We’ve gotten a lot of criticism from various quarters about our analysis and conclusions at the Transit Costs Project. The focus for this post is a criticism that isn’t usually made in public but looks like the biggest one among people in power in the American federal government: the issue of consultants. Writing in Slate about our report, Henry Grabar identified consultants as the ultimate reason the United States can’t build. This should be nuanced in that consultants are one of a few primary reasons, but the broad outline of the complaint is right: the overuse of consultants is a serious problem and must be replaced with large in-house bureaucracies in explicit rejection of the privatization of the state. And yet, there’s pushback. Why, and why is it wrong?

The current situation

In the English-speaking world today, the dominant view of infrastructure is that private companies are inherently more efficient than the state. In service of this ideology, large state organizations were left to rot and then privatized. The historic sequence is generally that as efficiency levels fall, political interest in investing in organizational capacity declines, and in-house organizations take the blame.

American and British societies both believe that specialist experts are inherently suspect and must always lower their gaze in the presence of a generalist who is paid and otherwise treated as a master of the universe, and thus those organizations would receive overclass appointees (US version) or generalist civil servants (UK version) who constantly belittle them and also have little ability to reform them from the inside. It’s remarkable how non-technical the members of the American overclass Eric and I have talked to are; one of them asked us straight out why we didn’t talk to more lawyers in our report where we talked to engineers, planners, procurement experts, and other specialists.

The result of this sequence is that usually at the time of privatization – say, when New York’s MTA let go of its 1,600 strong capital construction department in the early 2000s and downsized by about an order of magnitude – what is left is a hulk, easy pickings for the privatizer. What is left of that is even more of a hulk. The upshot is that in places that rely on consultants in lieu of in-house expertise, the quality of current public-sector leadership (that is, the various state political appointees, most federal political appointees, and even some permanent staff with pure management background) is low. The consultants are individually more competent than them, and this is readily apparent to anyone who’s talked with both sets of people; even the political appointees themselves get it and think their expertise is in managing the consultants.

What the consultants know

When the state doesn’t really like itself and privatizes key functions to consultants, the consultants look more competent. One federal official – not a political appointee, to be clear – told us straight out that the consultants have experience since they work on so many projects, domestically and internationally.

The problem is that what the consultants know is how things work on projects that use consultants. This is how an experienced consultant can say something as obviously wrong as “The standard approach to construction in most of Europe outside Russia is design-build.” Is this even remotely true? No. Parts of Europe are transitioning to design-build under British influence, universally seeing cost increases as they do so, but even in the Nordic countries and France this process is in its infancy, and in nearly all of the rest of Western Europe it’s not done at all. The upshot is that the US/UK consultant sphere is an expert on how to build public transportation in the failed US/UK way, and its international experience is largely (not entirely) US/UK-style badness.

But Americans are an incurious people. Even the ones who are aware of European and rich-Asian success in infrastructure and urbanism only really interact with it as tourists. So they can’t distinguish a government-built program like the TGV or nearly every European subway system from the few that are more consultant-driven like the Copenhagen Metro (at the time of its construction, Scandinavia’s highest-cost metro – though the rest of the Nordic world is catching up in both privatization and costs).

What’s more, the American preference for generalist knowledge means that what they see of the Copenhagen Metro is much more its use of unconventional financing than its use of driverless trains at very high frequency or its standardization of station components. Thus, looking at a metro that for all its expense by its regional standards was also cheaper than anything in the US going back to the 1970s, they take notes and imitate all the bad and none of the good.

The interaction between consultants

Okay, so in theory, if consultants’ recommendations are followed exactly and a turnkey system is built, in theory it should still be possible to imitate the medium costs of Denmark.

But in practice, the hallmark of consultants is private competition. This means there are different firms, and even though they are all broadly similar, they compete and each has a slightly different way of doing things and may have different recommendations for a specific project. And then each government agency in the United States hires a different consultant and the consultants clash and there is no way to resolve the conflict.

Seattle’s cost explosion in the last 10 years, going from semi-reasonable costs for U-Link to a world record for a majority-above-ground project for Ballard-West Seattle, comes from a somewhat different place from what we’ve seen in New York and Boston. For example, New York and Boston both have ample surplus extraction by local actors, but the extraction there happened before the plans were finalized and the Full Funding Grant Agreement was made; in the Seattle suburbs, one municipal fire department has demanded changes even after the FFGA and threatened not to certify the project. The issue of consultants there is likewise a new problem: a complex project – I think the Pacific Northwest intercity rail program but I forget – requires intergovernmental coordination and the different agencies hired different consultants, leading to substantial inter-contractor contention. The argument for privatizing state planning to large design-build contracts is that they avoid this contention, but here it’s recreated by the very presence of competition.

