Seventeen years ago, Californians bet on a grand vision of the future. They narrowly approved a $10 billion bond issue to build a high-speed rail line that would zip between San Francisco and Los Angeles in under three hours. This technological marvel would slash emissions, revitalize the state’s Central Valley, and, with some financial help from the feds and private sector, provide the fast, efficient, and convenient travel Asia and Europe have long enjoyed.
State officials promised to deliver this transit utopia by 2020. Instead, costs have more than doubled, little track has been laid, and service isn’t expected to begin before 2030 — and only between Bakersfield and Merced, two cities far from the line’s ultimate destinations.
It’s little wonder the project finds itself in a precarious financial position, fighting political headwinds, and deemed a boondoggle by everyone from federal Transportation Secretary Sean Duffy to Abundance authors Ezra Klein and Derek Thompson. “In the time California has spent failing to complete its 500-mile high-speed rail system,” they wrote, “China has built more than 23,000 miles of high speed rail.”
Such struggles are not unique to the Golden State, where support for the project remains strong. Although the private sector venture Brightline has seen some success, publicly funded high-speed rail efforts in Texas, Ohio, Washington, D.C., and beyond have stalled. Regulatory complexity, a political environment that favors cars and highways, and constant funding challenges stymie America’s aspirations even as other countries have spent big on tens of thousands of miles of track. Governor Gavin Newsom promises to see the nation’s most ambitious rail project through despite recently losing all federal support, but its troubled path underscores the systemic challenges of building big in America.
can someone explain: when a public infrastructure project is “over budget”, the work is usually being done by private companies who bid for it, so aren’t they stuck with the cost when the work exceeds their predictions? When do cost overruns come back to the state and require them to spend more to complete the project?
Here’s how megaprojects work in the US:
The megacontractor underbids on the project after colluding with the two other megacontractors that exist to not step on each others’ toes. They are awarded the project and the budget to design and build the system. They design the system poorly, but no one at the state has any expertise to know they have designed it poorly. Anyway, they then start the process of telling the state “oh wow this totally unforeseen thing/design flaw occurred so now the project costs more”. (These are called “change orders” and the burden for them is on the state, as per the contract.) The state’s options are:
Obvious the solution is to have literally anyone who works for the state on salary who has some knowledge of planning, designing, or building high speed rail at a reasonable cost, but Americans refuse to accept that anyone who doesn’t work for McKinsey or Deloitte might know how to do anything, or that anyone whose first language is not English might know how to do anything, so they do not do this thing.
I can’t answer for americans, but in my country the way it works is that the actual contractual agreement is only a socalled “framework” which includes a bunch of smaller contracts that are each more deliverable. When the project is delayed, that usually means that there is either a problem with the work (I.e. management keeps changing specifications halfway any work being done, which means that previous work has to be scrapped) or the company delivered something subpar (happens a lot with infrastructure projects where I live). If something happens that requires you to redo some of the previous work, the private company can then usually bill the government for the labour at a much higher price than was agreed upon initially. If any of the smaller piecemeal contracts run over budget, usually the entire project will be delayed, as the project is fundamentally planned as a series of smaller contracts that each have to be fulfilled before the next step can be initiated.