Tag Archives: budgets

What are the odds the new Kennedy Expressway construction ends in 3 years?

Posted on by

Chicago area drivers will soon face another major construction project, this time on the Kennedy Expressway, for several years:

Photo by Chait Goli on Pexels.com

The $150 million project will take place along a 7.5-mile stretch from the split at I-94 south to Ohio Street, and at the massive underpass near Hubbard Street downtown. It will include rehabbing 36 bridges and the highway’s reversible express lane access system, replacing overhead signs, upgrading lighting, paving and painting.

The work is designed to improve safety, traffic flow and reliability on the 10-lane expressway, used by more than 275,000 drivers each day, the Illinois Department of Transportation said. The last major rehabilitation of the 63-year-old roadway was in 1994, and bridges were last repaired a decade ago.

Construction is expected to take place in phases over the next three warm-weather seasons, starting with the inbound, or southbound, lanes this year…

The outbound work and the updates at Hubbard’s Cave are expected to be complete in late fall 2025.

The last major road project nearby went over budget and over time. Are there publicly posted odds regarding this project?

Given the importance of this stretch of highway for the Chicago road network, it is hard to say that the construction should not happen. Even as the cynic might note that as soon as this project is over the next stretch of the Kennedy will be under construction, roads do need repair. But, what are the consequences if the project is not completed on time? Are there any significant incentives that can help make sure this project stays on track and within budget?

It does not help that the timeline for this project is so long. At some point, the regular driver on the Kennedy may have a hard time remembering when the road was not under construction. In fall 2025, how many will remember the optimism of a prediction of 3 years? If it goes into 2026 and the cost went up some, how many will care? I will set a mental note for late 2025 but we will see what happens…

The American difficulty in building and funding major infrastructure projects, California high-speed train edition

Posted on by

The cost and time needed to build a high-speed rail line in California keeps increasing:

Photo by David Dibert on Pexels.com

A New York Times review of hundreds of pages of documents, engineering reports, meeting transcripts and interviews with dozens of key political leaders show that the detour through the Mojave Desert was part of a string of decisions that, in hindsight, have seriously impeded the state’s ability to deliver on its promise to create a new way of transporting people in an era of climate change…

When California voters first approved a bond issue for the project in 2008, the rail line was to be completed by 2020, and its cost seemed astronomical at the time — $33 billion — but it was still considered worthwhile as an alternative to the state’s endless web of freeways and the carbon emissions generated.

Fourteen years later, construction is underway on part of a 171-mile “starter” line connecting a few cities in the middle of California, which has been promised for 2030.

Meanwhile, costs have continued to escalate. When the California High-Speed Rail Authority issued its new 2022 draft business plan in February, it estimated an ultimate cost as high as $105 billion. Less than three months later, the “final plan” raised the estimate to $113 billion.

This is not the first time this has happened in the United States. Many major projects, ranging from highway construction to tunnels to bridges, involve expanding timelines and budgets. Even though people may not care as much about these changes once the project is done and things work, the extra time and money comes from somewhere and can affect a lot of people.

There must be some major projects that are completed on time and on budget. Are these properly celebrated?

Complicated urban repairs: 20 years to repair 11 blocks of Park Ave above and below ground

Posted on by

Manhattan is dense, above ground and below ground. Hence, the city is planning for a 20 year project to to a portion of Park Avenue:

Photo by Vlad Cheu021ban on Pexels.com

The good news is the city finally has plans to restore 11 blocks of Park Avenue north of Grand Central to a semblance of its former glory, Bloomberg reports, expanding the median from a useless 20 feet to a potentially-rejuvenating 48 feet. That redesigned street could include bike paths, walking paths, and generally more space for things other than cars or pretty things for people in cars to look at as they drive by.

The bad news is many if not most of the people currently living and working in New York will not be around to enjoy it once it’s done. It will take 20 years to redesign these 11 blocks, according to the city’s Department of Transportation. Yes, you read that right. The project to redesign 11 blocks of a Manhattan street will not be completed until 2042.

But there is no mistake, according to both DOT and Kaye Dyja, Powers’s spokesperson. As Dyja explained, “The reason the construction is going to take a long time is because they’re improving the underground railroads leading to Grand Central, as well as redoing the ‘train sheds.’ This entails that they’re digging up the ground, so the construction will have to take place in stages which will end up taking many years to complete.”