Nor is replacing competition with a single private consultant going to solve the situation. The private sector’s norms of how to deliver value depend on competition; all benchmarks used for how to successfully deliver to the customer are honed based on how to beat or at least match other firms that could get the contract if the firm fails. A private monopolist combines the worst aspects of the public sector (no competition) with those of the private sector (fundamentally adversarial relationship with the customer). As soon as a project is large enough that multiple agencies are involved, forcing them to all use the same consultant, even if the initial choice does feature competition between WSP, AECOM, Arup, and other such firms, means that for the duration of the project there’s such lock-in it has the same problems as a literal monopoly.

The way forward

If it’s not possible to successfully deliver infrastructure megaprojects through competition among private consultants or through a private monopoly, it follows that delivery must be done through the public sector. This means a public sector that is staffed up with thousands of permanent professional hires. Small cities can use big cities’ agencies or a federal agency as a public-sector consultant; in all cases, this must be domestic rather than international, since the social mission that makes many public monopolists good vanishes at the border and turns into predatory monopolistic behavior (for example, by SNCF toward other national railways).

Metropolitana Milanese, the infrastructure builder that also provides public-sector consulting services for the rest of Italy, has around 1,300 employees. The Anglo world can imitate that – never literally import the firm, but set up a similar construct, with advice by MM, RATP, and other public-sector engineering firms about how to do so and even some early hires. This needs to be done publicly and ostentatiously, to make it clear what’s going on for the sake of transparency and to lock in good changes. Instead of regulators who nudge, the state needs people who do; there is no alternative.

We’ve been talking to a lot of Americans in positions of power when it comes to transportation investment about our cost reports, and usually the conversations go well, but there’s one issue that keeps irking me. They ask good questions about corner cases, about some specific American problems (which we do want to revisit soon), about our prognosis for the future. But they don’t usually express curiosity about the non-American cases – and even journalists who write investigative pieces sometimes insist on only using London and Paris as proper comparanda for New York. This is not everyone, and I do know of some civil servants who are interested and have made sure to read the Italy, Stockholm or Istanbul cases. But it is a large majority of Americans we talk to, including ones who are clearly interested in doing better – even they think acquiring fluency in how things work in low-cost countries is irrelevant and are far more passionate about all the barely relevant groups that can block change than about how Stockholm, Milan, and other such cities build cost-effective infrastructure.

Incuriosity and consultants

I recently saw a transit manager in North America who I’d previously had tepidly positive opinion of tell me, with perfect confidence, that “The standard approach to construction in most of Europe outside Russia is design-build.”

To be very clear, this is bunk. Design-build is not used in Southern Europe or in the German-speaking world. Ant6n has only been able to find one such contract in Germany, for the signaling of Stuttgart 21. There’s more use of design-build in France, the Low Countries, and the Nordic countries, and the tendency is toward doing more of it, but,

• The process of privatization of the state is in its infancy in these countries – for example, Nya Tunnelbanan is mostly procured as build contracts
• Costs in the Nordic countries are rising rapidly, albeit from very low levels, and this also seems to be happening in France – this minority of Europe that uses design-build (which, again, correlates with other elements of state privatization) isn’t seeing good results
• As a consequence of the above two points, the current and former civil servants in those countries that I’ve spoken with are familiar with the more traditional system of project delivery and don’t generally think it is inferior to alternative systems that reduce the role of the state and increase that of private consultants, and thus they are familiar with how to do traditional project delivery well
• Even with the ongoing privatization of the Nordic and French states, more institutional knowledge is retained in the public sector, to ensure it can supervise the consultants, in contrast with the American and British models, where the consultants are supervised by other consultants and the in-house public-sector employees lack the technical knowledge to do proper oversight

So why did this person think design-build is standard, where the majority of Western Europe by population does not use it?

The answer is incuriosity. This person is a generalist Anglo consultant. What they know of Europe is what Anglo consultants know. They never stopped to think if perhaps places that build infrastructure cost-effectively publicly would ever have any reason to be legible to international English-speaking consultancies. Why would they? Infrastructure construction is almost entirely at the level of countries, not the European Union; the weakness of cross-border rail planning is so notable that I know a green activist devoted specifically to that issue. If you’re building in and for Germany, you have no real reason to publish in English trade journals or interact with British or American consultants. Another consultant that Eric and I spoke with had the insight to point out, when we asked about a comparison of High Speed 2 with the TGV, that their company gets no work in France since France does it in-house, but the transit manager who shall remain unnamed did not.

The good ones

I am sad to say that, for the most part, the mark of a good American transit manager, official, or regulator isn’t that they display real willingness to learn. Too few do. Rather, the mark is that they don’t say obviously false things with perfect confidence; they recognize their limits.

This is frustrating, because many of these people genuinely want to make things better – and at the federal level this even includes some political appointees rather than career civil servants. The typical cursus honorum for federal political appointees involves long stints doing policy analysis, usually in or near the topic they are appointed to, or running state- or city-level agencies; I criticize some of them for having failed in their previous jobs, but that’s not the same as the problem of a generalist overclass that jumps between entirely different fields and has no ability to properly oversee whichever field whose practitioners have had the misfortune to be subjected to its control.

