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> You've probably noticed massive cost overruns in public projects. That $1 billion bridge is now $3 billion--oh, sorry, make that $4 billion. If we ever get it

> You've probably noticed massive cost overruns in public projects. That $1 billion bridge is now $3 billion--oh, sorry, make that $4 billion. If we ever get it finished, better estimate $5 billion. This rings home as I was recently talking to someone at an engineering firm that often bids for government contracts. And they were explaining that you build your timeline back from the deadline in the proposal even if you know it isn't feasible. A lot of companies will then bid under-cost and hope that there was a flaw in the design that requires adjustments. Then since they are already on the site with a bunch of workers they will charge extortionary process for the modification to make money on the whole project. So that $10M dollar bid jumps to $15M because they needed to reroute a gas line before starting the building (not a real example, but representative) Of course a lot of the problem is that the city has strong processes and policies to avoid corruption, however the end result is that it is very difficult to hire the people you know do good work, instead you are stuck with the lowest bidder. Of course there is a process for banning companies however it is long, complicated and very bureaucratic, so even if you could get the ban in place it is easier for any project manager not to bother. I guess it all comes down to lack of trust, and this is why we can't have nice things.

Pfhreak 6y ago
Here in Seattle, we've built out a light rail system under budget and ahead of schedule. And of course, we've also really flubbed the cost/schedule for a highway tunnel. I'm not sure that the result is axiomatically over budget for major projects. That said, I'm less worried about budget than I am worried about who benefits (e.g. I'm generally ok with transit going over because it provides such a valuable benefit for the city.)
- kevincox 6y ago
  I guess my point that at least for the city I was talking about the bids were rarely a good estimate of the cost and time required. I'm not saying that they never make it for around that cost, but it is rare. The bids more reflected some complicated mating ritual to get their food in the door, then they deliver the bad news that the actual cost is higher the first chance they get.
- smegger001 6y ago
  then there is the freeway construction through Tacoma that has been ongoing for 20 years.
- bluGill 6y ago
  Though your system still cost several time what similar systems in other countries would cost. It was under a vastly too large budget.
  - Pfhreak 6y ago
    I do wonder, however, how our environment is different. There's water everywhere, it's very hilly, and Seattle is literally built on top of older versions of Seattle. I'm open to the idea that we spent more than we should have (even if it was under budget), but I'd want to see more data about the project and where the costs were unreasonably high.
    - bluGill 6y ago
      Water is a feature of all cities for historical reasons. Hills are common as well. As for old : you a practically new born, compared to cities in Europe.
- ISL 6y ago
  The highway tunnel was failed execution. Between using the largest boring machine ever built and feeding multiple steel well-casings into the cutter-head of said machine, the errors were of engineering and management.
- coryrc 6y ago
  You have that exactly backwards: the tunnel was a fixed price design-build contract and somehow the courts held it to the original price (still $1billion more than fixing the viaduct, the benefits which accrue to private land owners downtown). The light rail was originally going to be to the University District by 2006. Ridership wasn't even close to original predictions. It's slow and will never replace more than a small fraction of traffic by design; the stations are too small, the area around them isn't zoned dense enough to bring in more more people, and there are no express bypasses so it will always be slow.
  - coryrc 6y ago
    For less than double the cost of Seattle's light rail, Japan is building a 178 mile maglev line of 90% tunnels. Our cost/benefit ratios are terrible.
citizenpaul 6y ago
The sad part is the trust got moved to the least trustworthy actors. At least the gov workers are beholden to their job and maybe their office People are for whatever reason terrified to allow gov workers to just do their job. Instead they allow them to contract out millions and billions of dollars to companies that are beholden only to themselves and maybe a contract that will take 10 years to dispute in court. The saddest part is honest companies want nothing to do with these huge gov contracts. The only way to navigate the minefield of regulations is to lie which honest people dont want to do. This results in nefarious companies that specialize in ripping of the government. And just to get my mandated downvotes. Trump has been beating the drum of their being too many regulations since he got in office. I'm guessing HN won't want to hear that though.
- kevincox 6y ago
  > Trump has been beating the drum of their being too many regulations since he got in office You're right, but he is also the type of person that make the corruption-prevention regulations look like a good idea from my point of view. But he was elected and I'm not from the US so maybe my point of view isn't the important one here.
  - vangelis 6y ago
    When it comes to regulations, we should have both less and the same; the same requirements in less paper.
- LanceH 6y ago
  I don't see how anyone sees the government as more trustworthy in this process. The people paying these companies outrageous sums are the ones taking campaign donations from those companies. The people that decide that the high speed rail which needs to stop at every town along the route (and that the route needs to include all their towns) are -- again -- the politicians. At every turn politicians stick their noses into the workings of infrastructure projects. Quality and cost finish well behind kickbacks to the politician and largesse to their supporters.
- notabee 6y ago
dllthomas 6y ago
I've been wondering if it might make sense to maintain a score across those involved in any project, where your score goes up for involvement with a successful project but down when that project has issues (delays, overruns, faults), with all movement in proportion to the individual's share of the financial returns from the project. Then, when seeking bids, you could factor in the scores of those involved in the organizations bidding - giving it a weight or requiring a threshold (for average or median or P95 or something) among the participants.
- kevincox 6y ago
  This is similar what they have for the banning process, but the score is well specified and has a number of points. There have been terrible projects that got a passing score. So you have the classic problem of if it is public they will game it, but if it isn't public than it is corruption. But I think this is on the right track. As a simple approach you can have final-cost ratio. "Unknown" bidders would use the average score across all projects (or all first-time projects?) and known-good bidders would be able to use their own score (which may be close to 1). Known-bad bidders may have 1.5-2 multipliers which "corrects" for their underbid. Of course this too simple. You want to: - Account for time. - Account for how easy they were to work with. - You need to factor in unexpected changes. (which do have a cost, but how do you determine the true cost?) - Using the average for unknowns may make it too difficult for new companies to enter. I way I see it you want some new entries to keep your pool in check. (Although the majority of projects, and quite possibly the largest projects should be going to known-good companies). I think this is part of the problem. There are so many factors that it is difficult to rigidly define them, and if they aren't rigidly defined than you have chances for corruption. The TL;DR is that unless you just let a human make the decision it is a very hard problem, and right now we don't think that humans are trustworthy enough.
  - dllthomas 6y ago
    An important point for my proposal is that we only track scores for individual humans, not aggregate entities. I think this makes a difference in a lot of ways. A new company can (should!) hire some people with solid local experience, so can have a score (we still need defaulting rules for individuals, of course). Individuals risk reputational damage if people elsewhere in the project behave badly, which should increase cooperation with controls. Similarly, well managed companies will find it easier to hire, while poorly managed companies will find it more difficult. Companies that have a lot of poorly scored individuals because of poor historical practice will be extra motivated to bring on people with a history of working on well managed projects, which would help knowledge flow about how to keep projects well managed.
sokoloff 6y ago
There's a reason I can find many image results for this query (and none of them are small): https://www.google.com/search?q=change+order+boat https://www.google.com/search?q=change+order+boat
908B64B197 6y ago
One of the issues with the lowest bidder approach is that the organization writing the bid must completely understand its needs before writing the actual bid. For physical infrastructure that's often the case but with software you get 2-3x cost overruns simply because the project is effectively re-done 3 times. Because often what the buyer is asking for is simply not what he needs. Of course, bidding laws makes it illegal to contact the bid writer and if you try to anticipate anything not explicitly written, you'll end up with a more expensive proposition than your competitor. The IBM Phenix payroll system is a prime example of that, but there are many more.

