Surreptitious Cost Escalations and Spurious Cost Savings

In response to my previous post regarding the extreme cost of Amtrak’s new Northeast Corridor Vision plan, people both on forums and on blogs have said that it’s actually a cost saving coming from bundling the Vision with the earlier Master Plan. Although the original cost was $117 billion and the current one is $151 billion, the current one is still lower than the sum of the original cost plus the cost of the Master Plan, by $15 billion. This looks like a cost saving, but it’s actually not.

The explanation is that the Master Plan still contains elements that are unnecessary if large portions of the line, including nearly the entire New York-Boston segment, are bypassed. The list of projects on PDF-page 21 of the plan contains additional tracks in eastern Connecticut and a replacement of the bridge over the Connecticut, boosting capacity. However, if the intercity trains are removed from the line, there is no need to boost capacity. Low-performing branch lines – and this is what Shore Line East is without intercity trains – can be and are spun off to regional agencies: JR East abandoned the northern reaches of the Tohoku Main Line as it extended the Tohoku Shinkansen, spinning them off to the prefectures to run as it is not interested in running regional rail at the low densities of northern Japan and the intercity functions were all rolled into the Shinkansen.

So in that sense, any cost saving was spurious: Amtrak simply removed some, but not all, Master Plan projects that are obviated by the plan for a bypass. It’s no different from the fact that the Tokaido Main Line and the PLM Line are still double-tracked, as in both cases the national railroad chose to build high-speed rail parallel to them instead of to quadruple-track them to boost capacity.

But on top of that, there is at least some cost overrun implied in the plan. The cost breakdown is not detailed enough to make this clear, but the cost of the Gateway Tunnel is up to $14.7 billion, from $10-13.5 billion last year. It’s buried deep enough that it’s hard to see, or discern what the total overrun is, but it’s there. So Amtrak has a surreptitious cost escalation for the Gateway project at the same time as a spurious cost saving from partially merging the Vision and the Master Plan.

About these ads
This entry was posted in Amtrak, Construction Costs, High-Speed Rail, Incompetence, Transportation. Bookmark the permalink.

13 Responses to Surreptitious Cost Escalations and Spurious Cost Savings

  1. J.D. Hammond says:

    I think you’ll probably notice my support of these was rather tepid. Sarah Silverman quote and all.

    • Alon Levy says:

      Not saying it was support – just that you took the “15 billion in savings” claim at face value. (By the way, I probably would have too if I hadn’t remembered the original cost of Gateway.)

  2. Adirondacker12800 says:

    There’s going to be intercity service on the Shore Line between New Haven and where ever, New London, Kingston or Providence. Once an hour kinda thing, think Keystone or Empire service. Might only run New York to Boston but there will be enough demand. Ulterior motive #4 or #5 for why Amtrak hasn’t been more aggressive about improving the Shore Line is that it’s going to be bypassed, so why spend money on it?

    • Alon Levy says:

      If it’s once an hour, the current bridges provide enough capacity.

      • Adirondacker12800 says:

        The current bridges are 100 years old. They need to be replaced sooner or later. Getting the Admiralty of Itty Bitty Harbors out of SLE’s hair along with Amtrak is useful.

      • Nathanael says:

        What Adirondacker said: The bridges need to be replaced if the Shore Line is going to be used for anything at all. They’re past the end of their useful lives, and then there’s the Coast Guard water-has-priority nonsense. True, Amtrak *could* throw that problem onto the State of Connecticut, but the problem would still be there.

  3. jim says:

    I think there’s a political vs. technical divergence here. The Vision is a political document. It’s political externally: it wants to persuade Sen. Lautenberg that Amtrak is just as dedicated to the well-being of NJT as he is. It’s political internally: it wants to avoid implying the existence of consensus within Amtrak where it doesn’t exist. This is where the contradictions come from. If A is unnecessary if B occurs and the plan says both A and B occur, we may assume there’s some group within Amtrak that opposes B: in order not to take sides the plan says both A and B. Eventually the contradiction will be resolved, but Boardman hasn’t yet seen the need to make a decision.

    I’d add that in any plan that’s divided into multiple phases, the earlier phases will be much better defined than the later ones. In particular, in the Vision, work on NYC-Boston doesn’t start until 2028. Over the next 16 years there will be changes to the plan with regard to this work. This document commits to two decisions: there will be no East Side Manhattan station and if there’s a Rhode Island station, it’ll be Providence. Everything else is a place-holder: Amtrak intends to extend high speed service to Boston, but exactly how is still undetermined.

    Even the early phases are changeable. No work starts until 2015. That work will be redefined as a result of the PRIPC that will run between now and 2015.

    So the costs in the document shouldn’t be taken too seriously. Amtrak is doing the opposite of CAHSR. Mehdi Morshad deliberately low-balled the initial estimate for CAHSR (he, for example, assumed that the Tehachapis could be crossed basically at grade) to get approval. The Amtrak Visions are (deliberately?) exaggerating the costs of a 350 km/h NEC perhaps so that an eventual 300 km/h capable compromise (along the lines you suggested a couple of posts ago?) will seem a bargain.

