http://www.smdailyjournal.com/article_preview.php?type=opinions&id=95557

Printed from THE DAILY JOURNAL, dtd. 07/28/2008

A lesson in cost overruns
By Martin Engel

They're talking about building a bike tunnel in my town Menlo Park. Well, here's a lesson in cost overruns: The Homer bike tunnel in Palo Alto, a modest affair built a couple of years ago, was budgeted at $2.8 million, but came in at $5.4 million.

Petty cash.

The Bay Bridge replacement, which isn't finished yet, was priced at - don't laugh - $1.4 billion in 1998. By 2004 it was $5.1 billion. In March of '07 it was $6.3 billion. Remember, it's not finished yet.

What's the point? When the government gets into the large scale construction business, stuff happens. And, by government, that includes those fat cat contractors who wine and dine our public servants in order to obtain the deal to relieve us of our tax dollars.

Originally estimated at $2.8 billion, the Boston Big Dig was over $15 billion when completed. Well, not fully completed, because it still leaks. The lead contractor was Parsons-Brinckerhoff. Guess what, that's the same outfit that's going to build our California high-speed train. When they were projecting costs for the Big Dig, Congressman Barney Frank said, "Rather than lowering the expressway, wouldn't it be cheaper to raise the city?" At the time, it was considered the most expensive highway project in U.S. history.

Well, that's now petty cash.

The present going price for the California high-speed train is $45 billion. Several years ago, the number was around $25 billion to $30 billion. Can we draw some plausible conclusions from all this? It's not rocket surgery. We now know that Union Pacific won't let the CHSRA use their right of ways. We also know that the train promoters haven't included all the property purchases or eminent domain takings in their projections. They haven't included the costs of all the lawsuits they will be hit with, either.

Here's some more to think about: Inflation is becoming serious, not only in the United States, but also worldwide. Construction materials for large-scale projects are in scarce supply. China is scarfing up everything available. Fuel costs raise energy costs. It takes huge amounts of energy to make things and build things. Those prices are going up daily.

Right now, the CHSRA would like us to believe that the $9.95 billion bond issue on the November ballot is all we Californians will have to pay. That's to build and ride on this marvel of a luxury train, for which, they say, ticket costs will be $55 to Los Angeles from San Francisco, a train which they say will be operational by 2020. Now, it's a very long way from $9.95 billion to $45 billion. There are many people who believe that the $45 billion number will double or triple. It's happened before.
So, if you still believe $9.95 billion, or even $45 billion, I have a Bay Bridge I'd love to sell you.

Martin Engel is a resident of Menlo Park.

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Martin Engel
1621 Stone Pine Lane
Menlo Park, CA 94025
650:323-1670
martinengel@earthlink.net


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