5 ms·

The idea of having Boring Company pay for the construction and then reap the profits strikes me as a really great idea. When the government pays for constructi

by apeace 8y ago

The idea of having Boring Company pay for the construction and then reap the profits strikes me as a really great idea. When the government pays for construction, the contractors don't have a strong incentive to actually finish the project. They'll keep getting paid no matter how long it runs over or how over-budget it goes. But in this situation, Boring Co won't make any money unless and until they get it up and running. I know nothing about this. Has this been done successfully before? What are the potential downsides I'm not thinking of?

nickik 8y ago
> The idea of having Boring Company pay for the construction and then reap the profits strikes me as a really great idea. We could do what all normal business does for infrastructure. Revolutionary idea. But it is a good idea. Often private mass transportation is illegal. This seems to be a hybrid model, I don't quite understand what this project entails in terms of obligations by both sides. The downsides might be that they go bankrupt with a half finished tunnel and then the government has to either put in money to finish the project or start a new project.
- deleted 8y ago
  [deleted]
- ComradeTaco 8y ago
  There is also the possibility that a poorly engineered or rushed tunnel could destablize the foundations of structures above.
  - nickik 8y ago
    Extremly unlikely with such a small tunnel that goes fairly deep under the earth.
sschueller 8y ago
It is the opposite of a good idea in my opinion. The reason you don't want to do that is because the private enterprise wants to maximize its profits. There is nothing wrong with that but in order to do so they will cut corners where ever possible and do the absolute minimum for upkeep. Yes, this happens with poorly managed and financed public projects as well but public infrastructure can and sometimes must operate at a loss. In fact a lot of public infrastructure does not pay for itself and is subsidized by tax dollars.
- Shivetya 8y ago
  you do realize that across the US there is nearly a hundred billion dollars of deferred maintenance to light rail lines used in most cities? Look at all the maintenance issues just with NYC subway system which is considered the best in the US. Plus they have the ability to provide rides for less than cost and recoup it by other means, taxes on unrelated activities. I find this idea really odd that a private company is going to cut corners. The fact is it has been the public projects that have cut corners. A private company always has the incentive to stay profitable and cutting corners is not how you play the long term game. Unlike the public held transport agencies they cannot just ask for a bailout or tax increase
  - gamblor956 8y ago
    Private company and long term game are oxymorons in today's business climate. It's the rare company that thinks beyond the next quarter, and in almost all cases, those companies are not publicly traded.
- dsfyu404ed 8y ago
  >The reason you don't want to do that is because the private enterprise wants to maximize its profits. There is nothing wrong with that but in order to do so they will cut corners where ever possible and do the absolute minimum for upkeep. Government does this and when they do it it's much, much harder to hold them accountable. Look at the Big Dig or anything the MTA touches. When a private company acts like this and the public notices there's at least the risk that some politicians will latch on to the issue (no politician ever lost public support by being tough on a company that was mistreating the public). When government is the wrongdoer it's needs to get incredibly bad before the other parts of government hold them accountable.
  - rhcom2 8y ago
    Part of the problem with the Big Dig were the government was defrauded by a materials supplier who used substandard in order to cut costs.
gok 8y ago
Most mass transit systems we have were originally privately built and operated until they became unprofitable in the 1930s-40s at which point they were publicly taken over. More recently there has been a resurgence of "public-private partnerships" where a private company builds a project and then gets a long term deal to extract money from it once it's done. Denver's recent transit expansion is one example. A potential downside is that we might end up back in the 1940s, when the subways became unprofitable and cities were forced to buy them out of bankruptcy because residents came to rely on them.
- cassieramen 8y ago
  It's important to remember that the federal government was actively subsidizing the urban exodus to suburbia in the 1940s. The subway became unprofitable due to federal housing policy and the local or state government ended up having to bail it out.
  - pg_bot 8y ago
    The NYC subway became unprofitable due to the terrible contracts that the operators signed.[0] Specifically they could not increase the fare greater than five cents, which doomed them because of inflation. The city took over the BMT and IRT companies on June 1st 1940. Suburbanization did not really start occurring in the US until after the end of WW2. [0]: https://en.wikipedia.org/wiki/Dual_Contracts#Conditions https://en.wikipedia.org/wiki/Dual_Contracts#Conditions
ComradeTaco 8y ago
Okay, my bachelors was in civil engineering and I have worked in construction and engineering for just over two years now. Most public projects today have generous structured incentives that are given to companies for meeting goals for time and budget. We work to these incentives. Keep in mind that often you cannot be aware of the things that will go wrong until you actually do them. This happens in software development quite a bit. I am not aware of any extensive private tunnel construction that has occurred without public financing inside of the U.S. So here are the drawbacks to Musk's plan: 1. He may prioritize speed over safety, either unintentionally causing loss of life or limb because of construction practices or geotechnically destablize the foundations of the buildings and infrastructure that he's traveling under. 2. I firmly believe that it's going to cost far, far more than 1 billion. That leaves the chance of a big hole in the ground that may eventually fill with water.
- jandrese 8y ago
  If he hits the $1 billion target this will be the civil engineering project of the century. It's hard to overstate just how optimistic that figure is compared to literally every other mass transit project worldwide. The craziest part is that there is already a much cheaper and not that much slower option to get to the airport. This project seems rather Quixotic.
  - rohit2412 8y ago
    Why is it so unrealistic? For example, this line in Mumbai metro ( https://en.m.wikipedia.org/wiki/Line_3_(Mumbai_Metro) https://en.m.wikipedia.org/wiki/Line_3_(Mumbai_Metro) ), with 34 km of big tunnels and 27 stations is supposed to cost 3.4 billion. Surely, Chicago's 25-30 km line with just two stations (one sort of half built already) and smaller tunnels won't cost so much.
    - jandrese 8y ago
      Two things. 1 is that they're planning to use a lot of cut and cover which is a lot cheaper but more disruptive. 2 is that the project isn't complete yet so those final cost figures are still fiction.
peatmoss 8y ago
It's worth noting that public-private-partnerships can lead to some perverse situations that are pretty antithetical to democratically-led governance. Companies that build the infrastructure typically have expectations around revenues in the long run. Very frequently there are provisions built in that prevent governments from turning around and building other infrastructure that competes with the privately operated infrastructure. Imagine a civil engineering firm builds a new highway funded by tolls. Now imagine 20 years from now, the city wants to build a transit link because the highway is at capacity and the government wants to shift travel to more ecological / efficient modes. What happens when the tollway operator hires some travel forecasters that show the new transit link cutting into their toll revenues? You end up in a strange circumstance where you're no longer just doing transportation planning balancing the desires of the citizens, the funding, and the technical challenges of transportation... you're now balancing all those things plus the business interests who are less interested in fixing transportation than they are interested in maintaining their maximum toll revenues. P3 infrastructure projects have many good aspects, but they have some really gnarly downsides as well.
- mlindner 8y ago
  If it's so profitable then why didn't any other companies set up a competing line in the first place? The perversion happened long ago if the city prevented any competition from stepping in before the city finally decided to move. In general companies are faster movers than governments in these types of things. If that didn't happen then something prevented them from being able to do so. The corrupted politicians are to blame here for blocking other companies from competing, not the business.
  - peatmoss 8y ago
    Generally cities prevent people from building infrastructure willy nilly. Buldozing houses or seizing public land for a new highway isn’t something that companies are allowed to do... I’d posit for good reason. Typically P3 agreements are initiated by government and promised revenue exclusivity is the incentive to build.
  - cornholio 8y ago
zantana 8y ago
It should be noted that Chicago doesn't exactly have a good track record on negotiating the details on these types of contracts. https://www.illinoispolicy.org/chicago-to-pay-20-million-to-parking-meter-company-in-2018/ https://www.illinoispolicy.org/chicago-to-pay-20-million-to-...