    That doesn’t mean that technical pushback is pointless. Indeed your “90% Off” post has been widely cited and one hopes influential. Just that you and Amtrak are aiming at slightly different targets.

    • Richard Mlynarik says:

      This is a bizarre — and completely counter-productive — way to go about things.

      One might expect that proponents of particular projects (or closely-related packages of smaller projects) might develop a realistic cost associated with them and, most importantly, a concrete and quantified and explicitly enumerated list of benefits delivered, explicitly in terms of improved quality of rail service.

      Then the job of policy makers is to select from that list of projects those than can be afforded, and develop phased packages of affordable projects that, at each stage, deliver a very clearly advertised improvement in quality of rail service.

      They’re going through that sort of process in Switzerland with the “ZEB” (“future rail network development’) process, with a 2030 horizon. There’s a big laundry list of things individual areas want, and the federal government’s transportation department is in the process of determining what can and can’t and will and won’t be financed over the next 20 years.

      A huge difference from the sort of Christmas tree bullshit that Amtrak has thrown out is that every one of the Swiss projects has an explicit and public associated deliverable, in terms of things like “enables 15 minute headways on line X” or “reduces A-B travel time by X minutes, enabling new connection to Y” or “reduces delays at node X by Y%”.

      They rely on plebiscites to approve the funding for many of these projects (megaprojects, mesoprojects and even some microprojects), so delivering concrete benefits to the general population — not just delivering pork to a handful of rent-seeking trrough feeding insiders — is a paramount political concern. People vote for a big package of stuff that includes a defined package of costed projects that are to deliver a definite and phased set of concrete improvements by particular dates.

      Here’s the proposed fourth big phase of Zürich regional rail improvement, just for example. It’s secret intra-agency laundry list. It’s not a bunch of crap about hundreds of millions of dollars expended to the benefit of particular, favoured contractors. Instead, it’s an explicit, public, public-oriented advertisement of how service will be improved and when.

      Amtrak and its dismal NECIP and follow-ones remain a conduit for delivering unjustified and unjustifiable patronage and kickbacks at completely unjustifiable cost and to little or no concrete public benefit. Just throw money down the hole, because, well, just because.

    • Alon Levy says:

      The lack of details is why, when I first saw the Vision, I was sure it was a spite document, a way for Amtrak to tell critics that building full HSR is so expensive they should be happy with the Master Plan.

      And then Amtrak started advocating for Gateway, which seems like agency imperialism more than anything: “we want this project done, on our terms, by us.” It’s very far from the first $14 billion anyone would want to spend on the corridor. For Amtrak’s own needs, it’s practically the last – it can lengthen trains and go EMU and quadruple its capacity per train, so the capacity limit is not relevant to it, and the speed limitation coming from the narrowness of the tunnels is a small deal compared to the cost of even a reasonably priced replacement.

      • jim says:

        Not exactly a spite document, but it was clearly written by people who thought that Al Engel’s Vision was insane, but recognized that there is an internal Amtrak constituency for it (or something like it), so had to include it.

        Gateway is for Lautenberg. And the stress on it appears to have worked. From Ben Kabak’s SAS:

        In a statement, Senator Frank Lautenberg of New Jersey voiced his support. He will soon begin pushing legislation forward that is designed to deliver dollars for Amtrak. “Investing in our railways will create jobs, bolster businesses, and take cars off of our congested roads,” he said in a statement. “Amtrak will continue to have my full support as we move forward to revolutionize passenger rail travel in the Northeast.”

        • Nathanael says:

          And there you go.

          For Amtrak’s own needs the political relationship with NJT is crucial.

        • Alon Levy says:

          The question is whether Lautenberg is worth that many billions of dollars. Surely there are Senators who are much cheaper to buy and more useful. Kerry has to be far cheaper; he’s not the chair of the subcommittee, but he did get reasonably close to getting a climate bill passed, and Amtrak should be (but for institutional reasons isn’t) more proactive about forcing the competition to pay pollution taxes. On top of that, Lautenberg is 88, which means he’s unlikely to stay in the Senate past ’14.

          The other problem is that there is such a thing as absolute costs. It’s politically better to start from $100 billion and go down to $20 billion than to start from $5 billion and go up to $20 billion, but there’s also an element of how much money Amtrak can realistically get out of the next Congress, and that’s a relatively fixed number; if costs are much higher than that, it’s harder to slip it into a more general transportation or spending bill. At its Vision’s current state it’s going to get money for Gateway, get a local match from agencies other than the state, and then not have anything else for the next few years. So by promising Lautenberg Gateway, Amtrak is going to get funding for Gateway, and little else.

    • Nathanael says:

      Richard, you don’t understand politics *at all*. Your comment is actually bizarre in its ignorance of political maneuverings. What you might expect is completely inappropriate if you actually want to get anything useful done; you are making the Enlightenment fallacy, the assumption that you are dealing with a well-informed, thoughtful electorate and well-informed, thoughtful politicians.

      Try to bone up before you comment, because your comment is mostly arrant nonsense, apart from the description of what Switzerland, a country with a much healthier political culture, a political system structured entirely differently (and yes, in a better fashion), and a better educational system, does.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s