It would be interesting to compare prices of privately funded projects vs publicly funded ones, both in terms of cost, over-budget amounts and time needed to complete the project.
I see many public locations, where a short street or even a walkway is closed for months, because they need to repave literally 20-30 square meters of a walkway, while companies such as Hofer (Aldi) manage to repave their parking yard in a few days, while keeping half of it still open for customers.
I imagine a lot of the cost & time for public projects is precisely because they have to be contracted out to private developers. If the government had construction workers & equipment on it's own payroll (like we do for police, postal workers, sanitation, etc), these projects probably get done a lot quicker.
It would have the bonus effect of making infrastructure construction/maintenance projects happen more often. Both by lower the barrier to get started (no need to have contractors bid your project, etc) and b/c it's wasteful to have public employees just sitting around with no work to do.
The government has lots of employees who came from the private sector and know exactly how that side of the house works. They aren't really this disjointed set of workers.
IMO, a lot of the differences come from the different set of rules that govt work has to run by. For example, Aldi can just decide to hire a contractor that they know does good work at a reasonable price. In contrast, the govt has to use a lengthy fair and open bid process and if they want to select a bid that isn't the lowest, it's a painstaking process to justify that selection. Govt work must adhere to certain laws that tend to push up labor wages (see: Davis Bacon Act). Plus, the govt has lots of other competing goals, like supporting minority or veteran-owned business etc. A simple comparison misses all of those nuances.
> For example, Aldi can just decide to hire a contractor that they know does good work at a reasonable price. In contrast, the govt has to use a lengthy fair and open bid process and if they want to select a bid that isn't the lowest, it's a painstaking process to justify that selection.
It's unfortunate, but probably better than the corruption that anything else will enable in the long run. Churchill said that democracy is the worst form of government, except for all the others. For government spending, lowest bidder is the worst form of contracts, except for all the others.
I think the point that gets lost when you see comments like the GP is that they are operating under different sets of constraints because they are trying to optimize for different things.
FWIW, the govt can do "best value" contracts instead of lowest bid. But there is an asymmetry in risk to those making the selection. If something goes wrong in the design/construction, or if corruption is found, there's a lot more explaining to do. Like the old quote, "Nobody got fired for hiring IBM," except in this case "Nobody got fired for selecting the lowest bid."
> In contrast, the govt has to use a lengthy fair and open bid process and if they want to select a bid that isn't the lowest, it's a painstaking process to justify that selection.
Isn't that a recipe for cost over-runs?
I mean, it sounds like if building a tunnel costs $100M and one company bids $100M (planning to deliver on budget), a second company bids $50M (planning 100% cost overruns) and a third company bids $25M (planning on 300% cost overruns) it's mandatory to select the third company?
Within reason, yes. Engineers will still evaluate the proposals and if there’s a huge discrepancy like you described, they can be thrown out. But often part of the game seems to be first underbid (within reason) to get the contract and then make up the difference on change orders to be profitable.
It's absurd really. Massive pressure to pick the cheapest bid, then very slowly discover that the cheapest option can't actually do a reasonable job in a reasonable timeframe, then some years later try again with the same cheapest must win premise. It's kind of optimising for cost but poorly and with no feedback loop.
There is a feedback loop. Under a firm fixed price contract, the vendor has to eat any cost overruns. Contacts can include bonuses for finishing ahead of schedule, or penalties for being late. And there are administrative procedures for barring vendors who fail to deliver as promised from bidding on future contracts.
There are second order effects on those, though. Fixed price contracts incentivize contractors to cut corners to make up for cost overruns or to pad their profits (doubly so if it’s a contractor who underbid to win the contract). Unless you’re willing to pay for a lot of govt oversight, many of those won’t be noticed until the contract is long complete. Even if noticed, you need an organization willing to engage in that legal fight.
The administrative controls are lagging indicators at best, and administrative controls are usually one of the least preferable control mechanisms.
Not exactly true. They typically have a goal to award a certain percentage for those programs. It’s not as if every contract is graded by that criteria.
But yes, it can open the door to corruption and inflated costs. For example, a tiny veteran owned corporation may be hired who subcontracts to a massive firm instead of the other way around. The govt would probably be better off just contacting to the large firm directly.
> nobody has an incentive to finish in a timely manner.