Pfhreak 6y ago

Here in Seattle, we've built out a light rail system under budget and ahead of schedule. And of course, we've also really flubbed the cost/schedule for a highway tunnel. I'm not sure that the result is axiomatically over budget for major projects. That said, I'm less worried about budget than I am worried about who benefits (e.g. I'm generally ok with transit going over because it provides such a valuable benefit for the city.)

kevincox 6y ago
I guess my point that at least for the city I was talking about the bids were rarely a good estimate of the cost and time required. I'm not saying that they never make it for around that cost, but it is rare. The bids more reflected some complicated mating ritual to get their food in the door, then they deliver the bad news that the actual cost is higher the first chance they get.
smegger001 6y ago
then there is the freeway construction through Tacoma that has been ongoing for 20 years.
bluGill 6y ago
Though your system still cost several time what similar systems in other countries would cost. It was under a vastly too large budget.
- Pfhreak 6y ago
  I do wonder, however, how our environment is different. There's water everywhere, it's very hilly, and Seattle is literally built on top of older versions of Seattle. I'm open to the idea that we spent more than we should have (even if it was under budget), but I'd want to see more data about the project and where the costs were unreasonably high.
  - bluGill 6y ago
    Water is a feature of all cities for historical reasons. Hills are common as well. As for old : you a practically new born, compared to cities in Europe.
ISL 6y ago
The highway tunnel was failed execution. Between using the largest boring machine ever built and feeding multiple steel well-casings into the cutter-head of said machine, the errors were of engineering and management.
coryrc 6y ago
You have that exactly backwards: the tunnel was a fixed price design-build contract and somehow the courts held it to the original price (still $1billion more than fixing the viaduct, the benefits which accrue to private land owners downtown). The light rail was originally going to be to the University District by 2006. Ridership wasn't even close to original predictions. It's slow and will never replace more than a small fraction of traffic by design; the stations are too small, the area around them isn't zoned dense enough to bring in more more people, and there are no express bypasses so it will always be slow.
- coryrc 6y ago
  For less than double the cost of Seattle's light rail, Japan is building a 178 mile maglev line of 90% tunnels. Our cost/benefit ratios are terrible.

