lifelong generalist elites rather than domain experts.
In Italy, the situation is especially lopsided. The political layer of the government is weak because party control changes so often and ministers do not last, and there are so few political appointments that even with political instability, the civil service lasts across those changes. If anything, the instability makes the professional layer stronger.
It’s critical to ensure the civil service is not political. This doesn’t just mean that it should not be partisan. There are enough dominant-party jurisdictions in which it’s understood that the civil service exists to implement a predictable political agenda, which can be left-wing (Berlin, New York, California) or right-wing (Bavaria, Texas). Those jurisdictions all have problems coming from the lack of meaningful political competition, but those problems come from politicians, not civil servants. No: political noninterference goes much deeper, and means sidelining issues of petty personal priorities.
The ideal civil service has as few political appointees as possible. Those are neither elected nor meritorious. By their nature, they lack the legitimacy of both the politicians above them and the deep layer of domain experts below them. If they’re selected from among people with industry and operating experience then this is fine – technically senior generals are political appointments in both the US and Israel subject to the usual military norms, and Andy Byford was an external hire for New York City Transit with experience in the industry but not the agency. But letting generalist managers selected for political loyalty parachute in charge of agencies is a recipe for disaster.
The word for people who are always to be managed by people who are not from within their own social group is servants. Such people, knowing that their manager will always be someone who has other priorities that are not always transparent to them, will learn to lower their heads rather than proactively looking for ways to improve their institution.
A scientist working at a federal institution explained it to me this way: “There’s absolutely ways to speed things up, but they need cover from the political appointees at the top. A career officer understands their role to be following an existing plan, laid down in writing by either congress or by a planning process involving the top (i.e. political appointee) officers of the agency.”
This was meant to explain the sluggish FDA corona vaccine approval process, but can equally apply to infrastructure and operations of public transportation. Any variation from a plan written long ago by people who were often not even at the frontier of knowledge then requires political approval.
Trusting the civil service
A low-trust society isn’t one in which common people don’t trust the elites. It’s one in which the elites don’t trust the common people. In the context of civil service, it’s crucial to set up a system in which the top people affirm rather than scourge those below them.
Byford did it well, setting up a system encouraging employees to complain and suggest improvements, much to the surprise of managers at other MTA agencies who preferred scourging their subordinates. At the topmost level, it means the political layer needs to affirm the authority and expertise of the civil servants; in conflict between a petty actor such as a community advocate and the junior members of the state, the state must support its own, while internally ensuring that the proposal has technical merit. (Political merit is judged by elections, not by who screams the most loudly at midday community meetings.)
Civil servants who see that their superiors are hired and promoted from within the ranks or among peers, and judged for their ability to work with those below them and not just those above them (in the tech industry, a managerial hire spends some interview time with the team they are to supervise), will soon learn that they can show initiative. The ones with bad intuition will fail, whereas the ones whose initiative is more successful will be able to rise and transmit their ideas to the group. It goes without saying that this also requires staffing up to normal levels and paying competitive wages. This way, the state can ensure it can oversee its own projects competently; there is no alternative.
This is the start of a multi-post series, of undecided length, focusing on institutional, managerial, and sociopolitical issues that govern the quality of infrastructure. I expect much of the content to also appear in our upcoming construction costs report, with more examples, but this is a collation of the issues that I think are most pertinent at the current state of our work.
Moreover, in this and many posts in the series, the issues covered affect both price and quality. These are not in conflict: the same institutions that produce low construction costs also produce rigorous quality of infrastructure. The tradeoffs between cost and quality are elsewhere, in some (not all) aspects of engineering and planning.
The common theme of much (but not all) of this runs through procurement. It’s not as exciting as engineering or architecture or timetables – how many railfans write contracts and contracting regulations for fun? – but it’s fundamental to a large fraction of the difference in construction costs between different countries. Some of the subheadings in this post deserve full treatments by themselves later, and thus this writeup is best viewed as an introductory overview of how things tie together.
What is procurement?
Procurement covers all issues of how the state contracts with providers of goods and services. In the case of public transportation, these goods and services may include consulting services, planning, design, engineering, construction services, equipment, materials, and operating concessions. The providers are almost always private-sector, but they can also be public companies in some cases – for example, Milan Metro provides consulting services for other Italian cities and Delhi Metro does for other Indian ones, and state-owned companies like RATP, SNCF/Keolis, and DB/Arriva sometimes bid on private contracts abroad.
The contracting process can be efficient, or it can introduce inefficiencies into the system. In the worst case I know of, that of New York, procurement problems alone can double the cost of a contract, independently of any other issue of engineering, utilities, labor, or management quality. In contrast, low-cost examples lack any such inefficiencies in construction.
The issue of oversight
On the list of services that are procured, some are more commonly contracted out than others. Construction is as far as I can tell always bid out to private-sector competition, including equipment (nobody makes their own trains), materials, and physical construction. Design and engineering may be contracted out to consultants, depending on the system. Planning never is anywhere I know of, except some unusually high-cost American examples in which public-sector planning has been hollowed out.
The best practice from Southern Europe as well as Scandinavia is that planning and oversight always stay with the public sector. Even with highly privatized contracts, there’s active in-house oversight over the entire process.
The issue of competition
It is necessary to ensure there’s healthy competition between contractors. This requires casting as wide a net as possible. This is easier to do in environments where there is already extensive private- and public-sector construction going on: Turkey builds about 1 million dwellings a year and many bridges, highways, and rail lines, and therefore has a thick domestic market. In Turkish law, it is required that every public megaproject procurement get at least three distinct bids, or else it must be rebid. This rule is generally easy to satisfy in the domestic market.
But if the domestic market is not enough, it is necessary to go elsewhere. This is fine – foreign bidders are common where they are allowed to participate, always with local oversight. Turkish contractors in Northern Europe are increasingly common, following all of the local labor laws, often partnering with a domestic firm.
