A 2017 conference including people from British Columbia and Washington State explained the opportunity for high-speed rail in the Pacific Northwest corridor. Their release mentioned a budget equivalent to about $50 billion in 2024 dollars.
Seven years following the announcement, millions of dollars have been spent on studies. The effort involves bureaucrats, academics and lobbyists. BC taxpayers have contributed modest sums so far and Americans are now seeking federal funding worth hundreds of million of dollars to conduct yet more studies.
Undoubtedly, high speed rail should play a role in North American transportation, as it does now in other parts of the world. But costs may be prohibitive because of the special needs of this mode of transportation. California provides a cautionary tale.
In 2001, an official of the USA’s Government Accountability Office (GAO) testified before Congress about high speed rail proposals. One was a 703-mile system to link Sacramento and San Francisco in the north to Los Angeles and San Diego in the south. The project was said to cost around $40 billion in 2024 dollars.
Work finally began on the Initial Operating Section (IOS) at the start of 2015. A 171 mile Central Valley segment is under construction but not fully funded. Promoters expect completion before 2034.
Rail Authority Chief Executive Brian Kelly, who plans to step down this year, and other rail officials have also acknowledged the questionable funding of a rail system with less than a quarter of its length under construction three years after the the first phase was supposed to be completed.
L.A. Times — High-speed rail is $100 billion short and many years from reality
Oxford Professor Bent Flyvbjerg, a megaproject expert, says the most sophisticated rail line in North America will operate between Merced and Bakersfield, two towns that most people outside California have never heard of. He writes that critics call it the bullet train to nowhere.
California admits the full cost of the proposed high-speed rail could be as high as $128 billion and completion date of the routes initially planned is unknown.
Early in his career, Dr. Flyvbjerg was the planner in a Danish project that succeeded beyond expectations. It seems to have put him on the path to understand and explain why so many large-scale project do the opposite:
In the early 1990s, Danish officials had an idea. Denmark is a small country with a population less than New York City’s, but it is rich and gives a lot of money in foreign aid and wants that money to do good. Few things do more good than education. The Danish officials got together with colleagues from other governments and agreed to fund a school system for the Himalayan nation of Nepal. Twenty thousand schools and classrooms would be built, most of them in the poorest and most remote regions. Work began in 1992. It would take 20 years.
The history of foreign aid is littered with boondoggles, and this project could easily have added to the mess. Yet it finished on-budget in 2004 — eight years ahead of schedule. In the years that followed, educational levels rose across the country with a long list of positive consequences, particularly a jump in the number of girls in classrooms.
The schools even saved lives. When a massive earthquake struck Nepal in 2015, almost nine thousand people died, with many being crushed to death in collapsing buildings. But the schools had been designed to be earthquake-proof. They stood.
…I was the planner on that project. At the time, I was pleased with how it turned out, but I didn’t think much about it. It was my first big project and, after all, we only did what we had said we would do: turn a vision into a plan that was delivered as promised.
However, in addition to being a planner, I am an academic, and the more I studied how big projects come together — or fail to — the more I understood that my experience in Nepal was not normal. In fact, it was not remotely normal.
The data shows that big projects that deliver as promised are rare. Normal looks a lot more like the California High Speed rail. Average practice is a disaster, best practice an outlier, as I would later point out my findings about project management.
Why is the track record of big projects so bad? Even more important, what about the rare, tantalizing exceptions? Why do they succeed where so many others fail? Had we just been lucky delivering the schools in Nepal? Or could we do it again?
As a professor of planning and Management, I spent many years answering those questions. As a consultant, I’ve spent many years putting my answers into practice…
How Big Things Get Done, 2023, Bent Flyvbjerg with Dan Gardner, ISBN: 9780771098437
All senior public servant involved in the approval or management of megaprojects that consume vast sums should demonstrate detailed knowledge of Professor Flyvbjerg’s work. Many works would be better managed or not even approved. Billions of dollars would be saved.
Of course, the reality is that government approaches to management of megaprojects will not change. Political leaders have half-heartedly addressed widespread concerns about fiscal irresponsibility and the influence of lobbyists. That is, if they have addressed the concerns at all.
I wrote previously that the revolving doors between governments and industries continue to spin because the people who construct lobbying rules are people who expect future gains if those rules are lax. The same applies to evaluators and overseers of megaprojects. Personal and corporate interests always trump public interests.
If readers show interest, I will write more of Professor Flyvbjerg’s work on decision making and project management. The principles he reveals can be applied to large endeavours, but also to work done in our homes and businesses.
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Categories: Budget & Estimate Disasters
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Norm, you have been posting good articles for a long time. You must spend a lot of time doing research and finding links to great sources of information. I also appreciate the quality of comments from other people that get posted here. Almost all of them are worth reading.
