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Lack of accountability is an important, perhaps even the most important, part of the problem: With private projects if a project is overdue or if it is exceedi

Lack of accountability is an important, perhaps even the most important, part of the problem: With private projects if a project is overdue or if it is exceeding the originally projected costs either of the parties will be held accountable, either through civil liability enforced by a contract or in simple economic terms. With public projects there generally is no such accountability. If a public project is delayed and it costs more than planned the public purchaser (the state, city, you name it) - and by extension taxpayers will simply cough up the money, put up with the inconvenience of yet another unfinished and out-of-repair piece of infrastructure and move on. If we want to change that creating the right incentives is only one side of the coin. The other side is holding both civil servants and politicians accountable for the public projects they're responsible for. Given the amount of money typically involved in these projects personal financial liability wouldn't be practical. Disciplinary consequences for gross negligence or the outright nepotism rampant with that sort of projects shouldn't be out of the question though. I find it unacceptable that civil servants and politicians who demonstrably and deliberately waste tax money continue to climb the ladder with apparently no care for the damage they cause.

matt4077 9y ago
I've seen quite a few articles and studies that say that government projects aren't actually more expensive than private projects. The impression is created because (a) the media will report on a government-run project over budget because they actually get that data (unlike private cost overruns), and the public cares more about these projects. And, (b), government projects are more likely to start with an initial estimate that is too low, because that's beneficial to getting a project approved. Speaking to your argument about accountability: Do you think the CEO of GE is really more afraid of the shareholders than the mayor of some city in Kansas? Politicians are plenty accountable. And for something like the federal government, projects are managed by employees, who are managed by agency heads. The latter get a budget and have to work within it. Say you're the head of the National Park Service: If your new visitor centre at Yellowstone gets swallowed in a geyser, will you not face exactly the same consequences as someone at Disneyland tasked with building a new ride?
- TeMPOraL 9y ago
  > Do you think the CEO of GE is really more afraid of the shareholders than the mayor of some city in Kansas? Politicians are plenty accountable. This actually suggests the opposite - that both politicians and CEOs are not accountable enough!
- BjoernKW 9y ago
  I don't think government projects being more expensive than private projects simply is an impression created by the media. Sure, private project failures aren't bandied about as much (though sometimes they still are, especially if a failure simply is too spectacular not to be talked about), simply because they often aren't interesting to the general public. However, save for downright cover-ups project failures are usually known to the stakeholders. Government projects starting with too low an estimate is a well-known but deeply unethical practice. Everyone involved knows that the finished project will be above budget yet there's a silent agreement to not say anything because once the public realises there's a problem it's already too late to cancel the project and the project has to continue whatever the final costs may be. That's the common argument anyway. It's a bit like the 'too big to fail' fallacy. So, we keep throwing good money after bad because we're afraid of the consequences of admitting failure. It's exactly that kind of unethical behaviour that should be punishable by disciplinary action in order to disincentivise civil servants from going down that road in the first place. Finally, I suppose the larger the organisation the more lack of accountability becomes a problem. You see that with larger companies where projects often regularly are over time and budget as well. However, I still think that those in leadership positions in larger private organisations are more accountable. While there are misaligned incentives in these organisations, too (like CEOs getting a bonus or a generous severance package even though they performed badly) there are two crucial differences here: A company goes out of business if it runs out of money. It's also much easier to hold you both civilly and criminally liable if you overstepped your boundaries. When was the last time a state or city went out of business due to lack of funds? When was the last time a politician actually did time for embezzling and deliberately wasting tax money?
  - bluGill 9y ago
    The problem is time an materials - when the contractor is ethical - is the cheapest option. Anything else means that someone needs to overbid and make "excessive profits", or risk they underbid and have to make up millions of dollars to finish the contract. However ethical is a key part of this, and we know from experience that not everyone is ethical and we have no way of knowing who will be until it is too late. They get around this by carefully fixing the work to be done - which seems like a great idea, but in construction there are always something you don't know about until you get there. What happens is they bid for standard dirt work and when they start moving the dirt they go back and say "We bid to dig down 3 feet as standard, but there is a sink hole here: do you want us to complete the job as bid knowing the road will collapse there within a week of of finishing or pay extra to fix the sinkhole" (there are millions of variations of this). Of course the only sane thing to do is pay for the design change so it is done right.
Spooky23 9y ago