The project Dyja is referring to is a massive $2 billion renovation of the Metro North infrastructure underneath Park Avenue from Grand Central to 57th Street. Park Avenue is a bridge over those tracks, and like many of the U.S.’s bridges, this one is falling apart, too. The project will involve ripping up sidewalks and the median of Park Avenue a couple blocks at a time, going section by section, down the stretch of Park Avenue. It is expected to cause more or less permanent disruption to the Midtown East area, to varying degrees, over the next two decades. 

As a kid, I remember reading books with cross-sections of underground Manhattan. Seeing all of that infrastructure needed for modern urban life – pilings for skyscrapers, subways, water pipes and sewers, etc. – was fascinating.

The flip side of that is the work it takes to make significant changes to such a system. It takes time (and money) to work around what is there and complete the work.

The time is one factor but I wonder about how the budgets will work over a 20 year period. Large American infrastructure projects can have a tendency to stretch in terms of time and budget as the work is underway.

I would love to say I will check in on this in twenty years but that is a long commitment…

City government funded by cryptocurrency

Posted on by

At least one leader in Miami thinks the city can raise substantial revenue through partnerships with cryptocurriencies:

Photo by David McBee on Pexels.com

The lofty idea is the byproduct of a cooperation with CityCoins, a nonprofit that allows people to hold and trade cryptocurrency representing a stake in a municipality. By running software on their personal computers, CityCoins’ users mint new tokens and earn a percentage of the cryptocurrency they create. A computer program automatically allocates 30 percent of the currency to a select city, while miners keep the other 70 percent.

Since the nonprofit unveiled “MiamiCoin” in August, it has sent about $7.1 million to Miami. (City commissioners agreed to accept the donations on Sept. 13.)

While the program is still in its infancy, Suarez (R) estimates the effort could generate as much as $60 million for Miami over the next year and ultimately “revolutionize” how the city funds programs that address poverty and other societal issues…

Over the past year, several financial and tech firms set up offices in the city, including Goldman Sachs, SoftBank and Blackstone, according to Suarez. In June, the crypto wallet Blockchain.com announced it was moving its headquarters from New York City to Miami, citing the city’s “welcoming regulatory environment serving as a hotbed of crypto innovation,” the company revealed in a news release. That same month, the stock-trading platform eToro announced plans to establish offices in the city.

In many ways, this is a continuation of what cities have tried to do for decades: diversify their tax base and/or become a leader in a certain industry or sector, particularly in a new area. All of this helps bring in new tax revenues, jobs, and provides a certain status for the city.

Because of its growth in recent decades plus expectations that it will continue to grow, many American cities want to attract tech companies and grow the tech sector in their own community. If cryptocurrency is the new hot thing, everyone wants that.

On the other hand, chasing after the new thing does not always work out. Some cities will succeed in becoming cryptocurrency hubs, others will not. In a few years or decades, we can better assess Miami’s efforts. How much does cryptocurrency, or any tech business, need to be anchored in a particular place as opposed to conducting their business online or through a more distributed set of locations?

Additionally, cities are also interested in ways to generate easy revenue. When I read this article, I also thought of tourism. Many cities want to play in this game because there is a lot of money involved and visitors come, spend money, and then go home and do not require the long-term services that come with population growth. But, tourism is also dependent on factors like weather, pandemics, broad economic patterns, and more. Is cryptocurrency the newest easy money?

Cost and time overruns on public projects do not matter once the task is done

Posted on by

In a look at the troubled construction of the Salesforce Transit Center in San Francisco, one civil engineer puts the problems in perspective:

Paul Gribbon, a civil engineer who brought Portland, Oregon’s $800 million Big Pipe sewer project in on schedule and within budget, points out that, along with cost and time overruns, there’s another general law regarding megaprojects. “Once it’s up and running, once there’s a shining new bridge or light-rail station, people tend to forget about how much it cost, in all senses of the word.”

If the project eventually gets done and it all works, life moves on and the delays, frustrations, and extra monies fade into the past.

But, such challenges seem to be common in at least a few major American infrastructure projects in recent decades. What could help reduce these odds? Or, are these projects so complex that even a small issue – such as cracked steel beams in San Francisco – can create significant ripple effects and headaches?

My guess is that the civil engineer is correct: after delays and blown budgets, people just want something to work. The frustration during the process will dissipate as the public takes it as normal. They will feel relieved when the troubles are over. Yet, the long-term goal across all these projects should be to continue to seek timeliness and on-budget performance as the size of these projects can influence numerous other civic and municipal priorities as well as create inefficiencies for many.

Adding more context to Americans spending 7% of income on gas

Posted on by

AAA reports on how much Americans spend on gasoline:

Analysts say Americans are now spending 7% of their income on gas, a statistic that is up 1.5% from last year.