I think the real problem is more that there is accountability for job performance in the private sector (you get fired if you suck and waste your boss's money) and very little to none in the public sector. No one votes for politicians based on objective performance data.
It'd wild to me how it's considered American to have this sort of bid process because "free markets" and "small government" but the results are everything Americans accuse socialist countries of being.
Its also that you have thousands of miles of road in disrepair, and you have budget to deal with 1% of that so to be pragmatic you triage but people miss that and equate such pragmatism with incompetence.
I used to be a public sector dev with an agency that stores plaintext passwords and direct deposit information. People simply didn’t know any better and because government doesn’t have merit raises, the rest of us simply didn’t do anything about it.
That may be true in software (where the pay gap in the private sector is particularly blatant) but it's not true in most industries. The stereotype of lazy government workers is essentially conservative propaganda - I've known and worked with plenty, and with a few obvious exceptions (political appointees, software, etc.) across the board they're passionate and great at what they do. Civil engineers, road builders, park rangers, EPA researchers, administrative assistants, even IT.
> have you ever been to a government office to pull a permit?
Yes, several times, and it is always completely straightforward. Fill out the appropriate forms, provide the correct documentation, pay fee. If it can be approved by the administrator, it’s issued promptly. If it needs a hearing, it’s scheduled for the next one, you show up and answer questions, they make a decision promptly and it’s either issued or not. I’ve rarely had such efficient interaction with private companies.
Have you ever been to the IT department of a private company, to get a small change made that makes your job more efficient or helps a customer solve a problem?
My girlfriend works public service. The only lazy coworkers she has are Ron Swanson types taking it upon themselves to make public work shittier because they believe the government shouldn't do anything.
And have you ever been to a government office to pull a permit? Or dealt with government procurement? Or attempted to get paperwork through the FAA?
Yes. It was relatively straightforward, as long as you followed the rules.
The hard part is following all the relevant rules, almost all of which exist because people have tried to rip off the government or lawmakers decided to impose unrelated requirements on procurement. That's not the fault of the government workers whose job it is to carry out the requirements that have been imposed on them.
And what does an opinion piece about teachers have to do with procurement? Those are completely separate things.
>Yes. It was relatively straightforward, as long as you followed the rules.
The hard part is not going postal as you find out piece by piece that person A didn't tell you about rule X and that department T actually has a revised form W that... and on and on until you find out that you didn't actually have to do any of that because there's some other less shitty process none of these people told you about.
It's like the bureaucratic runaround is the default behavior in some of these organizations.
It's not person A's job to tell you about rule X or that department T revised form W, or that you don't even have to do any of that at all because there's an alternative process for doing it.
It's your job to do the research and do things out correctly so that person A doesn't have to waste time telling you what you should be doing.
Or do you think that government agencies have the budget to hire customer support representative and receptionists with intimate knowledge of their department's rules and regulations?
something that's helpful to keep in mind is that the government orgs you deal with frequently have what have what they must do set by law, with little latitude to change things other than bugging congress
Yes, I've never heard of a private company that has absolutely useless security protocols, let alone one that was broken into as a result of complete incompetence of their security architects and admins. /s
"The problem with corruption, inefficieny and ignorance in government is corruption, inefficiency and ignorance, not government".
Let's not put the cart before the horse, shall we? Yes, all human organizations can suffer from these things (and maybe some more than others). But that's not a reason in and of itself to dismiss an entire class of human organizations as irretrievably doomed.
Look at what the UK government's digital service has done: absolutely outstanding online presence for so many important government services.
also in many cases if regulation is written to prohibit such practices, the government exempts itself from that.
For example, you can't use SSN to identify someone. Unless of course you were doing it before the prohibition was established. Apparently it's fine if you keep using it, forever.
I’m not sure it’s so much the have to be contracted out part, Aldi may not have in-house pavers either, as the contracting protocols and methods they are required to use. I think an honest, empowered government worker could find and supervise a modest construction project as well as an honest and empowered Aldi worker. But the government workers are not empowered.
The cost of a grocery store parking lot being closed can be easily quantified in terms of lost sales, while the cost of closing a short street or walkway is not as well-defined, and the cost is not borne by those in charge of the construction anyhow. So in the former, there's a clear and measurable incentive to get things done quickly, and in the latter, there's not.