What did you use to develop this opinion? I've worked in both private sector and government. As long as a competitive bidding process is used, government actually gets better outcomes from a cost POV, especially for infrastructure style projects. One big difference that leads to distorted perceptions is accounting standards. Government is mostly funded on an appropriation basis and uses cash accounting. Private sector uses GAAP and does all sorts for wacky bullshit to reduce tax burden. When I sold stuff to a big fortune 50 company, they would roll everything they could into leases -- we would literally buy cases of toilet paper when selling them technology equipment because it would push the booking of cost out. When I worked for a company like that we would do similar hijinks to book revenue now and push out liability until after the exec bonus periods.
- bearjaws 9y ago
  I agree, having only ever worked in non-government jobs, I have seen almost no accountability for my entire career. In fact more often than not, if the company elects to fire someone over a mistake, missed deadline, etc, it has been the wrong person, because management refuse to take any blame. Additionally, at every privately held company i've worked at, the owner would have 2-10 friends who he kept onboard despite overwhelming incompetence or them refusing to do work entirely. I don't get where the idea that government is inefficient and private sector is.
  - prawn 9y ago
    Heard a story recently from the private sector where an employee had been secretly sleeping on the job. One day, his scheme was disrupted, not because he was found out, but because someone else was already sleeping in the secret room he'd been using and he had to find somewhere else. Another time, they discovered someone sleeping on the job in a large bin of soft rags, covered in towels. I find this sort of thing absolutely incredible. Good luck sleeping on the job in small business - you would not last a day. I think in any large organisation though (public sector included), waste is somewhat inevitable.
kalleboo 9y ago
That still doesn't explain why other countries do it better/cheaper. There's no more accountability there (often even less in some countries).
PaulHoule 9y ago
The people at the Olkiluoto construction site in Finland where they are building the first (and probably the last) EPR nuclear reactor do not seem so upset about the delays and cost overruns... More money for them.
willyt 9y ago
>With public projects there generally is no such accountability. Public projects use construction contracts just like private ones, they are just as accountable to their clients in this sense. The difference between property developers and politicians as clients is that developers can choose when, where and and what to build to optimise costs, whereas with public projects politicians are optimising for votes. Politicians very publicly decide to commit to a project based on an initial estimate and then order the civil service to procure it. Changes in specification that are big enough to significantly affect cost have to be approved by the political process which takes ages and is unpredictable. Different politicians get elected half way through the process and they will try to make last minute changes to designs and specifications. The later that changes are made to specifications the more they cost. If you make multiple late changes it causes massive confusion and it is extremely complicated and expensive to reconcile the redesign with all the existing information. Therefore this will cause cost overruns which can get out of control when the rushed integration of new features causes unanticipated consequences. Unfolding events affect public projects more. The Scottish parliament and Welsh assembly buildings both had last minute design changes to incorporate airport style security after 9/11. The Welsh assembly introduced a TV studio and broadcast lighting into the specification very late on. The Scottish parliament added a whole office block with offices to accommodate 130 MSPs and their staff. Of course those projects cost a lot more than the initial estimates given when they were first announced to the public, and the opposition politicians made as much political capital out of this as they could by comparing the original estimates to the final cost without mentioning the fact that a different thing was built than was specified at the beginning. You can be sure that the politicians that opposed the cost overruns in Wales enjoy showboating on TV though, and you can be sure that the Scottish MSPs all enjoy their lovely closed plan offices. Major privately financed projects can be just as bad though, believe me I have worked on a few. The key to a well run project is a quick and efficient decision making process. My theory is that because both the UK and the USA are effectively two party states they tend to suffer a lot more from a lack of a political consensus on whether it is a good idea to build something and how it is going to be done. This causes delays and inefficiencies because elections have much more potential to upset a project than in countries that govern by a coalition of consensus. Lastly, politicians will spend whatever they can get hold of if will get them votes and it's not coming out of local taxation or they can hide the capital expenditure in a different budget by using PFI procurement.
ubernostrum 9y ago
With private projects if a project is overdue or if it is exceeding the originally projected costs either of the parties will be held accountable The vast corpus of literature on things like managing large corporate projects suggests that private projects fail at least as much and have at least as much trouble ensuring accountability.
tmaly 9y ago
I think part of this lack of accountability is how some of these larger projects are funded. In Connecticut, they had a busway that was created on an interstate highway. The total was 570 million of which the federal government provided 400 million. That 400 million was added to the nation debt. The reasoning why this project continued despite its costs was because the federal government had already approved the funds.