Old boy networks, in which contractors are required to have a preexisting relationship with the client, are destructive. They lead to groupthink and stagnation. A Turkish contractor held an Android in front of me and, describing work in Sweden, said, “If a Swede said it’s an iPhone, the Swedes would accept that it’s an iPhone, but if I did, they’d check, and see it’s an Android.” In Sweden at least the domestic system is functional, but in a high-cost environment, it is critical to look elsewhere and let foreigners outcompete domestic business.
It is even more important to make sure the experience of bidding on public contracts is positive. A competent contractor has a choice of clients, and a nightmare client will soon lose its business. Such a loss is triple. First, the contractor would have done a good job at an affordable price. Second, the negative experience, such as micromanagement or stalling, is likely to increase costs and reduce the quality of work. And third, the loss of any contractor reduces competition. In the United States, we have repeatedly heard this complaint from contractors and their representatives, that they always have to deal with the “agency factor,” where the agency can be the MTA or any other transit agency, making things difficult and leading to higher bids.
Good client-contractor relations
The issue of avoiding being a nightmare client deserves special scrutiny. It is critical for agencies to make sure to be pleasant clients. This includes any of the following principles:
- Do not change important regulations midway through the project. In Stockholm, the otherwise-good Nya Tunnelbana project has had cost overruns due to new environmental regulations that required disposal of waste rock to the standards of toxic waste, introducing new costs of transportation.
- Avoid difficult change order process (see below for more details on itemization). It should be everyone against the project, not the agency against the contractors or one contractor against another.
- Avoid any weird process or requirements. The RFPs should look like what successful international contractors are used to; this has been a recent problem of American rolling stock procurement, which has excessively long RFPs defining what a train is, rather than the most standard documents used in Europe. This rule is especially important for peripheral markets, such as the entire United States – the contractor knows what they’re doing better than you, so you should adapt to them.
- Require some experience and track record to evaluate a bid, but do not require local experience. A contractor with extensive foreign experience may still be valuable: Israel’s rail electrification went to such a contractor, SEMI, and the results are positive in the sense that the bid was well below expectations and the only problems stem from a nuisance lawsuit launched by a competitor that bid higher and felt entitled to the contract.
- For a complex contract, the best practice here is to have an in-house team score every proposal for technical merit and make that the primary determinant of the final score, not cost. Across most of the low- and medium-cost examples we have looked at, the technical score is 50-70% of the total and cost 30-50%.
- Do not micromanage. New York’s lowest bid rules lead to a thick book of regulations that force the bids to be as similar to one another as possible in quantity and type of goods, to the point of telling contractors what materials they are allowed to use. This is bad practice. Oversight should always be done with flexibility and competent in-house engineers working in conversation with the stakeholders and never with a long checklist of rules.
Contracts should permit as much flexibility as practical, to allow contractors to take advantage of circumstances for everyone’s benefits and get around problems. This is especially important for underground construction and for construction in a constrained city, where geotechnical surprises are inevitable.
Most of the English-speaking world, and some parts of the rest (Copenhagen, to some extent Grand Paris Express) interpret flexibility to mean design-build (DB) contracts, in which the same firm is given a large contract to both design a project and then build it. However, DB is not used in the lowest-cost examples I know of, and rarely in medium-cost ones. If design is contracted out, then there are almost always two contracts, in what is called design-bid-build (DBB). Sources in Sweden say they use single build contracts, but they often use consultants for supplementary engineering and thus they are in practice DBB; Italy is DBB; Turkish sources claim to do design-build, but in reality there are two contracts, one for 60% design and another for going to 100% and then doing construction.
The Turkish system is a good example of how to ensure flexibility. Because the construction contractor is responsible for the finalized (but not most) design, it is possible to make little changes as needed based on market or in-the-ground conditions. In Italy and Spain, the DBB system is traditional, but the building contractor is allowed to propose changes and the in-house oversight team will generally approve them; this is also how the more functional American DBB contracts work, typically for small projects such as individual train stations, which are within the oversight capacity of the existing in-house teams.
DBB can be done inflexibly – that is, wrong – and often when this happens, everyone gets a bitter taste and comes out with the impression that DB is superior. If the building contractor has to go through onerous process to vary from the design, or is excessively incentivized to follow the design to the letter, then problems will occur.
One example of inflexibility comes from Norway. Norwegian construction costs are generally low, but the Fornebu Line’s cost is around $200 million/km, which is not as low as some other Nordic lines. Norway uses DBB, but its liability system incentivizes rigidly adhering to the design: any defect in the construction is deemed to be the designer’s fault if the builder followed the design exactly but the builder’s fault if the builder made any variation. This means small changes do not occur, and then the design consultants engage in defensive design, rather than letting the building contractor see later what risks are likely based on meter-scale geology.
Itemization and change orders
Change orders, and defensive design therefor, are a huge source of cost overruns and acrimony. Moreover, because of the risks involved, any cost overruns are transmitted back into the overall budget – that is, every attempt to clamp down on overruns will just increase absolute costs, as bidders demand more money in risk compensation. California is infamous for the way change orders drive up costs. New York only avoids that by imposing large and growing risk on the bidders (including, recently, a counterproductive blacklisting system called disbarment, a misplaced effort by Andrew Cuomo to rein in cost overruns); the bidders respond by bidding much higher.
Instead of the above morass, contracts should be itemized rather than lump-sum. The costs of materials are determined by the global, national, and local markets, and the contractor has little control over them; in fact, one of the examples an American source gave me of functional change orders in a DBB system is that the bench at a train station can be made of wood, metal, or another material, depending on what costs the least when physical construction happens.