I appreciate your work and plan to contribute some dollars today to help keep In-Sights going. I challenge other readers to do the same.
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Let us look at high speed rail.
Before anyone should even dare to support HST, the main question should be asked: “will the route provide the ridership to justify the investment?”
Can we operate 3 to 4 fully booked trains per direction per hour?
If the answer is no, do not invest in HST.
Is there a quality regional passenger rail service to complement HST?
If the answer is no, do not invest in HST.
Are ‘commuter’ style air services going to be terminated along the HST route?
If the answer is no, do not invest in HST.
From what I have been told, at best, HST from Vancouver to BC to Eugene Oregon, would see a 120 minute service from Vancouver BC to Eugene and a 60 minute service between Portland and Seattle – at a cost of $50 billion USD ($68.5 billion CAD)!
I also have been told that an investment of $10 billion USD on the same route (replacing the Fraser River Bridge and increasing speeds in Delta and South Surrey (fencing and pedestrian over passes), replacing the series of bridges from Marysville to Everett and increasing track speed to a maximum of 90 mph (145 kph) instead of the current legal maximum of 79 mph (125 mph) we could have the same benefits of HST.
The same is true of our SkyTrain light metro system as the taxpayer is spending over $11 billion to extend the Expo and Millennium Lines a mere 21.7 km on two route that do not have the ridership to support such an investment.
Those supporting HST in the Pacific North West, really do not know what they are talking about because the ridership will never meet the criteria for the investment. Those who champion HST most probably will stand to make good money from it during construction.
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My comment on Facebook:
‘Insanity is doing the same thing over and over again and expecting different results.’
The words, written by Rita Mae Brown In her 1983 book Sudden Death, should be top of mind when large-scale endeavours are launched.
Oxford Professor Ben Flyvbjerg is the world’s leading expert on megaprojects management. More correctly, megaproject mismanagement.
A response from Kim Morton:
Interesting article. Having worked on several multi-billion dollar projects, I have discovered a few commonalities. 1) Projected cost is estimated way too low, to get approval. 2) politicians and senior bureaucrats are more interested in photo opps and creating a monument than getting the job done. 3) Poor or inadequate engineering, AKA imagineering. Ground conditions are often not as claimed, because of cheaping out on testing. Things don’t fit in a building because there are too many people wanting different things installed. Overbuilding, especially in foundations because of something that might happen. Or not. 4) An obsession with studies and consultation and permits. TMX being a prime example. It took longer to get permits to build the second pipeline than it did to plan and build the first pipeline.
My reply to Kim Morton:
Professor Flyvbjerg agrees with several of your observations. He suggests “Think slow, act fast.“
Slow planning allows for iteration, learning, and productive feedback before shovels hit the ground. That’s the relatively inexpensive phase of a project. But when construction starts, the project is fully understood.
Of course, BC Hydro spent decades planning and designing Site C. Their thinking was slow but their thinkers were incompetent. As a result, the dam needed redesign well after building began.
Any project is headed for disaster if the leadership doesn’t know what they are doing. Budgets that double or triple from project conception may be great for corporations and their managers, but are certainly not great for the folks paying the costs. At BC Hydro, those are ratepayers and taxpayers.
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Good Morning Mr Farrell,
You conclude your latest report on unnecessary Mega-projects, funded by self-blinded government bureaucrats, with this:
If readers show interest, I will write more of Professor Flyvbjerg’s work on decision-making and project management.
Let me amend that.
If taxpayers continue to ignore these scandals by not showing interest in how billion-dollar boondoggles magically materialize year after year, how does anyone imagine these scams can be stopped? Thoughts and prayers?
Backstory: Remember the huge kerfuffle around the American film Water World? It generated lots of headlines, “Two Hundred Million Dollars!”,
However, the explanations provided zero understanding of a much larger issue. Why do cost overruns keep accelerating?
During a Vancouver lecture, a filmmaker offered insight into how such projects are audited, post-completion. Standard practice he said was for a certain percentage of losses (up to 3%) to be ignored as not worth further scrutiny.
Meaning? This process created a huge incentive to deliberately inflate costs to enable insiders to skim percentages at every level, much like The Mob once did in Las Vegas.
Why engage in such fraud? Money now, not later.
It can take years before a producer gets project approval and the money flows in. Once a project is completed it can take more years to repeat. If ever. Meaning most of a producer’s time is devoted to fundraising. Hence Mel Brook’s surprising send-up about Broadway’s – “The Producers”. Numbers man Leo Blume doesn’t comprehend the system. ruthless opportunist Max Bialystock does. So he manipulates every participant.
Is it a surprise that those most artfully devious could manipulate a loophole-infected system with methods that could be applied to any major swindle?