Also: below pavements there are usually quite a lot supply lines as that's the only available space. All work there has to be done careful not to damage anything. On a larger parking lot however there is just a single power line for the lights and little sewage for collecting rain water, while most other area is free.
So my city runs along a highway. They did construction, closing 5 of the 7 north-south roads crossing that highway at the same time. It was either incredibly stupid, or a brilliant move to build a habit of doing everything local.
There's probably a good reason for it. Highway closures are always planned to have the least impacts possible. A lot of caltrans work happens on weekends or at 2am as such.
Absolutely, and added on to this is that cost is fairly proportional to labor hours (plus cost of rental equipment), so if it takes a lot longer to get done, it’s probably also costing a lot more money.
I don't know much about public works, but when you're hiring trades and subs for small residential projects, you pay extra to know they're going to show up and work on your project until it's done. If you want to minimize costs, you have to accept that it may be slow. They say they'll start on Tuesday, and they actually show up Friday. They do two days of a four day job, and then they disappear for a week. It's not because they're lazy. It's because they have different projects that are more or less lucrative to work on, and they generally prioritize the more lucrative ones.
"Stupid rules" for one person are what enable another person to live an independent life. The Americans with Disabilities (ADA) act has been law since 1990 and codifies mobility and access as civil rights in the US.
ADA does add to the costs of projects, but so does, say, safety code compliance. It's the law, and it exists for a good reason.
As for the example of a minor accessibility project costing $1.4M and taking 3 years, I would suggest that there is probably more to the story that helps explain the cost or the time.
Replacing curb ramps can mean relocating the curb cut, which can mean relocating the underground sensor loops.
Adding a beg button can mean upgrading or replacing the signal control module, which could mean replacing the housing if it's not large enough for the new module. (Audible-tactile buttons and controllers themselves cost $5-6k each, just for parts.)
Aside from that, the issue with ADA compliance costs isn't when a municipality or DOT pays for them. It's when they remove the crosswalk entirely because they decide compliance isn't affordable enough.
The rules are fine, the stupidity is latent and revealed:
1. New construction must meet ADA requirements.
2. Old construction can remain.
3. Repairing broken old construction requires meeting ADA requirements.
So between 2 and 3 you end up with broken old construction that cannot be repaired to "what it was" because repairs must meet ADA requirements.
Each step makes sense on its own, but combined they result in something worse (in particular) even though overall it works out better.
The local maximum of "fix it but don't improve it" is a problem, and the requirement for major reconstruction to be done to current codes is foundational to almost all building codes. Note that small repairs and routine maintenance don't activate this requirement - it's activated when major work is being done, and there is a percentage of total project cost cap to the requirements.
If the new local maximum is "well, we won't fix it at all then" - the usual building code solution is property maintenance codes that mandate repairs.
The buildings often get repaired/updated pretty quickly - it's the items like sidewalks that are under the purview of the government itself that "slip through the cracks".
What's the alternative that reaches eventual compliance everywhere on a shorter span than "wait for the grandfathered buildings to be bought and demolished" though?
A daily fine for everything noncompliant. Make the fine approximately proportional to the number of potential users impeded.
Then a popular crosswalk gets upgraded before a rural crosswalk that nobody uses anyway. An easy upgrade is done before a hard upgrade. Sometimes even new stuff might be built non-compliant if, for example, there are other substantial benefits that outweigh the fine.
Just burn the fine revenue. (Burning money is the inverse of printing money, helps reduce inflation, and means nobody has an incentive to maximize fines)
I have trouble imagining anyone convincing a city to 'burn revenue', even if it's a good idea in principle. Maybe the next best thing is applying it to a negative income tax so that it goes to the lowest-income residents.
Impose a supplemental property tax, increasing over time, on buildings out of compliance with current requirements, so that upgrade or replacement becomes comparatively more desirable vs. doing neither than it currently is.
Or, just have a fixed window to achieve compliance or the building is condemned.
Cool. Let’s start with NYC subway stations. Public infrastructure should be ADA compliant yet NYC permitting will hammer a small business for a toilet two inches out of compliance when the city itself has massive issues that are ignored.
As implemented ADA compliance requires that even trivial changes to a moderate complexity intersection require an engineering study at $300-500k, minimum.