Labor costs depend on large-scale factors as well, including market conditions and union agreements. The use of union labor ensures that the wages and benefits of the workers are known in advance and therefore unit costs can be written into the contract easily. Spain essentially turns contracts into cost-plus: costs depend on items as bid and as required by inevitable changes, and there is a fixed profit rate based on a large amount of competition between different construction firms.
The upshot is that itemized costs prevent the need to individually negotiate changes. If difficult ground conditions or unexpected utilities slow down the work, the wages of the workers during the longer construction period are already known. It is especially important to avoid litigation and the threat thereof – questions of engineering should be resolved by engineers, not lawyers.
Here, our results, based on qualitative interviews with industry experts, mirror some quantitative work in economics, including Ryan and Bolotnyy-Vasserman. Itemization reduces risk because it pre-decides some of the disputes that may arise, and therefore the required profit rate to break even net of risk is lower, reducing overall cost.
The impact of bad procurement practices
One of our sources told us that procurement problems add up to a factor of 2 increase in New York construction costs. Five specific problems of roughly equal magnitude were identified:
- A regulation for minority- and woman-owned businesses (MWB), which none of the pre-qualified contractors in the old boy network is.
- The MTA factor.
- Change order risk.
- Disbarment risk.
- Profit in a low-competition environment.
MWB and disbarment are New York-specific, but the other three appear US-wide. In California, the change order risk is if anything worse, judging by routine cost overruns coming from change orders. California, moreover, is very rigid whenever a contractor suggests design improvements, as Dragados did for its share of California High-Speed Rail, even while giving contracts to contractors that engage in nuisance change orders like Tutor Perini.
Aligning American procurement practice with best practice is therefore likely to halve construction costs across the board, and substantially reduce equipment costs due to better competition and easier contractor-client relations.
Richard Mlynarik is too nice. He uses expressions like “we’re doomed” and “inexplicably not indicted” and “grossly corrupt,” but I get the feeling that it’s not quite as heavy a grudge as it should be.
The problem with retaining failed leaders and failing projects, you see, is that they exercise soft power. This is seen repeatedly for American rail projects, from BART to San Jose to California High-Speed Rail. But it’s not just infrastructure and not just the United States.
Anders Tegnell’s mass manslaughter
Sweden infamously rejected the typical European approach to corona, which included lockdowns of various levels of intensity and mask mandates. Its chief public health bureaucrat, Anders Tegnell, believed the only solution was herd immunity, that is infecting everyone under retirement age in order to produce herd immunity protecting high-risk populations. None of this happened: no herd immunity was achieved despite his false claims to the contrary, and the virus got into Swedish nursing homes. I computed excess deaths through the beginning of May of this year (and the death toll since has not been high enough to matter); Sweden’s amount to 16.1% of its annual death toll, compared with about 2.5-6% for Norway, Finland, and Denmark, its Nordic peers.
And because Sweden never publicly drew a line and removed Tegnell for his gross incompetence, he gets to keep peddling his denialism, globally. Early on, he was even trying to get Finland not to engage in any lockdowns, explicitly in order to infect more people and reach herd immunity; Finland wisely did not listen and became, together with Norway, the closest thing Europe had to a corona fortress. Sweden enjoys good reputation in the world, which Tegnell abused domestically and in developing countries, counseling a strategy of mass infection in Brazil and India.
The imprimatur of Sweden has enabled him to keep making excuses. He and other defenders of Sweden’s failure say that Sweden has had fewer deaths than the US or Southern European countries; in reality, 22.4% of Swedes age 18-34 lived with parents in 2019, which proportion is similar in other Nordic countries, but in Italy it’s 69.4% and in Spain 64.5% – as with much else, Southern Europe is poor, rather than poorly-governed. He’s even taken to making racist excuses, saying that Sweden has an unusually difficult problem with immigration compared with Norway – but the two countries have similar immigration levels, Sweden just thinks it’s exceptionally open and blames its various social problems (high rape rates, detriorating schools) on immigrants. But the arguments are not what’s relevant. They are weak, but so long as he stays, they seem serious, because a person with a serious position makes them. Sweden is not only mass killing its own residents very day it fails to remove this deadly failure, but also exporting mass death through force of argument.
Excuses in transportation and the people who make them
The head of the Federal Transit Administration is Nuria Fernandez, formerly of San Jose’s transit agency, VTA. This is not the job Fernandez should have. The ideal job for Fernandez is none. She has a record of failure – the San Jose extension of BART, planned and built by VTA and not by BART, is seeing prices skyrocket, currently $9.1 billion, or $950 million per kilometer in an easy environment that is not even 100% underground, only 83%. Fernandez herself, I am told, signed off on questionable design decisions, namely the use of a large-diameter single bore (as in Barcelona’s L9) with oversize station halls (unlike Barcelona) to avoid cut-and-cover construction.
And there’s the rub. One could make arguments why VTA is bad. Richard has made them in comments for many years, foreseeing that the San Jose extension was beeing built without regard for its utility. The engineering decisions are clearly unusual and indefensible; the Barcelona method’s use case is for lines slaloming under older metro lines, not for a city’s first subway, especially not one going underneath wide streets. But as long as the project keeps going, and as long as the FTA is led by a political appointee who came from VTA, the full power of the federal government screams “this is okay.” It doesn’t have the global cachet of Sweden, not in infrastructure, but domestically it sets the tone.
In theory, she could accept that she had failed and work to be better. But she hasn’t. Quite to the contrary. At Eno’s symposium about construction costs and project delivery, she gave the keynote, which decision I had already been suspicious of, but her talk was even worse. While Eno’s experts talked about the need to minimize costs at many panels and about how to do it, she talked about balancing costs with environmental impact (as if there are no environmental protections in Southern Europe) and community needs. It was a boilerplate talk, unrepentant about the fact that she is the wrong person for the job – in fact any job in transportation, management, or government.