Theme and Variations: Demand kickbacks from those contracted, engineer some nice large cosmetic losses, inflate costs, hide all embezzlements, swindle the investors, and hope no one notices.
Is this new? Not in my memory.
Inexplicable cost overruns were rampant during the construction of 20th century Nuclear Reactors world wide. Only recently has the bizarre idea that constructing Canadian mini-nukes is somehow Green-minded. What to do with decades of spent nuclear fuel? Hide it from public view. It will only be toxic for a few thousand years. What could go wrong?
As to lawsuits against Mega-swindlers engaged in tax evasion and money-laundering?
Remember the infamous Panama Papers?
https://www.rawstory.com/panamanian-court-acquits-28-people-tied-to-panama-papers-scandal/
A Panamanian court on Friday acquitted 28 people charged with money laundering in connection with the now-defunct law firm Mossack Fonseca, the epicenter of the “Panama Papers” international tax evasion scandal.
Among those acquitted were the firm’s founders, Jurgen Mossack and Ramon Fonseca, the latter of whom died in May in a Panamanian hospital.
During the trial, which was held in Panama City in April, the prosecution asked for 12 years in prison for the duo, the maximum sentence for money laundering.
The investigation, based on 11.5 million leaked documents from Mossack Fonseca, revealed how personalities from around the world hid properties, companies, assets and profits to evade taxes or launder money.
To do so, they created companies through the firm, opening bank accounts and creating shell foundations in multiple countries to hide money, which in some cases came from illicit activities, according to the investigation.
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The maximum sentence for money laundering in BC is?
The maximum number of successful money-laundering prosecutions in BC is?
The maximum number of people and corporations who should be charged with money laundering in BC is?
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Your comments about a filmmaker saying there was a tolerance of fraud as long as it was a small percentage fits with what I have observed. Behaviours that outsiders would view as wrong are not uncommon in the industry.
I remember one film shoot near Squamish. One scene involved characters in a log booming area. The film crew ordered a shipment of brand new boom chains to be trucked from Vancouver. They then had people work to distress the chains, making the steel pieces look old and rusty, like they’d been sitting in a pile for months or years.
People who actually worked in the booming ground were laughing. One said to me, “We have piles of boom chains. If they asked, we would have lent them as many old chains as they needed and charged them nothing.”
There was no fraud involved, just zero concern for spending with care. I think that explains some of the megaproject budget overages. People in positions of authority simply don’t aim to maximize value for money.
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That was an excellent article and I would be most interested in reading more. Especially about why megaprojects go so incredibly far over budget. It seems to me that Government officials who are employed quickly learn that they have access to a gigantic cookie jar and don’t have any consequences associated with their decisions regarding fiscal management. I think the last time a senior provincial bureaucrat got into trouble was Craig James – the former Clerk of the BC Legislature. James was accused of various misconduct allegations related to his expenses and retirement benefits.
First off, why is/was a “clerk” paid over 350,000 dollars to do his job and what is the job description of the “clerk” position today? This salary pales in comparison with the appointed officials who are charged with the responsibility of managing large “mega projects” and public organizations like the BC Pension plan.
Anyway, Jaames was found to be in “breach of trust” by then speaker of the house Darryl Plecas. This was a big story when it broke in 2018, if you are interested in more background please see the following story: Former Speaker’s report includes more on spending scandal, #MeToo allegations at B.C. legislature | CTV News
If you want to download the 50 page report try this link: Final Plecas Report | Download Free PDF | Whistleblower | Cabinet (Government) (scribd.com)
I digress, Craig James was, after 4 years and tens if not hundreds of thousands of dollars spent in legal fees and salaries paid to provincial government staff, found guilty of a “misdemeanour” with the specific charge of improperly spending public money for personal clothing!!!! All other charges were dismissed or dropped.
If this is all that happens to people who gain the “trust of the public” when they are hired and breach that trust through actions that are detrimental to the public interest, then no wonder the mega projects are so badly managed.
There is no accountability of our elected officials, It is challening to lay the blame entirely on their shoulders because the public service controls almost all of what they see, read, hear and act upon. Not many bureaucrats are going to support active investigations that might impare their ability to do their job, this is why the recommendations of former independent politicians like Darryl Plecas gather dust in the archives of the BC Legislature.
We need to encourage greater engagement in the process of governance in our democracy. We are losing the right to impact the way our tax dollars are spent. Why do you think the expression “You can’t fight city hall” is so ubiquitous.
I look forward to hearing more about Professor Flyvbjerg’s work on decision making and project management Norm.
Perhaps others will be triggered to explore ways to Participate in Democracy. If you are OK with passing on my contact information, I would be happy to hear from others about how to help me launch my new website/podcast Participate in Democracy. I “soft launched” the project last year, it is surprising how relevant the stories remain one year later.
Cheers, Gary G
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