by apeace 8y ago

nickik 8y ago

> The idea of having Boring Company pay for the construction and then reap the profits strikes me as a really great idea. We could do what all normal business does for infrastructure. Revolutionary idea. But it is a good idea. Often private mass transportation is illegal. This seems to be a hybrid model, I don't quite understand what this project entails in terms of obligations by both sides. The downsides might be that they go bankrupt with a half finished tunnel and then the government has to either put in money to finish the project or start a new project.

deleted 8y ago
[deleted]
ComradeTaco 8y ago
There is also the possibility that a poorly engineered or rushed tunnel could destablize the foundations of structures above.
- nickik 8y ago
  Extremly unlikely with such a small tunnel that goes fairly deep under the earth.

sschueller 8y ago

It is the opposite of a good idea in my opinion. The reason you don't want to do that is because the private enterprise wants to maximize its profits. There is nothing wrong with that but in order to do so they will cut corners where ever possible and do the absolute minimum for upkeep. Yes, this happens with poorly managed and financed public projects as well but public infrastructure can and sometimes must operate at a loss. In fact a lot of public infrastructure does not pay for itself and is subsidized by tax dollars.

Shivetya 8y ago
you do realize that across the US there is nearly a hundred billion dollars of deferred maintenance to light rail lines used in most cities? Look at all the maintenance issues just with NYC subway system which is considered the best in the US. Plus they have the ability to provide rides for less than cost and recoup it by other means, taxes on unrelated activities. I find this idea really odd that a private company is going to cut corners. The fact is it has been the public projects that have cut corners. A private company always has the incentive to stay profitable and cutting corners is not how you play the long term game. Unlike the public held transport agencies they cannot just ask for a bailout or tax increase
- gamblor956 8y ago
  Private company and long term game are oxymorons in today's business climate. It's the rare company that thinks beyond the next quarter, and in almost all cases, those companies are not publicly traded.
dsfyu404ed 8y ago
>The reason you don't want to do that is because the private enterprise wants to maximize its profits. There is nothing wrong with that but in order to do so they will cut corners where ever possible and do the absolute minimum for upkeep. Government does this and when they do it it's much, much harder to hold them accountable. Look at the Big Dig or anything the MTA touches. When a private company acts like this and the public notices there's at least the risk that some politicians will latch on to the issue (no politician ever lost public support by being tough on a company that was mistreating the public). When government is the wrongdoer it's needs to get incredibly bad before the other parts of government hold them accountable.
- rhcom2 8y ago
  Part of the problem with the Big Dig were the government was defrauded by a materials supplier who used substandard in order to cut costs.

