15 ms·
Why American construction costs are so high (2019)
- dang 5y agoSome past threads: Why American Construction Costs Are So High - https://news.ycombinator.com/item?id=19313042 https://news.ycombinator.com/item?id=19313042 - March 2019 (158 comments) Why US Major Infrastructure Construction Costs Are So High - https://news.ycombinator.com/item?id=19308481 https://news.ycombinator.com/item?id=19308481 - March 2019 (2 comments) An adjacent one for good measure: Why Are Canadian Construction Costs So High? (2018) - https://news.ycombinator.com/item?id=21618134 https://news.ycombinator.com/item?id=21618134 - Nov 2019 (140 comments)
- asploder 5y agoThanks for linking these past threads. Alon has continued their work on this subject with a team of other scholars as the "Transit Costs Project": https://transitcosts.com/about/ https://transitcosts.com/about/
- jimmyed 5y agoTl;dr anyone? I'm guessing it's something to do with the US dollar being overvalued.
- rodonn 5y agoNo that isn't one of the reasons given. The bigger reasons are: a) US unwillingness to learn best practices from other countries about how to keep costs of construction down, especially for public transit infrastructure. b) US builds much bigger + fancier stations for the trains compared to other countries, which drives up cost c) US procurement is done based on cost alone, which leads to frequent cost overruns and delays. d) a lack of internal managerial competence and instead relying frequently on costly external consultants e) bad political incentives
- jimmyed 5y agoWell, thank you. The reliance on external "consultants" seems like a cabal, much like the ones you find in the Pakistani army. How rampant is corruption in the states?
- wayoutthere 5y agoMunicipal governments in the US tend to be incredibly corrupt, and consultants are generally the vectors of that. Not as bad as India or Pakistan, but definitely worse than every other “western” country. Most municipal governments in large cities are overwhelmingly left-leaning, which means the elections aren’t really competitive and politicians can be as corrupt as they want (do nothing jobs for relatives, pick and choose which developers are allocated which land, arbitrarily deny permits, etc) with no repercussions. The party exists to play kingmaker and drive turnout for the general elections. The only thing that’s starting to change is that far-left parties are having some success at the local level. My city has multiple city council members who ran under a socialist party, which would have been completely unheard of 10 years ago.
- jimmyed 5y agoAre you suggesting that far left politicians are less corrupt?
- fallingfrog 5y agoCurrently, yes, that is the dynamic. They take special pride in not accepting money from corporations, lobbyists, big real estate, etc and the politician to lobbyist to consultant pipeline is the main center of corruption in the country today. For example, Jim Crowley is now a highly paid consultant for Squier Patton Boggs. In other times and places that may not have been the case but right now, the far left is noticeably less corrupt than the center or the right.
- jimmyed 5y ago
- redis_mlc 5y agoNo, it's mismgmt., nimbyism, enviro review, non-arms length bids, unions, sloth and political fantasies. It's instructive to look at good projects: SF MacArthur Maze rebuild and San Jose Terminal B, both with aggressive project leadership. http://www.amazingmaze.org/ http://www.amazingmaze.org/ https://airportimprovement.com/article/13-billion-modernization-project-redefines-san-jose-international https://airportimprovement.com/article/13-billion-modernizat... And awful projects, like the failed Calif. High Speed Rail, and brutally overbudget WTC subway rebuild, with aimless leadership.
- rfrey 5y agoThe article has very good headers that you could scan in < 15 seconds, no guessing required. 1. Engineering part 1: station construction methods 2. Engineering part 2: mezzanines 3. Management part 1: procurement 4. Management part 2: conflict resolution 5. Management part 3: project management 6. Management part 4: agency turf battles 7. Institutions part 1: political lading with irrelevant priorities 8. Institutions part 2: political incentives 9. Institutions part 3: global incuriosity
- Retric 5y agoGlosses over the real reasons, both high costs and cost overruns are incentivized. Usually this money comes from outside sources, such as higher-level governments, but even when it is purely local, individual stakeholders may treat it as money coming from other parts of the city. In this environment, there is an incentive to demand extra scope in order to spend other people’s money on related but unnecessary priorities. There is little reason to be efficient when spending other people’s money without their input or any long term consequences.