There are other requirements as well relating to multimodal travel depending online the funding source.
All the while, we had an increasingly dangerous intersection with no visible crosswalks and outdated signals for years.
The stupid isn’t ADA, it’s compliance activity. Cities and towns cannot afford the engineers to meet the standards, so the Federal and State governments fund projects. So there’s no framework of best practices beyond the state standards - each project is a special snowflake.
ADA just forces better designs. Retrofits are costly.
> As for the example of a minor accessibility project costing $1.4M and taking 3 years, I would suggest that there is probably more to the story that helps explain the cost or the time.
Committees, political turf wars, getting funding for the project through grants (that are complicated to apply for, that's why you need a dedicated bureaucrat to do it!). Then there's union rules since construction workers from the city are government employees.
That's half a million in employee's salaries right there and not a single concrete steps has been taken yet!
I'm not going to argue that it isn't necessary or right. But it absolutely costs more. A bathroom stall, for example, literally takes up more space, and that costs. A ramp and stairs takes up more space, materials and time and that costs.
There are things which are right to do, but disingenuous arguments to support them aren't helpful.
IMO ADA is probably a net harm at this point. When I look at the sidewalks here in socal, where 50 years ago they planted these rooty trees that make the region look like a tony hawk game today versus something you'd be able to get a wheelchair across, I'm starting to suspect its all ironically ADA's fault. They put the costs to meet their criteria so high that cities find it a better bet to just absorb lawsuits and not do anything than to actually make their cities manageable for disabled people. We need a more practical ada, that isn't nearly so costly to implement, so cities don't find it financially sensible to just sit on their hands forever.
A few years ago, my daughter (a young person) ended up in a wheelchair and/or on crutches for several weeks while recovering from surgery. It is moments like that when you realize that the scope of beneficiaries of the ADA is: all of us
Put differently, if you live long enough, you can pretty much guarantee that you will benefit from the facilities the ADA requires at least once (and possibly for a more extended period than my daughter did).
It all looks like extra cost for little benefit until you can see it through the eyes of someone who actually needs this stuff, at which point it becomes at least a valuable and at best a life-enabling set of features.
And the chances are good that you will be one of the people, assuming you live a long and healthy life.
There's nuance you are missing here. Have you ever been in LA county where 50 years ago city planners made terrible choises regarding sidewalk trees? Basically the sidewalks today look like a cardiogram on some stretches. To the point where they are totally impassable for disabled people, and the city is often sued by disabled people due to these sidewalks.
Why haven't they been fixed? Why does the city continue to be cruel to disabled people year in and out, content to absorb the lawsuits from the few with means to bring them up? It's probably a simple case of those lawsuits being a lot cheaper than actually fixing the sidewalk to the standards the sidewalk is supposed to be fixed. This is an example of a regulation that was meant to help people (building nice sidewalks with various characteristics), but in the end the regulation was written with no understanding of the cost of these changes, or how they might stack up against the cost of doing nothing at all, so its an example of a bad regulation that should be changed so it can actually help people.
However there should be a balance. Look at parking lots — the ratio of disabled spaces to standard spaces is not the same ratio as disabled people to non-disabled people.
And sometimes it’s ridiculous: drive through ATMs with braille for instance. Private motel swimming pools requiring wheelchair lifts. That extreme additional cost means that many motels just won’t have a swimming pool at all — so everyone is worse off. But you can’t charge disabled people a swimming pool surcharge since that discriminatory. So it raises costs for everyone. By the way, I am referring to private building codes, not taxpayer-funded projects like sidewalks.
Other things that can add cost fast are having too many elevators. I've been in 4 story buildings with 4 separate elevator shafts before that didn't have nearly the population or staff to ever get more than two moving at once. That just means higher rent to make a return on those 4 shafts mandated by some ordinance, which probably hurts you especially if you can't work and are living cheaply on disability. A lot of ordinances have been written with no understanding of how it would look in practice or the costs to implement them in the market and what that will mean for people who have to rent these units.
Reminds of the Navy Pier Flyover in Chicago, a half-mile long bicycle/pedestrian bridge that took seven years and $64 million to construct[1].
Not saying that this project was simple by any means, but why did it take seven years to finish? For comparison, the Sears Tower, arguably Chicago's most iconic building and at one time the world's tallest building, only took four years to complete.