If you make $45,000 per year, you’re shelling out over $3,000 just to put gas in your vehicle.

The 7% figure may be interesting in itself but this is a statistic that begs for more background information. Is 7% a lot or a little? Should people be alarmed?

The story already includes two pieces of context:

  1. This is an increase from last year. Generally, people do not want to be paying significantly higher prices year after year. While 1.5% is a low number, drivers would probably not want this number to keep going up.
  2. A slightly lower than average income person or family – the median household income is a bit higher than this – spends over $3,000 on gas. People could read this figure and then think where else that $3,000 could be used.

But, there is more information that could be useful here.

  1. Historically, how much do Americans spend on gasoline? The article includes a one-year trend but how does this look over decades? Are gas prices going up the same way medical costs are going up?
  2. How does this 7% compare to other essential categories of spending such as food (and the groceries vs. eating out breakdown could be interesting) or housing?
  3. What are the total costs of car ownership? Gasoline adds up but vehicle owners also have to factor in maintenance and insurance.
  4. These are average figures for gasoline consumption: how much different will gas costs be for SUV and truck owners (and these are driving the car market) versus small car owners?
  5. How does this compare to gasoline costs in other countries? The rise to 7% may seem like a lot but gasoline costs more in some other industrialized countries and people in other countries drive less than Americans.

While this may be too much to ask for a short news story, gas costs, as well as most other social and economic statistics, are complicated. The numbers do not necessarily interpret themselves. Something going up or down or staying the same is as meaningful as its context and what we make of it.

Living by “a week’s pay for a month’s rent” in the early suburbs

Posted on by

Within a set of observations in Harper’s in 1953 about the new way of life in six mass-produced suburbs, Harry Henderson discusses the financial situation of the new suburbanites:

Henderson1b

Henderson2

Three quick thoughts:

  1. If we still adhered to the guideline of one week’s pay to cover housing, a lot of suburbanites would be in trouble. That rule suggests 20-25% of earnings should be for housing, not 30% which was a more common guideline today. But, with the dearth of affordable housing in many metro areas plus a desire of many suburbanites to be in communities that will help them be successful (i.e. good housing values, high-performing school districts, middle- to upper-class neighbors, a community with a good reputation, etc.).
  2. The desire to achieve the American Dream of owning a home in the suburbs is a powerful one as these residents of mass suburbia were willing to stretch financially – taking on extra work, living with in-laws – to make it happen. I would guess that this is still the case today.
  3. The full article is both an interesting snapshot of suburban life at the beginning of mass suburbia as well as an odd read since it treats suburbia as the exotic. Henderson admits at the beginning that the notes are subjective but they both provide some interesting information as well as provide insights into how outsiders viewed these early suburbs.

Nature, driving, and states closing “old-fashioned” rest stops

Posted on by

When money is tight at the state level, one way to save money is to close highway rest areas:

Cash-strapped transportation agencies are shuttering the old ones to save money, or because they don’t attract enough traffic or are in such bad shape that renovating them is too costly. Or, the stops have been overtaken by tourist information centers, service plazas that take in revenue from gasoline and food sales, or commercial strips off interstate exits.

Florida, Michigan, Ohio and South Dakota are among the states that have closed traditional rest stops in the past two years. And a battle is brewing in Connecticut over a proposal to shut down all seven stops on its interstate highways to save money.

But advocates of maintaining traditional rest areas say even if motorists are offered flashier options for pit stops, the ones that sprung up as highways did are still needed for driver safety and convenience. Some view them as a tranquil, environmentally friendly alternative to crowded service plazas and commercial strips…

But unlike service plazas, rest areas on federal interstate highways are prohibited from selling gasoline or food other than from vending machines, the proceeds of which traditionally go to people who are visually impaired. State transportation departments run the rest areas and are responsible for cleaning and maintaining them. That can take a chunk of their budget, depending on staffing and amenities, officials say.

It almost seems quaint that highway driving should be broken up to stops at state rest areas where drivers can experience nature and rest. Can highways and nature go together, especially on a small patch of green land within earshot of the interstate? Highways can of course be used for pleasurable trips but the majority of highway traffic is likely for practical purposes such as going to work or conducting some kind of personal business. In contrast, given our reliance on the trucking industry, the issue of spaces for truck drivers to stop seems like a bigger deal.

Ultimately, this seems to be about whether Americans deserve to have some spaces in life where commercial interests are severely limited or not allowed. Given the encroachment of economic life into many life domains, this change isn’t too surprising.