- 2OEH8eoCRo0 5y agoSlightly different but I work in defense as a contractor and I usually summarize it as "being paid for work". The incentive is to do the most work because being done early and under budget doesn't maximize $. Usually the market keeps these entities honest. Do shit work that's over budget and you lose business. But there is no market at play here, thus the govt needs to play the part of the market and penalize for this behavior but they do not. /Endrant
- Joker_vD 5y agoWell, you see, if you get the work done earlier and under budget, then the next time you'll be given stricter deadlines and less budget.
- TheAdamAndChe 5y agoBut if it's completed late and over budget, your company won't get the bid in the future because of your soiled reputation as long as there are enough competitors. Hence the reference to markets.
- belval 5y agoIn a perfect world maybe, in practice I doubt it. It's just not very human-like to take a lot of risk in large projects. If IBM takes a big project and delivers it late and over budget, they still delivered it so they will likely be picked for another project with the same low-bidding strategy.
- JPKab 5y agoThe article lacks precision in the fact that it's not necessarily "American" construction costs, so much as "why are construction costs in large American cities so costly". DC, NYC, LA, SF are not representative of how infrastructure projects are pursued in the rest of the country. We know very well that there are orders of magnitude more bureaucratic obstacles, as well as dramatically higher labor costs, when comparing any building project conducted in Texas vs. California. New York City's municipal projects are widely-known to have dramatically inflated labor costs due to various factors, not limited to rampant corruption within unionized labor. I'm a supporter of labor unions, but a minority of unions give the majority a bad name by allowing themselves to be used as tools to enrich corrupt officials. European unions seem to be far, far less susceptible to these kinds of grifters. There are certainly issues at the federal level as well with metrics for funding allocation, but let's not pretend that building large infrastructure in states with lower regulations is remotely as expensive as in places like California which have ridiculous levels of red tape and NIMBY empowerment. (Understood that construction in California has to take into account earthquake mitigation, but it isn't remotely enough to explain the cost deltas.)
- xxpor 5y ago>We know very well that there are orders of magnitude more bureaucratic obstacles, as well as dramatically higher labor costs, when comparing any building project conducted in Texas vs. California. New York City's municipal projects are widely-known to have dramatically inflated labor costs due to various factors, not limited to rampant corruption within unionized labor. Please read the actual link. This simply isn't an issue the way you think it is. "It's the unions" is simply being intellectually lazy because it fits your preconceived notions. "I am not overlooking union power, I believe it is not an important factor, not when right-to-work US states have very high construction costs too while Scandinavia has low costs." The problem is the quantity of labor. In the US we use many more people to operate a TBM vs what they'd use in Europe. On commuter rail lines we pay conductors $100k a year to collect tickets when in Europe they'd use a ticket machine. On the NYC subway they have a driver and a conductor when in Europe they'd only have a driver at best, or even some lines are being made driverless I believe. They're trying that in NYC too but it's complicated and costly because of how old the signaling system is, because it was too costly to ever upgrade. The agencies should focus less during union negotiations on keeping salaries and benefits down and more on reducing the quantity of required workers. If they were able to do it in Europe, they can certainly do it here.
- whereis 5y agoTake a peek at the Honolulu Rail Transit project on O'ahu. Boondoggle plagued with fraud, waste and abuse.
- whereis 5y agohttps://www.civilbeat.org/2021/04/hanabusa-awarded-200k-hart-consulting-contract/ https://www.civilbeat.org/2021/04/hanabusa-awarded-200k-hart...
- realitysballs 5y agoThis title is too generalized , it’s not talking about ‘American construction’ . It’s talking about American large-scale civic construction in large metropolitan areas.
- zinckiwi 5y agoAgreed, I came in ready to argue that US residential construction was positively cheap compared to much of the OECD!
