Tuesday, June 14, 2016

Project timelines and cost overruns

Everywhere you look nowadays you see a common pattern, cities need more infrastructure to keep up with their rapid growth, so local governments plan to build more infrastructure to fit their needs, and then hire private companies for construction. I have nothing against hiring private companies as long as the bidding process is fair, but whether you look at Seattle's mass transit, Berlin's airport, The Dulles-Washington rail link, or so many other cases of needed infrastructure being delayed for years or even decades, the costs start to run into the billions of dollars. The opportunity cost of not getting such programs done also tends to be significantly higher.

Here are a few ideas for how to get projects done on time.

  1. There will be a completely open bidding process where different contractors will bid for building the project and give their design plans, with details on how many people will be able to be served by the project, the cost of designing the project with a complete breakdown, how it fits into the general plan of the city and region, and how long it will take to complete the project. The contractor with the best benefit/cost ratio will get the job.
  2. Contractors are required to finish the project by the deadline and to have all necessary safety features installed. Failing to finish the project by the deadline will give them the choice of finishing with extra charges for not being proper, or handing the job to another company and penalizing the company for not finishing the job. Environmental disasters will of course be acceptable reasons for not finishing a project on time. (eg you are working a project at a city on the Gulf Coast and a hurricane destroys your project)
  3. Contractors will receive a bonus for finishing the job early and completely.

This is a major environmental and economic issue. There are projects that need to get done now, and there are many high speed rail lines which need to be built. It is ridiculous that the US lacks high-speed rail (which is internationally defined as going a minimum of 150 km/hr) and that Canada lacks sufficient mass transit between Montreal and Windsor. We need government and contractors to be responsible.

Further reading:
http://www.dcd.com/oleary/oleary_jf_2002.html is a good summary like what I have posted here.

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