matt4077 9y ago

I've seen quite a few articles and studies that say that government projects aren't actually more expensive than private projects. The impression is created because (a) the media will report on a government-run project over budget because they actually get that data (unlike private cost overruns), and the public cares more about these projects. And, (b), government projects are more likely to start with an initial estimate that is too low, because that's beneficial to getting a project approved. Speaking to your argument about accountability: Do you think the CEO of GE is really more afraid of the shareholders than the mayor of some city in Kansas? Politicians are plenty accountable. And for something like the federal government, projects are managed by employees, who are managed by agency heads. The latter get a budget and have to work within it. Say you're the head of the National Park Service: If your new visitor centre at Yellowstone gets swallowed in a geyser, will you not face exactly the same consequences as someone at Disneyland tasked with building a new ride?

TeMPOraL 9y ago
> Do you think the CEO of GE is really more afraid of the shareholders than the mayor of some city in Kansas? Politicians are plenty accountable. This actually suggests the opposite - that both politicians and CEOs are not accountable enough!
BjoernKW 9y ago
I don't think government projects being more expensive than private projects simply is an impression created by the media. Sure, private project failures aren't bandied about as much (though sometimes they still are, especially if a failure simply is too spectacular not to be talked about), simply because they often aren't interesting to the general public. However, save for downright cover-ups project failures are usually known to the stakeholders. Government projects starting with too low an estimate is a well-known but deeply unethical practice. Everyone involved knows that the finished project will be above budget yet there's a silent agreement to not say anything because once the public realises there's a problem it's already too late to cancel the project and the project has to continue whatever the final costs may be. That's the common argument anyway. It's a bit like the 'too big to fail' fallacy. So, we keep throwing good money after bad because we're afraid of the consequences of admitting failure. It's exactly that kind of unethical behaviour that should be punishable by disciplinary action in order to disincentivise civil servants from going down that road in the first place. Finally, I suppose the larger the organisation the more lack of accountability becomes a problem. You see that with larger companies where projects often regularly are over time and budget as well. However, I still think that those in leadership positions in larger private organisations are more accountable. While there are misaligned incentives in these organisations, too (like CEOs getting a bonus or a generous severance package even though they performed badly) there are two crucial differences here: A company goes out of business if it runs out of money. It's also much easier to hold you both civilly and criminally liable if you overstepped your boundaries. When was the last time a state or city went out of business due to lack of funds? When was the last time a politician actually did time for embezzling and deliberately wasting tax money?
- bluGill 9y ago
  The problem is time an materials - when the contractor is ethical - is the cheapest option. Anything else means that someone needs to overbid and make "excessive profits", or risk they underbid and have to make up millions of dollars to finish the contract. However ethical is a key part of this, and we know from experience that not everyone is ethical and we have no way of knowing who will be until it is too late. They get around this by carefully fixing the work to be done - which seems like a great idea, but in construction there are always something you don't know about until you get there. What happens is they bid for standard dirt work and when they start moving the dirt they go back and say "We bid to dig down 3 feet as standard, but there is a sink hole here: do you want us to complete the job as bid knowing the road will collapse there within a week of of finishing or pay extra to fix the sinkhole" (there are millions of variations of this). Of course the only sane thing to do is pay for the design change so it is done right.