- andbberger 5y agoIt's a transit blog
- Dumblydorr 5y agoRegarding station costs: can you include opportunity cost into your analyses? Maybe NYC is just far more economically productive than Paris, like if there are 50 story buildings all along that block, vs 5 story buildings in Paris...couldn't the cost even out because NYC is trying to diminish the disruption to local economy? Also hard to measure, but what are the QoL diffs between the two station methods, is one louder and more disruptive? I'm also wondering about technological differences. Can stations be constructed in a more modular fashion, can innovation occur to allow cheaper builds? And what about using more advanced tech in boring machines, like what TBC is trying in Vegas? Lastly, do we think a lot of stations is truly optimal? I don't know trains well, but if we get a fleet of SDCs in 20 years, maybe these can reduce station numbers by shuttling passengers their last mile or two, rather than building out billions of extra dollars of stations?
- gehatare 5y agoOutside of Manhattan this is unlikely, Paris is much denser than NYC and the difference in GDP or however you want to measure economic productivity is too small to make much of a difference.
- brianwawok 5y agoGoogle puts NY GDP at 1.75T, and Paris GDP at 785M (in USD). So more than double?
- pchristensen 5y agoNY metro population is 18.3 million, Paris 12.3 million. So NY's per-capita is about 50% higher.
- nobodyandproud 5y agoNYC is unusual. Manhattan is mostly solid bedrock, for one. Thus the time it takes to create tunnels below all the pipeworks cannot be overlooked, as it’s a very noisy endeavor. Also, the NYC subway system is (or was, pre-covid) 24 hours, extensive, and was forward thinking. The grates and vents you see today sidesteps the heat trapping of, say, the Tube (London). It’s also built robustly because honestly, the riders abuse every feature.
- deepsun 5y agoI feel like solid bedrock is actually a perfect soil type for engineering. Other towns has to account for moving sandy or clay soils, diverting or pumping out their ground waters (sometimes it's even easier to actively freeze large areas of land).
- inglor_cz 5y agoPrecisely. Here in Prague, the subterranean geology is horrible. Broken rock, cavities, a lot of river deposits, unexpected (and rich) water springs. Not to mention a thick layer of shit dating from 1350 to approximately 1800 along a former ditch that separated the Old Town from the New Town and that served as a latrine for thirty generations of burghers. Building subway tunnels in such conditions is an equivalent of Olympic Games for engineers.
- ant6n 5y agoPlenty of subways get built in bedrock. Its a bit more expensive to tunnel, but not unusual at all. It’s not so easy to use tunnel boring machines, but you can blast. Its also possible to make station caverns right in the rock. Btw, the tunnels aren’t the biggest cost of subway systems. Maybe 15-30%. I think the biggest tickets are usually the stations.
- bradleyjg 5y agoAs pointed out in part 2, the 2nd Avenue stations are grotesquely large. Sure they are pretty but I’d rather have 4x ugly stations.
- capekwasright 5y agoThe section discussing (inter/intra)agency turf battles reminded me of a recent article discussing how the pandemic has led to some significant reevaluation of what the role and purpose of traditional "commuter rail" is within public transit as a whole (particularly focusing on the MBTA/Boston, contrasting the quote from Frank DePaola): https://www.governing.com/now/taking-the-commuter-out-of-americas-rail-systems https://www.governing.com/now/taking-the-commuter-out-of-ame...
- Ericson2314 5y agoYes American computer rail service is a complete scourge. It's a regressive sop to white fighters and their posh descendents. It simply begets more car culture, a band-aid that hides scaling limitations where they are most salient. It's a self-defeating honey-pot that soaks up the political will for transit in something that will never get broad traction.
- sthnblllII 5y agoMaybe try having some compassion for white America, and try to see the race riots of the 1960's that destroyed the cities their grandparents built from their perspective. Demonizing an entire ethnic group would not be tolerated if any other group were being attacked. Honestly this is probably just flame bait. Never mind.