I imagine some aspects of building horizontally might not scale as well as vertical construction.
For instance, it looks like the Navy Pier Flyover touches the ground in many different places along its half-mile length, each of those places will have different junk buried there already, unique challenges and access restrictions, and new ownership/usage agreements.
With the skyscraper you dig one messy hole then stack and connect layer after layer of engineered rectangles.
In the mid 19th C Brunel built a ~100 mile long railway line in 5 years, the route was dug out by hand with picks shovels and wheelbarrows. It's a marvel of engineering with a route alignment that would allow trains to travel at well over 100mph. However, over a hundred people were killed just digging one of the tunnels on the route. When the Sears Tower was built there were probably still guys walking along the bare girders with no safety harnesses. So that's probably part of it.
The flyover is free. The sears tower collects rent. If you pay for fast construction with the tower, that means less time not collecting rent which might work out better. If you pay extra to expedite the bike bridge, whats the point? Its a cost center for the city either way. Getting it done faster just wastes the public's money giving them the same thing they would have gotten anyhow.
> It would be interesting to compare prices of privately funded projects vs publicly funded ones, both in terms of cost, over-budget amounts and time needed to complete the project.
Take for example the Munich "Luise Kiesselbach Tunnel": it finished early and under budget, and to my knowledge in its seven years of operation there was no apparent case of cutting corners or botched work. And now one may ask, how is that possible in the country that produced infamous disasters such as the BER airport, the Elbphilharmonie or the #2 S-Bahn tunnel under Munich?
The answer is, the funding makes no difference - the oversight of the funders over the construction process does. When you have to hire external consultants for each project, where the people keep on rotating, instead of having expert knowledge in-house that answers to you, you'll always end up with worse quality - and the external consultants may not have the political standing to override pushes for changes, which tend to be a massive issue in government-funded projects.
Proper oversight and project leadership (as in, it goes beyond "call McKinsey and have them send over a couple of seniors") can save costs at many parts of the process:
- catch politicians' bullshit before planning (plans that, say, lead directly through a nature reserve) or during construction (e.g. a new politician comes in and wishes some random shit to change just to be able to brag "I did something") and intervene
- check bids on tenders if they are actually plausible or if they are so far under a realistic budget that there will be massive problems later on (e.g. the company threatening insolvency to demand re-negotiated higher rates)
- check impediments if they are actually legitimate or if they are overblown and resolve them
- keep vendors accountable to milestones
You can forget about the first two points, which are the most critical, for external consultants.
Private meet budgets way more often, because there's a finite amount of money. Lenders sign term sheets detailing exactly how much money they'll lend and on what terms, so the developer has precisely that amount of money to spend. It's a big deal to need more funds, because it requires a ton of legal work, probably new banks, new agreements, new terms, etc - all of which might conflict with the existing funding structure.
I feel like some of the issue/reason is because the government has to cover every single possible scenario. “Time to make a road. We better do a three year environmental study to make sure this doesn’t hurt the native turtles.”
I’m all for taking care of the environment, but it feels like there’s a lot more “let’s get community and environmental input” than we had in the past (for better and for worse).
The article/video addresses this. You have to be careful that images of past efficiency aren't just examples of externalizing costs.
> There is no perfect project that makes everyone happy. So, you end up making compromises and adding features to allay all the new stakeholders. This may seem like a bunch of added red tape, but it really is a good thing in a lot of ways. There was a time when major infrastructure projects didn’t consider all the stakeholders or the environmental impacts, and, sure, the projects probably got done more quickly, efficiently, and at a lower cost (on the surface). But the reality is that those costs just got externalized to populations of people who had little say in the process and to the environment. I’m not saying we’re perfect now, but we’re definitely more thoughtful about the impacts projects have, and we pay the cost for those impacts more directly than we used to. But, often, those costs weren’t anticipated during the planning phase. They show up later in design when more people get involved, and that drives the total project cost upward.