The good ones ask interesting questions. Some are easy to answer, others are genuine challenges that require us to think about our approach more carefully. And yet, three things bother me.

They are not technical

Traditional American business culture looks down on technical experts, treating them as people who will forever work for a generalist manager – and this is a culture that treats working for someone else as a mark of inferiority.

The most innovative American industries don’t do this – software-tech and biotech both expect workers to be technical, and the line workers do not often respect managers who are technically illiterate; tech and biotech entrepreneurs likewise have a technical background (Mark Zuckerberg coded Facebook’s prototype, Noubar Afeyan is a biochemical engineering Ph.D., etc.), and Elon Musk, one of the less technical ones, still has a physics degree, wrote code in the 1990s, and goes to great pain to affect being part of the culture of tech workers.

However, the government at all levels does do this. The overclass comprises lawyers and public policy grads; engineers, architects, and planners can be trusted civil servants but are expected to lower their gaze in the presence of an elite lawyer (and one such lawyer told us, again with perfect confidence, something that not only was wrong, but was wrong about American law in their field).

The upshot is that even the good ones don’t ask technical questions. I don’t remember having had to answer questions from even the most curious American officials about grouting, about egress capacity, about ventilation, about construction techniques. It’s rare to even see economic questions about managing public-sector risk, about the required size of an in-house construction agency, about how one implements traditional project delivery effectively; we volunteer some numbers but I don’t remember being asked “how many engineers does RATP employ?” (the answer is around 1,200 across all fields combined).

They nudge and do not do

The American federal government is uncomfortable with the notion of doing things directly. One is supposed to make general rules and nudge others. Even regulations take a nudge form – often instead of direct compulsion (say, installing a safety system), the federal government would nudge private actors by threatening to withhold funds or other support if they don’t do it.

One consequence is that federal agencies don’t really try to learn how to do things themselves. I caution that one official who I spoke with and have a good impression of reacted well when I pointed out how, in Sweden, there’s mobility among the civil servants between state and county governments, so some of the people who built Citybanan working for the Swedish state are now building Nya Tunnelbanan for Stockholm County. This official said they were working on a program that doesn’t quite do this but does something similar, which stands to be successful if done well; I don’t know if it will be done well but there was not enough time in that conversation to get enough detail and I reserve judgment even on the aspects I am more pessimistic about until I know more. So it’s possible that this criticism I have of the federal government is going to do away in the next few years, and if so, I do expect better federal infrastructure investment, perhaps for intercity rail on the Northeast Corridor, which is a federal-led program.

This is not purely an American problem. The EU has the same problem, which is related to the poor state of cross-border rail; even when the European public wants more integration (see, for example, polling on an EU army), eurocrats respond with soporific abstraction, not out of political fear of backlash, but because none of them can actually do anything more than a light nudge – the doers remain at the member state level. The difference between us and the US is that member states like Germany do have some doers around, whereas New York can’t do anything.

They still only look inward

This is the part that I am most worried about in the future. I’ve had to take interesting questions about policy from people who, again, I think well of – if I didn’t, I’d speak of them the way I do of the official in the section on consultants above.

And then none of these questions is about, say, how Italy has set up its bureaucracy for protection of monuments, ensuring there is no risk to millennia-old Roman ruins under the aegis of professional archeologists and historians rather than third-party lawsuits. There’s ample interest among Americans in how to do better, reaching the highest levels among the people I’ve directly talked to, but so far it’s based entirely on internal thinking. Foreign examples can inform them but are not to be investigated as closely. I do know of some officials who’ve read the non-American reports we’ve put out, but it’s not common even among the good ones.

The problem, I think, is twofold. First, Americans are used to being in charge in their interactions with foreigners, and Western Europeans are about the least impressed people in the world by American pride. Why look up to a country that we know has worse public transportation and is, on net, probably about comparable in overall living standards? (Yes, Americans, I am aware that your SUVs are larger.) The average Western European doesn’t think about the United States much and when they do they’re not awed, so the American who asks questions puts themselves in an inferior position, and this is hard to handle.

The second issue is that the public sector draws from within the country’s borders, in almost all cases. The pipelines into working for Deutsche Bahn are completely different from those into working for any American outfit. This means that an official in a country has weak ties to other countries. This, again, is also a European problem – there’s too little knowledge of France in Germany and vice versa, too little curiosity about Southern Europe in higher-cost Northern Europe, and too little curiosity about Asia with disastrous results. But the European railroads have exchange programs among them and even with Japanese railroads, and Americans don’t participate in either; the insularity I see in Germany when I mention the capabilities of high-speed trains in France and Japan is considerably less bad than what I see among the worst Americans and Britons.