The system and the person
The need to remove failures is true at both the level of morally repugnant incompetents like Tegnell and Fernandez and overall systems. At California High-Speed Rail, moral offenders like Quentin Kopp and Rod Diridon are long gone. But their influence persists, as does the basic structure of a politicized board using the project as other people’s money (OPM) for local priorities.
And once again, the survival of the project exerts toxic influence. The state paused it on “let’s be real” grounds during the Trump era, even as Governor Gavin Newsom (himself morally loathsome for flagrantly breaking his own lockdown rule and dining indoors with donors) insisted the project would go as planned and connecting Bakersfield with Fresno was a worthy achievement. So the project was in effect mothballed, but not officially, and so all planning has operated under the assumption that bad decisions from 15 years ago are set in stone and, more importantly, the process that produced them is an acceptable way of building infrastructure.
The need for harshness
People do not exert effort in a social vacuum. They do so for any number of personal or social reasons:
- A sense of personal achievement and ambition
- The desire for peer approval
- The desire for broader social status
The higher up they are the managerial hierarchy, the weaker all these reasons become. They are paid too well to be curious of other organizational cultures, especially ones they’ve been brought up to believe are inferior to their own, like Southern Europe to both the US and Northern Europe. Their personal success is testimony to them and to their peers that no fluency in peer organizational cultures is necessary for one’s career, and their retention in important positions affirms that society views their contributions positively.
This is why quiet change is not possible. Sweden adopted mass masking in late 2020, but by then it was too late. Moreover, it keeps Tegnell around, which sends everyone in Sweden a message: we did fine, and as a public health bureaucrat you should aspire to be like Tegnell. A street criminal can be gotten rid of quietly – in some cases having his mother shame him is enough, no legal punishment needed, because said street criminal inspires nobody. A failed official of high public stature cannot, because said official inspires followers, unless removed loudly, clearly, and humiliatingly by a higher authority. In extreme cases like Tegnell’s (but not Fernandez’s), prosecution and lengthy imprisonment are ideal to communicate the gravity of the offense.
And this is equally true at the systemic level, that is that of the project. A small project, like a particular train station rebuild or a short tramway extension, can be postponed quietly. A megaproject cannot – a visible hulk still inspires people who argue in favor of the authority of the state, which de jure keeps the project on the books, and who invent excuses why the project is in fact good and its particular decisions are defensible. It can be built as is, or it can be formally canceled with all the humiliation that implies for the agency involved and the state, or it can be formally canceled and immediately restarted with the implication that all prior decisions are subject to review (as happened with the Green Line Extension in Boston).
There’s always thee temptation to walk back things slowly and quietly. Someone in a high position of power, or a project with symbolic significance for the state or a political movement, is deemed too important to be thrown away. But that’s precisely why throwing failures away is so important. Anyone deemed too important will never challenge themselves or grow, and end up occupying a seat someone with better understanding of the modern global situation should have; anything deemed too important will likewise systemically stagnate and acquire cruft, raising cots and reducing utility. It’s an error to make such people and such projects safe, and in some cases the failure to acknowledge and punish failure can kill tens of thousands.
Earlier this week, I complained about the OPM (other people’s money) problem: federal funding of American public transportation, which is managed locally, leads to cost-raising behavior as local and state governments seek to maximize federal infusion of cash. This is a companion post about more positive and fruitful interactions of government at different levels on this side of the Pond. The examples here often look pointless or acrimonious by local standards, but at the end of the day, they produce cost-effective infrastructure and are positive examples to learn from.
Of note, all the examples below are from unitary, not federal states. This is just an artifact of where I have talked to the most people about this – from what I know of Germany, Austria, Switzerland, and Belgium, they all fall within the spectrum spanned by Italy, Turkey, France, and Sweden when it comes to state-local funding allocation. Moreover, the extent of subnational fiscal autonomy in Germany is not greater than that of Sweden, where there are extensive county and municipal taxes funding subnational government, whereas in Germany nearly all taxes are federal and the Länder mostly rely on transfers.
This is a theme I’ve been investigating ever since I talked to a planner at DOTr. Philippine construction costs are high, although that’s mainly for subways, while elevated lines have fairly average costs. The planner explained to me how planning and procurement are done and specifically how it contrasts with the role of the federal government in the US. Manila Metro projects are planned and designed by DOTr, and ever since that conversation I’ve learned to interpret interviews with European experts in that light.
Sweden: state-local negotiation
The Nordic states practice consensus government. This means that decisions are done by majority vote without veto points, but also there’s no such thing as a majority. In practice, infrastructure involves negotiations between different stakeholders. Bigger projects, including the subway megaprojects we study, require funding from different sources, creating more stakeholders in the process.
In the case of Stockholm, it’s instructive to compare Citybanan and Nya Tunnelbanan. Citybanan is a regional rail tunnel, and therefore the lead agency was the state’s Trafikverket – but even then, Stockholm County had extensive input. Regions send wishlists to the state, and compete for a fixed pot of funding for grants, but there are further negotiations about project details. Nya Tunnelbanan is a subway project led by the county’s SL, but funding comes 25% from local sources, 25% from the county, and 50% from the state.
Crucially, Trafikverket builds rather than just nudges. It has a strong professional civil service capable of designing and supervising the construction of infrastructure megaprojects – and the same pool of civil servants move between agencies within the Swedish public sector, so that some of the people I’ve spoken to have moved between Trafikverket and SL. The example planners I have in mind are mid-level, not top management – this is not a case of a mobile executive suite lording over mid- and low-level career bureaucrats who can’t move between agencies easily.
There is also integration of transport and housing, in the sense that residential upzoning in Stockholm County focuses on areas that have or will soon have urban rail access. Construction rates in Stockholm County are some of the highest in Europe: per SCB, annual completions were around 6.5-7 per 1,000 people in the five years before corona. I’ve been told that it’s a consensual process, with no further elaboration; in Oslo, in contrast, the state has to compel wealthy NIMBY municipalities to upzone as a precondition of giving them subway expansion, but state-local coordination is as far as I can tell otherwise similar to the situation in Stockholm.