citizenpaul 6y ago

The sad part is the trust got moved to the least trustworthy actors. At least the gov workers are beholden to their job and maybe their office People are for whatever reason terrified to allow gov workers to just do their job. Instead they allow them to contract out millions and billions of dollars to companies that are beholden only to themselves and maybe a contract that will take 10 years to dispute in court. The saddest part is honest companies want nothing to do with these huge gov contracts. The only way to navigate the minefield of regulations is to lie which honest people dont want to do. This results in nefarious companies that specialize in ripping of the government. And just to get my mandated downvotes. Trump has been beating the drum of their being too many regulations since he got in office. I'm guessing HN won't want to hear that though.

kevincox 6y ago
> Trump has been beating the drum of their being too many regulations since he got in office You're right, but he is also the type of person that make the corruption-prevention regulations look like a good idea from my point of view. But he was elected and I'm not from the US so maybe my point of view isn't the important one here.
- vangelis 6y ago
  When it comes to regulations, we should have both less and the same; the same requirements in less paper.
LanceH 6y ago
I don't see how anyone sees the government as more trustworthy in this process. The people paying these companies outrageous sums are the ones taking campaign donations from those companies. The people that decide that the high speed rail which needs to stop at every town along the route (and that the route needs to include all their towns) are -- again -- the politicians. At every turn politicians stick their noses into the workings of infrastructure projects. Quality and cost finish well behind kickbacks to the politician and largesse to their supporters.
notabee 6y ago

dllthomas 6y ago

I've been wondering if it might make sense to maintain a score across those involved in any project, where your score goes up for involvement with a successful project but down when that project has issues (delays, overruns, faults), with all movement in proportion to the individual's share of the financial returns from the project. Then, when seeking bids, you could factor in the scores of those involved in the organizations bidding - giving it a weight or requiring a threshold (for average or median or P95 or something) among the participants.

kevincox 6y ago
This is similar what they have for the banning process, but the score is well specified and has a number of points. There have been terrible projects that got a passing score. So you have the classic problem of if it is public they will game it, but if it isn't public than it is corruption. But I think this is on the right track. As a simple approach you can have final-cost ratio. "Unknown" bidders would use the average score across all projects (or all first-time projects?) and known-good bidders would be able to use their own score (which may be close to 1). Known-bad bidders may have 1.5-2 multipliers which "corrects" for their underbid. Of course this too simple. You want to: - Account for time. - Account for how easy they were to work with. - You need to factor in unexpected changes. (which do have a cost, but how do you determine the true cost?) - Using the average for unknowns may make it too difficult for new companies to enter. I way I see it you want some new entries to keep your pool in check. (Although the majority of projects, and quite possibly the largest projects should be going to known-good companies). I think this is part of the problem. There are so many factors that it is difficult to rigidly define them, and if they aren't rigidly defined than you have chances for corruption. The TL;DR is that unless you just let a human make the decision it is a very hard problem, and right now we don't think that humans are trustworthy enough.
- dllthomas 6y ago
  An important point for my proposal is that we only track scores for individual humans, not aggregate entities. I think this makes a difference in a lot of ways. A new company can (should!) hire some people with solid local experience, so can have a score (we still need defaulting rules for individuals, of course). Individuals risk reputational damage if people elsewhere in the project behave badly, which should increase cooperation with controls. Similarly, well managed companies will find it easier to hire, while poorly managed companies will find it more difficult. Companies that have a lot of poorly scored individuals because of poor historical practice will be extra motivated to bring on people with a history of working on well managed projects, which would help knowledge flow about how to keep projects well managed.

sokoloff 6y ago

There's a reason I can find many image results for this query (and none of them are small): https://www.google.com/search?q=change+order+boat https://www.google.com/search?q=change+order+boat

908B64B197 6y ago

One of the issues with the lowest bidder approach is that the organization writing the bid must completely understand its needs before writing the actual bid. For physical infrastructure that's often the case but with software you get 2-3x cost overruns simply because the project is effectively re-done 3 times. Because often what the buyer is asking for is simply not what he needs. Of course, bidding laws makes it illegal to contact the bid writer and if you try to anticipate anything not explicitly written, you'll end up with a more expensive proposition than your competitor. The IBM Phenix payroll system is a prime example of that, but there are many more.