This is a huge time sink for transit projects. For example, the sepulveda rail project in LA has like 6 alternatives right now going from heavy rail, monorail, above and below grade, a few different routings. Each requires careful study as if you were going to commit 100% to it, millions of dollars probably in expensive engineering labor, even though realistically only 1 alternative (the heavy rail offering the fastest end to end time) is rumored to be considered. Still, the agency got proposed by this monorail maker, so to act in good faith they have to claim they did their due diligence and came up with these plans showing that yes, in fact, the monorail is inferior to the heavy rail alignment. If you have any community groups opposing any aspect of the project, prepare to spend 2 years refining further useless alternatives to satisfy each and every nitpick. Both community groups (and these are not representative of the community, but more the loudest and angriest with the most time to spare of the community) and companies exploit this good faith planning to extend timelines, increase costs, and often dilute the end product to the detriment of the public that this "community engagement" process is supposed to protect.
That (re-paving 20-30 meters of a walkway) is a tiny project, it has nothing to do with the complexities of large projects (which are the theme of the article).
On these tiny projects, usually the difference between what a public administration and a private can do is only the bureaucracy involved which is a lot for the public and very little for a private firm.
Others have mentioned this already but there are plenty of regulations that are relevant just for hospitals because of what they are. For example, the bulk of the historic LA county hospital is vacant, because the building is no longer up to the seismic standards required by the state for a hospital. When you have a big earthquake, you probably want the hospital to be the very last building to fall in the city. The building, however, is used for things like offices or storage because these uses don't have the same standards as a hospital.
It is very difficult to compare different (complex) projects (independently from whether they are public or private) because - Captain Obvious speaking now - they are different (not only the actual thing that is built, also the quality of the project and its engineering, the chosen contractor and a lot of other factors come into play, your new examples add two completely different countries and two completely different periods of construction).
Construction times are even trickier, as they may also be influenced by other factors (authorizations/approvals or changing norms as an example).
A (typical) appropriate construction time for a (large/complex) project is around 4-5-6 years, 3 years means they were fast (in Chicago , in the '70's) 10 years means they were slow (in Slovenia, in more recent years), but otherwise there is no way to make senceful comparisons.
It can also depend on the depth of the bureaucracy; in my little town the town owns a pothole/miniature paving setup, and fixes their own minor things; they don't have to contract out with a company to get it done.
A (larger) town nearby they contract, and everything gets pretty bad before they sign a huge contract, and the company works for a year and fixes everything in one long go.
I've seen this with roads. 1/2 mile closed or under construction for the whole summer. And then 4 miles of another road seems like they do it in 2 weeks.
Thats sometimes because the teams are not in sync because there's often more work than labor or budget. sewer work has to happen but the sewer team is busy with 10 other streets that will be completed first, so the paver team has to wait. It's not like work isn't being done, its more like work is being done elsewhere and you aren't there to see it.
A possible explanation for that situation is that some utility below the pavement needs urgent work, so the pavement is broken open by a utility contractor to do that work, and then they don’t repave it properly … because they’re not allowed to. If that utility contractor did the final repaving they would be taking that work from other contractors which would violate laws that force government to open up contracts fairly. So, a bidding process is started to select the contractor that will repave, and that process takes months.
I work for government myself and have often been frustrated by the inefficiency forced upon us by well-intentioned but misguided legislation. Also, you learn pretty quickly that some contractors play the game better than others and will win one government contract after another, not because they will do the job better, but because they understand the rules around bidding better.
Madrid Terminal 4 cost about half what Heathrow Terminal 5 did. Same architect. Both billion € projects. Both complicated sites next working airports. Similar sizes and infrastructure. Madrid T4 was a public project and Heathrow T5 was a private project. So I think it's more to do with the contracting culture of a country than wether it's a private or a public project. With the UK megaprojects there's about 5-10 project manager guys who rotate between them. It's quite a small group of people who all know each other. A lot of the people working on HS2 now would have been junior project mangers on Heathrow T5 or Crossrail in the past; they bring the culture with them between projects. I think UK construction culture is quite slow and bureaucratic compared to say France or Spain, but not as bad as the US which is on another level.
The scale that government manages, even your small suburban town or whatever, is much larger than an aldi store. Chances are there's more work than money or labor which is why things take as long as they do more than anything. It's not like a private company would manage this better, when the mindset of the american capitalist is to ditch their lifeboats to appear to sail faster.
I see many public locations, where a short street or even a walkway is closed for months, because they need to repave literally 20-30 square meters of a walkway, while companies such as Hofer (Aldi) manage to repave their parking yard in a few days, while keeping half of it still open for customers.