Turkey: state-local competition, but no OPM
Turkey has one of the world’s lowest construction cost levels; more details will be available in a report to appear soon, led by Elif Ensari. Wages in Turkey are low by European standards and social protections are weak, but the direct labor share of subway construction is small enough that it is a secondary contributor to the low costs; Turkey dos some things more efficiently than Sweden and others less efficiently.
The situation of state-local relations there is the exact opposite of Sweden’s. There is no collaboration – rather, there are metro tunnels in Istanbul funded and built by the state and others funded and built by the city.
The city is not quite local – the municipality covers the entire metropolitan area of 15.5 million people, and Istanbul politics has an ideological left (i.e. anti-Erdoğan) vs. right (i.e. pro-Erdoğan) characteristic rather than the hyperlocal ties of New York and other American cities. Moreover, now that AKP lost the municipal election and the mayor is CHP’s Ekrem İmamoğlu, who will likely challenge Erdoğan in the 2023 presidential election, there is friction between the state and the city, each trying to argue that it builds more and better infrastructure. There are arguments between pro- and anti-Erdoğan sources over who is to blame, but the city has much less access to state financing now than before İmamoğlu’s victory, which it has been able to replace with financing from the European Investment Bank and other sources of loans, like JICA and Deutsche Bank.
In this situation, there is no coordination, and this is a drag on efficiency – one of the ways Istanbul has been able to keep costs down is finding parks and state land to use for station footprint to keep station construction costs down. However, because there is direct responsibility for the state or the city for infrastructure, there is no OPM problem – İmamoğlu’s political career depends in part on his ability to build infrastructure, and Erdoğan’s ability to interfere is real but limited.
Housing construction is extremely rapid. Istanbul has a housing surplus thanks to the construction of around 160,000 annual housing units; neighborhood character is not a priority there. But I do not know whether it is integrated with subway construction as in Sweden.
France: the capital is the state
France has a convoluted set of local and regional governing mechanisms. However, in Paris, much of the power remains in state and state-appointed organs. The transport association Ile-de-France Mobilités, which would be called a Verkehrsverbund in Germany, is coordinated by the Ile-de-France region, but its two largest components, SNCF and RATP, are both state-owned (though SNCF-RATP agency turf battles remain). Public services that elsewhere in France might be devolved are in Paris often run by the state – for example, the Paris Police Prefecture is part of the National Police, and it’s smaller cities, for example in the Riviera, that have local police departments.
This is not unique to France. In infrastructure, Sweden too exhibits more state involvement in urban rail planning in the capital than in smaller cities – Västlänken in Gothenburg is a Trafikverket project but more of the planning and funding come from the county than was the case for Citybanan. London is a mix: TfL is run by the mayor, offering much more devolution than the Metropolitan Counties of England have, but conversely the construction of infrastructure megaprojects like Crossrail is really within the purview of UK-wide politics.
The issue here is one of scale. Grand Paris Express is a 200 km, 80% tunneled project, and France is a medium- rather than low-cost country. Even the state barely has enough planning capacity for it – the Cour des Comptes report on the cost overruns, not seen before for smaller Métro extensions, blamed the insufficient size of existing planning organs, but unfortunately, the solution arrived at, the special-purpose delivery vehicle (SPDV) GPE, is not good, and is either in imitation of or evolved toward convergence with Crossrail. Nothing below the level of the state could build such a project.
And because the project is so large, it’s been forced into a situation that rhymes with Sweden’s intergovernmental negotiation. It’s also been discussed as part of national politics, with some redesigns stemming from the Sarkozy-Hollande transition. In some cases, this has led to OPM – namely, M18 is unpopular among the region’s public transportation advocates and remains because of pressure by the high-income suburbs it would serve. However, there is no visible impact on unit costs; it’s notable that the OPM the state would dispense is additional infrastructure at per-rider costs that are high for France but common in the United States, rather than extras of little use like signature stations or more expensive construction methods.
Finally, housing construction in Ile-de-France is, as in Stockholm County, among the YIMBYest in Europe. Yonah Freemark’s paper on the subject is indispensable: stating around 2017, the annual construction rate rose to 80,000 units regionwide, around 6.5/1,000 people. Construction is largely in the Petite Couronne suburbs, and not the city, and focuses on regions with current or future urban rail extensions, as in Stockholm.
Italy: state planning and austerity
A full report on Italy will appear soon, on a similar timeline as Turkey, written by Marco Chitti. In Italy, there has been a transition from municipal funding and planning of metros to state funding; in Rome, there was always more state involvement as I understand it.
The situation leading up to the Financial Crisis had similarities with the United States: state funding, municipal or regional responsibility for construction. However, the state always exercised far more oversight. The Italian state builds rather than just nudging. State regulation is done through administrative rather than judicial mechanisms, and thus questions of environmental and historical protection are decided by civil servants trained in engineering, archeology, history, and ecology; there are clear rules, providing similar final outcomes to the Nordic process of negotiation and superior ones to the American process of lawsuit.
More recently, the state has devolved some of the funding to regional, provincial, and municipal governance. This was an artifact of post-Crisis austerity, so the state would fund the majority (I believe 70%) of each project’s budget but not all of it. The result has not been positive – subnational governments have no money, not even wealthy ones like Milan, and to fill in for missing state funding they’ve resorted to PPP financing, which has not impacted construction costs but in effect required hidden loans at high interest bonded to future revenue.
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.