- nonameiguess 5y agoI don't see this discussed at all, but if you're going to use New York City as your exemplar and you're going back to 1910 for data, I don't see how you can avoid the fact that both labor unions and the construction companies were under the control of the mafia. They put people on the payroll to do literally nothing, sold materials at way above market value, and the buyer had no choice but to pay because anyone underbidding would get murdered. Unfortunately, the ratchet effect for pricing means getting rid of mafia control doesn't necessarily undo the cost increases they dictated. Also, prevailing wage practices mean labor unions for the same trades that aren't themselves corrupt still end up with the same price inflation, at least regionally.
- raincom 5y agoHere is a book that describes various 'corrupt' schemes: Corruption and Racketeering in the New York City Construction Industry: The Final Report of the New York State Organized Crime Taskforce Here is a pdf the report: https://www.ceic.gouv.qc.ca/fileadmin/Fichiers_client/centre_documentaire/CEIC-R-3591_01.pdf https://www.ceic.gouv.qc.ca/fileadmin/Fichiers_client/centre...
- kryogen1c 5y agomichael franzese talks about this alot in various podcasts and interviews. it was true much more recently than 1910. the family isnt what it used to be, but its certainly not gone.
- j_walter 5y agoThere are still stupid high costs for stuff and people are still put on the payroll to do nothing. $70/hr for a guy who does nothing but get coffee... https://nypost.com/2018/03/05/union-workers-are-making-42-per-hour-delivering-coffee-suit/ https://nypost.com/2018/03/05/union-workers-are-making-42-pe... There was a great piece done by John Stossel about why a pretty basic public park bathroom cost $2M to build and took years to finish construction. https://www.youtube.com/watch?v=qKRuhiMDOjo https://www.youtube.com/watch?v=qKRuhiMDOjo
- tylermw 5y ago
- grouphugs 5y agoit's because the nazis paywalled EVERYTHING
- ChrisMarshallNY 5y agoI have no opinions on the American industry, but I have known folks that have run local (NY) construction companies. They have all said that you need to deal with the wiseguys. They also have told me that they are nothing like what TV makes them out to be. Sort of like the famous "widgets" scene in Back to School[0]. I can tell you that the Japanese (at least in Tokyo) construction industry is awesome. They build incredibly ambitous and robust buildings, in a really short time. I traveled to Tokyo regularly, for 20+ years. I tended to stay in the same hotel. I remember looking out my window one year, and seeing a big field. The next year, it was a big hole in the ground. The next year, it was a 30-story skyscraper; fully occupied. [0] https://www.youtube.com/watch?v=YlVDGmjz7eM https://www.youtube.com/watch?v=YlVDGmjz7eM
- criddell 5y agoIsn't Japan known for tearing down homes after 25-30 years? Are commercial buildings built to last?
- yummypaint 5y agoI think part of the quick turnaround on houses is related to superstitions about dwellings in which people have died. Most of the value is also in the land rather than the structure so the economics are less punishing. I suspect the costs of building in commercial areas is high enough to offset some of this.
- deleted 5y ago[deleted]
- njharman 5y agoI thought they were known for the 100yr mortgage. And multigenerational living/thinking. That's all I've heard about.
- freetime2 5y agoThey are also known for knocking down houses after 30 years[1]. Things are changing, though. It’s becoming more common to renovate and buy secondhand houses. And multi-generational households are also becoming much less common [2]. > The percentage of multigenerational households has been halved over the past two decades, dropping from 50% to 24% [1] https://www.theguardian.com/cities/2017/nov/16/japan-reusable-housing-revolution https://www.theguardian.com/cities/2017/nov/16/japan-reusabl... [2] https://academic.oup.com/psychsocgerontology/article/62/5/S330/570920 https://academic.oup.com/psychsocgerontology/article/62/5/S3...
