Why are infrastructure projects not getting cheaper?

Every now and again my town wrestles with the idea of extending a train line a mile or two, or adding a station to its paltry underground rail network. Always it seems to be too expensive. So when I think of some of the massive underground networks in places like London, Paris and New York I wonder at the business case that supported their development. How did they get those networks built?

Back then labour would no doubt have been cheaper, but technology was archaic, tax revenues less, and the population to earn a payback on those investments significantly smaller. So now we have better engineering, better construction technology, significantly larger cities, teeming hordes of folk with money in their pockets, and global capital markets to fund this stuff.

So how come these projects stacked up then, but are unworkable now?

If we’re talking about places like London or New York (specifically Manhattan), those places already counted their populations in the millions, at a time before automobiles came into common use. (In fact, Manhattan had many more people in 1900 than it does today.

I can’t claim to know what these projects cost 100 or more years ago, but I do think anti-transit cultural attitude that prevailed in most of the United States for most of the 20th century has probably been a significant factor in how expensive these projects are perceived to be.

In terms of technology I can’t help wonder why that part of it is so expensive.

In years past, there were far fewer regulations, and much simpler designs. In many respects, infrastructure is more expensive for many of the same reasons medicine is more expensive; people now demand the best, tolerate far less risk, and seek to reduce any and all liability. All those things come at a very high cost.

For example, around 100 people died building the Hoover Dam. Can you imagine any modern construction project claiming that many lives. Just paying off all the families would cost several million, and that doesn’t include all the stoppages and delays that would have likely arisen as a result.

Additionally, modern projects in the US tend to cost more today relative to other countries for a few reasons:

  1. Inconsistent government funding
  2. Too much red tape
  3. Government contractors who are incentivized to not contain costs
  4. Relatively high labor costs
  5. High land costs
  6. Time delays due to NIMBYism, law suits, and regulatory blockages

What I’m about to offer sounds flippant, but is actually an important factor:

Life used to be cheap.

As a railroad historian, I can tell you of many railroad projects where locals were drafted for a week’s worth of digging, ground clearing, track laying, culvert-building, trestle construction, etc. and were paid with (ultimately worthless) shares of the company. Many railroad companies in the South, before the Civil War, “rented” the use of slaves from their owners. People died falling off of bridges under construction, crushed by falling trees, and a multitude of other accidents on the job. As one song composed in the aftermath said, “Any Mick’ll do, any black, any Jew, any poor wee bugger who’s not like you…” It was all over, from sweatshops to coal mines to lumbering to railroads to bridge construction to tunneling to high-steel construction.

Today? Environmental impact statements, stringent safety requirements by OSHA and state officials, engineering requirements for safety factors of 3 to ten, extra-wide shoulders where they used to get away with a one-lane bridge with no shoulders, requirements for American content in the infrastructure or materiel, “set-asides” for minority and women contractors, requirement for in-state supply sources, numerous public meetings to seek approval for the proposals, union pay scales…

One classic example I run into all the time in historic bridges, another interest of mine: The covered bridge constructed in the 1800s for a sum as little as the high three figures ($20-30K today, adjusted for inflation), and at most the low five figures in the late 1800s, which is either rehabilitated or replaced in kind today (as a historic attraction) for prices starting at about $1 million. Put in perspective? Those simple open highway bridges across a simple stream? Call them about a million dollars per two-lane 100’ span.

There’s now significant overhead, and also significant profit-taking by the few companies considered qualified to do the work.

Start with the engineering, which even though computerized is now checked, cross-checked, and then value-engineered. There are the environmental impact statements, the archaeological certifications, the prevailing unionized wage laws, the DBE setasides, the public outreach programs, the ADA requirements, and the percent for art. The local utilities takes the opportunity to lard their own overhead onto the utility relocations. And there are so few qualified general contractors for transit projects that they don’t seem to use their sharpest pencils.

The results have become absurd. In Chicago, we recently built a ground level station (at Oakton) on vacant land in a suburb. Ground-level. No elevators or escalators or even staircases. So, let’s see. That requires two concrete slabs and a steel frame over the top to hold a simple roof. Gutters, signage panels, and lights. The station cost $20 million! For comparison, an entire Walmart typically costs about $14 million to build. Morgan cost $35 million. The new Cermak L station will be $50 million.

There is also a whole lot of other infrastructure ‘interference’ than there used to be. A few years ago, several of us from work spent lunchtime watching workers tearing up the street & digging t install upgraded utilities. There was an incredible array of gas, sewer, electrical, water, drain pipes, telephone, cable, traffic signal wiring, etc., etc. running under the street. The workers often spent time consulting old maps & ledger books that supposedly described what lines were where – most of that documentation seemed to be outdated or missing entirely. At least a couple of times they had big consultations with people from the city water dept, the city sewer dept, the phone company, a couple of cable companies, the natural gas company, etc. trying to see if anyone could identify a conduit they had found that was not on any f the maps. (One time, they decided that an unknown line was leftover telegraph wiring! Unused, so safe to cut it.)