Andrew Cuomo has a Midas touch. Everything he touches turns to gold, that is, shiny, expensive, and useless. Bin Laden killed 3,000 people in New York on 9-11. Cuomo, through his preference for loyalists who cover up his sexual assaults over competent people, has killed 60,000 and counting in corona excess deaths – 50% more than the US-wide average. And the state let it slide, making excuses for his lying about the nursing home scandal. Eventually the sexual assault stories caught up with him, but not before every state politician preferred to extract some meaningless budget concessions instead of eliminate the killer of New Yorkers at the first opportunity. Even now they delay, not wanting to impeach; they do not believe in consequences for kings, only for subjects.
Time and time again, powerful people show that they don’t believe in accountability. After all, they might be held accountable too, one day. This cascades from the level of a mass killer of a governor down to every middle manager who excuses failure. The idea is that the appearance of scandal is worse than the underlying offense, that somehow things will get better by pretending nothing happened.
And here is the problem: bad leaders, whether they are bad due to pure incompetence or malevolence, don’t get good. People can improve at the start of their careers; leaders are who they are. They can only be thrown away, as far as down as practical, as an example. Anders Tegnell proposed herd immunity for Sweden in early 2020 and then pretended he never did, and the country remained unmasked for most of the year; deaths, while below European averages due to low Nordic levels of cohabitation, are far and away the worst in the Nordic countries, and yet Tegnell is still around, still directing an anti-mask policy. Tegnell is incompetent; Sweden is a worse country for not having gotten rid of him in late spring 2020. Cuomo is malevolent; New York is a worse state for every day that passes that he’s not facing trial for mass manslaughter and sexual assault, every day that passes that his mercenary spokespeople who attacked his victims remain employed.
This is not a moral issue. It’s a practical issue. The most powerful signal anyone can get is promotion versus dismissal (there’s also pay, but it’s not relevant to political power). When Andrew Cuomo stripped Andy Byford of responsibilities as head of New York City Transit, it was a clear signal: you can be a widely acclaimed success, but you failed to flatter the monarch and prostrate before him and this is what matters to me. Byford read the signal correctly, resigned, and ended up promoted to the head of Transport for London, because Sadiq Khan and TfL appreciate competence every bit as Cuomo does not.
Likewise, the retention of Tegnell sends a signal: keep doing what you’re doing. The same is true of Cuomo, and every other failure who is not thrown away from the public.
If anything, it’s worse for a sitting governor. Cuomo openly makes deals. The state legislators who can remove this killer from the body politic choose to negotiate, sending a clear signal: corrupt the state and be rewarded. 60,000 dead New York State residents mean little to them; many more who will die as variants come in mean even less.
The better signal is you have nothing anyone wants, go rot at Sing Sing. This is the correct way to deal with a failure even of three fewer orders of magnitude. Fortunately, there’s only one Cuomo – never before has New York had such mass man-made death. Unfortunately, incidents that are still deadly and require surgical removal of malefactors are far more common. Many come from Cuomo’s lackeys; in my field, the subway, Sarah Feinberg is responsible for around a hundred preventable transit worker deaths, and should never work in or adjacent to this field again. But apolitical managers too screw up on costs, on procurement, on maintenance, on operations, on safety – and rarely suffer for it. But then the fish rots from the head. Chop it off and move on.
I wrote a long thread about regional rail and population density, and I’d like to explain more and give more context. The upshot is that higher population density makes it easier to run a rail network, but the effects are most visible for regional rail, rather than either urban rail or high-speed intercity rail. This is visible in Europe when one compares the networks in high-density Germany and low-density Sweden, and has implications elsewhere, for example in North America. I stress that high-speed rail is not primarily affected by background density, but only by the populations of cities within a certain range, and thus France, which has one of Western Europe’s lowest densities, manages to have high per-capita ridership on the TGV. However, the density of a regional mesh comes from background density, which is absent in such countries as France, Sweden, and Spain.
What is density?
Population density is population divided by area. This post is concerned with overall density at the level of an entire country or region, rather than the more granular level of the built-up urban area of a single city. What this means is that density is in large part a measurement of how close cities are to one another. In a high-density area like western Germany, Northern Italy south of the Alps, England, or the Low Countries, cities are spaced very close together, and thus people live at densities surpassing 300/km^2. In contrast, low-density areas have isolated cities, like Sweden, Australia, Canada, or the Western United States.
For example, take Stockholm. The region has about 2.5 million people, and has a strong urban and suburban rail network. However, there just aren’t a lot of cities near Stockholm. The nearest million-plus metro areas are Oslo, Gothenburg, and Helsinki, all about 400 km away, none much bigger than 1 million; the nearest 2 million-plus metro area is Copenhagen, 520 km away. The region I use as an example of German polycentrism, Rhine-Neckar, is about the same size as Stockholm, and has a good deal more suburban sprawl and car usage. The nearest million-plus region to Mannheim is Karlsruhe, 55 km away; it is a separate metropolitan area even though the Rhine-Neckar S-Bahn does have an hourly train to Karlsruhe. Frankfurt is 70 km away. A 400 km radius from Mannheim covers nearly the entirety of Germany, Switzerland, and the Low Countries; it reaches into Ile-de-France and into suburbs that share a border with Amsterdam. A 520 km radius covers Paris, Berlin, Hamburg, Milan, and Prague, and reaches close to Vienna.
Density and regional rail
Kaiserslautern is a town of 100,000 people, served by the Rhine-Neckar S-Bahn every half hour even though it is not normally seen as part of the Rhine-Neckar region. It has, in addition to the east-west S-Bahn, independent regional lines reaching north and south. When I visited two years ago, I saw these lines pulse while waiting for my delayed TGV back home to Paris.
