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Re: Tutor Perini installs 3.2 miles of substandard rails in SF job >> clickable link
Author: SP5103
Date: 05-12-2018 - 10:51
It is common business to underbid or break-even bid large projects such as these, whether public or private.
The reasoning is simple - the bidding company has every intention on making their profit on the inevitable change-orders, or once well entrenched in the contract to plead poverty that there is no way they can afford to continue and renegotiate the contract, or some combination of the two. (Someone I knew in the industry claimed this was common practice for Herzog on commuter operating contracts.)
As far as public projects - these are often politically driven, subject to changes and delays due to court challenges, environmental reasons (gotta be the first to be Tier 5 etc.) and politics. You often end up with incompetent and/or greedy consultants doing the planning who are basically trying to meet an impossible list of requirements, and sure to add enough unique stuff in that they have to be retained. And everyone just assumes the government money tree won't give out.
Now if this were being built for a private enterprise, they wouldn't stand for such foolishness because it would jeopardize the economics of the project and their investment (unless the whole thing was a promoted scam in the first place). Then again, they would cut corners themselves to make a bigger profit and bonus.
At some point, we (the public) will simply be unable to afford bloated public projects regardless of the potential public benefit or proven demand. I've seen where various commuter projects are rehabbing existing surface stations - at the cost of millions $$$$$$ each. At one point does it end up being a $99 fare or 99% tax rate?
The reasoning is simple - the bidding company has every intention on making their profit on the inevitable change-orders, or once well entrenched in the contract to plead poverty that there is no way they can afford to continue and renegotiate the contract, or some combination of the two. (Someone I knew in the industry claimed this was common practice for Herzog on commuter operating contracts.)
As far as public projects - these are often politically driven, subject to changes and delays due to court challenges, environmental reasons (gotta be the first to be Tier 5 etc.) and politics. You often end up with incompetent and/or greedy consultants doing the planning who are basically trying to meet an impossible list of requirements, and sure to add enough unique stuff in that they have to be retained. And everyone just assumes the government money tree won't give out.
Now if this were being built for a private enterprise, they wouldn't stand for such foolishness because it would jeopardize the economics of the project and their investment (unless the whole thing was a promoted scam in the first place). Then again, they would cut corners themselves to make a bigger profit and bonus.
At some point, we (the public) will simply be unable to afford bloated public projects regardless of the potential public benefit or proven demand. I've seen where various commuter projects are rehabbing existing surface stations - at the cost of millions $$$$$$ each. At one point does it end up being a $99 fare or 99% tax rate?
