8 to 12 times more expensive than Italy, Istanbul, Sweden... compared to low-cost Helsinki and Spain, and compared to medium-cost Paris and Berlin
labor is 40-60% of the project’s hard costs, a lack of design standardization leads to fewer economies of scale, New York’s subway station construction methods, by themselves, led station costs to triple through overbuilding, and unions profiting from graft cause redundancy in blue-collar labor, as did overstaffing of white-collar labor in New York due to general inefficiency as well as interagency conflict
Numerous cost drivers have been identified that stem from procurement norms in the United States.
These include a pervasive culture of secrecy and adversarialism between agencies and contractors, a lack of internal capacity at agencies to manage contractors, insufficient competition, and a desire to privatize risk that leads private contractors to bid higher.
Overall, this raises costs by a factor of 1.85, with the extra money going to red tape, wasted contingencies, paying workers during delays, and defensive design.
Moreover, many ongoing reforms hailed as steps forward, at best do nothing and at worst are actively raising costs; these reforms all aim to privatize risk and have been popular throughout the English-speaking world, and while consultants, managers, and large contractors like them, costs grow sharply wherever they are implemented.
Soft costs include design, planning, force account, insurance, construction management, and contingencies. Nonetheless, those add 5-10% on top of the hard contract costs.
But in the Second Avenue Subway, it was 21%.
The company I used to work for, did one job for the cities rapid transit system, that had trains and busses, they had not worked for this govt agency before and lost money on the job because they did not realize the scale of bureaucracy, that the company would have to deal with. its seemed like the transit system did everything they could to delay this project while at the same time screaming that it wasnt getting completed fast enough. The transit system required a 4 hour meeting every week, with 17 of the transit system bureaucrats, the sole job of one of the people was to ensure that a certain percentage of the money was spent on minority and disadvantaged small businesses, and that person wanted to interview every employee of the subcontractor to document that they were being treated fairly etc etc , the transit authority had one person with a copy of the blueprints on site everyday doing nothing but watching us, but if we had a question about anything, he always said he wasnt allowed to talk to us about it.
ReplyDeleteThey said that if they ever did any work for that transit authority again, ( highly unlikely) they would have to almost double the bid to make a profit. Some govt agencies are such a bear to deal with, that the companies have to increase the bid tremendously to compensate for the bureaucracy and delays caused intentionally by the govt agencies.