This is viable because there are towns ringing Kaiserslautern, close enough that a low-speed regional train could connect them, with their own town centers such that there is a structure of density around their train stations. This in turn exists because the overall population density in Germany is high, even in Rhineland-Pfalz, which at 206/km^2 is slightly below the German average. The alternative structure to that of Germany would have fewer, larger cities – but that structure lends itself well to regional rail too, just with fewer, thicker lines running more frequently. If those smaller towns around Kaiserslautern did not exist but people instead lived in and right around Kaiserslautern, then it would be a city of about 400,000, and likewise Mainz might have 500,000 and the built-up area of Mannheim would have more people in Mannheim itself and in Ludwigshafen, and then there would be enough demand for a regional train every 10-20 minutes and not just every half hour.
I bring up Sweden as a low-density contrast, precisely because Sweden has generally well-run public transport. Stockholm County’s per capita rail ridership is higher than that of any metropolitan area of Germany except maybe Berlin and Munich. Regional rail ridership in and around Stockholm is rising thanks to the opening of Citybanan. Moreover, peripheral regions follow good practices like integrated intermodal ticketing and timed transfers. And yet, the accretion of a mesh of regional lines doesn’t really exist in Sweden. When I visited Växjö, which is not on the main intercity line out of Stockholm, I had a timed connection at Alvesta, but the timetable there and at Växjö looked sporadic. Växjö itself is on a spur for the network, but poking around the Krösatågen system it doesn’t look like an integrated timed transfer system, or if it is then Alvesta is not a knot. I was told in the replies on Twitter that Norrbotten/Västerbotten has an integrated network, but it runs every 2 hours and one doesn’t really string regional rail lines together to form longer lines the way one does in Germany.
Integrated regional networks
The integrated timed transfer concept, perfected in Switzerland, is ideal for regional and intercity networks that form meshes, and those in turn require high population density. With these meshes, regional rail networks overlap, underlaying an intercity network: already one can get between Frankfurt and Stuttgart purely on lines that are branded as S-Bahn, S-Bahn-like, or Stadtbahn, and if one includes RegionalBahn lines without such branding, the network is nationally connected. Even in Bavaria, a state with lower density than the German average, nearly all lines have at least hourly service, and those form a connected network.
It’s perhaps not surprising that Italy, which has high density especially when one excludes unpopulated alpine areas, is adopting German norms for its regional rail. As in Germany, this originates in urban networks, in Italy’s case that of Milan, but Trenord operates trains throughout Lombardy, most of whose population is not the built-up area of Milan, and even lines that don’t touch Milan run hourly, like Brescia-Parma. Italy is not unusual within Southern Europe in looking up to Germany; it’s only unusual in having enough population density for such a network..
Once the network is in place, it is obligatory to run it as an integrated timed transfer system. Otherwise, the connections take too long, and people choose to drive. This in turn means setting up knots at regular intervals, every 30 minutes for a mixed hourly and half-hourly system, and investing in infrastructure to shorten trip times so that major cities can be knots.
The concept of the knot is not just about regional service – high-speed rail can make use of knots as well. Germany has some low-hanging fruit from better operations and under-construction lines that would enable regularly spaced knots such as Frankfurt, then Mannheim, then Stuttgart, and far to the north Hanover and then Bielefeld. The difference is that Germany’s ideal high-speed rail network has around 20 knots and its existing regional rail network has about as many in Hesse alone. Nor can regional rail networks expect to get away with just building strong lines and spamming frequency on those, as the Shinkansen does – regional rail uses legacy alignments to work, generating value even out of lines that can only support an hourly train, whereas high-speed lines need more than that to be profitable.
Globally, the lowest-hanging fruit for such a system is in the Northeastern United States, followed by China and India. Population density in the Northeast is high, and cities have intact cores near their historic train stations. There is no excuse not to have a network of regional lines running at a minimum every 30 minutes from Portland down to Northern Virginia and inland to Albany and Harrisburg.
A few modifications to the basic Swiss system are needed to take into account the fact that the Northeast Corridor, run at high speeds, would fill a train every 5 minutes all day, and the core regional lines through New York could as well. But regional rail is not a country bumpkin mode of transportation; it works fine within 100 km of Frankfurt or Milan, and should work equally well near New York. If anything, a giant city nearby makes it easier to support high frequency – in addition to internal travel within the regional system, there are people interested in traveling to the metropole helping fill trains.
What about low-density places?
Low-density places absolutely can support good rail transport. But it doesn’t look like the German mesh. Two important features differ:
- It is not possible to cobble together a passable intercity rail network from regional express lines and upgrade it incrementally. Intercity lines run almost exclusively intercity traffic. This tilts countries toward the use of high-speed rail, including not just France but also Spain and now Sweden. This does not mean high-density countries can’t or shouldn’t build high-speed rail – they do successfully in Asia, Italy has a decent network, Britain has high-speed rail plans, and Germany is slowly building a good network. It just means that high-density countries can get away with avoiding building high-speed rail for longer.
- The connections between regional and intercity lines are simpler. Different regions’ suburban networks do not connect, and can be planned separately, for example by state-level authorities in Australia or provincial ones in Canada. These networks are dendritic: intercity lines connect to regional lines, and regional lines branch as they leave city center. Lines that do not enter the primary city center are usually weaker, since it’s unlikely that there are enough strong secondary centers at the right places that a line could serve them well without passing through the primary center.
In extreme cases, no long-distance rail is viable at all. Australia is a borderline case for Brisbane-Sydney-Melbourne high-speed rail – I think it’s viable but only based on projections of future population and economic growth. But Perth and Adelaide are lost causes. In the United States, railfans draw nationally-connected proposals, but in the Interior West the cities are simply too far apart, and there is no chance for a train to usefully serve Denver or Salt Lake City unless cars are banned. Connecting California and the Pacific Northwest would be on the edge of viable if the topography were flat, but it isn’t and therefore such a connection, too, is a waste of money in the economic conditions of the early 21st century.
