Mineta Shows How not to Reduce Construction Costs
There’s a short proposal just released by Joshua Schank and Emma Huang at the Mineta Transportation Institute, talking about construction costs. It’s anchored in the experience of Los Angeles more than anything, and is a good example of what not to do. The connections the authors have with LA Metro make me less confident that Los Angeles is serious about reforming in order to be able to build cost-effective infrastructure. There are three points made in the proposal, of which two would make things worse and one would be at best neutral.
What’s in the proposal?
The report links to the various studies done about construction cost comparison, including ours but also Eno’s and Berkeley Law’s. It does so briefly, and then says,
Often overlooked are the inefficiencies and shortcomings inherent in the transportation planning process, which extend far beyond cost, to the quality of the projects, outcomes for the public, and benefits to the region. Rather than propose sweeping, but politically unfeasible, policy changes to address these issues, we focused on more attainable steps that agencies can take right now to improve the process and get to better outcomes.
Mineta’s more attainable steps, in lieu of what we say about project delivery and standardization, are threefold:
- Promise Outcomes, not Projects: instead of promising a concrete piece of infrastructure like a subway, agencies should promise abstract things: “mode-agnostic mobility solutions that ‘carried x riders per day’ or ‘reduced emissions by x%’ or ‘reduced travel time by x minutes,'” which may be “exclusive bus lanes, express bus services, or microtransit.”
- Separate the Planning and Environmental Processes: American agencies today treat the environmental impact statement (EIS) process as the locus of planning, and instead should separate the two out. The planning process should come first; one positive example is the privatized planning of the Sepulveda corridor in Los Angeles.
- Integrate Planning, Construction, and Operations Up Front: different groups handling operations and construction are siloed in the US today, and this should change. There are different ways to do it, but the report spends the longest time on a proposal to offload more responsibilities to public-private partnerships (PPPs or P3s), which should be given long-term contracts for both construction and maintenance.
Point #2 is not really meaningful either way, and the Sepulveda corridor planning is not at all a good example to learn from. The other two points have been to various extents been done before, always with negative consequences.
What’s the problem with the proposal?
Focusing on outcomes rather than projects is called functional procurement in the Nordic countries. The idea is that the state should not be telling contractors what to do, but only set broad goals, like “we need 15,000 passengers per hour capacity.” It’s a recent reform, along many others aiming to increase the role of the private sector in planning.
In truth, public transport is a complex enough system that it’s not enough to say “we need X capacity” or “we need Y speed.” Railways have far too many moving parts, to the point that there’s no alternative to just procuring a system. Too many other factors depend on whether it is a full metro, a tramway, a tram-train (in practice how American light rail systems function), a subway-surface line, or a commuter train. In practice, functional procurement in Sweden hasn’t brought in any change.
In the case of Sepulveda, LA Metro did send some of the high-level P3 proposals to Eric and me. What struck me was that the vendors were proposing completely different technologies. This is irresponsible planning: Sepulveda has a lot of different options for what to do to the north (on the San Fernando Valley side) and south (past LAX), and not all of them work with new technology. For example, one option must be running it through to the Green Line on the 105, but this is only viable if it’s the same light rail technology.
The alternative of microtransit is even worse. It does not work at scale; over a decade of promises by taxi companies that act like tech companies have failed to reduce the cost structure below that of traditional taxis. However, it does open the door for politicians who think they’re being innovative to bring in inefficient non-solutions that are getting a lot of hype. The report brings the example of a New York politician who was taking credit for (small) increases in subway frequency; well, many more politicians spent the 2010s saying that San Francisco’s biggest nonprofit, Uber, was the future of transportation.
The point recommending P3s for their integration of operations and infrastructure is even worse. The privatization of state planning has been an ongoing process in certain parts of the world – it’s universal in the English-speaking world and advancing in the Nordic countries. The outcomes are always the same: infrastructure construction gets worse.
The top-down Swedish state planning of the third quarter of the 20th century built around 104 km of the T-bana, of which 57 are underground, for $3.6 billion in 2022 prices. The present process, negotiated over decades with people who don’t like an obtrusive state and are inspired by British privatization, is building about 19 underground km, for $4.5 billion. This mirrors real increases in absolute costs (not just overruns) throughout Scandinavia. The costs of Sweden in the 1940s-70s were atypically low, but there’s no need for them to have risen so much since then; German costs have been fairly flat over this period, Italian costs rose to the 1970s-80s due to corruption and have since fallen, Spanish costs are still very low.
As we note in the Swedish case report, Nordic planners take it for granted that privatization is good, and ding Germany for not doing as much of it as the UK; of these two countries, one can build and one can’t, and the one that can is unfortunately not the one getting accolades. The United Kingdom, was building subways for the same costs as Germany and Italy in the 1960s and 70s, but its real costs have since grown by a factor of almost four. I can’t say for certain that it’s about Britain’s love affair with P3s, but the fact that the places that use P3s the most are the worst at building infrastructure should make people more critical of the process.