So it’s a lot harder to tunnel underground than it used to be.

Also, re: the OP – what makes you think those companies that built the early projects like the London underground survived? From my reading, many of them went bankrupt, and the assets were bought up by somebody else – often the government, since the need for this public utility had been demonstrated.

I’m curious, can you point to any actual research on whether infrastructure projects in the US really do cost more than other developed countries?

Basically, I think FLyingScotsman nailed it. Everything used to be cheaper. The engineering costs alone are through the roof nowadays, and construction workers get middle-class wages, not poverty subsistence. Things are over-engineered; look at the NYC subway - it’s bare iron beams (rusting to crap in places) and platforms so narrow it’s a wonder whole crowds aren’t pushed into the tracks in rush hour. Modern subway? They probably have to do a traffic study on anticipated volume, then the whole station is a work of art and a massive construction. Original tube stations in London had wooden backing for the tiles (remember the big fire a decade or so ago?) The heavy equipment used in lieu of cheap labour costs a lot to rent.

Not to mention environmental studies, insurance, worker’s compensation baord coverage, and a ton of other expenses that were never even contemplated in the early 1900’s. That NYC subway was simple cut-and-cover following the streets most of the time. London had soft gound and used boring (deep below the foundations) for a lot of its tube system.

Heck, automobile companies used to churn out new auto designs a dime a dozen - now a completely new design is a major billion-dollar piece of engineering. As for aircraft companies? Each new model is make-or-break for some of the biggest companies in the world. Sapcecraft and military aircraft? Billions! We over-analyze and over-engineer everything. (And things still fail or get recalled).

And it’s not just the USA, it’s every first world country.

I remember reading, years back, when things were cheaper, about a highway on-ramp built for I-66 outside Washington, DC. Ultimately the project came to naught, as it was decided not to widen I-66 at that point, and the ramp was wasted. The ramp, essentially a large concrete wedge, cost something like $60 million. And it would be more today.

Another modern-day example is the SF-Oakland Bay Bridge.

Original construction in the 1930s - $77M. Not sure how much this translates to in today’s dollars.

Eastern span replacement 2002-2013 - $6.3B (and it does not go all the way to SF).

BLS says that $77M in 1930 is about $1B today.

http://www.bls.gov/data/inflation_calculator.htm

So, about 6x the price and going only 2/3 the way across the bay.

I think another thing that drives up costs, at least in this case, and probably others, is aesthetics. The mayors of both SF and Oakland (as well as other locals) demanded more aesthetically pleasing/dramatic designs when other, less expensive, options were on the table. Of course, leaving the bills to residents long after they are out of office.

Well we can’t use disposable Chinamen anymore. So there’s that.

I’m not sure if you can really make an apples to apples comparison. A lot of infrastructure projects are simply much bigger now. Projects like Boston’s Big Dig, NYCs 2nd Avenue Subway or LIRR East Side Access extension are massive projects. And they have to be built underneath a major city without shutting it down. They are also getting set to replace the Tapenzee Bridge. Well they aren’t just going to replace it with the exact same bridge. They will need to put a much bigger bridge with greater traffic capacity in it’s place.

I don’t know what town the OP lives in, but buildng a rail extension may not necessarily be cheaper or more expensive than it was in the past. But the town may simply not believe the benefit outweights the cost.

Tappan Zee.

They were going to hire a Canadian bridge contractor, but they kept referring to the project as the Tappan Zed.

msmith527 mentioned the Big Dig. One thing that certainly increased the cost was the need to keep the old highway (elevated) open until the new one (buried) was ready. One of the first things they did was to build new supports and transfer the weight of the old highway onto them, then cut the old ones so they could dig where they had been.

Replacing that span on the Bay Bridge meant taking the old span out, and doing it with as little impact as possible. I don’t know how much that contributed to the cost, but it was something.

And the builder’s just found a bunch of faulty “bolts” that is going to cost 1 million or more to fix… Why isn’t the “bolt” company fixing them for free? Unless they were build to print, then they are not faulty?

Hasn’t the price of steel risen a lot faster than general inflation?

I saw something on Discovery or NatGeo, not long ago, about an addition to the NYC subway system, currently in progress. The sandhogs, so they said, are getting $1K per day, which does seem to stagger the imagination a bit.

According to this article it’s more like $100,000 a year. And that’s probably at the top of the salary range. Which isn’t that surprising. They aren’t a bunch of Coolies digging tunnels for the Transcontinental Railroad. It’s a highly technical and specialized union job in one of the most expensive cities in the country.

That’s a very significant discrepancy; I was skeptical of the $1000-per-day figure to begin with.