Note that even then, cities can have suburban rail networks – Perth and Adelaide both have these, and their modal splits are about on a par with those of secondary French cities like Nice and Bordeaux or secondary American transit cities like Boston and Chicago. Denver is building up a light rail and a commuter rail network and one day these networks may even get ridership. The difference between the case of Perth or Denver and that of a German city is that Perth and Denver can rest assured their regional rail alignments will never be needed for intercity rail.
In less extreme cases, intercity trains are viable, and can still run together with regional trains on the same tracks. California is one such example. Its population density and topography is such that planning regional rail around the Bay Area and in Los Angeles can be kept separate, and the only place where intercity and regional trains could work together as in Germany is the Los Angeles-San Diego corridor. Blended planning with timed overtakes is still recommended on the Peninsula, but it’s telling that at no point have Bay Area-based reformers proposed a knot system for the region.
Those less extreme low-density cases are the norm, in a way. They include the Midwestern and Southern US, the Quebec-Ontario corridor, the Nordic countries, France, nearly all of Eastern Europe, and Southern Europe apart from Italy; this is most of the developed world already. In all of those places, regional rail is viable, as is intercity rail, but they connect in a dendritic and not meshlike way. Many of the innovations of Germany and its penumbra, such as the takt and the integrated intermodal plan, remain viable, and are used successfully in Sweden. But the exact form of regional rail one sees in Germany would not port.
European and American intercity train planning takes it as a given that every train must have a car dedicated to cafeteria service. This is not the only way to run trains – the Shinkansen doesn’t have cafe cars. Cafe cars waste capacity that could instead be carrying paying passengers. This is the most important on lines with capacity limitations, like the Northeast Corridor, the West Coast Main Line, the LGV Sud-Est, and the ICE spine from the Rhine-Ruhr up to Frankfurt and Mannheim. Future high-speed train procurement should go the Shinkansen route and fill all cars with seats, to maximize passenger space.
How much space do cafe cars take?
Typically, one car in eight is a cafe. The standard European high-speed train is 200 meters long, and then two can couple to form a 400-meter train, with two cafes since the two 200-meter units are separate and passengers can’t walk between them. In France, the cars are shorter than 25 meters, but a TGV has two locomotives and eight coaches in between, so again one eighth of the train’s potential passenger space does not carry passengers but rather a support service. Occasionally, the formula is changed: the ICE4 in Germany is a single 12-car, 300-meter unit, so 1/12 of the train is a cafe, and in the other direction, the Acela has six coaches one of which is a cafe.
A 16-car Shinkansen carries 1,323 passengers; standard class has 5-abreast seating, but even with 4-abreast seating, it would be 1,098. The same length of a bilevel TGV is 1,016, and a single-level TGV is 754. The reasons include the Shinkansen’s EMU configuration compared with the TGV’s use of locomotives, the lack of a cafe car in Japan, somewhat greater efficiency measured in seat rows per car for a fixed train pitch, and a smaller share of the cars used for first class. An intermediate form is the Velaro, which is an EMU but has a cafe and three first-class cars in eight rather than the Shinkansen’s three in 16; the Eurostar version has 902 seats over 16 cars, and the domestic version 920.
The importance of the first- vs. second-class split is that removing the cafe from a European high-speed train means increasing seated capacity by more than just one seventh. The bistro car is an intermediate car rather than an end car with streamlining and a driver’s cab, and if it had seats they’d be second- and not first-class. A German Velaro with the bistro replaced by a second-class car would have around 1,050 seats in 16 cars, almost even with a 4-abreast Shinkansen even with four end cars rather than two and with twice as many first-class cars.
How valuable are cafes to passengers?
The tradeoff is that passengers prefer having a food option on the train. But this preference is not absolute. It’s hard to find a real-world example. The only comparison I am aware of is on Amtrak between the Regional (which has a cafe) and the Keystone (which doesn’t), and Regional fares are higher on the shared New York-Philadelphia segment but those are priced to conserve scarce capacity for profitable New York-Washington passengers, and at any rate the shared segment is about 1:25, and perhaps this matters more on longer trips.
Thankfully, the Gröna Tåget project in Sweden studied passenger preferences in more detail in order to decide how Sweden’s train of the future should look. It recommends using more modern seats to improve comfort, making the seats thinner as airlines do in order to achieve the same legroom even with reduced pitch, and a number of other changes. The question of cafes in the study is presented as unclear, on PDF-p. 32:
|Food and Refreshments||Willingness to Pay|
|Coffee machine (relative to no service at all)||3-6%|
|Free coffee and tea in each car||6%|
|Food and drink trolley||11%|
|Restaurant with hot food||17%|
Put another way, the extra passenger willingness to pay for a cafeteria compared with nothing, 14%, is approximately equal to the increase in capacity on a Velaro coming from getting rid of the bistro and replacing it with a second-class car. The extra over a Shinkansen-style trolley is 3%. Of course, demand curves slope down, so the gain in revenue from increasing passenger capacity by 14% is less than 14%, but fares are usually held down to a maximum regulatory level and where lines are near capacity the increase in revenue is linear.
Instead of a bistro car, railroads should provide passengers with food options at train stations. In Japan this is the ekiben, but analogs exist at major train stations in Europe and the United States. Penn Station has a lot of decent food options, and even if I have to shell out $10 for a pastrami sandwich, I don’t think it’s more expensive than a Tokyo ekiben, and at any rate Amtrak already shorts me $90 to travel to Boston. The same is true if I travel out of Paris or Berlin.
Even better, if the station is well-designed and placed in a central area of the city, then passengers can get from the street to the platform very quickly. At Gare de l’Est, it takes maybe two minutes, including time taken to print the ticket. This means that there is an even broader array of possible food options by buying on the street, as I would when traveling out of Paris. In that case, prices and quality approach what one gets on an ordinary street corner, without the premium charged to travelers when they are a captive market. The options are then far better than what any bistro car could produce, without taking any capacity away from the train at all.