Tuesday, January 6, 2015

The real challenge of infrastructure

This is Joseph

Scott Lemieux points out that the city of Seattle is now planning another major tunnel project.  What makes this unfortunate is that Seattle is currently home to a fairly unsuccessful tunnel project at the moment.  But it was not inevitable that the current project would work out so poorly, nor is it unclear that things could not be further improved upon in the current project.  Boston's big dig project had a lot of problems, was way over budget, but ended up providing what look like quite good infrastructure results.

What worries me more is that these sorts of ineffective infrastructure projects undermine public support for doing more of them.  To be a rich and successful country, it seems that infrastructure is a requirement.  Or at least I cannot think of any examples of countries with crumbling and defective infrastructure that are doing especially well.  The Eastern bloc, for example, has these issues and doesn't seem to be a powerhouse of economic dynamism at the moment (I happily solicit  contrary opinions from readers).

What has changed to make infrastructure projects slow, expensive, and subject to a lot of problems in execution?  I could see any two of the three if we had major pay-offs on the third axis (e.g. slow and problem-ridden but cheap could make a lot of sense).

And how do we change this?


  1. Major issue is that to get financing, they underestimate costs and then it becomes a firestorm when the real costs occur. This is more the story of the Boston Big Dig: they held the financing plans together with twine to get it committed and moving.

    But when real cost estimates are used, people balk at them. Some of that is likely due to fear that this is yet another intentional understatement, which means there is a real penalty for being truthful.

  2. Have large infrastructure projects ever regularly been on time and on budget? It'd be surprising if they were; not only are they complex, projects, but each one is unique and special - a bespoke one-time prototype ordered to spec and never to be repeated in the same way, for the same conditions. You've effectively never done it before so of course overruns are a real and frequent risk.