The infrastructure devil is in the (financial) details

Posted on by

Here is an interesting argument: generally, people like the idea of improving infrastructure until the details about finances and completing the project come up.

But beyond the potentially divergent approaches looms the question of how the expansion and improvements will be paid for. Abernathy’s colleague Eric Harris Bernstein pointed to an infrastructure proposal released by the Trump campaign in October that would rely on public-private partnerships, tax credits, and other private-sector incentives, which would likely require toll roads and bridges to entice investment. Bernstein characterized this approach as “a huge departure from this sort of populist message Trump ran on.”“They’re talking about having it all be financed by private investment, which is essentially the opposite of targeted [investments],” Abernathy adds. “It’ll go to the communities that have the potential to pay user fees and have the highest profit and ultimately reduce access and equity and basically turn our highway system into a bunch of toll roads.”

Richard Geddes, a professor of policy analysis and management at Cornell University and a visiting scholar at the conservative American Enterprise Institute, says that there is harmony across the political lines on “the notion that overall spending on infrastructure has been inadequate.” He suggests that the best way forward is to eschew the moonshot in favor of a more “surgical” approach to improving infrastructure quality. “The spending really has to be targeted on better, more efficient maintenance and operation of what we have, plus targeted expansions in the system,” he says. “We’re not going to rebuild the entire highway system, we’re going to add capacity—meaning a lane here, a lane there, expand facilities, particularly in urban areas as people move there.”

To pay for it, Geddes suggests there is some bipartisan consensus  for public-private partnerships, but he also believes the private sector will be instrumental in funding the work ahead. One solution he encourages would include making tax-exempt municipal bonds, which citizens buy to help communities pay for local projects, available to the private companies to incentivize them to renovate infrastructure. Another possibility he offered would be to update the gas-tax system to collect revenue from drivers based on miles traveled rather than gallons purchased, which would generate more revenue from hybrid or electric cars…

Of course, many Democrats and the Roosevelt Institute suggest that some infrastructure projects be financed by tax increases, be it on the wealthy or by closing of corporate loopholes or instating carbon taxes. These suggestions are anathema to Trump and many Republicans, some of whom have vowed not to raise taxes and not increase the debt. Meanwhile, on Tuesday, The Washington Post reported that House Democratic leader Nancy Pelosi said that she would oppose an infrastructure bill that banked heavily on tax breaks and privatization.

This is where finishing under budget and ahead of schedule would be helpful. I don’t know if there is much hope that any large infrastructure project (especially for the huge projects like major bridges or tunnels) can do this these days.

Perhaps infrastructure could also be a leading indicator in current American society regarding a lessened ability to plan for the long term. Infrastructure is not a very sexy topic yet people will complain vehemently if it ends up falling into disrepair.

The difficulties of projecting costs for big tunnel projects

Posted on by

Cost overruns on big infrastructure projects are common but may be even worse for tunnel projects, as the case of the California high-speed rail project may soon illustrate:

“You have an 80% to 90% probability of a cost overrun on a project like this,” Flyvbjerg said. “Once cost increases start, they are likely to continue.”…

Although some large tunnels have been constructed elsewhere without difficulty, including the 3,399-foot Caldecott Tunnel in the Bay Area, others have encountered costly problems.

The 11-mile East Side Access tunnel in New York City, for example, is 14 years behind schedule, and the tab has grown from $4.3 billion to $10.8 billion. Boston’s 3.5-mile Big Dig was finished in 2007 — nine years behind schedule and at nearly triple the estimated cost.

Digging stopped on the 2-mile Alaskan Way tunnel under Seattle when a boring machine broke down in December 2013 and had to be retrieved for repairs, causing a multiyear delay with an unknown cost overrun.

The bullet train will require about 20 miles of tunnels under the San Gabriel Mountains between Burbank and Palmdale, involving either a single tunnel of 13.8 miles or a series of shorter tunnels.

As many as 16 additional miles of tunnels would stretch under the Tehachapi Mountains from Palmdale to Bakersfield.

All told, this is a major project that might just draw attention from the public and scholars for decades to come. Is it possible to even finish it? What will be the end cost? Will it enhance transportation and life in California? There is a lot at stake here and big costs will not help. From the article, it sounds like part of this is due to falling behind schedule – this adds more money as the project takes more time and costs tend to go up over time – and is also due to the unique geological features of California – fault lines and possible earthquakes – which produce additional complications.

I’ve seen numerous people suggest that projects like these illustrate how difficult it is for the United States of today to complete major projects. This may be needed and/or helpful but a lot of good things have to happen before the line even becomes operational.