- gibsonf1 5y agoNew York is definitely not representative of America in the sense that NYC Unions have a true strangle-hold on labor and logistics costs in the city unlike most other places. (I think NYC is likely #1 in the free world for distorted construction markets because of this) As an architect living in NYC, I was shocked by how blatant this control was, how unaccountable labor was during construction, and the killing of a great pioneer project with modular construction because the modules weren't built in the city for example.)
- narrator 5y agoAn extreme example: 1 mile of subway in San Francisco cost just over 1 billion dollars to build. The central subway was a 1.7 mile long subway extension that recently finished construction: "Total cost overrun, largely driven by the claims settlement, three change order omnibus packages, contingency reserves and additional project management and other services, puts the final cost at $1.89 billion and sticks SFMTA with a $184 million deficit for this single project alone." https://www.sfexaminer.com/news/major-construction-on-central-subway-to-end-by-march-31/ https://www.sfexaminer.com/news/major-construction-on-centra...
- throwawaysea 5y agoIn Seattle we paid $3.4 billion for a 1.7 mile tunnel (https://www.seattletimes.com/seattle-news/berthas-woes-grind-on-more-delay-higher-cost-for-highway-99-tunnel/ https://www.seattletimes.com/seattle-news/berthas-woes-grind...). Construction began in 2013 and it was supposed to open in 2015 but didn’t until 2019. It replaced a 4 lane elevated highway on the waterfront, which gave all drivers beautiful views, with an underground 4 lane highway that gave waterfront property owners a big boost in value, while relegating everyone else to views of subterranean walls. Somehow our local government saw this project as value for our money.
- Slippery_John 5y agoCosts aside, lets not pretend the viaduct was removed just to improve property values. The thing was a ticking time bomb that would have killed dozens or hundreds of people the next time a moderately sized earthquake hit, to say nothing of the cost of cleaning up the damage and replacing it. Speaking a somebody who lived in the area both before and after the demolition (not a property owner), the whole place is just so much more beautiful. Some commuters may have lost a view, but what they lost pedestrians all over the area gained. Even outside of the waterfront itself, the view from the street level in the adjoining neighborhoods is gorgeous now.
- throwawaysea 5y ago> The thing was a ticking time bomb that would have killed dozens or hundreds of people the next time a moderately sized earthquake hit, to say nothing of the cost of cleaning up the damage and replacing it. It could have been replaced with a much cheaper and safer viaduct, instead of a tunnel boondoggle that was way too expensive.
- m0llusk 5y agoThis is woefully lacking in context. The Second Avenue subway in particular was proposed more than a hundred years ago and at that time the proposal was considered to be far more expensive than could possibly make sense. Over and over again the proposal came back up and got shot down again because of the expense. By the time New York actually committed to building the Second Avenue subway there was roughly a hundred years of literature going in detail into why the project was simply to complicated and costly to ever make sense. So then they actually built it and if you can actually imagine this it turned out to be so expensive it didn't necessarily make sense. But instead of referring to the hundred or so years of detailed documentation of this problem neophyte analysts descend and make what they think is a detailed comparison of costs when in fact they should have been examining the many complications faced by this extremely complex project. Ultimately this analysis is drug down by the weight of their failure to comprehend the Second Avenue subway alone because of the huge scale of that project and the complications that it faced. This is like looking at per seat construction costs of the Airbus 380 and deciding that something strange must have gone on to make it cost more per seat than a basic small scale commuter aircraft.
- bluGill 5y agoSure, but they finally got the current part done because it was worth it - at seven times the cost to do a similar capacity tunnel in Spain. If NYC could control their costs a little better there are a lot of tunnels that right not are not worth it that would be obviously worth doing.
- ncmncm 5y agoShort answer: legalized corruption. Waste and overrun are not problems, they are the whole point of the endeavor. It is the opportunity to direct those into chosen pockets that motivates the stakeholders. The project itself amounts to legal cover, similarly to real estate now used for international money laundering. It looks like a real project, and something comes out at the end, but the majority of the money moved is just dollars shuffled from public purse to private. It's all legal, so no risk of indictments. The US is the world leader in legalized corruption.