Spooky23 9y ago

What did you use to develop this opinion? I've worked in both private sector and government. As long as a competitive bidding process is used, government actually gets better outcomes from a cost POV, especially for infrastructure style projects. One big difference that leads to distorted perceptions is accounting standards. Government is mostly funded on an appropriation basis and uses cash accounting. Private sector uses GAAP and does all sorts for wacky bullshit to reduce tax burden. When I sold stuff to a big fortune 50 company, they would roll everything they could into leases -- we would literally buy cases of toilet paper when selling them technology equipment because it would push the booking of cost out. When I worked for a company like that we would do similar hijinks to book revenue now and push out liability until after the exec bonus periods.

bearjaws 9y ago
I agree, having only ever worked in non-government jobs, I have seen almost no accountability for my entire career. In fact more often than not, if the company elects to fire someone over a mistake, missed deadline, etc, it has been the wrong person, because management refuse to take any blame. Additionally, at every privately held company i've worked at, the owner would have 2-10 friends who he kept onboard despite overwhelming incompetence or them refusing to do work entirely. I don't get where the idea that government is inefficient and private sector is.
- prawn 9y ago
  Heard a story recently from the private sector where an employee had been secretly sleeping on the job. One day, his scheme was disrupted, not because he was found out, but because someone else was already sleeping in the secret room he'd been using and he had to find somewhere else. Another time, they discovered someone sleeping on the job in a large bin of soft rags, covered in towels. I find this sort of thing absolutely incredible. Good luck sleeping on the job in small business - you would not last a day. I think in any large organisation though (public sector included), waste is somewhat inevitable.

kalleboo 9y ago

That still doesn't explain why other countries do it better/cheaper. There's no more accountability there (often even less in some countries).

PaulHoule 9y ago

The people at the Olkiluoto construction site in Finland where they are building the first (and probably the last) EPR nuclear reactor do not seem so upset about the delays and cost overruns... More money for them.

willyt 9y ago

>With public projects there generally is no such accountability. Public projects use construction contracts just like private ones, they are just as accountable to their clients in this sense. The difference between property developers and politicians as clients is that developers can choose when, where and and what to build to optimise costs, whereas with public projects politicians are optimising for votes. Politicians very publicly decide to commit to a project based on an initial estimate and then order the civil service to procure it. Changes in specification that are big enough to significantly affect cost have to be approved by the political process which takes ages and is unpredictable. Different politicians get elected half way through the process and they will try to make last minute changes to designs and specifications. The later that changes are made to specifications the more they cost. If you make multiple late changes it causes massive confusion and it is extremely complicated and expensive to reconcile the redesign with all the existing information. Therefore this will cause cost overruns which can get out of control when the rushed integration of new features causes unanticipated consequences. Unfolding events affect public projects more. The Scottish parliament and Welsh assembly buildings both had last minute design changes to incorporate airport style security after 9/11. The Welsh assembly introduced a TV studio and broadcast lighting into the specification very late on. The Scottish parliament added a whole office block with offices to accommodate 130 MSPs and their staff. Of course those projects cost a lot more than the initial estimates given when they were first announced to the public, and the opposition politicians made as much political capital out of this as they could by comparing the original estimates to the final cost without mentioning the fact that a different thing was built than was specified at the beginning. You can be sure that the politicians that opposed the cost overruns in Wales enjoy showboating on TV though, and you can be sure that the Scottish MSPs all enjoy their lovely closed plan offices. Major privately financed projects can be just as bad though, believe me I have worked on a few. The key to a well run project is a quick and efficient decision making process. My theory is that because both the UK and the USA are effectively two party states they tend to suffer a lot more from a lack of a political consensus on whether it is a good idea to build something and how it is going to be done. This causes delays and inefficiencies because elections have much more potential to upset a project than in countries that govern by a coalition of consensus. Lastly, politicians will spend whatever they can get hold of if will get them votes and it's not coming out of local taxation or they can hide the capital expenditure in a different budget by using PFI procurement.

ubernostrum 9y ago

With private projects if a project is overdue or if it is exceeding the originally projected costs either of the parties will be held accountable The vast corpus of literature on things like managing large corporate projects suggests that private projects fail at least as much and have at least as much trouble ensuring accountability.

tmaly 9y ago

I think part of this lack of accountability is how some of these larger projects are funded. In Connecticut, they had a busway that was created on an interstate highway. The total was 570 million of which the federal government provided 400 million. That 400 million was added to the nation debt. The reasoning why this project continued despite its costs was because the federal government had already approved the funds.