viewer Wrote:
-------------------------------------------------------
> One of the better-written reviews (almost
> certainly seen here before) of the "why does it
> cost so much to build stuff in the US" ...
> [www.vox.com]
> ture-costs-america
>
> Many others can be found, but many have right-wing
> axes to grind so be careful.
>
> An interesting paper (PDF) ...
> [papers.ssrn.com]
> d=3428675
> And another article, along the same line:
> [www.strongtowns.org]-
> is-why-infrastructure-is-so-expensive
>
> Bottom line seems to be: our procurement
> regulations and funding practices are wrong. We
> reward graft, extortion, change orders, and
> ballooning costs rather than penalizing it. FWIW,
> it's not just transportation - have you ever
> looked at health care? Here's one obvious example:
> engineering and overhead costs as a percentage of
> construction cost; how could that possibly go
> wrong?

That pretty much sums it up. As an economist we call those "perverse incentives" wher the rewards for bloat, waste, and added costs are greater than the rewards of less costly more cost effective alternatives.

Much of this has become "endemic", not part of some kind of individual corruption, as much as it is built into those perverse reward systems, like the fixed percentages as a percentage of project costs. This is the incentive system we've built into our project management contracting.

It works like this, the more you make the project cost, the more you make for managing it-AKA the CHSRA management model. So, the more you gold plate the project in the planning and design phase, the more cream there is to skim of the top later when it is constructed. Since the management firm is controlling those costs or controlling the information about that for their often part time Boards, there is an "endemic" bias of all human behavior to line your own pockets with change order and contract time (and cost) externsions.

This models works very well with the "deliberate "low bid" and add change order later to mske up for it contracting systems which predominate American public works contracting, today. These almost invariably seem to always add up to much more than the original"low" bids, and are method that has proven most effective in milking (bleed?) of taxpayer's of their hard earned money.

There are alternative models right here that are muck better, where you have fixed price design build contracts, and even side by side examples of projects at the MTA where all of the LRT project contracted on the low bid/change order/project management contingency system come in years late and hundreds of millions over budget (Crenshaw is a great example), and the Goldline, bid on a design build with an independent oversight agency manageing design and procurement (not a percentage of cost management consultant model), where all projects have come in on time and on budget (but with "higher" initial "low bids"). In fact, the current Goldline eastern extension is now six months to a year ahead of schedule.

This is also why the franchise public private infrastructure/private investment model has failed to materialize in the United States. Folks like Brightline have there own money at risk, and follow the market incentive to do the right things. There is no built in incentive for gold plating or change orders, because it is coming out of investors pockets, and it's not a poor beleagured mass of taxpayers who would be robbed.

And, since politicians won't be getting campaign contributions for approving all of those change orders, and budget increase, when I worked on trying to do this in CA the 2000's, the politicians were aghast, because they could not find a teet on that cow to milk for themselves.