- tibbydudeza 5y agoNo show jobs ???.
- baybal2 5y agoEven if it is so, you don't get it much cheaper when 60%-70% percent of a single family home is land. Going from expensive to ridiculously cheap in construction methods will only mean shaving $100k-$150k from a $1m home. Going for extra-cheap interiors will probably save more for house in such price range. The real solution is to rehouse America in highrise appartments. This way, you can get up 100 fold land price reduction.
- dcolkitt 5y agoThere’s very few homes in America where land is 60% of the property value.
- baybal2 5y agoThen, there is more runway there. But still... Foundation work is not going anywhere on any construction method except for smallest homes. Framework work is probably easiest to eliminate, but you will still have to count one most basic. Even if you have 4 fold work hours reduction, and 2-3 fold in materials you save $300k on a $1m home, and end up with a very basic house. Apartments are better than trying to improve upon a single family home.
- tomekjapan 5y agoSince I came to live in America I have been constantly shocked by how much different contractors are trying to screw you up. The spread in quotes can easily be as much as 5 times from the (already expensive) cheapest to the most expensive ones, with what I am guessing is the majority of contractors high balling and trying to score easy money. I dread the upcoming weeks of negotiations every time I need to get anything fixed around the house.
- deleted 5y ago[deleted]
- 1cvmask 5y agoThis point the author makes is an interesting observation: 9. Institutions part 3: global incuriosity The eight above factors all explain why American infrastructure costs are higher than in the rest of the world, and also explain high costs in some other countries, especially Canada. However, one question remains: how come Americans aren’t doing anything about it? The answer, I believe, has to do with American incuriosity. Incuriosity is not merely ignorance. Ignorance is a universal trait, people just differ in what they are ignorant about. But Americans are unique in not caring to learn from other countries even when those countries do things better. American liberals spent the second Bush administration talking about how health care worked better in most other developed countries, but displayed no interest in how they could implement universal health care so that the US could have what everyone else had, even when some of these countries, namely France and Israel, had only enacted reforms recently and had a population of mostly privately-insured workers. In contrast, they reinvented the wheel domestically, coming up with the basic details of Obamacare relying on the work on domestic thinktanks alone. The same indifference to global best practices occurs in education, housing policy, and other matters even among wonks who believe the US to be behind. This is not merely a problem in public policy. In the private sector, the same problem doomed the American auto industry. American automakers have refused to adopt the practices of Japanese and German competitors even after the latter produced small cars better suited for post-1973 oil prices. They instead dug in, demanded and got government protection, and have been in effect wards of the American federal government for about 40 years.
- WalterGR 5y ago> American liberals spent the second Bush administration talking about how health care worked better in most other developed countries, but displayed no interest in how they could implement universal health care so that the US The Right would never allow that. > In contrast, they reinvented the wheel domestically, coming up with the basic details of Obamacare relying on the work on domestic thinktanks alone. Obamacare is based on Romneycare, Massachusetts's health care reform under Mitt Romney (R)'s governorship.
- ipexnet 5y agoThis is my bread and butter; and honestly, the entire issue is engineering (or lack thereof). That is not that you have bad engineering, but more the oversight into the level of engineering is where things fall over. The article notes specific example of "low-bid" contractors demanding change notices. That isn't a function of a low bid contractor, that is an issue with the specifications and quality of engineering they are building too. A lot of the issues the US faces are related to soil conditions! Nowhere in the article is there a note that soil conditions are the biggest factor in tunneling costs. When we back up a little too, large infrastructure in the US is very political. The government doesn't deal with "project management" to ensure a project comes in on time and budget, they deal with yearly budget allocations - thats it! So the entire management ethos on public works is so drastically different you can't even compare. Anyway, stoked to see the discussion about construction here.
- tmaly 5y agoThis is going to sound funny, but I saw a video on TikTok last night where a guy in the construction industry was saying that material producers for construction are price gouging right now.