gok 8y ago

Most mass transit systems we have were originally privately built and operated until they became unprofitable in the 1930s-40s at which point they were publicly taken over. More recently there has been a resurgence of "public-private partnerships" where a private company builds a project and then gets a long term deal to extract money from it once it's done. Denver's recent transit expansion is one example. A potential downside is that we might end up back in the 1940s, when the subways became unprofitable and cities were forced to buy them out of bankruptcy because residents came to rely on them.

cassieramen 8y ago
It's important to remember that the federal government was actively subsidizing the urban exodus to suburbia in the 1940s. The subway became unprofitable due to federal housing policy and the local or state government ended up having to bail it out.
- pg_bot 8y ago
  The NYC subway became unprofitable due to the terrible contracts that the operators signed.[0] Specifically they could not increase the fare greater than five cents, which doomed them because of inflation. The city took over the BMT and IRT companies on June 1st 1940. Suburbanization did not really start occurring in the US until after the end of WW2. [0]: https://en.wikipedia.org/wiki/Dual_Contracts#Conditions https://en.wikipedia.org/wiki/Dual_Contracts#Conditions

ComradeTaco 8y ago

Okay, my bachelors was in civil engineering and I have worked in construction and engineering for just over two years now. Most public projects today have generous structured incentives that are given to companies for meeting goals for time and budget. We work to these incentives. Keep in mind that often you cannot be aware of the things that will go wrong until you actually do them. This happens in software development quite a bit. I am not aware of any extensive private tunnel construction that has occurred without public financing inside of the U.S. So here are the drawbacks to Musk's plan: 1. He may prioritize speed over safety, either unintentionally causing loss of life or limb because of construction practices or geotechnically destablize the foundations of the buildings and infrastructure that he's traveling under. 2. I firmly believe that it's going to cost far, far more than 1 billion. That leaves the chance of a big hole in the ground that may eventually fill with water.

jandrese 8y ago
If he hits the $1 billion target this will be the civil engineering project of the century. It's hard to overstate just how optimistic that figure is compared to literally every other mass transit project worldwide. The craziest part is that there is already a much cheaper and not that much slower option to get to the airport. This project seems rather Quixotic.
- rohit2412 8y ago
  Why is it so unrealistic? For example, this line in Mumbai metro ( https://en.m.wikipedia.org/wiki/Line_3_(Mumbai_Metro) https://en.m.wikipedia.org/wiki/Line_3_(Mumbai_Metro) ), with 34 km of big tunnels and 27 stations is supposed to cost 3.4 billion. Surely, Chicago's 25-30 km line with just two stations (one sort of half built already) and smaller tunnels won't cost so much.
  - jandrese 8y ago
    Two things. 1 is that they're planning to use a lot of cut and cover which is a lot cheaper but more disruptive. 2 is that the project isn't complete yet so those final cost figures are still fiction.

peatmoss 8y ago

It's worth noting that public-private-partnerships can lead to some perverse situations that are pretty antithetical to democratically-led governance. Companies that build the infrastructure typically have expectations around revenues in the long run. Very frequently there are provisions built in that prevent governments from turning around and building other infrastructure that competes with the privately operated infrastructure. Imagine a civil engineering firm builds a new highway funded by tolls. Now imagine 20 years from now, the city wants to build a transit link because the highway is at capacity and the government wants to shift travel to more ecological / efficient modes. What happens when the tollway operator hires some travel forecasters that show the new transit link cutting into their toll revenues? You end up in a strange circumstance where you're no longer just doing transportation planning balancing the desires of the citizens, the funding, and the technical challenges of transportation... you're now balancing all those things plus the business interests who are less interested in fixing transportation than they are interested in maintaining their maximum toll revenues. P3 infrastructure projects have many good aspects, but they have some really gnarly downsides as well.

mlindner 8y ago
If it's so profitable then why didn't any other companies set up a competing line in the first place? The perversion happened long ago if the city prevented any competition from stepping in before the city finally decided to move. In general companies are faster movers than governments in these types of things. If that didn't happen then something prevented them from being able to do so. The corrupted politicians are to blame here for blocking other companies from competing, not the business.
- peatmoss 8y ago
  Generally cities prevent people from building infrastructure willy nilly. Buldozing houses or seizing public land for a new highway isn’t something that companies are allowed to do... I’d posit for good reason. Typically P3 agreements are initiated by government and promised revenue exclusivity is the incentive to build.
- cornholio 8y ago

zantana 8y ago

It should be noted that Chicago doesn't exactly have a good track record on negotiating the details on these types of contracts. https://www.illinoispolicy.org/chicago-to-pay-20-million-to-parking-meter-company-in-2018/ https://www.illinoispolicy.org/chicago-to-pay-20-million-to-...